Sharman v Palmer [2000] TASSC 58

ROBIN GEOFFREY SHARMAN and ELAINE KAYE SHARMAN

1 On 23 May 2000 the plaintiffs filed a writ seeking, inter alia, damages against the defendants for breaches of an agreement dated 25 June 1997. No statement of claim has been filed.

2 By an interlocutory application, the plaintiffs seek a Mareva injunction against the defendants. I was informed that an hour prior the hearing, copies of the interlocutory application and the firstnamed plaintiff's affidavit in support of the application were delivered to the office of solicitors who act for the defendants. The solicitors had not undertaken to accept service of proceedings on behalf of the defendants. Accordingly, the defendants have not been served. They are not represented before me. The plaintiffs seek to pursue their application ex parte.

3 By an agreement dated 25 June 1997 the defendants agreed to purchase the plaintiffs' dairy farm, together with cows, machinery and other items for a consideration of $1,213,000. A deposit of $100,000 was paid. The date for settlement of the purchase agreement is within 28 days of completion of a sale of the defendants' property at Busselton in Western Australia, or 1 July 2000.

4 Pursuant to the purchase agreement, the defendants took possession of the farm and agreed to make quarterly payments of rental totalling $44,000 per annum. The defendants have not paid the rental instalments due on 15 January 2000 and 15 April 2000. In February this year, the plaintiffs served the defendants with notice of a number of claims made by the plaintiffs against the defendants referable to asserted breaches of the purchase agreement. By letter dated 9 March 2000, the plaintiffs gave notice of termination of the agreement. The defendants vacated the farm on or about 14 March 2000 and since that date the plaintiffs have resided on the property.

5 In the latter part of March and in April of this year, negotiations were pursued between the parties in an unsuccessful effort to settle their disputes.

6 The material before the court shows that the plaintiffs have a prima facie claim against the defendants for damages in the vicinity of $300,000. The firstnamed plaintiff avers that:

* the defendants have not met a number of outstanding liabilities and they owe sums to a variety of creditors;

* the defendants' property at Busselton in Western Australia has been sold by the defendants or their mortgagee for $750,000 and the sale is to be completed in six weeks' time; and

* the defendants may try to appropriate their assets so that the plaintiffs cannot obtain them if they are successful in their action.

7 The court should approach the granting of a Mareva injunction with caution; Construction Engineering (Aust) Pty Ltd v Tambel (Australasia) Pty Ltd (1984) 1 NSWLR 274 at 279. The authorities emphasise that a Mareva injunction should only be granted if it is necessary to prevent an abuse of the process of the court which has been shown to be likely to occur in that there is a real risk that a party will so deal with his assets as to stultify and render ineffective any judgment given against him. In Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 at 617 - 618, Wilson and Dawson JJ said in their joint decision:

"One important result of viewing the Mareva injunction in this way is to emphasize the limits of the remedy. Its use must be necessary to prevent the abuse of the process of the court. As Ackner LJ pointed out in A J Bekhor & Co Ltd v Bilton [1981] EWCA Civ 8; [1981] QB 923 at 941 - 942, the Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors."

Passages to the same effect appear in Riley McKay Pty Ltd v McKay (1982) 1 NSWLR 264 at 276 and Construction Engineering (Aust) Pty Ltd v Tambel (Australasia) Pty Ltd (supra) at 279.

8 As to the need for caution in approaching the granting of a Mareva injunction, I share the view expressed in Meagher, Gummow & Lehane, Equity, Doctrines and Remedies, 3rd ed, par2188, where the authors say:

"It is obvious that by obtaining a Mareva injunction even an innocent plaintiff can wreak havoc with the defendant's business, and an unscrupulous plaintiff can ruin his opponent. That these abuses, inherent in the very nature of the injunction, do occur has been all too evident."

9 The court must be careful to ensure that its jurisdiction to grant a Mareva injunction is not invoked merely to secure an applicant's hoped-for judgment and that where an injunction is granted it is necessary in order to prevent a respondent from abusing the court's process by disposing of assets. Whilst there are commonly good reasons for issuing a Mareva injunction on an ex parte application, whenever appropriate, the respondent should be given an opportunity to be heard before being visited with such a draconian order.

10 I am quite unpersuaded that the assertions as to urgency and risk pressed on behalf of the plaintiffs in this case warrant dealing with their application ex parte. Whilst the firstnamed plaintiff says he believes that the defendants may try to appropriate their assets so as to deny them to the plaintiffs if they are successful, there is no evidence of anything done by the defendants with that objective. The sale of the defendants' property in Western Australia was contemplated at the time they entered into the purchase agreement. There is no suggestion that their property was sold in order to defeat the plaintiffs' claim. The defendants have not left the State and there is no evidence that they have moved any assets out of the jurisdiction.

11 There has been some delay in the institution of proceedings by the plaintiffs. Their writ has not been served. They appear to be more concerned about obtaining a Mareva injunction than about expediting the hearing of their claim. In the absence of any event which explains to me the asserted urgency of the plaintiffs' application for an ex parte Mareva injunction, I am left with the impression that the motivation for the application is a wish to secure the plaintiffs' position and to obtain an order which will assist them in their efforts to negotiate a settlement with the defendants. That would be an inappropriate use of a Mareva injunction and it is the sort of matter on which the defendants should be heard.

12 I will not dispose of the plaintiffs' application ex parte. There is ample time for the defendants to be served with the application and given an opportunity to respond to it.