Grahame Cooper v Sithe Energies [2000] NSWIRComm 132 | Case summary

1 On 14 April 2000 Grahame Allan Cooper ("the applicant") filed a Summons for Relief under s 106 of the Industrial Relations Act 1996. The respondents were named as Sithe Energies Australia Pty Limited (First Respondent) and Sithe Energies Inc (second respondent). The first respondent is a company incorporated in New South Wales. The applicant is the Managing Director of the first respondent, although he was not formally appointed as a director of that company. The second respondent is a corporation incorporated in the state of Delaware in the United States of America. At all material times the first respondent was a fully owned subsidiary of the second respondent. 2 The Summons sought relief by way of various orders including money orders to the extent of A$14 million of which A$4,251,538.80 was particularised in the Summons. 3 On 24 July 2000 the applicant caused to be filed in this Court an ex parte notice of motion and affidavit in support the effect of which would be to restrain until further order the first respondent from disposing of, or dealing with, any assets or removing any assets from the jurisdiction including, in particular, moneys or funds standing to the credit of the first respondent in an account with the Banque Nationale de Paris ("BNP") in Sydney. These funds amount to about A$10 million. 4 The notice of motion was called on for hearing at 4.00pm on 24 July 2000. Mr R Goot, of counsel, appeared for the applicant. After hearing Mr Goot and having read the applicant's Summons for Relief and affidavit, as well as the respondents' Reply, I granted, with amendment, the short minutes of order sought by the applicant. In doing so I directed that the orders, the notice of motion and the applicant's affidavit sworn 24 July 2000 be served on the respondents by 6.00pm on 24 July 2000, that the orders may be served on BNP and that the notice of motion be heard before me at 1.00 pm on 27 July 2000. Costs of the motion were reserved. I indicated that I would shortly publish my reasons, which I now do. 5 What was sought here was a Mareva injunction. The basis of the jurisdiction to grant a Mareva injunction was explained by the Court of Appeal in Riley McKay Pty Ltd v McKay [1982] 1 NSWLR264 at 276: "The basis of jurisdiction is founded on the risk that the defendant will so deal with his assets that he will stultify and render ineffective any judgment given by the Court in the plaintiff's action, and thus impair the jurisdiction of the Court and render it impotent properly and effectively to administer justice in New South Wales. As has appeared, the jurisdiction to grant the injunction is not to be exercised simply to preclude a debtor from dealing with his assets, and in particular to prevent him from using them to pay his debts in the ordinary course of business. It is directed to dispositions which do not fall within this category and which are intended to frustrate, or have the necessary effect of frustrating, the plaintiff in his attempt to seek through the court a remedy for the obligation to which he claims the defendant is subject." 6 This approach was confirmed by the High Court in Jackson v Sterling Industries Ltd (1987) 61 ALJR 332. 7 In Patterson v BTR Engineering (Aust) Ltd and Others (1989) 18 NSWLR 319 at 321-322, the then Chief Justice, Gleeson CJ, observed of Mareva injunctions that: "The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish first upon the basic cause of action against the defendant and, secondly, the danger that by reason of the defendants absconding or assets being removed out of the jurisdiction or disposed within the jurisdiction or otherwise dealt with in some fashion, the plaintiff if he succeeds will not be able to have his judgment satisfied."

8 It is by now clear that this Court has power to make interlocutory orders in the nature of injunctive relief: Wheeler v Selbon Pty Ltd (T/as Parklands Nursery) & Ors (1984) 7 IR 383 Cahill J; Darvall v NZI Securities Australia Ltd (1991) 39 IR 215, Hungerford J; Geoffrey Bowker & Anor v Prophecy Technologies Pty Limited [1999] NSWIRComm 248, 26 May 1999, Marks J; Western Suburbs Leagues Club (Illawarra) Limited v Kenneth Leslie Vaughan & two Ors [1999] NSWIRComm 254, 2 June 1999, Schmidt J; Elliot v Royal Motor Yacht Club (1992) 42 IR 35, Watson J; Jacoby & Ors v Boral Transport Limited & Ors, unreported, 7 May 1993, Peterson J. 9 In Darvall v NZI Securities Australia Ltd, Hungerford J said at 221: "However, as earlier stated, the Commission is empowered, by reason of its constitution as a superior court of record, to make interlocutory orders in the protection of its process and so as to ensure that any final orders made may not be frustrated or put at naught." 10 A Mareva injunction is a discretionary remedy and a decision whether or not relief should be granted will depend on all the circumstances of the case. 11 In the present proceedings, apart from the affidavit supporting the notice of motion and the submission's of Mr Goot, I have had regard to the applicant's Summons for Relief and the affidavit in support as well as the respondents' Reply filed on 18 July 2000. These show, in my opinion, that the applicant has "made out a sufficiently strong case to justify the grant of the interlocutory remedy": Riley McKay Pty Ltd v McKay at 276. 12 I consider that without in any way commenting on the final outcome, the applicant has a good arguable case. 13 The ex parte notice of motion and affidavit by the applicant stated that the first respondent has a number of assets in New South Wales that included shareholdings, loans to subsidiaries, a gas fired cogeneration power plant at Smithfield ("the plant"), the net value of which was A$50 million and approximately A$10 million credit in the account with BNP. 14 The notice of motion and applicant's affidavit stated that the second respondent was in the process of attempting to sell the shares and the plant but since the applicant filed his Summons for Relief under s 106 of the Act he had not been informed of any details of these attempts and does not know the status of the proposed sale. The sale or disposal of the shares and the plant could proceed without the knowledge of the applicant. 15 The proceeds of the account with BNP could be transferred by the first respondent without the knowledge of the applicant who was not a signatory to the account. The applicant had been recently informed by the Treasurer of the second respondent that the second respondent intended to transfer all of the proceeds of the account with BNP as soon as the second respondent needed such proceeds or when she was satisfied with the exchange rate between the Australian dollar and the United States dollar. 16 Clearly, there is a risk of the assets being moved from the jurisdiction or otherwise dealt with so that there is a danger that the applicant, if he recovers judgment under s 106 of the Act, will not be able to satisfy it or, at the very least, disposal of the assets in Australia would expose the applicant to significant expense and delay in enforcement of any judgment in the proceedings under s 106, by requiring him to bring further proceedings in the state of Delaware. 17 The applicant, by his counsel, has given the usual undertakings as to damages. 18 I have had regard to the balance of convenience which, in my opinion, lies with the applicant because of the position in which he would be placed if the assets are moved from jurisdiction. The orders I have made allow the first respondent to pay rent, salaries and operating expenses and to dispose of or deal with its assets upon terms consented to by the applicant or the applicant's solicitors. Moreover, the notice of motion will be heard inter partes on Thursday 27 July 2000.

Grahame Cooper v Sithe Energies

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