Is there a danger that the prospective judgment will go unsatisfied
152This Court has always had the ability (if need be by granting a freezing order) to prevent an abuse or frustration of its process. Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 389 - 390 [12] and 393 [26], Jackson v Sterling Industries Ltd (1987) 162 CLR 612.
153In granting relief, it is not the case that relief be granted only if there is shown a positive intention to frustrate any judgment. Cardile at 394.
154As their Honours Gaudron, McHugh, Gummow and Callinan JJ said in Cardile at 405 - 406 [57] - [58]:
57. What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sought to be restrained? In our opinion such an order may, and we emphasise the word "may", be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which: (i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including "claims and expectancies", of the judgment debtor or potential judgment debtor; or (ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor.
58. It is that principle which we would apply to this case. Its application is a matter of law, although discretionary elements are involved.
155In Patterson v BTR Engineering (Aust) Ltd [1989] 18 NSWLR 319 at 325, Gleeson CJ said, again in the context of a mareva order:
It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probably than not.
156Bare assertions that a defendant is likely to put any asset beyond the reach of the plaintiff is not enough in itself. Ninemia Maritime Corp v Trave Schiffahrts GmbH & Co KG (The Niedersachsen) [1984] 1 All ER 413 at 417 per Kerr LJ.
157As Meagher JA however said in Patterson at 326 - 327:
Mr Heydon QC for the appellant submitted, and Mr Bainton QC for the respondent agreed, that the vast majority of defendants in litigation behave with propriety: in the "usual" case, therefore, the risk of improper dissipation of assets must be close to nil. In these circumstances, it cannot be the law that a plaintiff who seeks the extraordinary relief of a Mareva injunction need do no more than demonstrate a risk slightly higher than nil.
What degree of proof is, then, required? Different judges have decided it in different ways. Without wishing to drown in a sea of semantics, I should have thought that the plaintiff is required to prove, on a balance of probabilities, that there is a real risk of the dissipation of assets. Unhappily for the appellant, in the present case the respondent proved just that
158Justice Kenny in the Federal Court in Deputy Commissioner of Taxation v Hau Wang Bank Berhad and Others (2010) 80 ATR 449 at 453, approved a test that requires a plaintiff to establish "a sufficient likelihood of risk which in the circumstances of a particular case justifies, an asset presentation order", specifically adopting a decision of Justice Keifel in Lifetime Investments Ltd v Commercial (Worldwide) Financial Services Pty Ltd and Another (2005) FCA 226 at [14].
159As Staughton LJ remarked in Republic of Haiti v Duvalier [1990] 1 QB 202 at 214:
The law on this topic has developed in recent years; and in particular a distinction has emerged between pre-judgment and post-judgment restraint. Our courts are more willing to restrain a defendant from dealing with his assets after, than before, judgment has been given against him. (In passing, I would say that an injunction granted after judgment should normally, in my view, be of limited duration; the plaintiff should be encouraged to proceed with proper methods of execution; perpetual injunctions restraining a defendant from dealing with his assets until the crack of doom are undesirable.) This, of course, is a pre-judgment case.
160It is understandable why greater latitude would arguably apply in a pre-judgment case. It follows especially if proceedings have not been commenced the restraint might be required for a significant period of time. The length of any restraint of course may be influenced by a number of factors, the strength of the case being one. Commercial inconvenience or hardship another. The conduct of the parties and the history of the litigation yet another. As the High Court pointed out in Cardile (409, [70]), a court would, consistent with general principle, grant the minimum relief necessary to do justice between the parties and should specify the circumstances in which the order will cease to operate.
161As Campbell J (as he then was) said in Davis v Turning Properties [2005] NSWSC 742 at [35]:
The administration of justice in New South Wales is not confined to the orderly disposition of litigation which is begun here, tried here and ends here. In circumstances where international commerce and international monetary transactions are a daily reality, and where money can be transferred overseas with sometimes as little as a click on a computer mouse, the administration of justice in this State includes the enforcement in this State of rights established elsewhere. As well, the ordinary course of administration of justice has long included a court making certain of its remedies available in aid of proceedings in another court - the old equitable remedies of a Bill of discovery, a Bill to perpetuate testimony, and a Bill to take testimony de bene esse pending a suit (Story, Commentaries on Equity Jurisprudence 13th ed 1886 para [1480] ff) provide examples of remedies being available in Chancery in aid of proceedings in another court before the other court has heard a suit. After another court has heard and decided a suit, the title of a foreign-appointed administrator of an insolvent estate to movables is recognised in Australia under the general law (Australian Mutual Provident Society v Gregory (1908) 5 CLR 615), and can provide a sufficient basis for an appointment of a receiver of immoveables within the jurisdiction (Re Kooperman (1928) B & C R 49).
162To exercise this jurisdiction the Court must be satisfied that there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets might be removed from Australia or dealt with or diminished in value.
163Severstal submits that Bhushan's case amounts to no more than a bare assertion. Severstal submits further that there is no danger as a matter of reality. Severstal says that it has never shown any unwillingness to pay any judgment against it in the Indian proceedings. It also submits that if Bhushan needs to enforce the judgment outside India there is evidence that it would be able to do so in Switzerland.
164Severstal relies upon Frigo v Culhaci [1998] NSWCA 88. This matter involved an appeal from a District Court judge who had granted a mareva order. The Court comprising Mason P, Sheller JA and Sheppard AJA relied upon an earlier decision of Patterson. Patterson like Frigo was a case involving a Mareva order where of course the plaintiff at that time of the development of the relevant jurisprudence needed to establish a prima facie cause of action against the defendant. That is to be contrasted with the present rule. In any event, that part of Frigo which is relied upon by Severstal is what the Court said at 8 as follows:
A plaintiff must establish by evidence and not assertion that there is a real danger that by reason of the defendant absconding or removing assets out of the jurisdiction or disposing of assets within the jurisdiction the plaintiff will not be able to have the judgment satisfied if successful in the proceedings. There has been much debate as to the precise degree of risk which must be shown: See generally Patterson. What is clear is that mere assertions that the defendant is likely to put assets beyond the plaintiffs reach will not be enough.
165There is also no doubt that the purpose of such an order is not to require a defendant to provide security as a condition of being allowed to defend the action against it. Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 625.
166Severstal relies upon the affidavit of Mr Mumenthaler, a Swiss lawyer who represents Severstal in Switzerland. He sets out the position in relation to the enforcement of foreign judgments in Switzerland. The position in Switzerland is governed by the Swiss Federal Act on International Private Law. Article 25(2)(b) provides that a decision can only be recognised and enforced in Switzerland if it is final and binding that is one that cannot be changed or annulled by a Court of Appeal. The grounds of refusal are apparently regulated exclusively by article 27. He expresses the view that an Indian judgment could be recognised in Switzerland if it complies with the various prerequisites. He of course says nothing about what attitude Severstal would take were Bhushan to attempt to register an Indian judgment in Switzerland. Pursuant to article 27, one of the grounds in which, as he points out, a Swiss Court may refuse to register the Indian judgment is if the proceeding involves the same parties and the same subject matter and was first brought in Switzerland or adjudicated in Switzerland. (See Mumenthaler, 28 October 2011 [13]).
167Severstal also relies upon the affidavit of Mr Withold Skrotzki who was the manager of Severstal Export who deposes to the fact that Severstal is based in Switzerland and carries on business as a trader and exporter of Russian steel. Mr Skrotzki also asserts that Severstal sells approximately 3 million metric tonnes of steel per year and has a turnover of approximately USD$1.5 - 2 billion per year. In a further affidavit of his of 30 November 2011 and in particular in a confidential exhibit he deposes to the substantial assets in Switzerland.
168Bhushan suggested that Severstal's financial status in Switzerland was problematical. There is no doubt it has no assets in India. The position in Switzerland however, although initially on the evidence was somewhat ambiguous, was I consider sufficiently exposed by a late filed affidavit of Mr Skrotzki of 30 November 2011. That affidavit contains a confidential exhibit. There are a number of matters disclosed therein that may raise some further questions but as a whole in my mind it exposes Severstal as having substantial assets of various kinds in Switzerland. That of course is not an end of the matter.
169In his affidavit evidence filed on behalf of Bhushan Mr Ranjan (affidavit of 12 October 2011) says that as part of the Delhi proceedings Bhushan has sought an order requiring Severstal to provide security sufficient to cover any judgment. Severstal has refused to provide such security and the matter is to be determined by the Court in Delhi in due course. He further asserts that Severstal does not have any assets in India. If successful in India and Severstal fails to pay any judgment ultimately determined against it, he deposes that Bhushan would instruct his current solicitors to have the Delhi judgment recognised in Australia and executed upon Severstal's assets in Australia. He further deposes that there is no treaty or agreement between India and Switzerland concerning the recognition and enforcement of Indian judgments. He also expresses his concern that if Bhushan is awarded a significant judgment in its favour in Delhi there is considerable uncertainty about Bhushan's ability to enforce the judgment. In particular he expresses his concerns that Severstal may seek to remove its asset from Australia unless otherwise restrained.
170Mr Ranjan was cross examined, if I may so mildly on his assertions concerning his fears about enforcement against Severstal as follows:
Q: You say in your affidavit that you are fearful that Severstal would not be in a position to pay any judgment obtained against Bhushan Steel?
A: That is correct.
Q: Obtained by Bhushan Steel in the Indian proceedings?
A: That is correct.
Q: Can I put it out the opposite proposition; that Severstal would be in a position to pay any such judgment?
A: Not to my knowledge, No.
171As a passing observation I should remark that what is plainly apparent in these proceedings and indeed all of the other proceedings somewhat vividly described in the materials before this Court is that for some years now the respective parties had been feuding around the world. They are both companies of some substance but each in turn has sought to invoke by legitimate means strategies designed to succeed in the litigation arena. At the moment the feud is hard fought and I am entitled to infer that each side as I have said would take every legitimate course open to it. What may have commenced as a harmonious and hoped for long-term commercial relationship has soured many years ago, and it seems commercial resolution is off the agenda and expensive ongoing disputation the current strategy.
172There is evidence, which I accept, that Bhushan intends to enforce the Indian judgment if it is ultimately successful here in Australia. The enforcement will be governed by common law principles. There are assets in Australia. As I have said, there are no assets of Severstal in India although there is evidence of substantial assets in Switzerland. Bhushan in my view however is entitled, as was Severstal, to seek to enforce any judgment it ultimately obtains in whichever jurisdiction it can legitimately do so. Merely because Severstal has assets in Switzerland does not require Bhushan in the event of it being successful in proceeding there.
173In Switzerland it appears that a ground for a Swiss Court to refuse to recognise a foreign judgment is that it (the foreign proceeding) was "a proceeding involving the same parties, the same subject matter was first brought in Switzerland or adjudicated in Switzerland". Severstal in its defence in India argues that the proceedings are not maintainable there because they are indeed "between the same parties, regarding contracts having the same subject matter". Arguably Severstal would argue, consistent with the stance in India that in the event that Bhushan sought to enforce a judgment in Switzerland the matter had already been determined. It would, I can infer, invoke the operation of article 27. I am entitled to infer that it would indeed pursue that strategy consistent with its stance in India especially when there is no suggestion it would not take that course. This in my opinion is open not as mere speculation but a reasonable inference. Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 222 et seq, per Mahoney JA.
174Severstal clearly does have assets in Australia and there is no evidence that for the moneys to remain in an interest bearing account would cause any hardship to Severstal or affect in any relevant way the running of its business otherwise.
175Unless restrained, in my opinion on the evidence, it is reasonably open to infer that Severstal would remove the asset from this jurisdiction. There is clearly a real risk that it will do so. It has no reason to keep the asset here. By that I do not mean that it would do anything that was illegitimate, quite the contrary, but it is in no mood to cooperate with Bhushan for obvious reasons. An intention legitimately to remove assets from a jurisdiction is no bar to relief. Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49 at 53 per Young CJ. In particular I have had regard to the way Severstal has conducted this litigation all over the world. It has been relentless, single minded and unforgiving. The same can be said of Bhushan.
176In this case it is clear that a judgment in Bhushan's favour cannot be enforced in India but if judgment is obtained there are sufficient prospects of enforcement in Australia. Australia is a perfectly appropriate jurisdiction for that purpose and Bhushan is entitled to exercise its freedom of choice in that regard. I fail to see what real prejudice flows to Severstal if a freezing order were to be continued. Whilst there are competing estimates about how much longer the Indian proceedings may take, it is reasonable to assume that it is likely they will conclude sometime in the course of this year (at first instance at least). Severstal would not be prevented if there was a material change in circumstances from applying to have the order varied or dissolved.
177I consider that Severstal should initially be restrained until judgment is given at first instance in India. As I have said, that, on any of the estimates is likely to occur this calendar year. Upon the delivery of judgment in those proceedings the matter can be reconsidered.
178In all of the circumstances I am of the view that it is appropriate to make the orders sought but with the qualification referred to in paragraph [177] and I would invite short minutes be prepared accordingly.
179I would also invite the parties to have the matter relisted so that the question of costs can be determined.