Yadlamalka Land Pty Ltd v Ragless & Anor - [2018] SASC 131

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
YADLAMALKA LAND PTY LTD v RAGLESS & ANOR
[2018] SASC 131
Judgment of The Honourable Justice Hinton
2 August 2018
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DETENTION, INSPECTION AND PRESERVATION - FREEZING ORDERS
Interlocutory application for a freezing order pursuant to rule 247(2) of the Supreme Court Civil Rules 2006.
The substantive proceedings to which the application relates is an action for the specific performance of a contract for the sale of a pastoral lease and livestock and sundry items and for damages for the breach of that contract. The breaches asserted include the failure to stockproof the boundary fence to the lease and the sale and movement of livestock prior to settlement.
In this application the plaintiff sought an order quarantining, in effect, a portion of the proceeds of sale of the pastoral lease out of which it was to be reimbursed for stockproofing the lease boundary fence and for any shortfall in stock numbers transferred upon settlement should it succeed in obtaining judgment for related breaches of the contract of sale. The plaintiff contended that in the absence of an order retaining a portion of the proceeds of sale for the said purposes, the utility of the substantive proceedings would be defeated. The defendant submitted that there was no real risk of a judgment being frustrated. In particular: (i) there was a dearth of evidence relating to asset dissipation (ii) the plaintiff had overestimated its prospective judgment sum and, in any event, (iii) the defendant has adequate assets to satisfy any judgment sum.
Held, dismissing the application:
1. The plaintiff has not established that there is a risk that absent the making of a freezing order any prospective judgment will go wholly or partially unsatisfied due to action taken by the defendants.
Land and Business (Sale and Conveyancing) Act 1994 (SA); Pastoral Land Management and Conservation Act 1989 (SA); Supreme Court Act 1935 (SA), referred to.
Mercedes Benz AG v Leiduck [1996] AC 284; Jackson v Sterling Industries (1987) 162 CLR 612; Deputy Commissioner of Taxation v Hua Wang Bank Berhad (2010) 273 ALR 194; Third Chandris Shipping Corporation v Unimarine SA [1979] 1 QB; Frigo v Culhaci [1998] NSWCA 88, considered.

YADLAMALKA LAND PTY LTD v RAGLESS & ANOR
[2018] SASC 131
Civil
HINTON J:

This is an application for a freezing order. It arises out of the failure to settle on a contract for the purchase and sale of a pastoral lease and livestock and sundry items. In the substantive proceedings to which this application relates, the plaintiff seeks specific performance of the contract and damages for its breach. Amongst other things the plaintiff contends that the defendants have not used their best endeavours to obtain the consent of the Minister to the transfer of the lease, such consent being required by statute, and have diminished stock numbers. Ministerial consent was dependent upon the Pastoral Board being satisfied that the lease boundary fence was stockproof which, the plaintiff asserts, the defendants were required by the contract to achieve and, as yet, have not done so. In addition it is asserted that some of the livestock due to be transferred has either been sold or removed from the lease contrary to the contract.
In this application the plaintiff seeks an order quarantining, in effect, a portion of the proceeds of sale out of which it is to be reimbursed for stockproofing the lease boundary fence and for any shortfall in stock numbers transferred upon settlement should it succeed in obtaining judgment for the related breaches of the contract.
On 2 August 2018 I refused the application. My reasons follow.
Background
Beltana Station is approximately 384,000 acres in size and is located 540 kms north of Adelaide. It is stocked with Dorper sheep and Angus cross cattle. The station is comprised of a crown lease and annual licence. South of Beltana Station lies Yadlamalka Station. On 18 October 2017 the plaintiff, the corporate entity that owns and operates Yadlamalka Station, by its agent, successfully bid at auction for the purchase of the lease and annual licence to Beltana Station in addition to certain livestock, plant, equipment and sundry items on that station. Mr Ragless, the first defendant, was the vendor of the lease and licence to Beltana Station. Beltana Station Pty Ltd, the second defendant, was the vendor of the livestock, plant, equipment and sundry items.
The Beltana Station lease was granted for pastoral purposes. As a consequence it is a pastoral lease within the meaning of the Pastoral Land Management and Conservation Act 1989 (SA) (the Act).[1] The Pastoral Board (the Board) is an entity created by the Act and is responsible to the Minister for the administration of the Act.[2] The Board is empowered by the Act to impose a fine on a lessee under a pastoral lease or cancel the lease if satisfied that a breach of a condition of the lease has occurred.[3]
[1]    Pastoral Land Management and Conservation Act 1989 (SA), s 3; Schedule, cl 5.
[2]    Pastoral Land Management and Conservation Act 1989 (SA), ss 12, 17.
[3]    Pastoral Land Management and Conservation Act 1989 (SA), s 37(1).
Under s 22(1)(b)(iv) of the Act a pastoral lease is granted subject to land management conditions including the maintenance of existing fencing in a stockproof condition. Section 22(1a) of the Act provides that a condition referred to in s 22(1)(b) is taken to be a condition of all pastoral leases irrespective of when the lease was granted.
On 17 October 2017, the day before Beltana Station was auctioned, the first defendant received a letter from the Board. Amongst other things that letter advised that site inspections conducted by the Pastoral Unit, an administrative unit of the Board, revealed that there were sections of the boundary fencing of Beltana Station and of Puttapa Station, a second pastoral lease run by the first defendant, that were not stockproof with the consequence that the first defendant was in breach of the condition imposed on his leases by s 22(1)(b)(iv) of the Act. Those sites where non-compliance was observed were specifically identified in the letter.
The letter also made plain that the issue of compliant boundary fencing had been one agitated between the Board and the first defendant for some time. Some progress, the Board acknowledged, had been made, nonetheless the first defendant remained in breach of the relevant condition. The letter stated:
As a result of the continued breaches of your lease conditions for both Beltana and Puttapa leases, the Board is providing serious consideration to cancellation of both leases, pursuant to section 37 of the Act. Alternatively under this section the Board may impose a fine.
The Board considers that your long term and repeated non compliance with meeting your fencing obligations under Section 22(1)(b)(iv) of the Act; failure to comply with multiple requests of the Board to maintain your fences; non compliance with the requirement to furnish a stock return by 31 July each year on multiple occasions; and non-payment of a number of fines relating to your failure to comply with you (sic) lease conditions, constitutes multiple and serious breaches of your lease conditions for both leases.
The letter proceeded to advise the first defendant that he had 60 days from receipt to ensure that all boundary fencing on Beltana and Puttapa Stations was stockproof. That meant, the letter explained, the fencing had to be adequate to contain Dorper sheep. Further, the Board gave the first defendant 60 days in which to make a written submission as to why the two leases should not be cancelled or the first defendant not be fined. The penultimate paragraph of the Board’s letter stated:
It has also been brought to our attention by a member of the public that you have listed Beltana Station for sale. Please note that the Minister’s consent must be obtained before there can be a transfer of lease to another party. Your ongoing breach of lease conditions will be a relevant consideration for the Minister when deciding whether to consent to the transfer of the lease.
Those attending the auction of Beltana Station on 18 October 2017 were advised that the Board required the vendor to undertake “certain stock proof fencing work” on two sections of the Station’s boundary fence of approximately 20 kilometres in total length at an estimated cost of $100,000. It was also indicated that a special condition would be added to the contract of the sale recording that the vendor would be responsible for the work required by the Board. On the morning of the auction the proxy who attended the auction on behalf of the plaintiff received the same information in an email from Elders, the agent retained by the defendants to conduct the sale.
The Board’s letter of 17 October 2017 to the first defendant was not sighted by the plaintiff at this time. The first defendant contends that the letter was available for inspection. The plaintiff disputes this.
The Form 1 Vendor’s Statement provided by the defendants in the discharge of their obligations under s 7(1) of the Land and Business (Sale and Conveyancing) Act 1994 (SA) indicated that the sum of $26,759.70 was owed in rent. The statement also referred to the Board’s letter of 17 October 2017 which it said “asserted that the Vendor must undertake certain stock proof boundary fencing on the land between the Beltana Lease and the Beltana Town Common, and between the Lease and the Nilpena Pastoral Lease”, an approximate length of 20km of fencing and (to a specification being top barb, 7 ring lock, bottom barb) the Vendor estimates the total cost of the works to be $100,000.”
As indicated the plaintiff successfully bid for Beltana Station and for the livestock, plant, equipment and sundry items on that station.
The contract executed by the plaintiff and the defendants on 18 October 2017 included express terms to the effect that the plaintiff would pay $6,460,000 to the first defendant in consideration for the first defendant transferring the lease and licence to Beltana Station to the plaintiff, and $1,940,000 to the second defendant in consideration for the second defendant transferring its interest in the livestock, plant, equipment and sundry items listed in the schedules to the contract to the plaintiff. Clause 8.1 in the Schedule of Particulars to the contract identified the settlement date as the later of 18 December 2017 or on the expiration of 7 days after receipt of the Minister’s consent to transfer the lease and licence. The consent of the Minister was a requirement imposed by s 28(1) of the Act.
Clause 4 of the contract provided:
The Purchaser acknowledges and declares that:
(a)the Purchaser has not been induced to enter into this Contract by, and has not relied on, any statement, inducement or representation made by or on behalf of the Vendor about anything in relation to the State and Condition of the Land;
(b)the Purchaser has or has had the opportunity to undertake its own inspection and investigation of, and relating to the Land, the location and the State and Condition of the Land;
(c)the Purchaser has entered into this Contract relying exclusively on the following:
(i)the inspection and investigation of, and relating to the Land, the location of the Land and the State and Condition of the Land made by or on behalf of the Purchaser;
(ii)any express warranties or representations by the Vendor contained in this Contract;
(iii)the accuracy of the information contained in any statement under section 7 of the Land and Business (Sale and Conveyancing) Act served on the Purchaser before entering into this Contract; and
(iv)any opinions or advice obtained by the Purchaser independently of the Vendor or the agents or employees of the Vendor; and
(d)the Purchaser cannot Object without any matter referred to in this clause 4.
Clause 11.2 of the contract included:
Compliance with Notices
(a)   The Vendor warrants and agrees that as at the date of this Contract, no notices, orders, requirements or demands in respect of, or relating to, the Land, the Included Goods or any part of them have been given, made or issued under the provisions of any statute, regulation or by-law or by any authority which have not been fully complied with, except those specified in Item 16(a).
(b)   The Vendor will comply with the notices and orders specified in Item 16(a) prior to the Settlement Date.
(c)   The Purchaser will comply with the notices and orders specified in Item 16(b) and indemnifies the Vendor in respect of those specified orders and notices from the date of this Contract.
(d)   The Vendor will promptly provide the Purchaser with a copy of any notices or orders it may receive in respect of the Land after the date of this Contract and prior to the Settlement Date.
(e)   The Purchaser indemnifies the Vendor and will keep the Vendor indemnified against all costs and charges in respect of all such notices, orders requirements and demands which may be given, made or issued after the date of this Contract.
Item 16(a) in the contract Schedule of Particulars stated:
Letter from the Pastoral Board of South Australia dated 17 October 2017 relating to certain stock proof boundary fencing on the land between the Beltana Lease and the Beltana Town Common, and between the Beltana Lease and the Nilpena Pastoral Lease.
Under clause 20.2 of the contract the parties agreed to use their best endeavours to obtain any consent or approval as may be necessary or reasonably required to give effect to the contract.
The special conditions to the contract contained in Annexure E included the following covenants:
7.Livestock count
Prior to settlement the sheep and cattle on Beltana Station shall be counted by a representative of the Agent at the cost of the Vendor and in the presence of representatives of both the Vendor and the Purchaser. If it is found that there is less than the numbers of sheep and cattle shown on Annexure C the purchase price of such sheep and cattle shall be adjusted at settlement at the rate of $140.00 per head for sheep and $1,200.00 per head for cattle.
…
11.Compliance with Pastoral Board letter
11.1The Vendor acknowledges that it has received a letter from the Pastoral Board of South Australia dated 17 August 2017, which letter asserts that the Vendor is required to undertake stock proof fencing works (to a specification being top barb, 7 ringlock, bottom barb) on the boundary between:
the Beltana Lease and the Beltana Town Common; and
the Beltana Lease and the Nilpena Pastoral Lease.
(“Beltana Fencing Works”)
11.2The Vendor agrees to (at its own cost) comply with any obligation properly required by the Pastoral Board to undertake the Beltana Fencing Works as outlined in their letter of 17 October 2017 (as a condition precedent to the granting of Ministerial and/or Pastoral Board consent to the transfer of the Land to the Purchaser as contemplated by this Contract).
11.3The Purchaser acknowledges that the Ministerial (sic) and/or Pastoral Board may refuse or impose conditions on granting consent to a transfer of the Land to the Purchaser, and the Vendor may determine its response to the decision of the Minister and/or Pastoral Board including without limitation, determining whether any conditions imposed are acceptable or determining whether or not to seek a review or appeal a decision of the Minister and/or Pastoral Board including in relation to the terms and conditions of any approval or consent.
11.4Until the said Beltana Fencing Works are either complied with, withdrawn by the Minister and/or Pastoral Board or overruled, the Purchaser irrevocably authorises the Vendor at the Vendor’s expense to seek all such necessary consents and approvals from the Minister and/or Pastoral Board to enable the transfer of the Land to the Purchaser as contemplated by this Contract and to exercise and procure (at the Vendors expense) every right of review and/or appeal arising from any determination from such application or failure to determine such application.
11.5The Purchaser will at all reasonable times allow the Vendor access to the Land after the date of settlement (if required) to undertake any works in connection with the Beltana Fencing Works.
11.6The Vendor will notify the Purchaser in writing of the outcome of the Minister and/or Pastoral Board (including any appeals) within a reasonable period of time after the Vendor has been notified of that outcome and has determined its position in relation to that outcome.
11.7The Vendor will take reasonable steps within its control to support the timely processing of an application for transfer of the Land to the Purchaser on the terms of this Contract.
11.8If the Vendor is unable to procure approval from the Minister and/or Pastoral Board for the transfer of the Land to the Purchaser on the terms outlined herein within 6 months from the date of this Contract then the Purchaser may terminate this Contract by written notice to the other.
Between 23 and 28 November 2017 a muster and livestock count was conducted on Beltana Station for the purpose of, amongst other things, determining the livestock that would be transferred at settlement and the related purchase price payable. Annexure C to the contract records that 6,000 Dorper and Dorper cross mixed aged females (lambs at foot under live weight of 30 kilograms given in), 100 mixed aged Dorper rams, 750 Angus and Angus cross mixed aged females (calves at foot under live weight of 200 kilograms given in) and 15 Angus and Ultrablack mixed aged bulls were to be transferred to the plaintiff. The consideration payable for the transfer was set out in Annexure D ($840,000 for the sheep and $900,000 for the cattle).
On or about 5 December 2017 the plaintiff obtained a copy of the Board’s letter to the first defendant dated 17 October 2017. The plaintiff considers the content of the letter to reveal that the Board was of the opinion that a greater proportion of the Beltana Station boundary fence than the 20 km referred to in the Form 1 Vendor’s Statement and by the defendants’ agent was not stockproof.
The contract did not settle on 18 December 2017 as ministerial approval for the transfer had not been obtained.
On 20 December 2017 the Board sent a letter to the first defendant extending the time in which he was to comply with the requirements of the letter of 17 October 2017 to 15 April 2018.
On 7 January 2018 one of the director’s of the plaintiff company, Mr Andrew Doman, sent an email to the solicitors for the defendants offering to approach the Minister for consent to the transfer of Beltana Station on condition that the plaintiff would undertake the required fencing works on further condition that $1.5 million of the purchase price was retained in escrow to reimburse the plaintiff for the cost of those works. The plaintiff estimated that the cost of the fencing work required by the Board in its letter of 17 October 2017 was in the region of $1.5 million but acknowledged this could be assessed more precisely and was subject to a contingency allowance.
In mid-February 2018 the plaintiff was advised by the defendants’ solicitors that the first defendant was continuing to address the Board issues.
Section 29 of the Act provides that an agreement entered into for the transfer of a pastoral lease expires 12 months after its execution unless the consent of the Minister to the transfer has been obtained. The plaintiff was aware of this, and, as time passed, became concerned that it would lose the benefit of the contract entered into on 18 October 2017. In fact by April 2018 the plaintiff considered that it had reached an impasse in its attempts to negotiate with the first defendant in an effort to have the fencing work required by the Board completed so that the Minister’s consent to the transfer of the lease could be obtained and settlement occur. In these circumstances the plaintiff instructed its solicitors to write to the Minister undertaking to satisfactorily complete the fencing works required by the Board if the Minister would consent to the transfer of Beltana Station to the plaintiff.

On 30 May 2018 the solicitors for the plaintiff were advised in writing that the Minister consented to the transfer of Beltana Station after accepting that satisfactory arrangements had been made between the plaintiff and the Department for Environment and Water for the completion of the outstanding fencing work. Thereafter the plaintiff’s solicitors wrote to the first defendant’s solicitors offering to settle subject to the retention of $1.5 million to meet the cost of the outstanding fencing works. That offer was rejected.
On 7 June 2018 the solicitors for the plaintiff wrote to the solicitors for the defendants repeating the previous offer to settle on the same conditions as set out in the solicitors’ letter of 30 May 2018. That offer was rejected the following day.
On 7 June 2018 the plaintiff’s solicitors received an amended settlement statement from the conveyancer retained by the defendants. That statement indicated that 350 cattle had been removed from Beltana Station. The settlement statement made an adjustment accordingly. The plaintiff considered that those cattle formed a portion of the total number to be transferred on settlement and that it was not open to the defendants under the contract to make such adjustment. Cheque directions subsequently provided by the same conveyancer on 12 June 2018 required that $6,005,000 of the balance of the purchase price, being $7,128,307.90 (adjusted due to the removal of the 350 cattle and in view of the $840,000 deposit paid) be paid to Rabobank at settlement.
On 13 June 2018 the plaintiff’s solicitors wrote to the defendants’ solicitors asserting that the defendants were in breach of the contract executed on 18 October 2017. The letter referred to the cheque directions received from the defendants’ conveyancer as indicative of the likelihood that the defendants would not have the funds to remedy the breach (due to the degree of indebtedness to Rabobank and the assumed costs of rendering Beltana Station stockproof). The letter then reported that Ministerial consent to the transfer of the lease had been obtained upon the plaintiff providing a warranty that it would undertake the outstanding fencing works. In the wake of this, and the defendants not indicating whether they had at least attended to the fencing work subject of clause 11.2 of Annexure E to the contract, the letter advised that the plaintiff could not agree to proceed to settlement on the basis that the full purchase price was payable. The plaintiff was ready, willing and able to settle subject to the defendants recognising that damages were payable. In the closing paragraphs of the letter the plaintiff dealt with the need for a further muster in view of the time that had passed since the first and in view of expected stock losses. That muster, it was said, should be arranged proximate to settlement.
On 2 July 2018 the plaintiff commenced the proceedings to which this application relates. In its Statement of Claim it asserts that the defendants breached the 18 October 2017 contract in that they:
a.    did not remedy the fencing issue and thus did not use best endeavours to obtain the Minister’s consent to the transfer of the lease and licence in contravention of clause 20.2 of the contract and special condition 11.4;
b.    did not undertake the fencing work required by the Board in its letter of 17 October 2017 and thus were in breach of clauses 11.2(b) and 11.2(c) of the contract, item 16(a) of the Schedule to the Contract and Special condition 11.2;
c.    did not discharge the obligation contained in clause 11.2(a);
d.    did not discharge the obligation contained in clause 11.2(d);
e.    did not comply with the implied condition that they comply with the terms of the lease and ensure that the boundary to Beltana Station be bordered by a stockproof fence meeting the requirements of the Board in order that the Minister’s consent to the transfer of the lease be secured.
The remedies sought include a declaration that the plaintiff is entitled to the specific performance of the contract in addition to damages and interest thereon.
On 19 July 2018 the defendants responded by serving a Notice to Complete on the plaintiff requiring the plaintiff to complete on the purchase under the contract by no later than 2 August 2018. On the same day the solicitors for the plaintiff wrote to the solicitors for the defendants contending that the Notice to Complete was defective and asserting that for reasons, including that settlement could not occur without a fresh muster and count, the defendants were not in a position to settle. Further, and in any event, it was contended that the defendants were in breach of the contract and thus could not compel the plaintiff to settle. By contrast, the plaintiff contended that it had at all times been ready, willing, and able to settle.
Lastly, by interlocutory application dated 23 July 2018 (the present application), the plaintiff sought an order requiring that the defendants cause the sum of $1,500,000 (or such other sum as the Court deems appropriate) of the funds payable to the first or second defendants or their nominee on settlement of the sale contract dated 18 October 2017 between the plaintiff as purchaser and the defendants as vendors to be retained in the trust account of Mellor Olsson Lawyers or a controlled monies account operated by Mellor Olsson Lawyers until further order.
The applicable principles
Rule 246(1) of the Supreme Court Civil Rules 2006 (SCCR) vests a discretionary power in this Court to grant an injunction before, at, or after the hearing and determination of proceedings in the Court. Rule 247 SCCR empowers the Court to make a particular kind of injunction – a freezing order. Rule 247(2) provides:
(2) Freezing Order
(a)The Court may make an order (a freezing order), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied.
(b)A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.
Rule 247(5)(a)(ii)(A) provides that the power contained in rule 247(2) may be exercised where an applicant has a good arguable case on a prospective cause of action that is justiciable in the Court. Notwithstanding that rule 247(5)(a) and (b) condition the exercise of the power contained in rule 247(2), rule 247(5)(f) provides that nothing in the rule affects 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.
Rule 247(5)(d) provides:
(d)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 any of the following might occur—
(i)the judgment debtor, prospective judgment debtor or another person absconds; or
(ii)the assets of the judgment debtor, prospective judgment debtor or another person are—
(A) removed from Australia or from a place inside or outside Australia; or
(B) disposed of, dealt with or diminished in value.
Rules 246 and 247 are supported by s 29 of the Supreme Court Act 1935 (SA) and the Court’s inherent power. Whatever the breadth of the power contained in s 29,[4] to the extent that s 29 and the inherent power support rule 247 the doctrinal basis for a freezing order “is to be found in the power of the court to prevent the frustration of its process”.[5] “The process which the order is designed to protect is a “prospective enforcement process””.[6] In Mercedes Benz AG v Leiduck Lord Nicholls explained:[7]
Ordinarily a plaintiff seeks a Mareva injunction in the same proceeding as those in which he is seeking his judgment. This should not be permitted to obscure the fact that Mareva relief differs from other interim relief in an important respect. Like other injunctions, a Mareva injunction operates in personam. It does not create a proprietary interest in the affected property, even where it relates to a specifically identified asset. And like other interim relief, a Mareva injunction is concerned to provide protection pending a future stage in the judicial process. But unlike other interlocutory relief, Mareva relief is not connected with the subject matter of the cause of action in issue in the proceedings. A Mareva injunction does not prevent a defendant from doing something which if done by him would be a wrong attracting a remedy. An unsecured creditor, or a claimant for damages, has no legal or equitable interest in any of the assets of the defendant, nor will the judgment itself give him such an interest. The judgment will comprise an order of the court that the defendant pay the plaintiff an amount of money.
This feature has to be kept in mind. Although normally granted in the proceedings in which the judgment is being sought, [a freezing order] is not granted in aid of the cause of action asserted in the proceedings, at any rate in any ordinary sense. It is not so much relief appurtenant to a money claim as relief appurtenant to a prospective money judgment. It is relief granted to facilitate the process of execution or enforcement which will arise when, but only when, the judgment for payment of an amount of money has been obtained...
[4]    See ABC v Lenah Game Meats Pty Ltd (2001) 208 CLR 199.
[5]    ABC v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [94] (Gummow and Hayne JJ); see also at [60] (Gaudron J); Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at [35] (Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ); CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391 (Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ); Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [41]-[42] (Gaudron, McHugh, Gummow and Callinan JJ); P T Bayan Resources v BCBC Singapore (2015) 258 CLR 1 at [44] (French CJ, Kiefel, Bell, Gageler and Gordon JJ).
[6]    PT Bayan Resources TBK v BCBC Singapore (2015) 258 CLR 1 at [46] (French CJ, Kiefel, Bell, Gageler and Gordon JJ).
[7] [1996] AC 284 at 306 quoted with approval in PT Bayan Resources TBK v BCBC Singapore (2015) 258 CLR 1 at [46] (French CJ, Kiefel, Bell, Gageler and Gordon JJ).
Importantly any order made “must be framed so as to come within the limits set by the purpose which [the order] can properly be intended to serve”, that is, to ensure the effective exercise of the jurisdiction invoked.[8] Self-evidently rule 247(5)(d) is framed in terms consistent with this requirement. It also reflects the common law. In this regard in Jackson v Sterling Industries Ltd Deane J said:[9]
… As a general proposition, it should now be accepted in this country that “a Mareva injunction can be granted … if the circumstances are such that there is a danger of [the defendant's] absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied”: per Lord Denning M.R., Rahman (Prince Abdul) v Abu-Tahaquoted with approval by Street C.J. in Ballabil Holdings.
[footnotes omitted]
[8] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at [35] (Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ); Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [41]-[42] (Gaudron, McHugh, Gummow and Callinan JJ).
[9] Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623 (Deane J); Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at [35] (Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ).
That said the starting point is to observe that the remedy is exceptional. The general rule is that a plaintiff must first obtain judgment then enforce it.[10] Further:[11]
[A Mareva order] is a drastic remedy which should not be granted lightly. …
A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to‘provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency’ … Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. The leading decision in this State is Patterson v BTR Engineering (Aust) Ltd.”
[10] A J Bekhor & Co Ltd v Bilton [1981] QB 923 at 941-942 (Ackner LJ).
[11] Frigo v Culhaci [1998] NSWCA 88 (Mason P, Sheller JA and Sheppard AJA) as quoted with approval in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [51] (Gaudron, McHugh, Gummow and Callinan JJ).
A plaintiff will have a good arguable case where it demonstrates that it has “a reasonably arguable case on legal as well as factual matters”.[12] It will not be sufficient to merely assert a claim in an affidavit or pleading.
[12] Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [68] (Gaudron, McHugh, Gummow and Callinan JJ).
A court will conclude that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied if the court is satisfied on the evidence adduced that the refusal to make a freezing order would involve a real risk of such consequence.[13] In Deputy Commissioner of Taxation v Hua Wang Bank Berhad Kenny J added:[14]
The fact that assets within the jurisdiction are moveable, and that the respondent is incorporated outside the jurisdiction is not enough to warrant an inferential finding of danger of dissipation. Rather, there must be facts from which, to quote Lawton LJ in Third Chandris Shipping Corporation v Unimarine SA [1979] 1 QB 645 (Chandris) at 671 “a prudent, sensible commercial” person can “properly infer a danger of default if assets are removed from the jurisdiction”. In this connection, Lawton LJ also said (at 672):
In my judgment an affidavit in support of a Mareva injunction should give enough particulars of the plaintiff’s case to enable the court to assess its strength and should set out what inquiries have been made about the defendant’s business and what information has been revealed, including that relating to its size, origins, business domicile, the location of its known assets and the circumstances in which the dispute has arisen. These facts should enable a commercial judge to infer whether there is likely to be any real risk of default. Default is most unlikely if the defendant is a long established, well known foreign corporation or is known to have substantial assets in countries where English judgments can easily be enforced either under the Foreign Judgments (Reciprocal Enforcement) Act 1933 or otherwise. But if nothing can be found about the defendant, that in itself may be enough to justify a Mareva injunction.
See also Chandris at 669 per Lord Denning MR, Raukura Moana Fisheries Ltd v Ship “Irina Zharkikh” [2001] 2 NZLR 801 at 827 [122] per Young J, Hadid v Lenfest Communications Inc (1996) 67 FCR 446 at 449 per Lehane J, and Reches Pty Ltd v Tadiran Pty Ltd (1998) 85 FCR 514 (Reches) at 518 per Lehane J. In Reches Lehane J declined to grant a Mareva injunction where the respondent, though a foreign corporation that would remove or deplete its sole asset in Australian in the ordinary course of business, was “a major and profitable corporation with very substantial assets”; there was nothing to suggest that the respondent was likely to default; and the respondent resided and principally carried on business in a jurisdiction where enforcement was possible under a reciprocal regime for the registration of judgments.
[13] The Niedersachsen [1985] 1 All ER 398 at 419, see also Deputy Commissioner of Taxation v Hua Wang Bank Berhad (2010) 273 ALR 194 at [9] (Kenny J) and the authorities referred to therein.
[14] (2010) 273 ALR 194 at [12].
Further the relevant danger must be established by evidence and not merely asserted.[15]
[15] Frigo v Culhaci [1998] NSWCA 88 at [4] (Mason P, Sheller JA and Sheppard AJA); Deputy Commissioner of Taxation v Gashi (2010) 27 VR 127 at [11].
The defendants conceded that, on the plaintiff’s construction of the contract, there is a good arguable case of a breach of contract. Accordingly, the critical issue for decision on the present application is whether it is open to the Court to conclude, consistent with the above principles that there is a real risk of the prospective enforcement process contemplated by the plaintiff’s claim being frustrated if a freezing order is not made.
The affidavit evidence received
On the hearing of the application I received in evidence the following:
·An affidavit of Louise May Russo, affirmed 23 July 2018, exclusive of paragraphs 53-62 (Exhibit P1);
·A second affidavit of Louise May Russo, affirmed 27 July 2018 (Exhibit P2);
·An affidavit of Thomas Alistair Doman, sworn 27 July 2018 (Exhibit P3);
·An affidavit of Janine Belinda Carroll, affirmed 19 July 2018 (Exhibit D1);
·An affidavit of Graham Andrew Ragless, sworn 27 July 2018 (exhibit D2);[16]
·A letter dated 13 June 2018 addressed to Mellor Olsson Lawyers, solicitors for the defendants, written by Andreyev Lawyers, solicitors for the plaintiff and the enclosure referred to therein (Exhibit D3);
·A letter dated 24 May 2018 addressed to Ms Janine Carroll of Mellor Olsson, written by the Crown Solicitor and the two enclosures referred to therein (Exhibit D4).
[16] Exclusive of – the second and third sentence in paragraph 9; everything appearing in paragraph 12 after the date 5 November 2012; the second sentence in paragraph 17; and the fourth sentence and the final sentence in paragraph 29.
Some of the affidavits contained submissions. To the extent that I have referred to those portions of the affidavits it is because I understood counsel to embrace and, in effect, adopt the submission.
Initially the defendants sought to cross-examine Ms Russo on her affidavits. That application was withdrawn. No other application to cross-examine any other deponent was made.
In view of the defendants’ concession, in what follows I focus upon the risk of dissipation by the defendants of assets that might be required to satisfy any prospective judgment thereby frustrating prospective enforcement proceedings.
a. The first defendant’s financial position
In her first affidavit, Ms Russo, a solicitor employed by Andreyev Lawyers and having the conduct of this matter on behalf of the plaintiff, observes that the first defendant is the sole director and sole shareholder of the second defendant and so, it is contended, it may be accepted that he is responsible for the arrears in rent owed to the Board as disclosed in the Form 1 Vendor’s Statement. That said, Ms Russo queries whether the amount identified as rent owing on account of “Beltana Station Crown rental” (some $26,759.70) is rent or is actually an amount owed in unpaid fines levied by the Board. If it is the latter, she suggests it is indicative of protracted non-compliance on the part of the first defendant with lease conditions.
Next Ms Russo deposes to land searches undertaken which suggest that the first defendant has landholdings of approximately $214,500, and an ASIC personal name search showing that he has shares in three proprietary limited companies which, given the companies are all private companies, she surmises, are likely to be of limited value.

Lastly Ms Russo refers to the cheque directions received from the conveyancer retained by the defendants. Those directions request that the balance of the purchase price be paid by two cheques, one of which is to be made out to Rabobank in the amount of $6,005,000. Given the consideration for the transfer of the lease and licence is $6,460,000, Ms Russo suggests that the first defendant has equity in the lease and licence of only approximately $500,000.
In her second affidavit, sworn 27 July 2018, Ms Russo refers to subpoenaed documents released by the Pastoral Unit showing that as at 31 May 2018 the defendants were liable to fines in the amount of $36,605.45. Ms Russo concedes that a portion of the total may relate to fines imposed in relation to Puttapa Station. Documents provided by the unit also indicate that proceedings have been instituted in the Magistrates Court against the first defendant seeking the enforcement of an amount of $5000 plus costs related to a fine imposed by the Board in July 2014. In the light of the above, Ms Russo suggests the Form 1 Vendor’s Statement was inaccurate. Further, she refers to ss 28(3) and (4) of the Act and suggests that the liability accruing is one in rem which must be discharged pre-transfer; having not done this it cannot be said that the defendants are ready, willing and able to settle.
In the light of the above the plaintiff suggests that the defendants have limited assets. Accordingly, in the absence of an order retaining a portion of the proceeds of sale for the purposes of meeting the cost of stockproofing Beltana Station, the utility of the substantive proceeding will be defeated.
In his affidavit the first defendant refers to the second defendant owning eight other properties freehold. He says nothing as to the market value of those properties or the extent to which they are encumbered. He does indicate that he holds the pastoral lease to Puttapa Station which covers an area of 76,000 acres. The first defendant also challenges the inference Ms Russo draws as to the equity held in Beltana Station. The money payable to Rabobank, he says, relates to all liabilities the defendants owe to Rabobank for all facility loans, not just those relating to Beltana Station. The liability secured against Beltana Station is only approximately $3,000,000.
b. Stock Numbers and the Stock to be conveyed
In his affidavit sworn in support of the plaintiff’s application Mr Doman states that when stock is sold in the pastoral industry ordinarily it is selected for sale according to particular characteristics such as age, health and weight. This was the purpose of the 2017 November muster on Beltana Station. The outcome of that muster was that stock selected for sale to the plaintiff were ear-tagged with a tag labelled “Yadlamalka”.
Mr Doman goes on to describe who attended the muster and the process undertaken for the selection of the stock to be transferred upon settlement as overseen by a representative from Elders. Stock not tagged “Yadlamalka” was to remain on the station and be sold at the discretion of the second defendant.
In determining this application it is unnecessary to deal with that part of the plaintiff’s case which asserts that the defendants were not in a position to settle unless and until a second muster was conducted.
Mr Doman also deposes to having spoken to a former worker on Beltana Station who worked there from January 2018 to May 2018 and is owed wages. Mr Doman was told of “Yadlamalka” tags being removed and stock re-tagged as “Beltana” or “Puttapa”. In addition he was told of 360 head of sheep being moved from Beltana to another property operated by the defendants, and has himself twice received information offering Beltana cattle for sale. Mr Doman considers that these sales are likely to have included stock ear-tagged as Yadlamalka. He states that he would not accept any attempt by the defendants to seek to convey replacement stock to the plaintiff as that stock would need to be inspected to ascertain whether it was of a comparable quality to that previously ear-tagged as Yadlamalka in November 2017.
Mr Doman then refers to the hot and dry conditions that prevailed during the summer of 2017/2018. From his experience he considered that a lack of water and the likely drying up of water points on Beltana Station would have resulted in stock losses. His opinion was fortified by information provided by the same former Beltana worker referred to above who told him of dead cattle and sheep he had seen at water points on the station. Mr Doman says that he himself saw a number of dead cows and calves when he visited Beltana in December 2017. The stock losses provide a further reason why another muster is necessary before settlement particularly as no adjustment for cattle and sheep losses is made in the settlement statement provided by the defendant’s conveyancer.
For his part Mr Ragless disputes the contention that the contract prohibits him from dealing with the livestock on Beltana Station in the usual course of business. He also contends that at the muster no cows were tagged, just notched, no sheep were tagged, they were branded, and only lambs and calves had Yadlamalka tags placed on them.
Mr Ragless tells of stock movements and of the defendants continuing to buy and sell stock in the course of their business. I understand the thrust of his affidavit to be that with the exception of the 350 cattle tracked out of Beltana Station subject of the adjustment in the settlement statement, the defendants remain in a position to transfer to the plaintiff the stock referred to in Annexures D and E of the contract.
It is unnecessary to deal with Mr Ragless’ challenge to the suggestion that under the contract the purchaser is entitled to a further muster.
c. The taking of the poly pipe layer
Annexure B to the contract listed the equipment and sundry items purchased. Included in the list was a poly pipe layer. The settlement statement provided by the conveyancer retained by the defendants included as an adjustment a deduction of $5,290.91 from the purchase price in respect of a poly pipe layer that had been removed from Beltana Station. In his affidavit Mr Doman states that the plaintiff was not consulted regarding the removal of this item from the list of equipment and sundry items to be transferred on settlement nor has it been asked to agree the valuation attributed to the layer. More to the point, it was contended that the removal of the poly pipe layer was an example of asset dissipation.
In his affidavit Mr Ragless states that he had need for a poly pipe layer on another property and so took the one that was on Beltana. Before doing so he arranged for a quotation for a new replacement layer to be obtained. That quotation is exhibited to his affidavit and prices a new layer at $5,290.91 which was then deducted as an adjustment in the settlement statement.
d. The extent to which the Beltana Station fencing is stock proof
Mr Doman deposes to a meeting with the first defendant in November or December 2017 at which they discussed the extent of repairs needed to render the Beltana Station boundary fence stockproof. Here it should be observed that a stock proof fence was one capable of holding Dorper sheep, a breed known to burrow under fences.
In his affidavit Mr Doman deposes to the first defendant identifying approximately 120-200 kilometres of boundary fencing that was not Dorper proof.
Mr Doman further deposes that Dorper sheep are run on Yadlamalka Station. The cost of “Dorper proof” fencing for Yadlamalka was in the region of $5000 per kilometre. Accordingly, the plaintiff contends that a sum in excess of $1 million will be required to “Dorper proof” Beltana Station.
As part of its present application the plaintiff relies upon the different assessments provided by the first defendant (in the Form 1 Vendor’s Statement and in the meeting between Mr Doman and the first defendant) regarding the extent to which work on the Beltana Station boundary fence needs to be undertaken as relevant to the assessment of the risk that enforcement of any prospective judgment may be frustrated.
In her second affidavit Ms Russo refers to documents produced by the Pastoral Unit suggesting that the Board has had long and protracted dealings with the first defendant regarding the adequacy of fencing on Beltana Station going back many years. It is asserted that since 2010 the number of complaints as to the adequacy of fencing have increased. In a letter from the Crown Solicitor to the defendants’ solicitors dated 16 March 2018 it is said that the defendants rely upon compliance with the terms of a letter of 5 November 2012 from the Department of Environment, Water and Natural Resources recording an agreement reached with the Board in 2012 as providing the basis for their contention that the Beltana Station boundary fencing is stockproof. That letter is exhibited to the affidavit of Mr Ragless to which I refer below. The Crown Solicitor makes the point that a pastoralist cannot contract, in effect, out of the requirements of the Act. Thus irrespective of compliance with the terms of the said letter, the defendants remain non-compliant with the statutory imposed condition. It is not without relevance here that considerable time has passed since November 2012.
The Crown Solicitor’s letter also refers to fines imposed by the Board on the defendants in July 2014, December 2015 and June 2016 totalling $25,000. Further, the letter records the fact of consideration having been given from time to time by the Board to the question of the cancellation of the lease. The latest position as recorded in the letter is the extension granted to the defendants to comply with the requirements contained in the Board’s letter of 17 October 2017 by 15 April 2018 with an inspection planned for the week of 16 April 2018. Lastly, the Crown Solicitor’s letter expresses the opinion that special condition 11 of the 18 October 2017 contract did not accurately reflect the content of the Board’s 17 October 2017 letter. The condition did not adequately disclose the full extent of the stockproofing required in order that the Beltana Station boundary fence may be considered compliant.
Ms Russo deposes to being advised by the Board that 102 kilometres of the Beltana Station boundary fence bordering Puttapa Station to the east and 87 kilometres made up of a portion of the fence bordering Nilpena Station and another section bordering the Ediacara Crown Reserve is non-compliant. Ms Russo alleges that the defendants have, consequently, failed to disclose the full extent of the fencing work to be undertaken both before and after the 18 October 2017 contract was executed.
As indicated above, the plaintiff has not pleaded a case of misleading and deceptive conduct. On this application I understand the allegations of deception to go to the risk that the defendants have engaged or will engage in asset dissipation.
In his affidavit Mr Ragless states that Dorper sheep are run on only a third of Beltana Station. The point he makes is that in its entirety the boundary fence need not be “Dorper proof”. The maps of Beltana Station show that it is divided internally into named paddocks. I assume those paddocks are divided by fences. I know nothing of the extent to which internal fences in combination with a portion of the boundary fence may comprise a “Dorper-proof” area of the station.
As part of their case on the application the defendants tendered a letter dated 24 May 2018 from the Crown Solicitor to the defendants’ solicitors (exhibit D4). The letter advises of an inspection of boundary fences undertaken in the Beltana Station area in the previous month. The outcome of that inspection was the detection of a “number of instances of potential non-compliance with s 22(1)(b)(iv)” of the Act with “the condition of the boundary fencing not being stock proof in some areas”. Those areas are not identified in the letter but an enclosed map with annotations provides the areas subject of the Board’s concern. Amongst other things the letter invites the first defendant’s view of the condition of the boundary fence and, where inadequate, what action is proposed. The letter also advises the defendants that neighbouring pastoral leases are being asked for the same information and input.
Exhibit D4 suggests that as at 24 May 2018 the Board did not have a decided view as to the extent to which the boundary fencing to Beltana Station was stockproof.
In his affidavit Mr Ragless tells of a dispute between himself and the Board of longstanding but which has taken on a new emphasis since January 2017. The dispute includes the propriety of fines imposed by the Board in relation to the adequacy of the Beltana Station boundary fence and related enforcement action. Those fines, he contends, were imposed for the supposed failure to undertake fencing work in accordance with an agreement reached with the Pastoral Unit in October 2012. Mr Ragless contends that no such breach has occurred and to the extent that all the work subject of the agreement has not been undertaken it is because such work is dependant upon others doing things first such as pegging the boundary. Accordingly, he says, the fines have been wrongly issued.
It appears that a letter written by the defendants’ solicitors’ to the Board dated 21 September 2017 in which the first defendant asserted compliance with the November 2012 agreement and disputed fines imposed for alleged non-compliance with the agreement precipitated the Board’s letter of 17 October 2017. In his affidavit Mr Ragless observes that the Board letter only refers to two areas of the Beltana Station boundary fence as not being stock proof. The other two areas of fencing that the letter refers to form part of the boundary fence to Puttapa Station.
Despite the content of the letter Mr Ragless says he instructed Elders Real Estate to proceed with the auction after incorporating special condition 11 within the contract and to making reference to the Board’s letter of 17 October 2017 in the Form 1 Vendor’s Statement. Mr Ragless also contends that on his instructions the auctioneer advised those in attendance that:
The Vendor disputes the requirement or obligation for that fencing. However, the Vendor will assume the liability to undertake any such fencing which is properly required by the Pastoral Board… The Vendor has estimated that the fence line described in the pastoral Board’s letter to be approximately 20 kilometres.
Mr Ragless adds that prior to the auction prospective purchasers were given the opportunity to inspect the Board’s letter, the updated contract and the Form 1.
Mr Ragless contends that the fencing work required by the Board in its letter of 17 October 2017 is not in accordance with standard pastoral industry practices. Mr Ragless disputes Ms Russo’s contention that the letter of 17 October 2017 requires greater fencing work than was disclosed on 18 October 2017.
Referring to the letter of 29 May 2018 and attachments, counsel for the defendants contended that only 22 kilometres of the southern boundary fence to Beltana Station and 17 kilometres abutting the Beltana township was in need of replacement or maintenance.
Lastly, Mr Ragless asserts in his affidavit that the plaintiff’s offer to settle on the basis that $1.5 million of the proceeds of sale be held in trust was contrary to the terms of the contract. In this regard he points to clause 11 of the contract which renders the vendor liable for all fencing work to be undertaken in order that compliance with the Board’s requirements as detailed in the letter of 17 October 2017 be met but also reserves the right to the vendor to challenge those requirements. Further he refers to special condition 4 of the contract and the plaintiff’s agreement to accept Beltana Station in its then current condition. The defendants require the plaintiff to settle without the retention of any portion of the proceeds of sale for fencing purpose. Further again, and in any event, he disputes the estimation that approximately $1.5 million will be needed to stockproof Beltana Station. In this connection he has exhibited to his affidavit a quotation from AB & Daughters Pastoral Company Pty Ltd wherein a quote of $127,725.00 (inclusive of materials, labour and GST) is provided to render the Beltana Station fence bordering Nilpena Station “Dorper proof”. The quotation also suggests that the Beltana Station fencing bordering the Beltana Town Common was replaced in November 2017 and that bordering Moolooloo Station was not in need of repair.
Submissions
Despite the defendant’s concession that there is a good arguable case of breach of contract it remains necessary to understand the ambit of the claim in order that any freezing order not trespass beyond what is necessary.
The primary assertion is that, in short, the defendants did not use their best endeavours to obtain the consent of the Minister to the transfer of the lease in breach of clause 20.2 and special condition 11.4.
The thrust of counsel’s submissions was that there was an arguable case of breach of the contract in that the true extent of fencing work required in order to be compliant with s 22 of the Act and obtain Ministerial consent to the transfer of the lease was concealed. In this regard it was arguable that much more than 20 km of fencing required attention, and more likely 102 km. Clause 11.2 of the contract and item 16(a) of the Schedule of Particulars and the Form 1 did not reveal the true position and, if anything, conveyed an impression that the fencing issue was not a significant one, and not one that might unduly delay settlement. To the extent that the contract burdened the vendor with responsibility for stockproofing beyond settlement and reserved to the vendor the right to contest the Board’s requirements with respect to stockproofing, the relevant clauses would be construed subject to a requirement of reasonableness and in the light of the nature of the task as was disclosed. It was also submitted that any attempt to confine the dispute with the Board to the letter of 5 November 2012 was untenable. Whatever had or had not been agreed in 2012, and whatever had or had not been done in purported fulfilment of that agreement, the fact was the Act required that the boundary fence be stockproof and the Board’s letter of 17 October 2017 required the same.
Counsel also referred to no mention being made prior to the contract being signed of the risk of the cancellation of the lease. Counsel submitted:
My submission remains the fact that there is a statutory office that’s threatening a guillotine over the contract with respect to extensive and undisclosed fencing problems was a material matter for the vendor to disclose in these circumstances. The failure to disclose it, the plaintiff will contend, is misleading and deceptive conduct by silence.
Counsel then referred to the first defendant’s outstanding liability for fines imposed by the Board. It is arguable, he submitted, that this too had been concealed as had the true extent and duration of the defendants’ dispute with the Board. This amounted to a further example of non-disclosure relevant to the capacity of the defendants to settle within a reasonable time on the terms as contained in the contract. In addition it amounted to a breach of those terms that required the vendor to provide the purchaser with copies of any notices or orders received in respect of the land after the date of contract and before the date of settlement. The plaintiff contends that such warranties would include all ongoing communications with the Board after October 2017 which have not been provided.
Counsel then referred to the removal of stock and equipment from Beltana Station and submitted that there was nothing in the contract permitting such action to be taken. Clause 10 of the contract, it was submitted, left the first defendant in a custodial role only.

As to the defendants’ issue of a Notice to Complete, clause 16.3 of the contract prohibits a party issuing such Notice if they themselves are in default. Counsel contended the defendants were in default – the fencing work has not been done, fines remain unpaid, stock has been removed from the property and certain equipment (the pipe layer) has been removed from the property. Nothing in the contract allows for these issues to be dealt with by adjustment to the purchase price. Clause 20.2 requires the parties to use best endeavours to obtain any consent or approval required under the contract and to execute all acts, deeds and things reasonably required to give effect to the contract. The defendants have not met these obligations.
I do not stay to deal with the contention that absent a second muster the defendants cannot settle on the claim that the contract implicitly requires a second muster.
Counsel then referred to the Board’s letter of 20 December 2017 extending the time in which the first defendant was to comply with the demands contained in the Board’s earlier letter of 17 October 2017. Counsel submitted that there was no evidence before the Court that compliance had as yet occurred. In this connection counsel referred to the AB & Daughters Pastoral Company Pty Ltd letter of 26 July 2018 where it is estimated that a further 27 kilometres of fencing needs work at a cost of $127,725. Two points were made; first, this was an estimated cost for work yet to be done. That suggested that whatever the fencing work done in November 2017 was, it was not the work required at the sites identified in the Board’s letter of 17 October 2017 as it is those sites that the AB Pastoral Company letter refers to. Thus, even on the defence case the work to be undertaken to satisfy the Board remains undone. The second point is that the estimate works out to a cost of $4,000 per kilometre for replacement fencing. Referring to Exhibit D4 and the Beltana and Puttapa Fencing Map annexed thereto, counsel contended that the Board’s actual view was that approximately 102 kilometres of the Beltana Station boundary fence was in need of replacement or work in order to be stockproof. Counsel conceded that 102 kilometres at $4,000 per kilometre did not justify the retention of $1.5 million of the purchase price that the interlocutory application sought to have frozen. However, 102 kilometres at $4,000 per kilometre in addition to accounting for stock losses resulted in a figure approximating $1 million.
Counsel turned to the risk of dissipation of assets that could be devoted to the satisfaction of a prospective judgment by the defendants. Here counsel drew the Court’s attention to the evidence of the defendants’ limited assets as referred to in Ms Russo’s first affidavit. Next, the defendants faced relatively high levels of debt; $6,005,000 was owed to Rabobank. Further, on the Form 1 Vendor’s Statement, the first defendant disclosed a debt of $26,759.70 on account of ‘Beltana Station Crown Rental.’ As mentioned, this money was later discovered to be overdue fines for breach of lease conditions. It also transpired that the current balance due in unpaid fines was $36,605.45. Then there was ample evidence of the first defendant’s lack of candour, not limited to the withholding of information as to the true breadth and depth of the dispute with the Board but including the characterisation of fines owed as rent and the suggestion that over the 2017/2018 summer only six animals were lost.
Lastly, there was a real risk, it was submitted, that the defendants had already undertaken actual asset dissipation. Here counsel referred to the movement of stock off Beltana Station and the sale of other stock.
Counsel for the defendants opened by pointing out that the plaintiff made no claim for misleading and deceptive conduct, no claim of fraud, has not pleaded any material non-disclosure on the part of the defendants, has not pleaded any breach of an implied term requiring a further muster, and has not pleaded any breach of the term governing the transfer of stock. Counsel for the defendants emphasised that a claim for damages upon breach of contract gives rise to no right to an order for pre-action security for those damages. The plaintiff should settle on Beltana Station on the date specified in the Notice to Complete, it was contended, and accept the risk of a breach of contract having occurred like any other litigant.
Counsel for the defendants submitted that there was no real risk of any prospective judgment being frustrated. He pointed to (i) the dearth of evidence relating to either asset dissipation or the first defendant’s dishonesty, (ii) the adequacy of the defendants’ assets and (iii) the plaintiff’s overestimation of its prospective judgment sum. The plaintiff’s application was in truth, it was submitted, an attempt to obtain security for its claim ahead of judgment to which it was not entitled.
In elaboration counsel submitted that any conclusion of there being a genuine risk that a prospective judgment would be frustrated must be based on evidence. That is, evidence of actual or intended asset dissipation, which would demonstrate that the proceedings and the administration of justice may be frustrated if an order was not made.
It was submitted that the removal of livestock was not asset dissipation. Stock had been moved to avoid losses. The sale of stock took place as part of the defendants’ usual business. In any event, the defendant submitted that what had been done with the stock was irrelevant; the pertinent question was whether the promised stock would be present on Beltana Station as at the date of settlement. Nothing in the contract required that specific animals be present. What was required was a number of animals of particular types of breed. Ultimately the question was not what had been done with the stock, but would the stock be available on the date of settlement. No evidence had been placed before the Court to indicate that the stock would not be present and the first defendant asserts they will.
As to the removal of the poly pipe layer, that was not done in a covert attempt to deprive the plaintiff. The first defendant deposed to having needed it on another property, obtained a quote for its value, and had deducted its value from the settlement statement. The removal of the pipe layer was openly disclosed in the settlement statement.
Counsel conceded that the Court may have regard to the conduct of the first defendant. In this regard the plaintiff questioned the candour of the first defendant in respect of disclosing the 17 October 2017 letter and past communications with the Board. The defendants questioned whether the plaintiff could actually have been misled as to the state of the Beltana Station boundary fencing given it had a period of six weeks prior to the auction to seek information from the Board, had, according to the first defendant, the opportunity to examine the letter prior to the auction in addition to examining the updated Form 1 Vendor’s Statement and updated contract, and had arranged for the inspection of Beltana Station twice with the consequent opportunity to examine the condition of the boundary fence for itself. As to the latter point, the plaintiff conceded as much in clause 4(b) of the contract.
Further, there was no concealment of the fact that $26,759.70 was owing to the Crown or that there was a mortgage over the lease – both of these facts were disclosed in the Form 1 Vendor’s Statement. Counsel also referred to clause 4(a) of the contract where there was express acknowledgment that the purchaser had not entered into the contract in reliance upon any statements of the vendor.
The defendants submitted that there was no dishonesty regarding the stock figures. The defendants pointed to the fact that allowances for the reduction of stock had been openly made on the settlement statement. It was also submitted that the defendants had not opposed a second muster, but the muster having not been requested until 13 June 2018 (the day before a previous attempt to settle) suspected it was an excuse by the plaintiff to avoid settlement.
The defendants next submitted that the plaintiff had over-estimated its prospective judgment. The plaintiff admitted that it was difficult to estimate the extent of the fencing work required, nonetheless it made assumptions as to the extent of work required, not to mention the contention that the contract was to be construed as requiring that the entirety of the boundary fence be stockproof. The defendants asserted that to the extent that the plaintiff’s relied upon the opinion of the Board and the fencing work required by the contract as coextensive with that opinion, it had been shown to be operating on outdated information. The most recent correspondence (exhibit D4) demonstrated that the first defendant continued to negotiate with the Board and that no concluded opinion had been arrived at by the Board. The plaintiff had also assumed that the defendants had not undertaken the 20 km remedial fencing work required by special condition 11. The AB & Daughters Pastoral Company letter exhibited to Mr Ragless’ affidavit indicated that 21 km of “Dorper proof” fencing was completed along the south-eastern boundary of the Station. That letter also indicated that an inspection of the Station fencing on 30 January 2018 at certain points approximating those referred to in the Board’s letter of 17 October 2017 indicated that roughly 31.6 km of fencing needed work in order that it be rendered stockproof at the maximum cost of $127,725. If the fencing obligation imposed by the contract was limited to that required by the Board’s letter of 17 October 2017 and no more, then clearly the amount sought to be frozen was excessive. Further, if the contract required fencing work equal to that set out in the Board’s letter of 17 October 2017, or, indeed, any proportion, special condition 11 allowed for its completion after settlement of the contract. Further again, if the contract required that work be undertaken in relation to a greater proportion of the boundary fence, it could not extend to the entirety. In this regard the first defendant deposed that only a third of the station was devoted to running Dorper sheep.
In any event, the defendants submitted, there was available sufficient assets to meet an adverse judgment even with $6 million of the proceeds of sale being paid to Rabobank. In this regard the defendants pointed to the balance of the proceeds and to the defendants’ other property holdings including Puttapa Station the equity in which the first defendant said exceeded the $37,000 asserted by Ms Russo.
The defendants considered the plaintiff’s concerns reducible to an apprehension that if it settled it would not get what it had contracted and paid for in that less stock might be on the property and significant work might need to be done to the boundary fence to render it stockproof. Irrespective of the likelihood of those two things occurring, the appropriate course to take was to proceed to settlement, thereafter if the feared outcomes did eventuate proceedings for breach of contract may be pursued and the plaintiff would assume the normal risk of engaging in litigation. In those circumstances, the defendants asserted, the freezing order sought by the plaintiff was in fact an opportunistic attempt to obtain security for intended litigation where no adequate reason to make such order existed.
Consideration
The defendants’ concession that the plaintiff had established an arguable case of breach of contract was appropriately made. At a minimum there is much room for debate as to what is a stockproof fence and what, objectively construed having regard to the surrounding circumstances, the contract required in respect of Beltana Station’s boundary fencing. On one view the defendants’ obligation is confined to the sections of fencing referred to in special condition 11.1 and any further requirements located in the Board’s letter of 17 October 2017 form no part of the contract. Difficult questions of reconciliation may then arise when one has regard to clause 11.2 of the contract and item 16(a) if together they are construed as requiring that a broader view of the Board’s requirements contained in the letter of 17 October 2017 be taken. The determination of these issues and others will inform the resolution of the claim that the defendants have not used their best endeavours to obtain the Minister’s consent to the transfer of the lease, in addition to the first defendant’s ongoing liability under special condition 11 and the extent to which he may legitimately challenge the Board’s requirements under special condition 11.3. Difficult questions also arise regarding the extent to which the defendants may rely upon the warranties given by the plaintiff in clause 4 of the contract.
Then there is the question of what the contract permitted the defendants to do with stock and equipment in the period leading up to settlement. As to the former, special condition 7 might be construed as suggesting that a muster was contemplated as being undertaken at a time proximate to settlement in order to confirm Annexure C and that any adjustment at settlement occur if it transpired that a difference arose between Annexure C and the outcome of the muster. Of course, the muster was undertaken in anticipation of settlement in December 2017, a more difficult question arises as to what is contemplated where settlement does not occur by the nominated date and the purchaser has not exercised its right to rescind upon six months passing and settlement not occurring. Is it a matter of a second muster or is it a matter of adjustment upon settlement? With respect to the equipment and sundry items, I do not overlook the question of whether it was open to the first defendant under the contract to unilaterally decide to remove the poly pipe layer and instruct the conveyancer to make an appropriate adjustment to the purchase price.
The questions concerning the defendants’ obligation under the contract to transfer a Station with a stockproof boundary fence highlight a difficulty with the application. The plaintiff indicated that its case was based on non-compliance by the defendants with the stock-proofing requirements of the Act. Nowhere are those requirements identified save at a high level of abstraction such as in the Board’s letter of 17 October 2017. The most recent correspondence (Exhibit D4) suggests that the Board has not arrived at a concluded view as to the extent of compliance or otherwise of the Beltana Station boundary fence. That tends to suggest that it would be wrong to treat the letter of 17 October 2017 and s 22 of the Act as applying a particular standard of fencing to the entire boundary fence. In any event, on the hearing of this application the plaintiff sought an order that $1 million from the proceeds of sale be frozen and applied to the reimbursement of the plaintiff for the cost incurred in rendering the boundary fence stock-proof. That figure had been revised down from $1.5 million initially sought. It includes an estimated cost for work done in relation to 102 km of fencing. That 102 km was determined by interrogating the chart annexed to the Crown Solicitor’s letter of 24 May 2018. There is, however, no evidence that the Board has determined that the 102 km of fencing identified in the annexure is actually non-compliant or that, in order to comply with the requirements of the Act, 102 km of fencing needs work. In fact the letter of 24 May 2018 suggests that the Board has not arrived at a concluded view. At the other extreme the defendants contend that only 37 km of fencing requires work as set out in the AB & Daughters Pastoral Company letter. The point is that if the Court is to grant a freezing order such order must be framed so as not to exceed the purposes which the order may properly serve. Here the plaintiff’s case as currently formulated extends to an as yet indeterminate portion of the total boundary fence – it is somewhere between 37 km and 102 km but could be more. No evidence has been adduced from the Board as to precisely what it’s opinion is. I appreciate that this is an interlocutory application and that if an order is made the plaintiff will be required to give an undertaking in damages, however, it concerns me that the plaintiff cannot articulate with some precision as part of its own case how much of the Beltana Station boundary fence it says the first defendant is liable to render stock proof. Is it the 120-200 km referred to by Mr Doman in his affidavit or the 102 km? That the plaintiff embraced the latter and, in addition, the price for fencing per kilometre provided by AB & Daughter Pastoral Company Pty Ltd, leaves me with reservations regarding the amount sought frozen. Here too it is to be borne in mind that the order sought is exceptional and imposes a severe restriction on the defendants’ rights to deal with the proceeds of sale as they see fit.
In any event, in my view the plaintiff has not established that there is a real risk that absent the making of the order sought any prospective judgment will be wholly or partly unsatisfied. In arriving at this conclusion I rely in particular upon the first defendant’s affidavit and the property interests of the second defendant. That evidence was not challenged. True it is that the first defendant does not disclose the equity held in each property, but the very reason for his referring to the properties is to suggest the availability of sufficient assets to satisfy any adverse judgment debt. I do not think it would be appropriate to proceed on the basis, absent any evidence and any challenge, that the first defendant has purposely refrained from informing the Court of the equity held in those properties in an endeavour to deceive. The onus is upon the applicant to establish a real risk of asset dissipation. Here too regard should be had to the balance of the proceeds of sale and the first defendant’s evidence that the proportion of the proceeds of sale to be paid to Rabobank is intended to pay down debt on all liabilities owed to Rabobank for all facility loans and not just that secured against Beltana Station. Again, this contention was not challenged. As it stands it suggests that the defendants have significant assets which may be used as security for future lending such as may be required, or decided, to undertake in order to satisfy a judgment.
I am not prepared to conclude that the first defendant has engaged in dishonest conduct. In this regard I place little weight on the disclosure in the Form 1 Vendor’s Statement of the outstanding fines as rent. If those fines do attach to the lease under s 35 of the Act as opposed to the defendant in personam, the simple fact is the amount was disclosed. In any event, the first defendant challenges the issue of the fines including in the proceedings instituted in the Magistrates Court. Whether the fines were lawfully imposed remains to be seen.
I bear in mind that the assertions made by the former employee and repeated by Mr Doman are hearsay and consequently untested. I bear in mind that the first defendant refutes those allegations and has not been challenged on his refutation. I also take into account that the removal of the poly pipe layer was in no way concealed but was disclosed unprompted in the settlement statement provided.
I do not think the removal of stock and the sale of other stock is evidence of asset dissipation as opposed to steps taken in the ongoing management of livestock on a pastoral lease as part of the pastoral business engaged in pending settlement. True those steps, or some of them, may have been taken in breach of the contract, but there is a difference between acting in breach of a contract and dissipating assets for the purposes of frustrating legal proceedings. There is no evidence that the first defendant has moved and sold stock in the hope that he will benefit from an overpayment made at settlement which will be applied immediately in some way such that there is a real risk that any prospective judgment will be frustrated. Here I bear in mind that the first defendant has, in effect, guaranteed on oath that the stock referred to in Annexure C will be on Beltana Station if the parties proceed to settle.
Conclusion

The application is dismissed.