Earl Covington & Associates Pty. Ltd. v Bondley Pty. Ltd.
[2005] QDC 70
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Earl Covington & Associates Pty. Ltd. v Bondley Pty. Ltd.[2005] QDC 70
- Add to List
Earl Covington & Associates Pty. Ltd. v Bondley Pty. Ltd.[2005] QDC 70
Earl Covington & Associates Pty. Ltd. v Bondley Pty. Ltd.[2005] QDC 70
DISTRICT COURT OF QUEENSLAND
CITATION: | Earl Covington & Associates Pty Ltd v Bondley Pty Ltd [2005] QDC 070 |
PARTIES: | EARL COVINGTON & ASSOCIATES PTY LTD ACN 009 871 336 (Plaintiff) AND BONDLEY PTY LTD ACN 063 347 727 (Defendant) |
FILE NO/S: | 49 of 1999 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court |
DELIVERED ON: | 8 April 2005 |
DELIVERED AT: | Maroochydore |
HEARING DATE: | 1 April 2005 |
JUDGE: | Judge J.M. Robertson |
ORDER: |
|
CATCHWORDS: | MAREVA ORDER – undertaking provided to retain sum to cover claim and security for costs of counter-claim; sum retained in interest bearing deposit pursuant to undertaking; whether it is shown that there is a danger of dissipation; SECURITY FOR COSTS – whether applicant plaintiff (as defendant to counter-claim) has satisfied pre-requisite for making of order; whether order should be made on discretionary grounds. Cases cited: Earl Covington & Associates Pty Ltd v Bondley Pty Ltd [2004] QDC 303 Northcorp Limited v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405 Idoport Pty Ltd & Anor v National Australia Bank & 8 Ors [2001] NSWSC 744 Legislation: Rules 260, 264, 670-672 Uniform Civil Procedure Rules S 1335 Corporations Act |
COUNSEL: | M. Conrick (for the plaintiff) G. Barr (for the defendant) |
SOLICITORS: | Praeger Batt Solicitor (for the plaintiff) Butler McDermott & Egan Solicitors (for the defendant) |
- [1]The plaintiff seeks a Mareva order injunction to restrain the defendant from reducing the balance of an interest bearing deposit held by it at the National Australia Bank below $120,000.00 and (in its capacity as defendant by counter-claim) an order for security for costs.
- [2]The issues joined between the parties to this long running dispute are ventilated by me in Earl Covington & Associates Pty Ltd v Bondley Pty Ltd [2004] QDC 303 and I will not repeat them.
- [3]The litigation commenced with the Claim in early 1999 and a defence and counter-claim was filed on 25 March 1999. I think I am right in saying that it is the longest running active litigation in this Court.
- [4]The trial is set down for two (2) weeks before Judge Dodds to commence on 30 May next.
- [5]The defendant company is the trustee of the Bondley Unit Trust which I will accept for present purposes is its only function. Mr Earl Covington is said to be a unit holder and therefore receives financial reports and other information from the defendant in its capacity as Trustee.
- [6]Mr Praegar (the solicitor for the Plaintiff) sets out in some detail in his affidavit in support of these applications the background of dealings between the parties which resulted in the defendant company providing an undertaking in these terms:
“Bondley Pty Ltd hereby undertakes to retain a sum of not less than one hundred and twenty thousand dollars ($120,000) until the conclusion of District Court proceedings No. D49/1999.”
- [7]It is dated 7 December 2001 and signed by Graham James Wight, a director of the defendant company, and a solicitor of the Supreme Court of Queensland.
- [8]Without descending to detail, it can be accepted that the undertaking was provided to avoid a similar application to the one before me, and was accepted as such by the plaintiff.
- [9]Since the provision of the undertaking there have been further applications and the pleadings have been amended.
- [10]What seems to have prompted the present application is that in the balance sheet of the Unit Trust for the year ended 30 June 2004, the assets of the Trust are shown to have dipped below $120,000. I assume that the plaintiff was provided with the balance sheet at around Christmas 2004 together with a “newsletter” signed by Mr Wight and dated 16 December 2004.
- [11]This prompted a letter from Mr Praegar to Mr Barr (defendant’s solicitor) on 8 February 2005 which referred to this and said:
“It would appear that the undertaking given by your client has been breached and given your estimate of the length of trial we request your client provide sufficient security within seven (7) days.”
- [12]On 24 February 2005 Mr Barr responded:
“We confirm our instructions that the relevant funds are held in a Term Deposit on behalf of our client pursuant to the undertaking. As you will appreciate, the Directors of the Defendant are professionals with a high standing in the community. They obviously have concerns of any suggestion they have acted in breach of an undertaking.
We request that you and your client unreservedly withdraw any suggestion that the Defendant or its directors have acted in breach of the undertaking.”
- [13]The application was filed on 16 March 2005 returnable on 1 April 2005.
- [14]Any suggestion that the defendant has breached its undertaking is not maintained by the plaintiff. I was told this by Mr Conrick at the hearing of the application.
- [15]It is common ground that the Defendant does retain a sum in excess of $120,000 in an interest bearing deposit in the National Australia Bank.
- [16]Mr Conrick’s point is that in the latest balance sheet, when current liabilities consisting of a “contingent liability” of $40,989.59 are taken into account, the nett assets of the Unit Trust are $113,512.80. The balance sheet also discloses ‘cash at bank” of $24,728.30. As Mr Barr points out, the liability is said to be “contingent” although there is nothing in the material to otherwise explain the entry.
- [17]I think the plaintiff’s application can be disposed of very quickly.
- [18]The making of mareva type orders is governed by r 260 Uniform Civil Procedure Rules. The only relevant issue is whether the plaintiff has shown that there is a danger of dissipation of assets by the defendant which is likely to prevent recovery: Northcorp Limited v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405.
- [19]In my opinion, the plaintiff has fallen well short of establishing such a danger. Firstly, there is its apparent satisfaction with and acceptance of the defendant’s undertaking given on 7 December 2001 which it does not now assert has been breached. In that time, the litigation has proceeded with a number of applications to the Courts, and skirmishes between the parties. The plaintiff now points to the 2004 balance sheet; however it also received the 2003 balance sheet which showed (a) the relevant term deposit as an asset; and (b) “contingent liability” of $55,342.32 and nett assets of $120,552.69. Its own case refers to the fact (which I accept for present purposes) that the Unit Trust assets have fallen significantly since the provision of the undertaking, but it is only when it receives the latest balance sheet that it becomes concerned.
- [20]Given that the plaintiff’s claim at best is just in excess of $70,000, it could hardly be said that the sum in excess of $120,000 held by the defendant to cover claim and security for the plaintiff’s costs of the counter-claim would mean that any judgment it ultimately obtains “may go unsatisfied”. In the material relied upon by the plaintiff filed with its application there was no undertaking given as to damages which is required “unless there is a good reason” before a court can grant an order of this kind: r 264 Uniform Civil Procedure Rules. Mr Conrick says that Mr Covington will give the usual undertaking but nothing was placed before the Court in writing to this effect. This has no bearing on my final decision, but it is odd that the undertaking was not given when the application was filed, given that the plaintiff through its solicitors was alleging a breach of the undertaking as at 8 February 2005 which allegation was not withdrawn until the hearing.
- [21]The plaintiff’s application for injunctive relief is dismissed.
- [22]In my opinion, the application for security for costs falls at the first hurdle. The court’s jurisdiction to grant such orders is found in s 1335 of the Corporations Act and in r 670 Uniform Civil Procedure Rules and, r 671 provides:
“The court may order a plaintiff to give security for costs only if the court is satisfied:
(a)the plaintiff is a corporation and there is reason to believe that the plaintiff will not be able to pay the defendant’s cost if ordered to pay them; …”
- [23]The trial is set down for two (2) weeks. Mr Praegar’s affidavit deposes to the fact that daily costs to defend the counter-claim would be $5325. Even if one estimated that the time taken to defend the counter-claim would be five (5) days, given that the defendant holds in excess of $120,000 to cover claim and security for costs, there is no reason to believe that the defendant will not be able to pay the plaintiff’s costs of defending the counter-claim if ordered to pay them. Even if I would have been satisfied that the plaintiff had overcome the pre-requisite contained in r 671(a), I would nevertheless have refused the application on discretionary grounds. The defendant company is not impecunious, even on the plaintiff’s own case, and the delay (particularly since it received notice of the 2003 balance sheet) by the plaintiff in bringing an application is an important discretionary consideration. Although this is not a factor specifically referred to in r 672, Mr Conrick concedes that the discretion is unfettered and that delay has always been a factor to be considered in the exercise of discretion: see for example Idoport Pty Ltd & Anor v National Australia Bank & 8 Ors [2001] NSWSC 744, per Einstein J at paragraph 49.1.
- [24]The plaintiff’s applications are dismissed. It will pay the defendant’s costs of and incident to the application to be assessed on the standard basis, or as agreed.