Wylie v Pacific National Pty Ltd
[1997] QDC 63
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- Wylie v Pacific National Pty Ltd[1997] QDC 63
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Wylie v Pacific National Pty Ltd[1997] QDC 63
Wylie v Pacific National Pty Ltd[1997] QDC 63
DISTRICT COURT | No 745 of 1997 |
CIVIL JURISDICTION
JUDGE O'SULLIVAN
DONALD HERBERT WYLIE | First Plaintiff |
and
GAVIN MacGILL and JOHN MARIE THERESA MacGILL | Second Plaintiffs |
and
PACIFIC NATIONAL PTY LTD (ACN 069-822402) AS TRUSTEES FOR THE BANKCO PACIFIC ASSET MANAGEMENT TRUST | First Defendant |
and
JOHN LAWRENCE SKINNER | Second Defendant |
and
DENNIS WALLACE | Third Defendant |
BRISBANE
DATE 17/03/97
JUDGMENT
HER HONOUR: This is an application by the plaintiffs for a Mareva Injunction against the first, second and third defendants limited to the extent of net value of assets exceeding the sum of $100,000.
I heard this matter in Chambers on 13 March. I adjourned the matter in order to not only consider the submissions and the affidavit material but to research a particular aspect of it, about which I will enumerate in these Reasons.
I can say at the outset that the submissions I have received, both oral and written, from counsel for both parties have been helpful and persuasive which warranted my thinking about the Application and because I can see the merits of both the Applicants' position and the Respondents' position. I have therefore in view of that taken the trouble to consider the matter more fully than I might otherwise do in a busy Chambers week.
The area of dispute really came down in the end to one point only, i.e. whether the Applicants had discharged their onus of proving that there was a real risk of dissipation of the assets. The narrow point that I wanted to research, and one on which I invited counsel to deliver authorities if they wished, was this: at the hearing, Mr Maher advanced the proposition that there is affidavit material tendered by the Respondents which sets out the asset position of various of the defendants, that the onus of proof is on the Applicant and therefore that should be the end of the matter. He said he knew of no authority whereby there was an obligation on defendants to provide detail in support of the assertion in the affidavits. Mr Campbell, on the other hand, submitted that one would expect more detail, perhaps accounts, and one would expect independent evidence.
There are a large number of texts and authorities concerning Mareva Injunctions but the two that I have found most helpful on this point are Gee's text, “Mareva Injunctions and Anton Pillar Relief” (pages 149-154), and another text which is called “Commercial Litigation - Pre-emptive Remedies” by Goldrein and Wilkinson (at about page 139).
What they establish is this: the defendants, the Respondents to a Mareva Injunction application, have no obligation to disclose their financial affairs simply to answer a challenge from the other party which is unsupported by solid evidence. They confirm the point Mr Maher made, that the burden of proof should not be reversed. But they go further than he said, and say that the absence of satisfactory evidence from the defendants may strengthen inferences the plaintiff/Applicants seek to draw. And that was what Mr Campbell said had happened here; that the plaintiffs were inviting me to draw certain inferences and the absence of satisfactory evidence from the defendants would enable me to draw those inferences.
There are a number of authorities quoted in those texts but two are of particular relevance, the first being Third Chandris Shipping Corporation v. Unimarine SA (1979) 2 All E.R. 972. This is an authority which is often quoted in Injunction applications; at page 988 there is a particular passage - which I think apposite for the situation here - which talks about the necessity for the material advanced on behalf of the Respondent needing to include “more solid evidence”. What the Court there found was a situation which the Court described in these terms, “An image of themselves made up of words, not of facts”, and the Court was there critical of the material which had been advanced in order to resist the application for Mareva Injunction.
There is another authority, Rahman (Prince Abdul) bin Turki al Sudairy v. Abu-Taha [1980] 2 Lloyd's Rep 565. This was another instance of the Court looking at the material which had been advanced by the defendants, and again, without reversing the onus of proof, being critical of the information tendered and finding that on balance the Injunction ought to be granted.
The Applicants' counsel advanced four reasons why there was a real risk of dissipation. The first, he said, was a reluctance to disclose the nature or extent of assets. He said the absence of satisfactory evidence from the defendants may strengthen the inference that the plaintiff/Applicants seek to draw. There is an assertion by the defendants that the commissions exceed the present claim, and certainly on the face of it that would seem to be so. They disclose commissions of $1,065,500, which clearly exceeds the quantum of the claim by a figure of about 10.
The nature of the assets, though, disclosed in the affidavit material is very sketchy. There is the bald assertion concerning the first defendant of the assets I have just mentioned, commissions, which is expanded a little in an affidavit but no details were given. No accounts are attached and certainly there is no accounting evidence or any independent evidence.
Perhaps that would not of itself have been all that worrying, were it not for the facts stressed by counsel for the Applicants, that this is a situation where there has already been dissipation. There has, the plaintiffs say, already been dissipation of the sum of $100,000 and if one looks at the material sworn to in the affidavits it is very difficult to see where that money has gone.
This of itself would again not be sufficient to enable the plaintiff to get home, but it is certainly something that is relevant and I am inclined to agree with counsel for the plaintiff/Applicants who said it is of considerable importance, if not the most important factor.
So it is that dissipation, combined with the fact that the first defendant company has disclosed assets in the affidavit material but in a very sketchy way by way of bald assertion without detail, and on the face of it inconsistent with its assertion that the plaintiffs' money has not been in any way improperly dealt with. The asset position of the second and third defendants is that one is an undischarged bankrupt and the other is, to use Mr Campbell's term, a technical bankrupt.
But it is important, of course, to recognise that an application for Mareva Injunction is not an application to satisfy a Court that the defendant has sufficient assets. The test, really, is whether there is a real risk of dissipation.
The second matter that counsel for the applicant advanced is reluctance to disclose the source for promises to pay. It is certainly true on the material that there are a number of stories and at first glance one might say, “Well, it is not unusual for people in litigation to promise to pay and be a bit vague as to how.”
Nevertheless, it is true that a number of things have been disclosed in the material, promises to pay on 14 February, a request from the Applicant's solicitors, of details of a million dollar source of funds, those details never having been received; a suggestion that shares and other specified assets might be sold to pay; a suggestion that property in Sydney was to be sold in order to pay, the property being worth $194,000; a suggestion there was a golf course worth a million dollars that might provide a source of payment; a suggestion about buyers for Sirocco Warrants; numerous offers to settle, again of themselves not conclusive because it is not unusual for offers to settle to be made by both plaintiffs and defendants in the course of litigation.
Nevertheless, I think it is fair to say that there have been a large number of stories advanced by the defendant which do not seem entirely consistent with each other, nor with the financial information disclosed in the affidavit material. Again, this fact would not of itself be sufficient to warrant the granting of an Injunction, but it is relevant.
The third aspect advanced by counsel for the Applicants is that of properties presently to be sold, and I have just referred to that.
The fourth was that there was a suggestion of one of the defendants hiding from the plaintiffs. I have ignored that aspect, or I should not say I have ignored it, I have thought about it but decided that in the face of the affidavit material tendered by the Respondents, it cannot be a matter on which I can arrive at a proper conclusion. I therefore consider it does not justify granting an Injunction. I am prepared to accept at face value the denial in the affidavit material filed by the defendants.
The standard of proof as to whether there is a real risk of dissipation is a balance of probabilities test and that comes from Northcorp Limited v. Allman Properties (1994) 2 QdR 405.
As I have already said, the onus is quite clearly on the Applicants and of course it is important to bear in mind the long line of authorities. One which is most apposite to the situation here is that in Z Limited v. A-Z (1982) 1 Q.B. 558. That was a decision referred to me by counsel for the Respondents and it certainly points to the danger of granting an Injunction to Applicants where the real purpose may be to make themselves secured creditors or in some sense to threaten or blackmail or some other purpose.
That authority says, and indeed many authorities say, that for this reason Courts hearing Mareva Injunction applications ought to proceed with great care because a Mareva Injunction is a serious measure and it is one that ought to be granted only if a Court looks at the material and considers the matter carefully.
What the Respondents say I ought to take into account, and I do, is that the two individual defendants are locals, that the first defendant also is a local company and not a foreign corporation. The authorities certainly say that that might cause a Judge to be more circumspect in granting an Injunction. I do note though that on the material the first defendant has traded for only two years. Nevertheless, it is a local company.
It says it has receivables being fees or commission from four capital-raising ventures and it says that that is what constitutes the assets of $1,065,500. The Respondents also point to affidavit material from the second defendant and the third defendant, saying that they reside locally, they have no intention of moving out of the jurisdiction, and they have no intention of moving assets out of the jurisdiction. Assertions of intention, whilst not determinative, are nevertheless relevant in looking at the question whether objectively there is a real risk of dissipation.
I have therefore balanced the three factors outlined by counsel for the Applicants. I have done the balancing exercise of looking at those and what the affidavit material provides from the perspective of the plaintiffs, but also from the perspective of the defendants. I find that the plaintiff/Applicants have discharged their onus and it is more probable than not that there is a real risk of dissipation.
Reaching this conclusion I consider that it is a combination of the various factors that I have discussed, which together create a situation that leads to that inference being open and one which the plaintiffs had drawn and which I find on the balance of probabilities, ought to be drawn.
The next question then becomes whether it is just and convenient to grant the Injunction. The Respondents say that the Injunction will affect the reputation of the first defendant company and will be likely to result in a loss of business because it is reputation or goodwill which is being dealt with. That this is relevant has been recognised in a long line of authorities - two I think particularly relevant here are Polly Peck International v. Nadir 2 (1992) 4 All E.R. 769 and Rasumaritima v. Perusahaan (1978) Q.B. 644, particularly at 662.
The Respondents also say that it will have an effect on their ability to operate on a day-to-day basis in terms of bank accounts and the like. However, I consider that in view of the fact that the Injunction is operative for the sum of $100,000 only and given the defendants assert they have assets exceeding $1 million, this argument is not sufficient to justify refusing the Injunction.
The other factor advanced by the Respondents is that the Injunction will affect third parties which is deposed on the affidavits as 30 or 40 clients. I can accept that there may be some loss of reputation for the defendants, but the affidavit material does not, to my mind, disclose sufficient prejudice to third parties to warrant the refusal of the Injunction. I draw this conclusion having looked at the nature of the material provided by the Respondents. Again, like the financial information, it is sketchy and lacking in detail.
I stress that I am not reversing the onus of proof but accepting the proposition that if the evidence adduced by the defendants is not satisfactory then it does make a Court more willing to draw the inference sought by the Applicants. The other issue is whether even though one of these factors might not of themselves warrant the refusal of the Injunction, do they together warrant the refusal? I have given this matter considerable thought because it seemed to me to have some merit.
At the end of the day it is a matter of balancing the justice and convenience to one party against the other. And looking at the material as a whole I consider that it is just and convenient to grant the Injunction.
...
HER HONOUR: I should say that in preparing my reasons I was using an old Chambers Summons and it has been amended in two respects. One was to decrease the sum from $200,000 to $100,000 and to insert an application for an Injunction against Harbour Edge Ventures Pty Ltd. In the affidavit material one of the defendants deposes to the money not having been paid to Harbour Edge Ventures Pty Ltd as asserted by the plaintiffs, but the onus is not on the defendants so the question then becomes: have the plaintiffs established by the material that the Injunction ought to be granted in respect of Harbour Edge Ventures Pty Ltd? I consider that they have not, and that the Injunction ought not to be granted in respect of that company.
...
HER HONOUR: Order as per draft signed by me. Costs of and incidental to this application are to be reserved.