HARUKI MACHINERY PTE LTD -v- RSM CRANE SALES AND HIRE PTY LTD [2012] WASC 131 (3 April 2012)

3 The application is ex parte. It is brought ex parte because of the fear that the defendants may dissipate assets or dispose of the subject matter of the proceedings (a crane) prior to any orders being made.

4 I set out the background below. The background is derived from an affidavit of Mr Choon Bock Lim affirmed on 30 March 2012. Mr Lim is the managing director of the plaintiff, Haruki Machinery Pte Ltd (Haruki Machinery). There is also an affidavit from a private investigator, Mr Sean Parker, affirmed on 29 March 2012 to which I will make reference. I have also been provided with a short affidavit of service of a letter on the second defendant, Mr Parker, and attempted service of the letter on the first defendant, and another affidavit from a lawyer acting for Haruki Machinery which is mainly concerned with explaining the correction of an error in the recording of Haruki Machinery's interest in the crane on the Personal Properties Securities Register under the Personal Properties Securities Act 2009 (Cth).

6 Haruki Machinery is the owner of a crane with serial number GH0301931. The crane was manufactured in 2005.

7 In 2009 Haruki Machinery hired out the crane to the first defendant, RSM Crane Sales & Hire Pty Ltd (RSM Crane Sales). RSM Crane Sales is controlled by the second defendant, Mr Barry Harold Parker. The director of the Haruki Machinery, Mr Lim, dealt with Mr Parker at all times.

8 In very brief and broad summary, Mr Lim says the following.

1. Haruki Machinery is a Singaporean company in the business of hiring out cranes.
2. In about 2009 the crane which is the subject of these proceedings was purchased by Haruki Machinery for the equivalent of $AUS680,000.
3. Around August 2009, Mr Lim met Mr Parker. They had various face to face meetings between August 2009 and November 2009 in Perth and in Singapore.
4. In those meetings, Mr Parker told Mr Lim that he had Western Australian customers who wished to hire cranes and Mr Lim indicated that he was interested in supplying a crane. Mr Parker told Mr Lim that Mr Parker and his wife were directors and shareholders of the first defendant, RSM Crane Sales.
5. On 12 December 2009, Mr Lim and Mr Parker signed an agreement for the hire of the crane from Haruki Machinery to RSM Crane Sales. The hire agreement for the crane provided that the hire of the crane was for a period of not less than 36 months. The hire price, contained in sch 2 of the agreement, was $5,600 per week.
6. Prior to shipping the crane to Mr Parker, Mr Lim took photographs of the crane. He annexed them to his affidavit.
7. It appears that the crane was cleared by quarantine around February 2010 and then released to Mr Parker.
8. Mr Parker in various discussions told Mr Lim that he did not wish to buy the crane but that he would look out for potential buyers while hiring the crane out. Mr Lim agreed with this course.
9. Between February 2010 and March 2012 staff members acting on behalf of Haruki Machinery issued invoices to Mr Parker for the rental of the crane. The invoices total $629,440. This amount remains outstanding.
10. Mr Parker has also invoiced Mr Lim for quarantine repairs and maintenance charges of around $AUS300,000. Those invoices are disputed by Mr Lim.
11. Following various exchanges between Mr Lim and Mr Parker, Mr Lim indicated that he wished to terminate the agreement since no rent had been paid by Mr Parker. Mr Parker initially agreed to arrange for the crane to be shipped back to Mr Lim but said he needed to sort out the 'small' charges.
12. Mr Lim was then unable to contact Mr Parker in February 2012 and was advised by another person to speak to Mr Parker's accountant, a Mr Theo Jongeling, about the crane.
13. In an email exchange between Mr Lim and Mr Jongeling Mr Lim was advised by Mr Jongeling that the crane and its location would not be released until Mr Lim paid Mr Parker $AUS300,000.
14. No notice was ever given to Mr Lim that Mr Parker might sell or dispose of the crane.
15. On 22 March 2012 Mr Lim discovered that his crane was for sale by Mr Parker and RSM Crane Sales on a website called alibaba.com.
16. Mr Lim's lawyers sent a letter to RSM Crane Sales copied to Mr Parker demanding return of the crane and payment of rent outstanding of $AUS560,000 and seeking an undertaking not to sell or dispose of the crane.
17. The letter was personally delivered to RSM Crane Sales registered office and Mr Parker's place of residence.
18. RSM Crane Sales no longer occupies its registered office.
19. Mr Parker was residing at 3 Ali Turn, Canning Vale in Western Australia but he was a fly in/fly out worker and there was a for sale sign erected at that place of residence. The property at 3 Ali Turn, Canning Vale is also for sale on the Atree real estate website and was listed on 28 March 2012 with an asking price of $595,000.
20. On 24 March 2012 an email was sent to Mr Lim from a Mr Samynathan which attached an email from Mr Parker's email address. The attached email from Mr Parker referred to the letter to Mr Parker from Mr Lim's lawyers. In Mr Parker's attached email Mr Parker said that:

(a) he was currently in jail for sentences imposed on him for offences of handling stolen trucks and cranes;

(b) that Mr Parker would be in jail for five to seven years; and

(c) that the crane is currently with police and is locked up to be used as evidence and being seized under proceeds of crime legislation.

1. Mr Parker had also previously told Mr Lim in a telephone conversation that he (Mr Parker) was in trouble with the police fraud squad in Western Australia and that his phone and electronic communication was being monitored.
2. Mr Lim then instructed his lawyers to retain a private investigator to locate the crane and ascertain whether Mr Parker and RSM Crane Sales were still selling the crane.
3. The result of that investigation is supported by an affidavit sworn by the private investigator. The crane is still for sale.
4. Investigations by the lawyers for Mr Lim have revealed that there is serious doubt about the three statements made in the email from Mr Parker.

The principles concerning freezing orders and interim injunctions

9 Since this application is ex parte and the relief is for a short period, I will set out only in very brief, and broad, outline the principles to be considered in an application of this sort. A minimum condition of a freezing order is that there must be a good arguable case. But this is not sufficient. A freezing order is a drastic remedy which should not be granted lightly. All of the circumstances must be weighed in light of the potential serious prejudice to a defendant.

10 In National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271, 277, Mason CJ, Brennan and Deane JJ explained that a freezing order could be obtained even if there was not shown to be a positive intention by the party against whom the order was sought to frustrate any judgment. However, as the joint judgment of the plurality in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, 394 [26] observed, it is important to fashion any freezing order in a manner which the court considers appropriate to ensure that it is not abused.

11 As for the question of an interim injunction, this legal test is separate from the question of whether a freezing order should be granted. However, they both share the requirement that the applicant have a good arguable case (in the case of a freezing order) or that there is a serious question to be tried (in the case of an interim injunction).

12 In Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622 623 the High Court (Kitto, Taylor, Menzies & Owen JJ) said that a claim for an interlocutory injunction requires consideration of whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief and whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. This was quoted with approval in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 82 [65] (Gummow & Hayne JJ). Consideration must also be given to the question of whether damages would be an adequate remedy.

13 The first order I will make is to admit this matter to my CMC list.

14 I turn then to the question of the injunction and the freezing orders sought.

15 I accept that, on the limited (and ex parte) evidence before me that there is a serious question to be tried, and a reasonably arguable case, concerning whether the defendants, RSM Crane Sales and Mr Parker, are liable for the torts of detinue or conversion. I also accept that there are serious questions to be tried, and a reasonably arguable case, concerning the liability of the defendants for contractual debts which have accrued, subject to the possibility of any counterclaim by Mr Parker for the expenses which he may allege to have been incurred. The evidence currently before me suggests that, at the very highest, that counterclaim would be for less than half of the primary claim.

16 I also note that the basis upon which this finding of serious question to be tried or a good arguable case is made is, as is usual, made upon necessarily limited evidence.

17 I also accept, again on the limited ex parte evidence before me, that there is a real possibility that the crane might be sold or disposed of without the consent of Haruki Machinery and that recovery of it may by Haruki Machinery become difficult. I do note, however that Haruki Machinery's interest in the crane is registered on the Personal Properties Securities Register under the Personal Properties Securities Act. An error in the register has now apparently been rectified.

18 I also accept, again on the limited ex parte evidence before me, that there is a possibility that Mr Parker may seek to place his assets beyond the reach of Haruki Machinery or may deal with the crane in a manner which makes its recovery difficult.

19 In these circumstances, I consider that relief in the form of a freezing order should be given to protect against the possibility of Mr Parker moving his assets outside Australia or moving them beyond the reach of Haruki Machinery. That relief should be limited to a short period, to enable Mr Parker to raise with the court any objection to the orders at the first return. My first available date, which is when the return of these orders should be listed before me, is 2.00 pm on 18 April 2012.

20 Similarly, I consider that relief in the form of an interlocutory injunction should be granted to prevent Mr Parker from dealing with the crane, or interfering with the crane in any way including selling it, hiring it, or transporting it to any other location. If the location of the crane is not known, Mr Parker should also be ordered to disclose to Haruki Machinery the current location of the crane. Again, that relief should be limited to a short period, to enable Mr Parker to raise any objection with the court at the first return. My first available date, which is when the return of these orders should be listed before me, is 2.00 pm on 18 April 2012.

21 These orders are considerably more limited than those which are sought by Haruki Machinery. I do not consider it appropriate, in an ex parte application, to grant a mandatory injunction requiring the crane to be returned. It is enough to give orders prohibiting Mr Parker from dealing with, or interfering with the crane in any way.

22 Nor do I consider it appropriate for the freezing order to extend to prevent Mr Parker and his wife (against whom no claim is made or suggested) from selling the residence at 3 Ali Turn, Canning Vale in which he and his wife, Ms Tina Parker, are joint owners. This point was properly conceded by counsel. Provided that the freezing order prevents him from disposing of any proceeds of sale outside Australia and prevents him from moving his assets beyond the reach of Haruki Machinery then this is the appropriate extent of orders currently necessary on the evidence before me, at least until the first return of this matter on 18 April 2012.

23 Haruki Machinery also sought the appointment of a receiver in the alternative. A passage from Civil Procedure in Western Australia was quoted in support of the proposition that this appointment can be a valuable adjunct to the grant of a freezing order. The following sentence reads: 'this is a drastic step not to be lightly taken, and a party must make out a clear case for that remedy', citing Beach Petroleum NL v Johnson (1992) 9 ACSR 404, 406. I do not consider that the appointment of a receiver is appropriate, particularly on an ex parte basis.

24 I will hear from counsel concerning the appropriate form of orders to give effect to these reasons.