WHITE J:
1 The three Applicants in these proceedings have applied, ex parte, for freezing orders against the Second and Third Respondents pursuant to r 7.32 of the Federal Court Rules 2011 (Cth).
2 I am satisfied that it is appropriate to proceed ex parte, having regard to the nature of the application. I am also satisfied that it is appropriate to make the orders sought by the Applicants.
3 Because the proceedings have proceeded ex parte, and there is likely to be a hearing at which the Respondents will be heard on the continuance of the orders, I will provide some brief reasons so that the Respondents may have an understanding of the matters upon which I have relied.
4 I have reached my decision having regard to the principles concerning applications of the present kind, most of which were summarised by Kenny J in Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; (2010) 273 ALR 194. The principles are as follows:
(a) a freezing order made ex parte is an extraordinary interim remedy because of its restraining effect on the property of those to whom it applies, without them having had the opportunity to be heard on that question;
(b) the purpose of a freezing order is to prevent frustration of the process of the Court and not to provide security to an applicant;
(c) an applicant must show a prima facie cause of action against the respondent, as well as a real risk that a judgment debt will go unsatisfied if assets are removed from the jurisdiction, or disposed of in some way;
(d) a freezing order may be granted even though the risk of dissipation of assets is less probable than not;
(e) a freezing order may be granted even when there is no evidence that the respondent has a positive intention to frustrate the execution of a judgment; and
(f) the Court must be satisfied that it is in the interests of justice, in all the circumstances of the case, for the freezing order to be made.
5 Amongst other things, the last principle requires consideration of the potential detriment to the Applicants if the order is not made and the Court's process frustrated and the hardship that the order, if made, may cause to the Respondents.
6 I am satisfied that it is appropriate to proceed today on the basis that the Applicants do have a prima facie cause of action, being a claim of misleading or deceptive conduct against the Second and Third Respondents. It is reasonable to proceed on that basis, because the allegations of the Applicants are set out in the Fifth Amended Statement of Claim and the underlying proceedings are listed for a 10 day trial in March 2018. I have taken into account that the threshold for establishing a prima facie cause of action has been said to be low: Curtis v NID Pty Ltd [2010] FCA 1072 at [6].
7 It is neither necessary, nor appropriate, for today's purposes to make any assessment of the strength of the Applicants' case or of their prospects of successfully prosecuting it and I refrain from doing so.
8 As to the prospects of any judgment obtained by the Applicants going unsatisfied, the Applicants pointed to a number of matters. The first was that each of the corporate Respondents in the proceedings is now being wound up or, at least, resolutions for their winding up have been made by their creditors. Administrators had been appointed to each of the corporate Respondents on 5 July 2017 and shortly afterwards, the further conduct of the proceedings against them were stayed.
9 Secondly, the Applicants pointed to the withdrawal of a substantial sum (over $444,000) from the bank account of the 11th Respondent (over which it seems that the Second and Third Respondents had control) only a few days before the administrators were appointed. The purpose of that withdrawal is not known, nor is the use to which the withdrawn monies were put. The Applicants drew attention to the fact that the withdrawal of that substantial sum took the account of the 11th Respondent to its overdraft limit. That withdrawal warrants, the Applicants submit, some unease about whether the Respondents had been seeking to put money beyond the reach of the creditors of the 11th Respondent.
10 Thirdly, the Applicants pointed to evidence that the Second and Third Respondents appear, at least in some respects, to have paid little regard to the distinction between the funds of the 11th Respondent, on the one hand, and their personal funds, on the other. In particular, they referred to the circumstance that a number of debits on a credit card account of the 11th Respondent which was apparently used by the Third Respondent appear to have been directed to personal expenses, rather than to the kind of expenses one would have expected the 11th Respondent to have incurred in the conduct of its business.
11 I have declined to attach much weight to this circumstance, because the source of the funds deposited into the credit card account is not known and, at least insofar as the evidence presently shows, may well have been provided personally by either the Second or Third Respondents.
12 Fourthly, the Applicants pointed to the circumstance that their allegation against the Respondents is of misleading or deceptive conduct of a non-innocent kind. Counsel characterised it as a claim in effect of a fraud. I express no view about whether that claim has substance, as I have indicated, but it is appropriate to take into account the proposition emerging from cases such as Patterson v BTR Engineering Australia Limited (1989) 18 NSWLR 319 at 322-3 to the effect that an inference that a respondent may wish to frustrate execution of a court's process may more readily be drawn when the underlying allegation is that the respondent had sought by improper means to obtain funds from an applicant.
13 Fifthly, the Applicants pointed to evidence that the Respondents have connections with Serbia and with China with an implication that this should add to the unease. In respect of China they pointed to evidence that the 11th Respondent in the past has claimed to own a factory in China in respect of which it may have had some financial responsibility. I was disinclined to attach much weight for present purposes to that circumstance. The mere fact that the Respondents have some international connections without more does not, to my mind, seem a particularly persuasive factor.
14 Lastly, the Applicant has pointed to the fact that they have had no substantive response to a request made on 6 June 2017 for an undertaking by the Respondents that their assets would not be moved out of the jurisdiction other than in the normal course of business or disposed of. The Applicants' solicitor has deposed to receiving an email from the Respondents' solicitors on 27 June 2017 indicating that they planned to respond shortly but that thereafter no response has been received.
15 There is evidence that the Respondents have assets in the nature of real estate. The extent to which that real estate is presently encumbered is not known.
16 I have taken into account, however, that there is no evidence of recent attempts by the Respondents to dispose of that property or to further encumber it in a way which might frustrate execution.
17 As to prejudice to the Respondents, one starts with the prima facie presumption that the Respondents would be prejudiced by such a freezing order. However, in that respect it is appropriate to take into account that the proposed freezing orders do make provision for payment of the Respondents' legal fees and living expenses and that the Applicants in addition have provided the usual undertaking on such applications. The freezing orders will operate only until 22 November 2017. The principal assets which will be subject to the freezing orders are, as I have said, real estate which appears to be of at least a reasonably stable kind.
18 Having regard to all those matters I am not satisfied that the prejudice to the Respondents indicated that the orders sought by the Applicants should not be made. In addition, I will fix a hearing for the question of whether the freezing order should continue at a relatively short date.
19 These are my reasons for making the orders sought by the three Applicants.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.