Harrison Partners Construction Pty Ltd v Jevena Pty Ltd

Conveyancing Act 1919 (NSW), s37A LEGISLATION CITED : Bankruptcy Act 1966 (Cth), s 121

Adam P Brown Male Fashions Pty Limited v Phillip Morris Inc (1981) 148 CLR 170 AJ Bekhor & Company Limited v Bilton [1981] QB 923 Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 Barclay-Johnson v Yuill [1980] 3 All ER 190 Elders Rural Finance v Westpac Supreme (NSWSC, Bergin J, 24 May 1989) CASES CITED : Ex parte Russell; In re Butterworth (1882) 19 Ch D 588 Iraqi Minister of Defence v Arcepey Shipping co SA (The Angel Bell) [1980] 1 All ER 480 Jackson v Sterling Industries Limited (1987) 162 CLR 612 Lloyd v Blumenthal (1884) 5 LR (NSW) Eq 99 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Rahman (Prince Abdul) v Abu-Taha [1980] 1 WLR 1268

Harrison Partners Construction Pty Ltd (plaintiff/respondent) PARTIES : Jevena Pty Ltd (defendant/applicant)

E G H Cox (plaintiff/respondent) COUNSEL : T Hall (solicitor) (defendant/applicant)

David H Cohen & Co (plaintiff/respondent) SOLICITORS : Tzovaras Legal (defendant/applicant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST

55023/04 Harrison Partners Construction Pty Ltd v Jevena Pty Limited JUDGMENT (ex tempore - revised 16 December 2005) 1 HIS HONOUR: The plaintiff Harrison Partners Construction Pty Ltd, whose principal is Mr Xu, alleges that it was contracted by the defendant Jevena Pty Limited, to build eight townhouses on Jevena's land at Casula, and that Jevena has failed to pay it $875,000 or thereabouts said to be due as a result of the works performed by Harrison for Jevena on that land. Harrison also alleges that it was induced to enter the contractual arrangements which it had with Jevena by misleading, deceptive or unconscionable conduct by or on behalf of Jevena. By summons filed on 3 March 2004, Harrison claimed damages of $846,000, and by an amended statement of claim filed on 2 July 2004 the amount of its claim was increased to $875,000. Jevena has filed a defence, and a cross-claim for damages for defective building work. 2 Jevena has since sold the eight townhouses. In its summons, Harrison claimed, by way of interlocutory relief, an asset preservation order. On 17 June 2004, an interim arrangement was reached between the parties. By that arrangement, Harrison and Mr Xu gave the usual undertaking as to damages, in return for an undertaking by Jevena to the effect that it would, within 48 hours of receipt of 60,000 of the net proceeds of sale of the Casula townhouses, pay those proceeds into court to that extent pending further order. That consensual arrangement, however, left open to Jevena to restore the matter to the list after the amended statement of claim had been served upon it, for the purpose of revisiting the undertakings and orders made on 17 June 2004. 3 In due course Jevena did indeed file a motion seeking to be released from its undertaking given on 7 June 2004 to pay $600,000 from the proceeds of the Casula townhouses into court. That application was heard and determined by Einstein J on 24 September 2004 [Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2004] NSWSC 893]. At that time the case advanced by Jevena was that it wished to import goods for distribution in Australia from China, and that the Chinese suppliers were insisting upon payment prior to accepting any order for goods from Jevena. On that basis Jevena said that it required unrestricted access to the $600,000 the subject of its undertaking to the court. It appears now, if it did not then, that the business then contemplated was the importation from China of building products. 4 His Honour found [at [30]] that Harrison had established a sufficient prima facie case for, relief particularly in terms of its causes of action under the Trade Practices Act 1974 (Cth), to warrant a very close examination of the balance of convenience, not to say that Harrison's contractual claim was hopeless. Upon examining the balance of convenience, his Honour concluded [at [31]-[32]] that Harrison was clearly entitled justifiably to fear a dissipation of funds. His Honour referred to the circumstance that Jevena appeared to have no other assets, that it appeared to have no other projects in which to invest its money, that it appeared to have no obligations other than to discharge the mortgages on the townhouses and pay costs, that its directors appeared to have organised their affairs so as to protect their position, that there was a history between the controlling individuals of Harrison and Jevena whereby it was said that those controlling Jevena had acted in a way to cause loss to the entity in control of Harrison, and that Jevena had been in default of its obligations under the mortgages and deed of loan and had not borrowed sufficient funds to carry out the work for Harrison to perform. 5 His Honour thought that the real - not fanciful - concerns of dissipation of funds raised by those matters were accentuated by the proposal to enter into a complex business venture involving importation of products from China [at 32]-[33]]. His Honour concluded [at [36]] that the proper exercise of the court's discretion was to require Mr Xu by 31 October 2004 to pay into court as security for his undertaking as to damages the sum of $200,000, that should he do so, and upon Jevena having paid into court the sum of $600,000, $200,000 of that $600,000 would be released to Jevena; but if Mr Xu did not pay into court the security of $200,000, then the whole of the $600,000 would be paid out to Jevena. 6 By the time of the hearing before Einstein J on 24 September 2004, Jevena had on 17 August 2004 already paid into court about $47,000. It paid into court a further $268,000 on 20 August 2004, a further $230,000 on 9 September 2004 and a further $32,000 on 22 September 2004. On 1 November 2004, Jevena paid into court a further $22,000, bringing the total deposited to $600,000. Meanwhile, on 28 October 2004, Harrison lodged a bank guarantee for $200,000 and, as a result, pursuant to Einstein J's orders, on 1 November 2004 $200,000 was paid out to Jevena. 7 After that, the court record does not disclose any activity until in or about 20 May 2005, when Bergin J contacted at least Harrison, in relation to listing the matter for directions in June 2005. For reasons which the evidence does not at this stage disclose but might involve similar contact from Bergin J's chambers about relisting the matter in June 2005, Jevena on 20 May 2005 filed a notice of motion in which it sought, without any prior notice or communication of its intention to do so, dismissal of the proceedings for want of prosecution, and alternatively release to it of the balance remaining in court of the $600,000 initially paid in. 8 In the interim, it seems that Harrison had in fact been retaining experts and obtaining expert opinion in support of its case. As the matter proceeded, the application for dismissal was not pressed, and, on the hearing of the motion on 14 September 2005 Jevena was granted leave to file an amended notice of motion in which it sought only the following relief: The balance of any monies paid into Court by the Applicant [pursuant to orders of Justice Einstein of 28 September 2004] be released to Mr Peter Ngan, who is an Official Liquidator, for payment by him into a nominated bank account on conditions that they then be paid by him to the defendant, or such other party nominated by the defendant upon production of relevant invoices by the defendant to Mr Ngan with respect to:-

i. the proposed business venture outlined in the affidavits of:- (a) Guang Bin Wen, sworn 8 July 2005; (b) John Wood, sworn 6 July 2005 and 29 August 2005; and being a business referred to in these proceedings as the business "Kitchen Central;"

ii. any other business expense of the defendant which expense appears upon reasonable examination by Mr Ngan to arise in the normal course of the defendant's business, or in respect of the legal costs in defence of these proceedings; and

iii. in payment of any taxation liability or obligation falling upon the defendant. 9 It will be observed that the orders sought involve the release of moneys to an accountant, Mr Peter Ngan, who is an official liquidator, and his consent to act, for the purposes of monitoring expenditure by reviewing creditors' invoices for the establishment of the business now proposed to be established by Jevena, was tendered. 10 Jevena, by its directors, Guang Bin Wen and John Wood, describe their plans for application of any moneys released to them in their affidavits. They say that after the repayment to Jevena of $200,000 from the funds paid into court in October 2004, they reconsidered having Jevena commence a new business, and following discussions decided to consider a kitchen retail business. For that purpose they have decided that Jevena should take up a lease of a showroom and warehouse at premises at Horsley Drive, Wetherill Park and have it fitted out with equipment of showroom kitchen and accessories. They have formulated a budget which estimates that $511,000 is required for that purpose. They complain that since the payment of the net proceeds of sale of the Casula properties into court, Jevena has been unable due to lack of funds to produce any income-producing activity, and they wish to invest those funds in the proposed new business. They fear that unless the funds are returned to Jevena, Jevena will miss the opportunity of undertaking that new business. The new business will involve the leasing and fitting of the showroom and adjoining warehouse and the purchase of office equipment and a forklift, the employment of staff and the provision of working capital sufficient to enable Jevena to operate the proposed business. 11 In his affidavit of 29 August 2005, Mr Wood provides further details of the proposed new business. It appears to involve the import into Australia of kitchen cabinets pre-manufactured in China in preset model sizes, which can then be bought by Australian customers over the Internet or at a showroom with the aid of a computer program which would assist in the designing of a kitchen using the preset model size to fit the customer's usable floor spaces. It is said that this will enable kitchens to be provided and installed very economically at prices well below those currently obtainable in the Australian market. For example, it is said that at present it would normally cost $1,300 to install a kitchen, but that only $200 would be charged to install a kitchen under the proposed business. 12 Jevena is not at present carrying on any business. There is no evidence that it has any assets, other than the funds in court and perhaps a Mercedes motor vehicle on hire purchase. There is no evidence that it has any creditors, nor any employees. The only potential obligation which the evidence discloses is legal fees to Jevena's solicitors, but as to that the evidence is unsatisfactory, being an assertion by Mr Wood as to what he has been told by his solicitors and what might be necessary to defend those proceedings in the future. 13 Accordingly, this is not a case in which a Mareva order interferes with the conduct of an established business or in which it will wreak havoc with Jevena's current affairs. At the highest, the orders in place require an asset of $400,000 to be invested in court rather than in the proposed business. Thus this is a case in which the inconvenience or prejudice to Jevena from the grant or maintenance of such an injunction is markedly less than the usual one.

14 From the proceeds of sale of the Casula townhouses there has been available to Jevena (other than the $400,000 that remains in court) a sum of at least $500,000. Of that it seems $36,000 has been paid to the selling agents of the Casula properties as commission, and $106,000 to Jevena's solicitors for legal costs. That leaves at least $360,000, of which it seems that more than $80,000 has been spent on a new Mercedes motor vehicle. However, that vehicle was acquired on 15 September 2001 on a hire purchase contract for five years expiring on 15 September 2006. The deposit of $10,000 and at least three-fifths of the rent due under that contract would have been paid before the sale of the Casula townhouses. No doubt it is for that reason that Mr Wood in his affidavit describes the payment in respect of this vehicle as "reimbursement" for payment of finance on a "company vehicle"; I infer it has been reimbursed from the proceeds of the sale of the units to one or both of the directors. Likewise, the "reimbursement" for the loss on the sale of a BMW of $22,000 is presumably a reimbursement to one or other of the directors. At least no better explanation has been offered. The "reimbursement" to Ricky Ma of $60,000 is completely unexplained, but even assuming it is a wholly appropriate expense to be paid from the proceeds of sale, it leaves at least another $200,000 paid to the directors as directors' fees. Although Mr Wood's affidavit attempts to describe this as $1,500 a week over several years, it can only account for $200,000 from the proceeds of sale if it was paid more or less there as a lump sum after the townhouses had been sold.

15 Thus, to the extent that Jevena is currently without funds the manner in which the directors have chosen to apply at least $300,000 of those proceeds - and $360,000 if one includes the payment to Ricky Ma - has been a large contributing factor and one which was in the director's own control and thus not one on which they are entitled to rely to support a claim of newly arising hardship. 16 For Harrison, Mr Cox has argued that I should not even embark on a reconsideration of whether interim relief is appropriate, on the basis that nothing sufficiently novel arises to justify reopening the question that was determined by Einstein J. However, the circumstances and basis on which interlocutory relief is granted means that it is not to be regarded as immutable pending the final hearing, but may be reconsidered when the justice of the case so requires. To warrant reconsidering interlocutory relief will usually require there has been some relevant change of circumstance since it was last granted or considered, which change may bear on the criteria governing the grant of interlocutory relief - typically, whether there was a seriously arguable case for relief, or the balance of convenience. As Bryson J said in Elders Rural Finance v Westpac [NSWSC, 24 May 1989], the nature of claims for interim injunctions means that they are usually made on a basis which admits of some debate or reargument, but repeated returns to the court for reconsideration of a claim for an interim injunction cannot be regarded with favour. Nonetheless, there are circumstances where reconsideration may be appropriate. Gibbs CJ, Murphy, Aickin, Wilson and Brennan JJ in Adam P Brown Male Fashions Pty Limited v Phillip Morris Inc (1981) 148 CLR 170, 178 mentioned circumstances where new facts had come into existence or were discovered which rendered the enforcement of an interlocutory order unjust. As Bryson J commented: "Their Honours did not, of course, endeavour to give an exhaustive statement of which reconsideration would be appropriate and it would hardly be possible to do so. However, there ought in my view for this as for other discretionary applications to be some new matter to be raised which could represent a sound and positive ground or otherwise a good reason for embarking upon reconsideration." 17 In my opinion, acknowledging that it is impossible to state a principle capable of universal application in this field, nonetheless the general rule is that interlocutory relief is not to be reconsidered if all that is involved is a review on the same facts as prevailed when it was originally granted or declined or on facts which ought then reasonably have been in contemplation (in which case the appropriate course is an interlocutory appeal); but if new facts have emerged which may effect the arguability of the case for final relief or the balance of convenience, then the grant of interlocutory relief may be reconsidered. 18 In this case, the application before Einstein J was based on a proposal to embark on a business involving the importation of building products from China and the payment of funds, to fund the acquisition of those products, to the Chinese manufacturers. 19 Since his Honour considered the matter, a year has passed. While of itself that may not be sufficient to justify reconsidering the question, absent any suggestion that, in the application before Einstein J, a restraint for a shorter period was contemplated, it is still a factor to be considered when weighing the main change of circumstance, namely, that what is now proposed is a business situated in New South Wales, albeit having its product manufactured in China, with a superimposed mechanism of an accountant, who happens to be an official liquidator, vetting expenditure so as to verify that it would in fact be allowed only bona fide for the proposed business and supported by appropriate vouchers and documentation. 20 It is not necessary for me to reach a conclusion as to whether his Honour would have adopted a different view, had such a proposal been put before him. In my view, it is sufficiently different and incorporates sufficient additional protective mechanisms that, in the light of the passage of a year, it is appropriate to reconsider whether the existing interlocutory regime should be continued or varied. Accordingly, I reject the submission that this is a matter which had to be raised, if at all, on an application for leave to appeal. 21 I commence that reconsideration, however, from the starting point of Einstein J's decision. Neither party suggested that any other approach should be taken.

22 The relief in question is in the nature of an asset preservation or Mareva order, although because it does not restrain dealing with assets in the hands of the defendant, but requires payment into court, it is not entirely typical of applications for Mareva relief. Generally speaking, on an application for Mareva relief, an applicant has to demonstrate a sufficiently strong prima facie case for final relief, and a greater than ordinary risk of dissipation. It will be necessary to return in greater detail to just what must be demonstrated about the risk of dissipation. 23 His Honour found that Harrison had a sufficiently seriously arguable case for final relief to warrant considering where the balance of convenience lay, and indeed considering it closely. Neither party suggested that I should revisit the question whether there was a seriously arguable case for final relief, and I proceed on the basis found by Einstein J, that there is one. 24 The argument before me turned on the second limb, namely the risk of dissipation in the light of the new proposal advanced by Jevena. 25 The affidavit of Mr Wood of 6 July 2005 describes in par 7 the funds required to establish the proposed business, which, as I have said, total some $511,000. Generally speaking, those funds will not be applied to acquire what might be described as hard assets. In particular, they are not to be applied to the acquisition of real property, and, to the extent that they are to be applied at all to the acquisition of assets, they are assets which are of a character prone to depreciate. Thus, the $15,000 for the lease security bond would not be recoverable if the business failed and was unable to pay its rent. The $3,000 for legals and stamp duty will not be recoverable in any circumstance, being an outright expense item. The $88,000 allocated for fit out and decoration of premises is unlikely to be recoverable in the event of failure of the business, since it will probably accrue for the benefit of the landlord. Even if the lease could be sold, nothing like the initial cost would be recoverable. The second-hand equipment, being a forklift and truck and office equipment for which a total of some $65,000 is provided are all items which will depreciate at a rapid rate. The cost of advertising and signs is unlikely to be recoverable in the event of the business failing. The display stock, to which $220,000 inclusive of GST is allocated, may well also, in the event of failure of the business, pass to the landlord as fixtures in the premises, but even if not, are most unlikely to realise anything more than a fraction of the cost of their acquisition. $110,000 is allocated for working capital which that is likely to be a pure expense item, as is $10,000 for miscellaneous expenditure. In short, should the business fail there will be precious little to show for the $511,000. Under Jevena's proposal, the funds will be applied to the acquisition of assets which will not realise anything like their cost of acquisition in the unhappy event of the business failing. 26 Mr Wood says that Jevena believes that the business will be a sound one because of its innovative production techniques and very competitive prices. However, Jevena has supplied no business forecasts or analysis of the business's financial performance. Whether the business will succeed or fail is speculative. Even if it does not fail, whether Jevena would retain realisable assets to the order of $400,000 is doubtful. In my opinion, if the proposal were sanctioned, there is a very real risk that if Jevena were permitted to deal with the funds as it proposes, they would be diminished or lost, and it would be left with insufficient funds to meet Harrison's claim. 27 However, I do not accept that the proposal is other than a bona fide one. The evidence demonstrates a bona fide albeit undeveloped business plan. Both active directors and shareholders have deposed to their intention to implement it. While the business plan is not as detailed as a bank might expect to see were considering financing it, there is not necessarily any reason why in order to demonstrate bona fides it has to be so detailed. I regard the interposition of an accountant, who happens to be an official liquidator, as an important factor and a powerful indicator of the bona fides of the proposal. I do not consider that the bona fides of the proposal are affected by the circumstance, brought to light through some hearsay evidence adduced through an affidavit of Harrison's solicitor, Mr Cohen, that the proposed site at Wetherill Park is no longer available. Indeed, as Mr Hall points out, to some extent the fact that that enquiry was made and that there were discussions about going into such a business tends to demonstrate that Jevena is genuinely pursuing such a business opportunity. 28 As I have said, the interposition of the accountant provides a strong measure of comfort that expenditure will be applied only bona fide to the legitimate business purposes. While some money from the working capital will have to be sent to China to acquire stock, I would not in the light of the evidence now before me be satisfied that there is a real risk that Jevena would deal with the funds if they were released to it with the intention of defeating the terms of any judgment. I proceed on the basis that Jevena would deal with the funds, if released to it, bona fide for the purposes of the proposed business, but, as I have said, that there is a real risk that those bona fide dealings would nonetheless result in a situation where Jevena is left with insufficient assets to satisfy Harrison's claim if successful. 29 Mr Hall submits that that conclusion of fact means that Harrison is not entitled to maintain Mareva relief. He submits that the purpose of Mareva relief is to protect the jurisdiction of the court and prevent abuses, and that such relief is to be granted only where it is established that there is a real risk that the defendant will deal with its assets with the intention of defeating an anticipated judgment, thereby impairing the administration of justice. He says that a plaintiff is not entitled to have a defendant restrained from dealing with its assets bona fide, even if there is a serious risk that those dealings will operate to the detriment of the plaintiff's ability to recover. 30 That submission may be thought to enjoy some support in the authorities which I must therefore examine.

31 Ultimately, the Mareva jurisdiction in this country was confirmed by the decision of the High Court of Australia in Jackson v Sterling Industries Limited (1987) 162 CLR 612. The leading judgment was that of Deane J, whose judgment enjoyed the concurrence of Mason, Wilson, Dawson and Gaudron JJ. His Honour [at 622] described a general interlocutory power to make orders preventing a defendant from disposing of his assets so as to defeat any judgment obtained in an action as an incident of the substantive jurisdiction to entertain the action. His Honour held that, as a general proposition, it should now be accepted in this country that a 'Mareva' injunction can be granted if the circumstances are such that there is a danger of the defendant's absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied [see also Rahman (Prince Abdul) v Abu-Taha [1980] 1 WLR 1268, 1273 (Lord Denning MR); approved in Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155, 160 (Street CJ)]. 32 Later [at 625] his Honour emphasised that the purpose of Mareva relief was not to create security for the plaintiff, nor to require a defendant to provide security as a condition of being allowed to defend the action, nor to introduce a new vulnerability to imprisonment for debt or alleged indebtedness by requiring a defendant under the duress of the threat of contempt to find money, but to prevent a defendant from disposing of his actual assets, including claims and expectancies, so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action. However, his Honour added that it may be appropriate in a rare case that such an order require the defendant to deliver assets to a named person or even to the court itself. 33 Several of those passages were cited with approval by the Court of Appeal in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319. In that case Gleeson CJ said [at 321] that to obtain a Mareva order, as a general rule, a plaintiff would need to establish first, a prima facie cause of action against the defendant, and secondly, a danger that by reason of the defendant's absconding or assets being removed out of the jurisdiction or disposed of or otherwise dealt with in some fashion, the plaintiff would not be able to have his judgment satisfied, if he succeeded. 34 The frequent use in the passages to which I have referred of the words "so as to", and the description of the test by Gleeson CJ in the passage to which I have just referred, focus not so much on the subjective intent of the defendant, but on the objective result of the defendant's conduct. 35 In AJ Bekhor & Company Limited v Bilton [1981] QB 923, Ackner LJ said [at 941-942]: "It must be borne in mind that at the foundation of the jurisdiction was the need to prevent judgments of the court being rendered ineffective by the removal of the defendant's assets from the jurisdiction." Once again, this directs attention to the result of the defendant's conduct, rather than the intent which accompanies it. 36 There are dicta of the High Court of Australia to the effect that it is not necessary to show a positive intention to frustrate a judgment [Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, [26]].

37 In a passage which supports Mr Hall's submission, in Equity: Doctrines and Remedies, 4th edition, [21-445], the authors, Meagher, Gummow and Lehane, say that in Barclay-Johnson v Yuill [1980] 3 All ER 190, Sir Robert Megarry VC pointed out that not every threatened removal of assets from the jurisdiction could be enjoined, but only such removals which were intended to defraud creditors. 38 I have carefully reviewed the judgment of Sir Robert Megarry VC in that case and with great respect to the authors whom I have mentioned, I am unable to find a passage in it which supports that proposition. His Lordship said [at 194]: "... that the heart and core of the Mareva injunction is the risk of the defendant removing his assets from the jurisdiction and so stultifying any judgment given by the courts in the action." His Lordship added [at 195] that, in addition to establishing the existence of a sufficient risk of the assets being removed from the jurisdiction "in such a way as to stultify any judgment that the plaintiff may obtain", various other requirements must be satisfied, one of which is that it must appear that there is a danger of default if the assets are removed from the jurisdiction. I do not take His Lordship to be suggesting that a positive intent to defeat a judgment is necessary. Consistent with the Australian cases to which I have referred, the focus is on the result of the defendant's activity and not the intent which accompanies it.

39 Reference is also made by the authors of Equity: Doctrines and Remedies to what was said by Robert Goff J in Iraqi Ministry of Defence v Arcepey Shipping Co SA (The Angel Bell) [1980] 1 All ER 480, in which His Lordship rejected a submission that repayment of a loan from enjoined assets should not be permitted. His Lordship made it clear that the function of the injunction was not to freeze the defendant's assets pending determination of the claim nor to preserve them for the satisfaction of the claim, nor to effect a quasi winding-up of the defendant, but only to prevent the defendant "from abusing its dispositive power", not to secure the plaintiff's claim. 40 The Mareva jurisdiction is derived from the inherent powers of the court, or powers under the Supreme Court Act 1970 (NSW) (including section 66(4), but not only that section). Once those sources of jurisdiction for asset preservation orders are accepted, it is difficult to see why it should be a precondition to its exercise that there is a risk of dealing with assets intended to produce the result that there will be no or insufficient assets to satisfy an eventual judgment, or why honest blundering in dealing with assets by a defendant should be permitted to the detriment of a plaintiff's ability to achieve and the court's ability to do justice. 41 In the course of argument two examples, which to my mind remain apposite, were discussed. A defendant who is a professional gambler might persuade a court that bona fide in the pursuit of his professional gambling interests he wished to risk most or all of his assets on "one turn of pitch and toss", to borrow Kipling's phrase. Even if the court were satisfied that the intention was bona fide, it is difficult to see that that is a risk to which a creditor should be subjected. Likewise, a defendant who is a member of a professional gambling syndicate accustomed to bet on races would hardly be heard to say, however bona fide, that his wish to risk most of his assets on a particular horse on a particular day should, however bona fide, take precedence over the plaintiff's entitlement to have assets or the plaintiff's ability to have assets preserved pending judgment. 42 Thus, although the authorities sometimes use language which approaches that of suggesting that intent is required, proper analysis shows that in fact they focus on the anticipated result, and not on the subjective intent that accompanies it. A better word than intent would be "calculated" or "liable to", rather than "intended to" produce the result of defeating an anticipated judgment. 43 Accordingly, I would hold that an applicant for Mareva relief, in establishing a serious risk of dissipation, need not establish that a defendant may deal with the assets in a manner intended to produce the result that the plaintiff, if successful, would not be able to have his or her judgment satisfied. It will suffice to establish that there is a real risk that the defendant will deal with the assets in a manner calculated, or liable, to produce the result that a judgment in the favour of the plaintiff would not be satisfied. 44 That test, in my opinion, is plainly met in the present case. There is a real risk that, if granted access to the funds in court, Jevena will deal with them by investing in the proposed business, albeit bona fide, and that that business would fail, resulting in Jevena having insufficient assets to satisfy any judgment which Harrison might recover.

45 And, to the extent that the touchstone of the jurisdiction is an abuse of the defendant's power of disposition, I would hold that the investment of a defendant's sole remaining significant asset in a speculative venture at a time when it is facing a significant claim for an amount which exceeds the defendant's available funds, which has been found to be seriously arguable, in circumstances where there are no other creditors or obligation on the defendant, is indeed an abuse of the power of dispossession. In this respect the case is far removed and distinguishable from a case in which it is proposed to use funds to pay creditors or employees or even in the course of an ongoing existing business. Rather, this proposal involves putting funds which are currently safe in jeopardy, in a speculative venture. Though the analogy is not perfect, support for this view can be drawn from the cases that hold that a person who, being about to embark on a speculative venture, alienates his or her assets to an associate, thereby defrauds creditors within the meaning of the Conveyancing Act 1919 (NSW), s37A and the Bankruptcy Act 1966 (Cth), s 121 [see, for example, Ex parte Russell; In re Butterworth (1882) 19 Ch D 588, particularly in the judgment of Lord Jessel MR, who said: "The principle is that a man is not entitled to go into a hazardous business, and immediately before doing so settle all his property voluntarily, the object being this: 'If I succeed in business, I make a fortune for myself. If I fail, I leave my creditors unpaid. They will bear the loss'." 46 A similar view was taken in this court by the then Primary Judge in Equity, Manning J in Lloyd v Blumenthal [1884] 5 LR (NSW) Eq 99, particularly at 108. By analogy it seems to me that a person who has only one creditor, and insufficient assets to satisfy that claim if it succeeds, who then voluntarily embarks on a speculative course which jeopardises his or her ability to satisfy that debt, abuses his dispositive power in the sense referred to by Robert Goff J in The Angel Bell. 47 Accordingly, I conclude that notwithstanding that I am not satisfied that there is a risk of dealing with intent to produce the result that Jevena be judgment proof, I am satisfied both that there is a real risk of dealing liable to produce that result, and that the voluntarily investment of Jevena's sole asset in a speculative venture when faced with a substantial claim which if successful would exceed its assets, would be an abuse of its power of disposition in the relevant sense. 48 So far as considerations of balance of convenience remain relevant, I have already referred to the fact that Jevena has no creditors, no employees and no business, and that no disruption of the type normally occasioned by a Mareva injunction will be occasioned here. All that will happen is Jevena will be required to have its funds invested in the court rather than in a speculative business venture. So far as it is relevant on discretionary considerations, I take into account that, at least to the extent of $300,000, the proceeds of the Casula townhouses appear already to have been dispersed to, or for the benefit of, the directors. 49 The amended notice of motion is therefore dismissed with costs. 50 The proceedings are adjourned to Friday 23 September 2005 in the Technology and Construction list for directions.

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