Supreme Court of WA|2008-05-14|Before: Miere J

DRD AUSTRALASIA APS -v- STRATTON [No 2] [2008] WASC 76 (14 May 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : DRD AUSTRALASIA APS -v- STRATTON [No 2] [2008] WASC 76

Civil procedure - Interlocutory orders - Freezing orders - Application for freezing orders against defendant - Whether interim ex parte freezing orders made against the defendant should be continued or discharged - Whether there is a danger that a prospective judgment in favour of the first plaintiff will be wholly or partly unsatisfied because the assets of the defendant are removed from Australia or disposed of or dealt with or diminished in value - Turns on own facts

Civil procedure - Interlocutory orders - Freezing orders - Third party - Application for freezing orders against third party - Whether interim ex parte freezing orders made against the third party should be continued or discharged - Whether alienation of property was made with intent to defraud creditors - Turns on own facts

Rules of the Supreme Court 1971 (WA), O 52A r 5(5)

1 LE MIERE J: In 2002 the plaintiffs commenced this action against the defendant. The plaintiffs claim compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), equitable compensation, exemplary damages and an order that the defendant make restitution to the second plaintiff in the sum of US$200,000 arising out of four transactions. On 21 November 2007 I made an ex parte freezing order against Mrs Stratton, the wife of the defendant. On 26 November 2007 I made an ex parte freezing order against the defendant. Both orders provided that they had effect up to and including the return date of 4 December 2007. On the return date the first plaintiff (plaintiff) moved for the continuation of the freezing orders. The defendant and Mrs Stratton resisted the continuation of the freezing orders and moved for the discharge of the ex parte orders.

2 The following summary is based upon the outline of argument on behalf of the defendant and Mrs Stratton and is not contentious.

3 The plaintiff (DRD APS) is a foreign company and is a subsidiary of DRD Gold Ltd, formerly Durban Roodepoort Deep Ltd (DRD). At all material times Mr Roger Kebble (Kebble Senior) was chairman of DRD and Mr Charles Mostert was a director and chief financial officer of DRD.

4 A South African company, Consolidated African Mines Ltd (CAM) was the holding company of Consolidated African Jersey Ltd (CAM Jersey). The directors of CAM and CAM Jersey were Kebble Senior; his son, Mr Brett Kebble (Kebble Junior); Mr H Buitendag; and the defendant.

5 At the time of the events in question DRD was undertaking a major Australasian expansion campaign with acquisitions or proposed acquisitions in companies including Hargreaves Resources NL, Emperor Mines, Dome Resources NL and Saint Barbara Mines Ltd. DRD engaged the defendant, Mr Stratton, to undertake various activities on its behalf in this period, such as negotiating the acquisition of Emperor Mines. DRD also appointed the chairman of CAM to act on its behalf. The chairman of DRD, at the request of the CEO of DRD, signed approval for certain payments to various persons, including himself and various other DRD directors, in connection with DRD's Australasian acquisition strategies, and to the defendant.

6 DRD APS alleges that Mr Mostert breached his fiduciary and statutory duties to the plaintiffs in relation to four transactions and that the defendant:

(a) dishonestly assisted in and received a benefit from Mr Mostert's alleged breaches of fiduciary duty; and

(b) aided, abetted, committed or procured and was directly or indirectly knowingly concerned in Mr Mostert's alleged contraventions.

I will briefly refer to each of the four transactions.

7 The plaintiff's claims in relation to the first transaction make the following allegations. On or about 19 October 1999 the defendant caused CAM Jersey to render an invoice to DRD APS (the CAM Jersey invoice) which sought payment from DRD APS of the sum of $930,000 for the provision of corporate services in the period August 1998 to October 1999 and directed that payment of that sum be paid to Castlehill Management Ltd (Castlehill). CAM Jersey had not provided any services to DRD APS. On or about 22 October 1999 Mr Mostert caused DRD APS to pay $930,000 to Castlehill. On 29 October 1999 Mr Mostert provided Mr Buitendag with details of accounts into which payments were to be made totalling $945,000, of which $400,000 was to be paid to the defendant. Castlehill, at the request of Mr Buitendag, transferred to the defendant $400,000 of the money that had been paid to it by DRD APS. The defendant caused the CAM Jersey invoice to be rendered in the knowledge that DRD APS was not liable to pay any amount to CAM Jersey for the provision of corporate or any such services and intending that Mr Mostert would cause DRD APS to pay the sum of $930,000 to Castlehill notwithstanding that he and Mr Mostert knew that DRD APS was not liable to make the payment. The defendant received the sum of $400,000 in the knowledge that he had no right or entitlement to those funds; the $400,000 was paid to him by Castlehill from the $930,000 that was paid to it by DRD APS. Mr Mostert had caused DRD APS to make the payment in the knowledge that DRD APS was not liable to make the payment.

8 The plaintiff makes the following allegations concerning a payment to the defendant of $600,000. On or about 15 November 1999 Mr Paul Main of Dayspring Holdings Ltd (Dayspring) caused Dayspring to render invoices to DRD APS (the Dayspring invoices) which sought payments of amounts totalling $1,420,000 for the provision of certain corporate financial services. Dayspring had not provided any such services to DRD APS. Mr Main rendered the Dayspring invoices at the request of the defendant and Mr Mostert and pursuant to an agreement between the defendant, Mr Mostert and Mr Main to the effect that the money paid pursuant to the Dayspring invoices would be distributed in accordance with the defendant and Mr Mostert's instructions. On or about 25 November 1999 Mr Mostert caused DRD APS to pay $1,420,000 to Dayspring (the second payment). Dayspring paid $600,000 of the money that was paid to it by DRD APS for the benefit and at the direction of the defendant. The defendant requested Dayspring to render the invoices in the knowledge that DRD APS was not liable to pay any amount to Dayspring for the provision of corporate finance or any such services and intending that Mr Mostert would cause DRD APS to pay the sum of $1,420,000 to Dayspring notwithstanding that he and Mr Mostert knew that DRD APS was not liable to make the payment. The defendant received the benefit of the sum of $600,000 in the knowledge that he had no right or entitlement to the benefit; the $600,000 was paid by Dayspring from the $1,420,000 that had been paid to it by the first plaintiff. Mr Mostert had caused DRD APS to make the second payment in the knowledge that DRD APS was not liable to make the payment.

9 The plaintiff makes the following allegations concerning a payment of $426,226.32 for the benefit of the defendant. On or about 15 December 1999 Mr Main, at the request of the defendant, sent Mr Mostert a form of an agreement (the Bauxite Agreement) whereby DRD APS was to purchase from Bauxite Investments Ltd all of the issued share capital in Delta Minerals Corporation and which provided for the payment by DRD APS of a non-refundable deposit of US$1,650,000. Mr Main sent Mr Mostert a facsimile dated 15 December 1999 in which he requested that Mr Mostert pay the sum of US$1,650,000 to Transit Securities Inc (Transit). On or about 16 December 1999 Mr Mostert, purportedly on behalf of DRD APS, and the defendant signed the Bauxite Agreement and Mr Mostert sent Mr Main a facsimile containing instructions for payments to be made by Transit totalling $2,585,000 of which $426,226.32 was to be paid to the defendant. On 17 December 1999 Mr Mostert caused DRD APS to pay to Transit the sum of US$1,650,000 which was then approximately $2,572,500 (the third payment). Neither Transit nor any other person had any lawful entitlement to receive the third payment. Mr Main caused Transit to pay $426,226.32 of the money that was paid to it by DRD APS for the benefit and at the direction of the defendant. The Bauxite Agreement was never performed and not intended by the defendant, Mr Mostert or Mr Main to be performed. The third payment was made pursuant to an agreement between the defendant and Mr Mostert to the effect that the money paid to Transit would be distributed in accordance with Mr Mostert's instructions. The defendant asked Mr Main to prepare the Bauxite Agreement and signed the Bauxite Agreement intending that Mr Mostert would cause DRD APS to pay the sum of US$1,650,000 to Transit notwithstanding that he and Mr Mostert knew that DRD APS was not liable to make the payment. The defendant received the benefit of the sum of $426,226.32 in the knowledge that he had no right or entitlement to the benefit; the $426,226.32 was paid by Transit from the US$1,650,000 that had been paid to it by DRD APS. Mr Mostert had made the third payment in the knowledge that DRD APS was not liable to make the payment.

10 The plaintiff makes the following allegations concerning a payment of US$200,000 to Transit. On or about 13 April 2000 Mr Mostert, at the request of the defendant, caused the second plaintiff (DRD APL) to pay the sum of US$200,000 to Transit (the fourth payment). Transit had no right or entitlement to receive the fourth payment. Mr Mostert caused DRD APL to make the fourth payment in the knowledge that DRD APL was not liable to pay any amount to Transit. The defendant asked Mr Mostert to make the fourth payment in the knowledge that DRD APL was not liable to pay any amount to Transit and intending that Mr Mostert would cause DRD APL to pay the sum of US$200,000 to Transit notwithstanding that he and Mr Mostert knew that DRD APL was not liable to make the payment.

Ex parte freezing order made against Mrs Stratton

11 On 21 November 2007 I made an ex parte order restraining Mrs Stratton from dealing with the properties situated at and known as 34 Glenelf Street, Applecross and Lot 79 Harnett Street, Broadwater. The order provided that it was to have effect up to and including 4 December 2007 on which return date there would be a further hearing in respect of the order. The plaintiff's application was supported by an affidavit sworn on 21 November 2007 by the solicitor for the plaintiffs, Mr David John Martino, who also appeared as counsel. Annexed to Mr Martino's affidavit was a draft affidavit of Mr Botes. In granting the orders I said, amongst other things:

I am satisfied, from the material in the draft affidavit of Mr Botes that the plaintiff has made out a good arguable case necessary for the granting of an order in the nature of a [freezing] order ... The plaintiff must also show in these proceedings that a process in this court is or may ultimately be available to the applicant as the result of a judgment or prospective judgment under which process the third party may be obliged to disgorge assets or contribute towards satisfying the judgment or prospective judgment. I am satisfied that that requirement is met, having regard to the provisions of s 89 of the Property Law Act 1969 (WA) and to the materials set out in the draft affidavit of Mr Botes, in particular the circumstances under which the properties were transferred and in particular that there was no consideration for the transfer of the properties to Mrs Stratton and the fact and circumstances of the mortgage lodged on the Glenelf Street property lead to that inference (ts 24 - 25).

12 I lifted the stay ordered by Master Sanderson on 2 April 2007 to the extent of varying the order made by Master Sanderson to permit the plaintiff to bring the motion for a freezing order and for the order to be made.

Ex parte freezing order made against defendant

13 On 26 November 2007 on the application of the plaintiff I made an ex parte order restraining the defendant from removing from Australia or in any way dealing with any of his assets in Australia or elsewhere up to the unencumbered value of $4,440,000. The order was in the usual form of a freezing order and included exceptions permitting the defendant to pay ordinary living expenses, pay reasonable legal expenses and dealing with assets in the ordinary and proper course of business. There was also an order that the defendant provide information concerning his assets. The order provided that it was to have effect up to and including 4 December 2007 on which return date there would be a further hearing in respect of the order.

14 The plaintiff's application was supported by the affidavit sworn by Mr Martino on 21 November 2007 which annexed a draft affidavit of Mr Botes dated 21 November 2007. In making the order I stated:

I am satisfied from the material in the draft affidavit of Mr Botes that the plaintiff has made out a good arguable case necessary for the granting of an order in the nature of a ... freezing order. Secondly, I am satisfied, on the materials set out in the draft affidavit of Mr Botes, and in particular [108] of that affidavit, together with the matters set out in Mr Botes' affidavit concerning the transactions which are the subject matter of the action, and the recent publicity in The West Australian newspaper concerning events in South Africa concerning Mr Kebble and allegedly involving Mr Stratton, and all of the materials set out in Mr Botes' draft affidavit. I am satisfied, having regard to all the circumstances, that there is a danger that a prospective judgment against Mr Stratton will be wholly or partly unsatisfied because of the disposal, or dealing with or diminishing in value, of assets of Mr Stratton.

...

One matter which was raised by counsel for the plaintiff is that the plaintiff is a foreign company, and that in turn gives rise to the question of whether or not there is a risk that any damages incurred by the defendant as a result of the making of a freezing order, which results in an order for compensation, might not be satisfied because the applicant has insufficient assets within the jurisdiction ... In my view, the plaintiff should give security to support the first plaintiff's undertaking. There is no evidence before me that the first plaintiff has sufficient assets within the jurisdiction of the court to provide substance for its undertaking as to damages. Indeed, there is no evidence before me concerning the first plaintiff's assets within the jurisdiction of the court.

15 Both ex parte freezing orders were the subject of the hearing on 4 December 2007. As I have said, the defendant and Mrs Stratton then resisted the continuation of the freezing orders and sought the discharge of the ex-parte orders previously made. Counsel for the plaintiff accepted that it was incumbent on the plaintiff to establish a case for continuation of the orders and no onus lies on the defendant or Mrs Stratton to establish that the orders should be discharged. Notwithstanding that it is up to the plaintiff to establish a case for continuation of the injunction, the defendant and Mrs Stratton submitted that there were three reasons why the ex parte freezing orders should be discharged and not continued:

(a) There has been material non-disclosure vitiating the ex parte orders;

(b) The plaintiff has not established a good arguable case on the evidence;

(c) The plaintiff cannot establish that the defendant or Mrs Stratton will abscond or that their assets may be removed or dispersed.

16 I will consider each of those issues, but not in that order.

Is there a good arguable case on the evidence?

17 The defendant's answer to the case against him is set out in his defence which he has verified by affidavit. Senior counsel for the defendant and Mrs Stratton submitted that the first plaintiff has not made out a good arguable case warranting the 'draconian orders' sought. Senior counsel put forward a summary of the defendant's case in a written schedule to his outline of submissions. In a further schedule to those written submissions senior counsel summarised the evidence in relation to each of the transactions and payments which give rise to the plaintiff's claims. In view of the conclusions I have reached in this application, it is not necessary or desirable that I canvas the defence or the evidence. It is sufficient to say that I am satisfied that the plaintiff has made out an arguable case but there are clearly issues in relation to each of the plaintiff's claims.

Danger of removal or disposal of assets of Mrs Stratton

18 The plaintiff's argument starts with the proposition that at the commencement of these proceedings the defendant and Mrs Stratton owned the Applecross and Broadwater properties as joint tenants. On 14 May 2004 the defendant gifted to Mrs Stratton his interest in the Broadwater property which is a holiday home. On 29 September 2005 the defendant gifted to Mrs Stratton his interest in the Applecross property which is the family home. Order 52A r 5(5) Rules of the Supreme Court 1971 (WA) provides, amongst other things, that the court may make a freezing order against a person other than a judgment debtor or prospective judgment debtor (a third party) if the court is satisfied that a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute towards satisfying the judgment or prospective judgment. The plaintiff submitted that a freezing order may be granted against Mrs Stratton, whether under O 52A r 5(5), or under its inherent equitable jurisdiction, if she is in possession of property which has been transferred to her by the defendant with the intention of avoiding the satisfaction of a judgment obtained against the defendant by the plaintiffs in these proceedings: s 89 of the Property Law Act 1969 (WA); Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380; Trustees of the Property of Cummins v Cummins [2006] HCA 6; (2006) 224 ALR 280; Audio Products Group v Mamone [2005] NSWSC 982 and Puglia v Basol [2005] NSWSC 1271.

19 The plaintiff submitted that an inference can be drawn that the defendant has dissipated assets with an intention to avoid the satisfaction of any judgment claimed against him by the plaintiff in the circumstances that a prima facie case has been made out that the defendant has misappropriated a large sum of money and has gifted property to his wife at a time when proceedings had been commenced against him. The plaintiff submitted that where a conveyance is voluntary, it is easier to infer a dishonest intention than when it is made for consideration: Freeman v Pope (1870) 5 Ch App 538.

20 The defendant and Mrs Stratton submit that familial and marital considerations were the motivating factors for the defendant gifting his interests in the family home at Applecross and the holiday home at Broadwater to his wife. In his affidavit sworn on 3 December 2007 the defendant says that in about 2000 he formed an intention to reside permanently in South Africa and from that year on the periods during which he resided in South Africa increased until in about 2002 he began residing in South Africa for a greater part of each year than he was residing in Australia. From about 2002 Mrs Stratton became increasingly unhappy and uncomfortable with the situation. She did not want to reside permanently in South Africa. The defendant deposes that there were other circumstances which caused a strain on their marriage. The defendant had previously been married but no final property settlement orders were made. He has always informally provided financial support to his former wife and children. Mrs Stratton was concerned that as a result of those circumstances and in the event of his death the defendant's former wife and children may have been able to make a claim against his estate and her financial position would be compromised. Furthermore, the defendant's health was a matter of concern. In or about 1986 he was diagnosed with chronic lymphocytic leukaemia. Mr Stratton deposes that the strain in their marriage became quite acute in 2004. In order to avoid the breakdown of their marriage and to allay Mrs Stratton's concerns as to her financial security in Australia, Mr Stratton agreed to transfer to her his undivided interest in the family home at Applecross and the holiday home at Broadwater.

21 The circumstances leading to the transfer of the defendant's interest in the family home and holiday home to his wife are verified by Mrs Stratton in her affidavit sworn 3 December 2007.

22 Property Law Act s 89(1) provides that an alienation of property made with intent to defraud creditors is voidable at the instance of any person thereby prejudiced. The relevant intent is that of the defendant.

23 The plaintiff relies principally on four matters to establish that the defendant transferred the family home and holiday home to Mrs Stratton with intent to defraud the plaintiff which is a prospective creditor. The first is that the transfers were made without consideration. However, the defendant and Mrs Stratton have both gone on oath to explain the reason for and circumstances leading to the transfers. There is nothing inherently unlikely about their explanation.

24 The second matter relied upon by the plaintiff is that the transfers were made after these proceedings had commenced. However, the timing of the transfers offers little support to the plaintiff's case. The defendant transferred his interest in the holiday home to his wife about two years after the commencement of these proceedings and transferred his interest in the family home to his wife about three years after the proceedings commenced.

25 Thirdly, the plaintiff says that the inference that the defendant transferred his interest in the properties to his wife with the intent of putting those assets beyond the reach of the plaintiff is supported by the defendant's conduct in misappropriating the sums of money which give rise to the plaintiff's claims in these proceedings. As I have said, the defendant denies those claims and has put his denial on oath.

26 Fourthly, the plaintiff relies upon the circumstances of the mortgage in favour of Inter-Ocean Management Ltd registered over the Applecross property. In his affidavit the defendant swears that in about January 2001 he and his wife borrowed $900,000 from Corpnomin Ltd pursuant to a loan agreement. It was a condition of the loan agreement that 5,000,000 options in CAM be deposited as security with Frampton Investment Ltd as escrow agent. Interest was payable annually on the outstanding amount of the loan. The defendant and Mrs Stratton did not exercise the options which then lapsed. The defendant swears that subsequently he failed to make certain interest payments and Corpnomin Ltd required alternative security which he and Mrs Stratton agreed to give over the family home. The defendant says that that is the reason the mortgage was registered in or about May 2004. There is nothing implausible about that explanation.

27 I am not satisfied that the plaintiff has made out a sufficiently strong case that the defendant transferred his interests in the family home and holiday home to his wife with intent to defraud creditors so as to justify the continuation of the freezing order against Mrs Stratton.

28 The plaintiff essentially relies upon the same matters to support the inference that there is a danger that a prospective judgment in favour of the plaintiff will be wholly or partly unsatisfied because the assets of the defendant are removed from Australia or disposed of or dealt with or diminished in value.

29 The plaintiff also relies upon announcements by Rand Gold & Exploration Company Ltd (Rand Gold) and JCI concerning alleged misappropriations and investigations. It was submitted that those matters might cause the defendant to seek to put assets beyond the reach of those prospective creditors.

30 The plaintiff also relied upon the publication in The West Australian newspaper on 10 November 2007 and a subsequent clarification. The article published statements that:

in documents relied on in court proceedings, South African police allege the defendant and others conspired to have Mr Kebble shot and killed;
South African police have been investigating the alleged theft of $400 million from the company and other Kebble related firms shortly before his murder;

despite evidence that Mr Kebble was assassinated, two of those arrested so far claimed the killing was an assisted suicide organised by Mr Kebble because he and others faced allegations over almost $400 million in shares and cash alleged to have been missing from his companies Rand Gold and JCI;

Mr Stratton said there was no money missing and that Mr Kebble just traded for himself back into various entities.

31 The plaintiff submitted that this publication put the defendant under further pressure and increased the likelihood that he would seek to remove assets from the jurisdiction and from the reach of creditors. Mr Botes deposed that because of all those matters he was concerned that there is a risk that further steps may be taken to avoid or minimise the extent to which the properties owned by Mrs Stratton may be available to satisfy any judgment obtained by the plaintiff in these proceedings.

32 In his affidavit the defendant deposes that the details of the investigation of the financial affairs of JCI and Rand Gold have been publicly reported in the media since at least early 2006. So far as the matters reported in The West Australian newspaper on 10 November 2007 are concerned, the defendant deposed that those matters have been widely and publicly recorded since at least November 2006. The defendant denies the allegations and describes them as nothing more than outrageous and scurrilous accusations.

33 Finally, the defendant swears that there is an argument being advanced by him and others, including JCI, by way of a writ issued in this court on 6 December 2006 and by pleadings filed in an action in South Africa, that all of the proceedings brought, both in this jurisdiction and in South Africa, against the defendant and others, including JCI, by DRD and the plaintiffs have been settled. The defendant says that since August 2005 he has maintained that all proceedings against him have been settled and that he believes he will succeed in arguing that all the proceedings have been settled.

34 None of the matters referred to by the plaintiff, taken alone or in combination, satisfy me that there is a danger that a prospective judgment in favour of the plaintiffs will be wholly or partly unsatisfied because the assets of the defendant or the properties transferred by him to his wife are removed from Australia or disposed of, dealt with or diminished in value.

35 It is strictly not necessary to deal with this issue. However, I will briefly set out my findings in relation to this issue.

36 The defendant and Mrs Stratton say that there are six matters of material non-disclosure by the plaintiff in the course of obtaining the ex parte freezing orders.

37 The first matter of non-disclosure was the failure to inform the court of when the plaintiff first knew of the transfers of property of which it complained in the ex parte application. The defendant and Mrs Stratton submit that it appears the plaintiff knew of the property transfers at least some 16 months prior to the ex parte applications and probably much earlier than that. It is submitted that this was important because it went to the appropriateness of applying ex parte and to the alleged risk of dissipation when solicitors were on the record for the defendant and it was known that Mrs Stratton was the defendant's wife. Furthermore, the proceedings had been on foot for nearly 5 1/2 years, the pleadings were substantial and complex, there was scheduled to be a resolution of the issue in South Africa in January 2008, none of the evidence relied on by the plaintiff in support of its alleged arguable case of knowing involvement by the defendant was new, the property transfers complained of had occurred more than two years previously, there was no evidence of any imminent apprehended serious harm and the litigation had been stayed on the defendant's unopposed application since April 2007.

38 I am not persuaded that there was any material non-disclosure by the plaintiff in failing to inform the court of when the plaintiff first knew of the transfers of the defendant's interest in the family home and holiday home. At the ex parte hearing there was no submission by, nor impression given by, counsel for the plaintiff that the plaintiffs had only recently learned of those matters. The title search bears a footnote that it was printed on 10 July 2006. The plaintiff's case at the ex parte hearing was that the recent publicity concerning the defendant in The West Australian newspaper had caused it to be concerned that the Applecross and Broadwater properties and other assets might be put beyond their reach. In any event, if there was a failure to draw that matter specifically to the attention of the court, there was no deliberate lack of candour and the matter which was not disclosed is not of a major character overall and I would not set aside the ex parte freezing order on that account.

39 The second matter of non-disclosure complained of is in relation to the newspaper and other reports relied on as allegedly being relevant to discretion. It is said there was a failure to inform the court that the plaintiff had known of the subject matter of the allegations appearing in The West Australian newspaper on 10 November 2007 for about a year and certainly well prior to the unopposed stay of these proceedings.

40 The plaintiff does not deny that it had known of the allegations for some time before it made the application for a freezing order. Counsel for the plaintiff said:

But, your Honour, that isn't to the point. The genesis of the application, as Mr Botes has deposed, was the fact that on the front page of The West Australian - in Mr Stratton's resident jurisdiction - a publication was made in detail of various matters concerning potential claims or extradition proceedings against him. That factor together with the JCI litigation statement in October 2007 caused him to be concerned that there was an imminent prospect of further dissipation of assets (ts 77 - 78).

41 I accept that counsel for the plaintiff pointed to the publication of the allegations in The West Australian newspaper as being the matter which caused Mr Botes concern that the defendant would dispose of assets and Mrs Stratton might deal with the family home and holiday home. At the ex parte hearing it was not drawn to my attention that the plaintiff had known of the allegations against the defendant made in The West Australian newspaper and of the other investigations for some time. Nevertheless, I find that there was no deliberate lack of candour and if I dissolve the ex parte order for non-disclosure I would consider the re-grant of an order on the merits.

42 The third alleged non-disclosure goes to discretion in respect of Mrs Stratton. It is said that some significance was attached to the fact that the defendant's South African solicitors had just recently gone off the record in the South African proceedings but that no disclosure was made, which a proper enquiry should have been ascertained, that under the South African court rules a party has 10 days to file a notice appointing new solicitors and that on 20 November 2007 that 10 day period had not expired. I am not satisfied that there was any material non-disclosure in that respect.

43 The fourth non-disclosure is said to be a failure to inform the court, in applying ex parte on 26 November 2007 for a freezing order against the defendant, that the plaintiff's solicitors had written to the defendant's solicitors on 26 November 2007 about proposed freezing orders but without mentioning it was applying ex parte that day and that it had filed its motion on the previous Thursday 22 November 2007. I am not satisfied that that amounts to a material non-disclosure justifying the discharge of the ex parte order.

44 The fifth alleged material non-disclosure, in the case of the ex parte order against Mrs Stratton, is that the plaintiff failed to inform the court that the plaintiff was a foreign company with no identified assets in Australia and which had previously given security for costs in the action for that reason when proffering the undertaking as to damages.

45 The defendant and Mrs Stratton submit that if the plaintiff does not give evidence as to its capacity to meet the undertaking as to damages the court will assume it has such capacity. If the plaintiff does not have such capacity, this should be disclosed. If it is not, the court may discharge the order without going into the merits: Manor Electronics Ltd v Dickson [1988] RPC 618, 623 - 625.

46 The plaintiff did not disclose at the ex parte hearing for a freezing order against Mrs Stratton that it was a foreign company and did not have sufficient assets within the jurisdiction to satisfy its undertaking as to damages. However, on the ex parte hearing for a freezing order against the defendant on 26 November 2007, counsel for the plaintiff made that disclosure. Furthermore, counsel for the defendant and Mrs Stratton submit that the plaintiff is able to, and has, given security.

47 In my view the plaintiff should have disclosed at the ex parte hearing on 20 November 2007 that it was a foreign company and did not have assets within the jurisdiction sufficient to satisfy its undertaking as to damages. However, I am satisfied that the failure to disclose was inadvertent. I would exercise my discretion to consider the matter afresh and make a fresh order if I was satisfied on the merits. However, for the reasons I have previously given I am not satisfied on the merits that a freezing order should be continued or made.

48 The sixth alleged material non-disclosure was a failure to inform the court that there was no evidence for many, if not most, of the material allegations pleaded against the defendant. In my view this is a matter of argument and controversy and does not give rise to a material non-disclosure.

49 For the reasons stated I am not satisfied that there is a danger that a prospective judgment against the defendant in favour of the plaintiffs will be wholly or partly unsatisfied because the assets of the defendant or Mrs Stratton may be removed from Australia or disposed of, dealt with or diminished in value. Furthermore, I am not satisfied that a process in the court is or may ultimately be available to the plaintiff as a result of the prospective judgment against the defendant, under which process Mrs Stratton may be obliged to disgorge assets or contribute towards satisfying the judgment or prospective judgment. For those reasons I will not continue the ex parte freezing orders.

50 On 4 December 2007 I ordered that the freezing orders should continue until further order. That order will now be discharged. The order that the defendant provide information concerning his assets will be discharged.

DRD AUSTRALASIA APS -v- STRATTON [No 2] [2008] WASC 76 (14 May 2008)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (73 paragraphs)

DRD AUSTRALASIA APS -v- STRATTON [No 2] [2008] WASC 76 (14 May 2008)

Legislation Cited (1)

Cases Cited (2)