Brigitte Lipman and Anor v AG Lifestyle Management Pty Limited and Anor [2001] NSWIRComm 115 | Case summary

1 This judgement concerns a notice of motion filed by the applicant on 21 May 2001, in which three forms of relief were sought. The first was a Mareva type injunction, restraining the respondents from dealing with their assets. The second, seeking to join Mrs Joan Lewis, at one time a director of the first respondent, AG Lifestyle Management Pty Limited and the mother of the second respondent, Ms Amanda Gore, as a respondent to the proceedings. Orders restraining her from dealing with her assets were also sought. The application for the injunction against the respondents was heard on 22 May, when it was adjourned in order for Ms Nomchong of counsel for the applicant, to put on some written submissions in reply. They were filed on 24 May. The application for joinder and the Mareva injunction against Mrs Lewis has been listed for hearing on 29 May at 4pm. 2 The application brought under s106 of the Industrial Relations Act 1996 ('the Act') asserts that the applicants were employed by the first respondent, of which the second respondent, Ms Amanda Gore, was a director. The claim concerns employment of the applicants at the Buckundera Holiday Village. Two other companies of which Ms Gore was a director are alleged to have been involved with that business - Timecks Pty Limited and Excellence in Corporate Marketing Pty Limited. These two companies were put into voluntary liquidation by Ms Gore after the termination of the applicants' employment. 3 Ms Gore is not in the country and is apparently working in the United States. Searches and enquiries made by the applicants have indicated that the only asset owned by the first respondent is an interest in a holiday rental property in Queensland. The respondents put on an extensive document entitled "Summary of Facts", supported by an affidavit sworn by Ms Gore in December 2000, in which it was asserted that Ms Gore's liabilities exceeded her assets. The applicants have been unable to discover that she has any interest in any assets. 4 The application was the subject of unsuccessful conciliation proceedings before Glynn J. Since then the applicants have sought an undertaking from the respondents as to the dissipation of assets. No such undertaking has been given. Evidence was put on by way of affidavit sworn by Ms Simpson, the applicants' solicitor, as to their concern that in the absence of the orders sought, the respondents will put themselves into a position where any order made in their favour in these proceedings will be frustrated by a prior dissipation of assets. 5 The respondents appear not to have complied with the Court's Rules as to the provision of a response to the summons issued in these proceedings in August 2000, but have relied upon the earlier mentioned Statement of Facts. In that document it is asserted that the applicants were never employed by the first respondent, but at the hearing Mr Moses of counsel, appearing for the respondents, conceded that there was a serious issue to be tried between the parties in these proceedings. 6 The claims made in the summons go to the payments made to the applicants during the course of their employment, the failure to give any notice of termination of employment, or payment in lieu and are quantified in the sum of $166,941.60. plus interest and costs. 7 It appears that the claims made will be strongly contested, although there does not appear to be an issue that no payments were made to the applicants on termination, in respect of which no notice was given. 8 It is undoubted that the Court has jurisdiction to grant orders in the nature of a Mareva injunction. That position is now well settled and it is unnecessary to refer to the authorities which have decided that point. 9 It is the usual case that when a Mareva injunction is sought, the applicants for the relief proffer the 'usual' undertaking as to damages, as the 'price' for the injunction being granted. Here that undertaking was not proffered, it being submitted that the Court had a discretion as to whether it would be required. Ms Nomchong, however, explained that she had instructions to give the undertaking, if the Court declined to exercise that discretion in favour of the applicants. 10 The material relied upon in support of the exercise of such a discretion in favour of the applicants, which was opposed by the respondents, was such as to lead me to the view that the discretion ought not to be exercised in favour of the applicants. All that was put by way of support for the application were the circumstances which here brought the applicants to the Court, as disclosed in the summons for relief, supported by an affidavit sworn by the first applicant. In my view, that is not a proper basis for the exercise of such a discretion, even given that the complaints made in the summons concerned the amount of remuneration which the applicants received under the contract or arrangement in question and the failure to give the applicants notice on termination. 11 The importance of the giving of an undertaking as to damages was discussed by the Court of Appeal in Frigo v Culhaci [1998] NSWSC 393 (17 July 1998). In my view, if an application for relief from the giving of such an undertaking is to be sought, a proper evidentiary foundation for the exercise of that discretion must be put before the Court, which the respondents will then have an opportunity to meet, if they wish. That was not done here and having regard to the material relied upon, no basis for the exercise of such a discretion was established. 12 In Patterson v BTR Engineering (Aust) Ltd and Anor (1989) 18 NSWLR 319, the Court of Appeal considered the circumstances in which a Mareva injunction would be granted. Gleeson CJ, as he then was, dealt at p321-2 with the circumstances in which a Court would exercise the discretionary remedy in favour of an applicant. The first limb was here conceded for the respondents - namely the existence of a prima facie cause of action. The second - "a danger that by reason of the defendant's absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, of he succeeds, will not be able to have his judgement satisfied" was strongly contested. 13 The question thus is, has it been shown that there is a risk that the respondents' assets will be disposed of in the absence of the grant of the injunction sought? That question has to be answered in a context where the evidence suggests that there are not now and have not been since the commencement of these proceedings, any assets in the jurisdiction. 14 The view was taken by the Court of Appeal in Ballabil Holdings Pty Ltd v Hospital Products Pty Ltd (1985) 1 NSWLR 155, that a Court could make orders in respect of property which was within the jurisdiction when the litigation commenced, but was thereafter removed from the jurisdiction. Here, however, the assets in question appear never to have been within the jurisdiction. 15 In Patterson, Rogers A-JA expressed the view at p327, that it was unnecessary that the assets be within jurisdiction, with reference being made to the High Court's decision in Jackson v Sterling Industries Limited (1987) 162 CLR 612 at 623. In Ashtiani and Anor v Kashi [1987] 1 QB 888 the Court of Appeal took the view that mareva injunctions should not be granted in relation to foreign assets. At pp901 to 902, Dillon LJ discussed the reasons for this approach, including the difficulty of the court controlling or policing enforcement proceedings in other jurisdictions. He did, however, leave open the possibility that such an order would be made 'on special grounds'. Neill and Nicholas LJJ took similar views. 16 Rogers J considered this decision in Yandil Holdings Pty Ltd v Insurance Co of North America and Others (1987) 7 NSWLR 571 at 575-7. In the circumstances of that case, he took the view that there were "special circumstances which justify an order for discovery of foreign assets". No injunctive relief was however granted. 17 In Derby & Co Ltd and Others v Weldon and Ors [1989] 2 WLR 276, the Court of Appeal dealt with an application for a Mareva injunction freezing assets and ordering disclosure on a worldwide basis, which had been declined at first instance. A Mareva injunction had been granted in relation to the assets in the jurisdiction, but refused outside. It was concluded that in the special circumstances there in question - which concerned litigation between former directors of two of the plaintiff companies and an injunction seeking disclosure of assets in so far as they exceeded 25 million pounds - that such orders would be made. 18 May LJ observed at p281 that the Court would only make such an order in an exceptional case, having referred to submissions that what was required was evidence of previous malpractice or notorious intent, or evidence of equally persuasive effect. Parker LJ described the evidence as to the defendants who were " …clearly sophisticated operators who have amply demonstrated their ability to render assets untraceable and a determination not to reveal them."(at p282). Nicholas LJ with whom the other members of the Court agreed, also dealt in detail with safeguards which should be built into such a worldwide orders particularly having in mind the undertakings already given by the applicants for the orders in that case (at p285). At p287 he said: 'In my view each case must depend on its own facts. An order restraining a defendant from dealing with any of his assets overseas, and requiring him to disclose details of all his assets wherever located, is a draconian order. The risk of prejudice to which, in the absence of such an order, the plaintiff will be subject is that of the dissipation or secretion of assets abroad . This risk must, on the facts, be appropriately grave before it will be just and convenient for such a draconian order to be made. It goes without saying that before such an order is made the court will scrutinise the facts with particular care. In the instant case there are present the special factors to which May and Parker L.JJ. have referred. I do not think that it is correct that, if an order is made in the present case regarding overseas assets, such an order will become, or should become, the norm in cases where a restraint order is made regarding assets within the jurisdiction.'

19 The decision in Weldon was followed by Lee J in Planet International Ltd (in liq) v Garcia 1989 2 Qd. R. 427 at 430. 20 The difficulties discussed in Ashtiani certainly arises here, where the orders sought would attach to the second respondent's earnings in the United States and any assets there acquired and where the only asset to which the order sought in relation to the second respondent was known to be able to attach, was a property in Queensland. Of itself that situation militates against the orders sought being granted, unless the special circumstances discussed in Weldon, be established here. These requirements were not addressed by the applicants. Nor was the need for the safeguards in such orders there discussed, addressed here. 21 There were, however, also other reasons for the application for the injunction sought being declined. It is plain that bare assertions that there may be a dispersal of assets is not a sufficient basis for the grant of a Mareva injunction, even in relation to assets within jurisdiction. Nor is the purpose of such an injunction to grant security in favour of an applicant, as a condition of the respondent being permitted to defend the claim brought, or to guarantee to an applicant that any judgment obtained will be satisfied. Rather, the purpose of the injunction is to prevent the process of the Court being frustrated by depriving the applicant of the fruits of any judgment obtained. 22 Gleeson CJ in Patterson cautioned at p324, that to impose a freeze or partial freeze on the assets of a person is no light matter. Here these proceedings were commenced in August 2000, the applicants then being aware that the other two companies involved in the arrangement between the parties, Timecks and Excellence, had already been put into liquidation. Since December 2000, the applicants have been aware of Ms Gore's financial position and that the Buckundera Holiday Village was sold by the liquidator with the sale proceedings not discharging amounts owing to the ANZ bank and the liquidator and with Ms Gore herself having lost $1.8 million, which she had advanced to the project. 23 The only material advanced in support of the claim that the injunction was now necessary, in addition to these matters, which have now long been known to the applicants, was evidence led from Ms Simpson. Ms Simpson's evidence was that her clients were concerned that Ms Gore was now working in the United States and in addition to the aforementioned sequence of events, that an unidentified third party had informed the applicants that Ms Gore's former accountant had made enquiries as to the removal of the real estate in Queensland out of the ownership of the first respondent. When this was said to have occurred was not made clear. That evidence was led on the basis, not of the truth of what the applicants had been told by that unidentified person at an unidentified time, but rather by way of explanation of the existence of a belief on the applicants' part, that a threat existed that the respondents' assets would be dissipated. There was no explanation as to why no evidence was called from the applicants about these matters 24 The evidence, so understood, cannot provide a proper basis for the grant of the relief sought. Proof of insolvency, the position which may have been the case in respect of the second respondent in December 2000, is not a proper basis for the grant of a Mareva injunction. Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545. Nor is the fact that Ms Gore is in the United States a proper basis for such an order. Indeed, while Ms Gore is in the United States, she is apparently working there. Rather than evidencing a dissipation of assets, this suggests that earnings are being generated. 25 It is also relevant that the respondents are both actively defending these proceedings. Not only have solicitors been retained, but Ms Gore participated in the conciliation proceedings before this Court by way of teleconference from the United States and retained counsel to defend the injunction sought. While it was submitted to be relevant that the respondents had themselves put on no evidence, not much in my view can be made of that given the time at which the application for the injunction was filed and the matter heard, with Ms Gore in the United States. 26 The basis upon which the applicants' concerns in relation to the first respondent dispersing assets was put before the Court, amounted to nothing more than their solicitor's account of a suspicion which they held, based on material not put before the Court in a way which would permit their apparent concern to be properly understood, let alone tested. While the evidentiary basis upon which a Mareva injunction may be granted is different to what is required at final trial, the evidence brought forward to support this application was plainly insufficient, particularly given that it was a worldwide injunction which was sought. 27 That is not to say that the applicants do not have a real concern. Undoubtedly they do, otherwise the application for injunctive relief would not have been brought. Nevertheless the evidence, such was it was, cannot provide a proper foundation for the conclusion that there here exists a real danger that either respondent is going to dispose of assets in order to deprive the applicants of the fruits of any judgment in their favour. 28 In all of the circumstances, it must be concluded that no case was made out for the grant of the injunctive relief here sought, even were it available in respect of foreign assets. 29 I also observe in passing that the orders which were here sought were expressed in the widest terms imaginable and were such that, even as they were amended by counsel during the course of the hearing, I would not have been disposed to grant them. In Frigo there is a useful discussion at pages 11 to 12 of the form in which Mareva orders should be framed and the difficulties which flow from the approach here adopted. There is also a discussion of this topic in an article by Mr Sullivan QC, published in the Australian Bar Review, Volume 8, Number 3, February 1992 and the safeguards required in the case of a worldwide order are discussed in Weldon. An applicant for discretionary relief such as this should take care in the drafting of such orders, having in mind their nature and the caution which a Court must exercise when entertaining such relief.

Brigitte Lipman and Anor v AG Lifestyle Management Pty Limited and Anor

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Judgment (13 paragraphs)

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