62 I do not accept the submission of the defendant in this regard. I accept that the evidence does not enable any conclusion to be drawn as to whether the sale of business agreement was entered into for valuable consideration, or upon good consideration. However, there is a real case to be investigated as to whether the sale of business agreement was entered into in good faith. Further, if the sale of business agreement was entered into with intent to defraud creditors, in particular the plaintiffs, there can be no doubt that Violet Home Loans, through Mr Mingos, had notice of that intent. Accordingly, s.172(3) is not a complete answer to the plaintiffs' reliance upon s.172(1) as a process which is or may be available to them to recover any judgment from the non-parties.
63 I say the non-parties, and not just Violet Home Loans, because it seems to me that there is a real case to be investigated as to whether the direction by the defendant to Violet Home Loans, that Violet Home Loans should pay the purchase consideration under the sale of business agreement to Franklin Dell in satisfaction of its dividend entitlement, also constituted an alienation of property made with intent to defraud creditors. Accordingly, there is a real case to be investigated as to whether that direction should be set aside under s.172(1).
64 Further, there is a real case to be investigated as to whether the distribution or distributions by Franklin Dell to the beneficiary or beneficiaries of the Mingos Family Trust, which I was informed amounts to the whole of the $850,000 paid by Iden in respect of the sale by Violet Home Loans of the Adelaide Bank loan portfolio, is an alienation of property which may be set aside under s.172(1). At present, the evidence justifies the inference that Mr Mingos was the recipient of the $850,000 or, if not him personally, a person or entity associated with him.
65 Accordingly, the plaintiff has satisfied me that s.172(1) is a process which is or may ultimately be available to it in order to set aside the sale of business agreement, the direction that the purchase consideration payable by Violet Home Loans to the defendant be paid to Franklin Dell and any distribution made by Franklin Dell to a beneficiary of the Mingos Family Trust of monies representing the proceeds of that purchase consideration. If these transactions are set aside, then the Court could order that the sum of $850,000 already paid in respect of the sale of the defendant's assets be returned to the defendant, in order to satisfy any judgment against it. Further, the remainder of the assets sold by the defendant to Violet Home Loans would revert to the defendant and would be available to satisfy any judgment.
66 It is accordingly unnecessary to reach a firm conclusion in relation to the other processes which were relied upon by the plaintiffs in argument. Those processes included processes available to a liquidator of the defendant under various provisions of the Corporations Act 2001 (Cth) relating to unreasonable director-related transactions, unfair preferences or breach of director's duties. Further, reliance was placed on and the possibility of a liquidator proceeding against the non-parties to recover property of the defendant received by them in circumstances where it was transferred to them as a result of the actions of Mr Mingos in breach of his duties as a director of the defendant, thus calling into play the principles in Barnes v Addy.[9] However, it seems to me that the possibility of such claims being pursued by a liquidator of the defendant is a real one. One or more of these processes may well be available to a liquidator of the defendant, in the event that the plaintiffs succeed in obtaining judgment in the proceeding.
VI. BALANCE OF CONVENIENCE
67 In my view, the balance of convenience strongly favours the granting of freezing orders against the non-parties. On the evidence, they are either in possession of, or may soon be in receipt of, assets of the defendant or the proceeds of the sale of those assets. In the absence of freezing orders, any judgment recovered by the plaintiffs against the defendant will most likely be wholly unsatisfied.
68 It was submitted on behalf of the defendant and the non-parties that no injunctive relief should be granted in any event, because the plaintiffs were companies of no substance and their undertaking as to damages was worthless. Accordingly, it was submitted that, at the very least, the plaintiffs should be required to provide security in respect of any undertaking given by them as to damages.
69 I accept that the ability of a plaintiff to satisfy any undertaking as to damages is a relevant factor to take into account in the balance of convenience. However, this is only one of the totality of factors relevant to the exercise of the Court's discretion to grant or withhold injunctive relief.[10]
70 In all the circumstances of the case, I do not believe that the plaintiffs should be required to provide security in respect of their undertaking as to damages. As the evidence presently stands, the impecuniosity of the plaintiffs has been substantially contributed to by the defendant's alleged breaches of contract. Further, the conduct of the defendant and the non-parties in seeking to strip the defendant of all its assets and place them under the control of Mr Mingos is a strong discretionary factor against requiring the plaintiffs to support their undertaking by security which they are unable to give. In reaching this conclusion I have also taken into account the fact that Mr Condo is prepared to give a personal undertaking as to damages, in order to support that given by the plaintiffs.
71 Next, as to the balance of convenience, it was submitted on behalf of the defendant and the non-parties that any freezing order should be made conditional upon the plaintiffs commencing a proceeding under s. 172(1) of the Property Law Act. In this regard, reliance was placed upon the reference by the High Court in Cardile v LED Builders Pty Ltd to the need to consider whether such a condition should be imposed, as part of considering the balance of convenience and the form of relief to be granted.[11]
72 In my view, I should not impose such a condition. It was not said in Cardile v LED Builders Pty Ltd that such a condition ought be imposed, only that consideration should be given to whether such a condition should be imposed in the circumstances of a particular case. In this case, it would be unfair to require the plaintiffs, as a condition of obtaining relief, to commence proceedings under s. 172(1). First, it would be unfair because the trial of this proceeding is imminent. It would be unduly burdensome upon the plaintiffs to require them to now formulate their case under s. 172(1) prior to the hearing and determination of this proceeding. Second, if the plaintiffs are successful in obtaining judgment, they will no doubt seek to have a liquidator appointed to the defendant. The plaintiffs and the liquidator may then wish to join in proceedings under s. 172(1) of the Property Law Act, and also join in that proceeding other claims available to a liquidator, with a view to minimising costs and avoiding multiplicity of proceedings. Further, in formulating and prosecuting their claims, the plaintiffs and the liquidator may wish to avail themselves of the forensic advantages available to liquidators, by the use of processes such as compulsory examination of directors and compulsory production of documents.
73 Of course, if the plaintiffs wish to commence a proceeding under s. 172(1) now, it is open for them to do so. It is also open for them to apply in this proceeding to join the non-parties as parties and to amend their statement of claim to raise claims under s. 172(1) in this proceeding. However, that is a matter for them. No doubt, the risk that such a course of action may have the result that the current trial date is vacated will be a matter considered by the plaintiffs in this regard.
VII. ANCILLARY ORDERS
74 I have referred to the fact that, notwithstanding that Mr Mingos was in court during the hearing of the application and gave instructions to senior counsel for the defendant and the non-parties on numerous occasions, the Court has not been informed as to the identity of the persons who received the sum of $850,000 which was paid to Franklin Dell and then distributed by it to the beneficiaries of the Mingos Family Trust. In my view, an ancillary order under Rule 37A.03 should be made, requiring Mr Mingos to forthwith swear an affidavit disclosing all matters relating to the use and application of the $850,000 paid to Franklin Dell. If it transpires that these moneys, or assets acquired from the application of them, are not held by Mr Mingos but are held by other non-parties, the Court will entertain an application for freezing orders against those parties.
ORDERS
75 For the reasons given, I will make freezing orders against the defendant, Violet Home Loans Pty Ltd, Franklin Dell Pty Ltd and John Mingos. In all the circumstances, I will make the order against the defendant, even though there may presently be no identifiable utility in doing so. In circumstances where Mr Mingos controls the defendant, Violet Homes Loans and Franklin Dell, and having regard to the course of action embarked upon by Mr Mingos, I will exercise my discretion to include the defendant within the orders.
76 The freezing orders will prevent the defendant, Violet Home Loans, Franklin Dell and Mr Mingos from disposing of, dealing with, encumbering or diminishing their assets to the extent of the particularised amount of the plaintiffs' claim, in the sum of $1,258,602.57. Further, I will order that Mr Mingos swear and file a detailed affidavit disclosing all matters relating to the payment and application of the $850,000 paid to Franklin Dell. I will hear the parties as to the precise form of the orders to be made and as to costs.