SOUTHERN EQUITIES CORPORATION LTD (IN LIQ) v BOND

2 The plaintiffs are Southern Equities Corporation Ltd (in liquidation) ("SECL") and Bond Corporation Pty Ltd ("Bond Corporation"), and Mr R A F England as liquidator of SECL. The defendants against whom the orders are sought are Craig Bond, Delores Caboche, and John Bond. The persons who are not parties are Carindale Land Corporation Pty Ltd ("Carindale"), Fairoak Pty Ltd ("Fairoak") as trustee of the Alpha Trust, Topsfield Pty Ltd ("Topsfield") as trustee of the JB Trading Trust, Hastings Finance Pty Ltd ("Hastings Finance") and Mr William Redmond ("Redmond"), a solicitor. Mr Redmond is a solicitor in Brisbane who has from time to time acted for Craig Bond and John Bond and has acted in respect of dealings involving Carindale and land owned by Carindale. He has said that he will abide the order of the court. The other respondents to the application oppose it.

3 The plaintiffs seek Mareva orders against each of the three named defendants and against each of the four persons who are not parties. The plaintiffs also seek orders that the three defendants, Craig Bond, Delores Caboche and John Bond, be each directed to file and serve affidavits disclosing their assets at 19 March 1996, assets which they have acquired since, and assets they have disposed of.

4 The defendant, John Bond, has in turn applied for an order that the plaintiffs' application for Mareva orders and for the affidavit of assets be struck out or dismissed as an abuse of process. The applications were heard together.

5 All of the respondents to the plaintiffs' application including the non-parties gave certain undertakings to the plaintiffs not to dispose of assets pending judgment on the plaintiffs' applications. For their part, the plaintiffs give the usual undertaking as to damages. Although SECL is in liquidation it has assets available to honour the undertaking. There was no dispute concerning the ability of the plaintiffs to honour the undertaking.

6 The evidence was contained in the following affidavits and the exhibits to those affidavits.

7 I deal first with the application of John Bond to strike out or dismiss the plaintiffs' application as an abuse of process. It is based on three grounds. The first is that he had been engaged in without prejudice discussions with the liquidator concerning settlement of this action. John Bond engaged in those discussions on the footing that he denied liability but was examining whether there was any basis on which a commercial settlement could be reached. On 8 February 2000, he had had a discussion with the liquidator on possible terms of settlement. He agreed to send the liquidator a draft document concerning the matters discussed for the liquidator to consider. He sent the document. On the afternoon of 11 February 2000 he received a letter from Fisher Jeffries, the solicitors for the plaintiffs, outlining the liquidator's response to the document John Bond had sent him. Later on the same afternoon, Fisher Jeffries served his solicitors with this application and the affidavit in support. The documents were served with a letter from Fisher Jeffries which included a paragraph in these terms:

"We are instructed, in view of the discussions between our respective clients, not to seek the listing of this application for a period of 7 days. Should those discussions not result in a satisfactory outcome by that time, we are instructed to seek to have the within application heard and determined. In the interim we seek your client's undertaking that monies presently standing to the credit of Carindale Land Corporation Pty Ltd in any of its bank accounts will not be withdrawn for the period of 7 days. We request your confirmation of this by return facsimile."

John Bond says that the application was completely unexpected because of the discussions concerning settlement proceedings and that it was issued for the purpose of exerting pressure upon him in the settlement discussions.

8 The second ground is that this application has been made some years after this action was instituted. The action was commenced on 2 January 1996. The summons was not served until May 1997. In the meantime, it had been renewed. The fact that the action had been commenced was confidential so as not to prejudice the liquidator's examination. Thus, this application was made almost three years after the defendants had been served. In that time, John Bond says, there has been no material change in circumstances.

9 The third ground is that the Mareva orders have the potential to cause financial embarrassment to Alan Bond, to Craig Bond and to John Bond, and restrict their ability to fund their defence to this action.

10 For the reasons which follow, the grounds relied on, whether considered individually or as a whole, do not constitute an abuse of process.

11 Abuse of process essentially consists of using legal proceedings as a means of obtaining some advantage for which the proceedings are not designed or some collateral advantage beyond what the law offers: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 526 - 527. The plaintiffs are doing no more than making a well recognised application for the purpose of seeking to preserve assets which might be available to satisfy any judgment that they might obtain if successful. There is no reason why the plaintiffs should not issue proceedings in case the settlement negotiations should break down. I infer from the fact that these applications are now being argued some weeks after they were issued that the negotiations have not resulted in any compromise. It has not been suggested that negotiations are still continuing. I do not think that the fact of the earlier negotiations means that the plaintiffs' application is an abuse of process.

12 The second and third grounds are not grounds which support an application that proceedings are an abuse of process. Instead, they are factors relevant to the exercise of the discretion whether to grant the application and I will consider them in that context.

13 In order to make the orders sought by the plaintiff, the court must be satisfied

(1) That the plaintiffs have a substantial cause of action against the defendants.

(2) That the plaintiffs have a sufficiently arguable case to justify the grant of interlocutory relief.

(3) That danger exists that, if successful in the action, the plaintiffs will not be able to have the judgment satisfied.

(4) That it is just and convenient to make an order. According to the circumstances of each case, this will involve consideration of a number of factors relevant to the exercise of the court's discretion including the balance of convenience.

In addition to seeking orders against respondents to this action, the plaintiffs also seek orders against persons who are not parties. I will note in a moment the principles to be applied where orders are sought against persons not parties to the principal action.

14 The application concerns land which is in Queensland and the proceeds of the sale of that land. A Mareva order may be made to restrain a defendant from dealing with assets outside the jurisdiction of this Court: Coombs and Barei Constructions Pty Ltd v Dynasty Pty Ltd (1986) 42 SASR 413; National Australia Bank Ltd v Dessau [1988] VicRp 58; [1988] VR 521; and Planet International Ltd (in liq) v Garcia [1989] 2 Qd R 427. The latter two decisions also note that it is not necessary that the assets should have been within the jurisdiction at some time before the order.

15 I turn to examine each of the matters about which the court must be satisfied if it is to grant an order in the nature of a Mareva injunction.

16 Shortly stated, the plaintiffs allege that in December 1989 SECL and Bond Corporation owned certain works of art, namely 13 paintings and one sculpture. They further allege that these works of art had an insured value of some $6 million; that the works of art were purportedly sold by Alan Bond and Mr Peter Beckwith in breach of their duties as directors of the plaintiff corporations for $922,500, a sum which, on the basis of the plaintiffs' allegations, was grossly below true value; that the true purchasers of the paintings were Alan Bond and his son, Craig Bond or interests associated with them; that all of the works of art have been sold or otherwise disposed of in a series of transactions in which the defendants have participated to varying degrees; and that the defendants are liable, among other things, for damages for the fraudulent dealings and to deliver up the paintings. The plaintiffs allege that all of the dealings in the works of art are void and should be set aside on the ground that the defendants Alan Bond and Peter Beckwith acted in breach of their fiduciary duty in disposing of the paintings in this way and that the other defendants participated and assisted in those breaches of duty and conspired to defraud SECL and Bond Corporation. The total loss is alleged to be some $12.9 million.

17 These are plainly very serious allegations. The statement of claim is complex and detailed. The alleged dealings are pleaded at length. The affidavits filed in support of the application exhibit a great number of documents, many of which may be admissible as business records, which are said to evidence the alleged dealings. The statement of claim and the affidavits filed in support satisfy me that the plaintiffs have a substantial cause of action against the defendants and that their case is sufficiently arguable to justify a grant of interlocutory relief.

18 For the purpose of this application only, these three defendants conceded that the plaintiffs have established a prima facie case for remedies grounded on Barnes v Addy (1874) LR 9 Ch App 244 in respect of $A300,000 being part of the sum of $A798,667.71 paid into the trust account of a Mr Redmond, a solicitor who has from time to time acted for Craig Bond and John Bond. The sum of $A300,000 is said to be the proceeds of the sale of two paintings included in the works of art, the subject of this action. They do not concede that the plaintiffs have in any other respect demonstrated that they have a substantial cause of action which is sufficiently arguable to justify the grant of the relief which is sought. For the reasons already expressed, I do not agree.

19 One of the works of art is a portrait of Captain Cook. That painting has been recovered by the liquidator. On 7 June 2000 orders were made in this Court that the painting was the property of SECL and Bond Corporation. The liquidator has since sold the painting for $5.4 million. The plaintiffs maintain the action in relation to the other works of art.

20 Although the monies recovered from the sale of the portrait of Captain Cook represent a substantial part of the monies the plaintiffs seek to recover from the defendants in this action, I do not think that is a ground for refusing to grant Mareva orders. There is nothing to suggest that any of the other works of art will be recovered. The plaintiffs make their claim for damages on several grounds. There is a claim for compound interest totalling some $2.002 million and a claim for further loss and damage in the sum of $7.84 million. These claims are made in addition to the claim for the value of the other 12 works of art. There is also a claim for exemplary damages. Thus, the plaintiffs' claim remains very substantial despite the proceeds from the sale of the portrait of Captain Cook. Thus, the sale of that portrait is not a reason for refusing the orders sought.

21 I deal first with the application that the defendants, Craig Bond, Delores Caboche and John Bond, file affidavits disclosing their assets. It is now well settled that this Court has jurisdiction to make orders requiring defendants to swear affidavits disclosing their assets: A v C [1981] QB 956; Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 per Deane J at 622 - 623. The court will, in the exercise of its discretion, make such an order when it is just and convenient to do so: A J Bekhor & Co Ltd v Bilton [1981] EWCA Civ 8; [1981] QB 923 at 940, and where it is necessary or appropriate to promote the purposes for which Mareva relief is to be granted: Bax Global (Australia) Pty Ltd v Evans [1999] NSWSC 815; (1999) 47 NSWLR 538 at 549 - 550 para 40. The order may be made even in those cases where assets are outside the jurisdiction: Ballabil Holdings Pty Ltd v Hospital Products Ltd [1985] 1 NSWLR 155 at 161, 164, 165. On the face of the matter, it is appropriate to make the orders sought as the orders will be in aid of the relief which the plaintiffs seek. However, each of these three defendants oppose the application on the ground that it is an abuse of process for reasons in addition to those already mentioned. I turn to examine that argument.

22 Each of these three defendants has been examined by the liquidator of SECL pursuant to s 596A or s 596B of the Corporations Law or the respective statutory predecessors of those sections. In the course of those examinations, each has been asked questions concerning the assets held by them. The plaintiffs submit that an order that each defendant swear an affidavit is necessary because each has given inaccurate evidence in those examinations. The defendants oppose the application asserting, among other things, that it is an abuse of process for the liquidator to proceed in this way having required each of the defendants to be examined. Although there is some force in that submission, I think that there are countervailing reasons which justify an order being made. The plaintiffs do not know what assets are held by each defendant. The power of a liquidator to examine under s 596A and s 596B is not necessarily the most satisfactory means of eliciting that information since the person who is being examined does not necessarily have all details to hand. That is evident from the examination of Ms Caboche. For example, although she knew that she held insurance policies she did not know the surrender value of those policies nor, indeed, how many policies she held. An order requiring a person to swear an affidavit disclosing his or her assets provides an opportunity for considered self-examination by that person and the capacity to check details. The fact that the affidavit must be sworn or affirmed should encourage that person to examine the position rigorously and provide truthful information. Although a person giving evidence at a liquidator's examination has the same obligation to be truthful, the opportunity for considered or fully informative answers is not always available. The plaintiffs make the application for the legitimate object of ascertaining to the fullest extent possible the assets which might be available to satisfy any judgment they might obtain. I repeat, abuse of process essentially consists of using legal proceedings as a means of obtaining some advantage for which the proceedings are not designed or some collateral advantage beyond what the law offers: Williams v Spautz (supra) at 526 - 527. The plaintiffs are using the procedure for the legitimate purpose of obtaining whatever information they can concerning the assets of these defendants. They are not using the procedure for any purpose other than that for which it is intended. There may be occasions when using every remedy permitted by law is so oppressive as to amount to an abuse of process. But this is not such a case. The plaintiffs are using the full armoury of the powers available to them because the procedures so far used have not been entirely successful.

23 In support of the applications, the plaintiffs point to the fact that the defendants have taken a number of steps to seek to frustrate Mr England as liquidator of SECL in the conduct of the examinations under the Corporations Law. Both Lander J and I have commented on the steps taken by the defendants. I have regard to those matters, not in the exercise of my discretion whether to make the order, but instead as illustrating some of the difficulties which the liquidator has faced in securing full information.

24 For these reasons, I will order that the defendants, Craig Bond, Delores Caboche and John Bond, swear affidavits concerning their assets.

25 The plaintiffs' claim for Mareva orders essentially concerns the development and sale of a large parcel of land for residential purposes at Carindale, a suburb of Brisbane and the proceeds the sale of land. For convenience, I will call the land "the Carindale land". Before examining the facts concerning the development of that land, the ownership of that land and the application of the proceeds of the sale of the land, I set out certain facts concerning the four respondents of this application who are not parties to the action.

26 Carindale is a company incorporated in Western Australia. Its present directors are John Bond and Delores Caboche. Until 2 August 1994 Craig Bond was a director of Carindale. Two shares only have been issued in Carindale. One is held by Craig Bond. The other is held by Mr Redmond. Mr Redmond holds his share on trust for Craig Bond. Craig Bond is therefore in a position to control Carindale. John Bond is the sole decision-maker in respect of the affairs of Carindale.

27 Fairoak is trustee of the Alpha Trust. It is common ground that the directors of Fairoak are John Bond and Ms Caboche. The Alpha Trust operates for the benefit of members of the family of Mr Alan Bond. Ms Caboche oversees the accounts and prepares the income tax return for Fairoak.

28 Topsfield is trustee for the JB Trading Trust as well as for the JB Investment Trust. The directors of Topsfield are at least John Bond and Ms Caboche. It is reasonable to infer that the JB Trading Trust and the JB Investment Trust are operated for the benefit of John Bond and his family.

29 Hastings Finance lends money which is ultimately received by members of the Bond family. The directors of Hastings Finance are John Bond and Ms Caboche. There is no direct evidence of the shareholders of Hastings Finance. In his affidavit Mr Mews said that Hastings Finance was the main operating company in the Bond family group and that shareholders were Argos Pty Ltd as trustee for the Jody Bond Investment Trust, Redriff Pty Ltd as trustee for the Eileen Bond Investment Trust, Topsfield Pty Ltd as trustee for the JB Investment Trust, Tambar Pty Ltd as trustee for the Craig Bond Investment Trust and, Nemrod Pty Ltd as trustee for the Susanne Bond Investment Trust. If those shareholdings are correct, it is readily apparent that Hastings Finance has been created for the purpose of providing monies to individual members of the Bond family. Tambar Pty Ltd, a defendant in this action, is controlled by Craig Bond.

30 John Bond is responsible for the management of Hastings Finance and the application of its income. Most of its income is lent to the trusts of members of the family of Alan Bond. John Bond decides to whom Hastings Finance will make the loans. The loans are then written off or forgiven. John Bond has the authority to decide which loans are irrecoverable. In the years ending 30 June 1996, 1997 and 1998, substantial loans totalling approximately $17.3 million have been made to entities associated with the Bond family. All but $1.2 million of these loans have been written off. As Ms Caboche admitted in the course of being examined, that is "a fairly extraordinary state of affairs". The income of Hastings Finance includes profits from the development and sale of the Carindale land. I set out those profits below.

31 Carindale purchased the land in November 1993 from Suncorp Insurance and Finance Ltd ("Suncorp") for the sum of $11,077,000. The amount of $2.7 million was to be paid by a deposit of $50,000 and a further payment on settlement of $2,650,000. Those amounts were advanced by a company called Cairvalley Pty Ltd. The balance of the purchase price was provided by vendor finance from Suncorp secured by mortgage. It was to be repaid by four annual instalments of about $2 million each. The loan has been repaid and the mortgage has been discharged. However, Carindale has borrowed further monies which are applied towards the development of the land. The monies have been borrowed from Suncorp Metway Ltd and the loan is secured by mortgage. Carindale is the registered proprietor of the land.

32 The Carindale land is being subdivided and sold for residential purposes. It is a large parcel of land and is being divided into about 500 residential allotments. The development has proceeded in stages. In June 1999 two stages remained to be completed. The development is being conducted by a joint venture called the Carindale Joint Venture. The members of the joint venture are Fairoak, Topsfield and Hastings Finance. Distribution of the income of the joint venture is discretionary. John Bond decides how and to whom the income is to be allocated. All of the profits of the Carindale Joint Venture have been paid to Hastings Finance, which has also borne losses. It appears that the joint venture commenced its operations in May 1995. There is a question whether a corporation incorporated in Texas in the United States of America and called Dampier Inc ("Dampier") was a member of the joint venture. I will return to that issue.

33 Mr John Bond is responsible for the management of the development of the land and of the operations of Carindale and of the Carindale Joint Venture. It seems that Craig Bond does not have any role in the development of the land or of the operations of Carindale or of the operations of the joint venture. According to Redmond, the net proceeds of the sale of each allotment are remitted to Carindale after payment of a pre-determined amount to the mortgagee of the land. The pre-determined amount is about 75 percent of the sale price of each allotment. On each occasion when an allotment is sold, Redmond arranges a partial discharge of the mortgage.

34 As at 30 June 1999, the value of the Carindale land, as assessed by the Valuer-General in Queensland, was $4,999,000. On 23 March 1999 Metway Business Bank, a division of Suncorp Metway Ltd entered into an agreement to lend a total of $5.1 million to Carindale. Of that sum, $4.5 million was to be applied as working capital for the development of the Carindale land. The balance was the remainder of the vendor finance to be repaid from the Stage 10 development of the Carindale land. The loan was guaranteed by John Bond, Topsfield in its own capacity, as well as in its capacity as trustee of both the JB Investment Trust and the JB Trading Trust. The credit approval request in relation to this loan is a document prepared by the lender. It includes an assessment of the loan. It shows that the profit to date on the land is some $5.3 million. The lender expects a substantial profit to be made in respect of the remaining two stages of the subdivision because most of the costs of the infrastructure of this development have already been paid. I am satisfied that the land yet to be subdivided is of substantial value and is likely to yield substantial profits, particularly as the greater part of the costs of the development have already been expended.

35 I now deal with the question whether Dampier was a member of the Carindale Joint Venture. The evidence concerning this issue comprises certain documents and evidence which the liquidator has obtained by means of examinations conducted pursuant to s 596A and s 596B of the Corporations Law or the statutory predecessors of those provisions. Mr Redmond swore an affidavit instead of being examined. The liquidator obtained orders for the examination in the United States of America of Mr Peter Philpott who is a lawyer practising in the State of Texas. Much of the following is based on the affidavit of Mr Redmond and the examination of Mr Philpott and the documents which each has produced.

36 In January 1995 Craig Bond instructed Philpott to incorporate two companies. They were Dampier, which was to be incorporated in Texas, and Stoneham International Investments Ltd ("Stoneham"), which was to be incorporated in the British Virgin Islands. It seems that Craig Bond also instructed Philpott that a person wished to invest money in land in Queensland and that the money was to be paid to Stoneham and then to Dampier and then to a bank account in Queensland. Dampier was incorporated in Texas on 13 January 1995. Stoneham was incorporated in the British Virgin Islands on 19 January 1995.

37 In January 1995, Mr Jurg Bollag informed Philpott that the sum of $US3.2 million was to be transferred to Stoneham. Mr Bollag is a person whom the plaintiffs allege has been very instrumental in assisting the defendants in this action in their allegedly wrongful dealings. It is alleged, among other things, that Bollag has arranged for payments of proceeds to Bond family interests. Philpott was also instructed by Bollag that that sum of $US3.2 million was to be transferred by Stoneham to Dampier and thence to Carindale.

38 On 31 January 1995 Philpott caused a bank account to be opened in the name of Stoneham with Barclays Bank at Tortola in the British Virgin Islands. On 8 February 1995 the sum of $US3,244,445.25 was paid into the account of Stoneham at Barclays Bank at Tortola.

39 In February 1995 Philpott instructed Barclays Bank to transfer the sum of $US3.2 million from Stoneham to Dampier at its account at Overton Bank and Trust at Fort Worth, Texas. On 27 February 1995 Barclays Bank transferred the sum of $US3,200,095 to Dampier's account at Overton Bank and Trust at Fort Worth, Texas. It seems that Philpott must have amended the request for the amount to be transferred from $US3.2 million to $US3,200,095.

40 On 28 February 1995 Dampier transferred $US3,182,000 to Redmond's trust account at the branch of the ANZ Bank at 324 Queen Street, Brisbane. The sum of $US3.182 million converted at the then prevailing rate of exchange to $A4.3 million.

41 According to Redmond, the sum of $A4.3 million was to be a loan from Dampier. He received instructions from John Bond concerning Dampier early in 1995. John Bond saw Redmond in Brisbane. He told him that a company called Dampier, which had incorporated in one of the United States of America, was interested in establishing a joint venture for the development of the Carindale land. He said that Dampier could be contacted through a Mr Peter Philpott in Fort Worth, Texas. Redmond says that he neither spoke to Philpott nor contacted him in any way. Although he now has no independent recollection of doing so, Redmond prepared a loan agreement between an unnamed lender and Carindale. It is reasonable to infer for the purpose of this application that the lender was Dampier. The loan agreement was not executed. John Bond informed Redmond that Dampier would pay $4.3 million into Redmond's trust account on 2 March 1995 and that that sum was to be paid in turn to Suncorp Metway in payment of the first instalment of the purchase price. On 2 March 1995, the sum of $4.3 million was deposited in Redmond's trust account. Redmond says that he had no other knowledge as to the source of the sum of $4.3 million.

42 On 16 June 1995 Philpott sent a letter to John Bond at Carindale at its office in Perth stating that the directors of Dampier had resolved to convert the loan into an investment in the joint venture and to forgive the accrued interest on the loan. There is a document purporting to prove that the resolution was made on 12 June 1995. This is consistent with Philpott's evidence that in May 1995, Craig Bond told him that the Carindale development was not going well and that it would not be possible to repay Dampier the money it had lent Carindale. It was decided to convert the loan to an investment in the joint venture to develop the land. Subsequently, Dampier agreed to forego its interest in the joint venture. Later, on a date which Redmond cannot recall, John Bond instructed Redmond to prepare a joint venture agreement between Fairoak, Topsfield and Hastings Finance. Dampier was not a member of the joint venture as John Bond had told Redmond that it was no longer to be a party.

43 On 2 July 1995 the sum of $4.3 million was paid into Redmond's trust account at the ANZ Bank at its branch at 324 Queens Street, Brisbane. On the instructions of John Bond, Redmond disbursed the sum of $4.3 million in the following manner:

(1) The sum of $2,103,030.30 was paid to Suncorp Metway being the first of three annual instalments in respect of the purchase by Carindale of the Carindale land.

(2) The sum of $2,096,569.70 was paid to Hastings Finance.

(3) The sum of $59,400 was paid to the Office of State Revenue for land tax in relation to the subdivision of the Carindale land.

(4) The sum of $31,000 was paid to W P Brown and Partners, Engineers engaged in relation to the Carindale land.

(5) The sum of $10,000 was paid as legal fees to Redmond.

The evidence suggests that the amount of $2,096,569.70 paid to Hastings has since been applied in payment of various outgoings on behalf of Mr Alan Bond and his family.

44 On 15 November 1995 Redmond received the sum of $798,667.71 into his trust account from an overseas source. He says that he now has no independent recollection of the receipt of those monies nor of the fact that on 21 November 1995 they were paid to Carindale. He believes his instructions could only have come from John Bond. This is the sum which, for the purposes of this application, the three defendants concede included some $300,000 received as payment for two paintings.

45 For the purpose of this application, I infer that it was never seriously intended that Dampier should either lend $4.3 million to the joint venture or that Dampier should invest in the joint venture. Instead, the statements concerning the purported loan and the purported investment were made to cloak a payment to Bond interests arranged by Bollag. The source of that monies is not established. For present purposes, it is sufficient to note that Carindale, a company controlled by Craig Bond, received the sum of $4.3 million, that Craig Bond instructed Philpott to incorporate two companies which were used to assist the transfer of those funds to Carindale, and that, of the sum of $4.3 million, just over $2.1 million was applied towards the purchase of the Carindale land.

(1) Carindale is a company controlled by Craig Bond and managed by John Bond.

(2) Carindale is the owner of the Carindale land.

(3) The Carindale land is being developed by the joint venture comprising Hastings Finance, Fairoak and Topsfield.

(4) Carindale makes the land available to the joint venture for development free of charge.

(5) Carindale borrows monies which are used by the joint venture as working capital. The loans are secured by mortgage over the Carindale land.

(6) When an allotment is about to be sold, Carindale transfers the relevant parcel to the purchaser and the mortgage is pro tanto discharged. Carindale does not receive any other payment for the land. It follows that Carindale makes no profit.

(7) The profits and losses of the joint venture in the years ending 30 June 1994 to 30 June 1999 are as follows:

(8) In the three years in which a profit was made, the whole of that profit was distributed to Hastings Finance. The losses in 1995 and 1998 have been debited to Hastings Finance.

(9) Hastings Finance has in the years 1995 to 1999 distributed its income to trusts which benefit members of the Bond family. That income has included the whole of the profits made by the joint venture in 1996, 1997 and 1999.

(10) Hastings Finance distribute its income by loans to the various trusts and those loans are subsequently written off. John Bond has discretion to decide to whom the loans should be made. In effect, the distribution is a gift, notwithstanding that it is made by a loan which is subsequently forgiven or written off. No matter how it may be characterised, the distribution represents a distribution of income to members of the family of Mr Alan Bond ("the Bond family") and is available to them to spend as they see fit.

Shortly stated, the Carindale land is used to generate profit in the hands of the joint venture and those profits are then distributed to members of the Bond family. As the distribution is by loans which are forgiven or written off, there is no reasonable likelihood that any of the income which has been distributed will be recovered.

(11) Each of the four companies involved, Carindale, Hastings Finance, Fairoak and Topsfield are controlled by members of the Bond family.

47 This exceptional remedy should not lightly be granted. I note that it is not the purpose of the jurisdiction to make a Mareva order to improve the position of the applicant to the property of an insolvent debtor or otherwise to circumvent the insolvency laws: Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 at 618. One circumstance in which a Mareva order may be made is where there is a danger of assets being disposed of so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied: Jackson v Sterling Industries Ltd (supra) at 623. The purpose is to prevent the abuse or frustration of the process of the court in relation to matters coming within its jurisdiction: Jackson v Sterling Industries Ltd (supra) at 623.

48 The Carindale land is still being sold. This creates a further reason to exercise caution to take care to see that no order is made which would be oppressive to the persons restrained either in the carrying on of a business or in everyday life: TSB Private Bank International SA v Chabra [1992] 1 WLR 231 at 241.

49 Carindale is an asset of Craig Bond which would be available to the plaintiffs, if successful, to satisfy the judgment debt. When purchased by Carindale, the Carindale land was ready, if not ripe, for development for residential purposes. Not only was that the intended purpose of Carindale in buying the land, but it has been proved by subsequent successful development of the land. Thus, although Carindale had borrowed to purchase the land and the balance sheet showed no equity, there was an unrealised development potential which would have added value to the land. The duty of John Bond and Ms Caboche as directors of Carindale was to take all steps to realise that development potential for Carindale. However, instead of realising that development potential for Carindale, they permitted Carindale to do two things. First, they permitted Carindale to make the land available to the joint venture for residential development for no fee or other reward. Secondly, they permitted the joint venture, which had no land or assets available to offer as security for borrowings, to use monies borrowed by Carindale for the purpose of the joint venture, again for no fee or reward.

50 Thus, instead of acting in the best interests of Carindale, John Bond and Ms Caboche as directors of Hastings Finance, Fairoak and Topsfield, have permitted the joint venture not only to retain the profits but have also decided that Carindale should not be paid any fee or other reward for the use of the Carindale land or the monies borrowed on the security of that land. Thus, instead of Carindale receiving the profit from the development and sale of its land, the profits are diverted to Hastings Finance of which John Bond and Ms Caboche are directors. John Bond then decides what loans to make to the various trusts for the benefit of the members of the Bond family and later, as a director of Hastings Finance, decides if the company will forgive or write off those loans. It is unnecessary to consider whether the decisions of John Bond as a director of Hastings Finance to forgive or write off those loans are decisions which are in the best interests of Hastings Finance. It is sufficient to note that the decisions render the profits of the joint venture irrecoverable. In other words, the only asset of Carindale is being dealt with by a consortium of companies controlled by members of the Bond family and managed and directed by John Bond and Ms Caboche and the profits which that land is capable of realising are being diverted from Carindale to members of the Bond family. This conclusion is entirely consistent with the affidavit evidence of Mr Mews, a chartered accountant who gave advice to the joint venture. He said that his instructions were that the Carindale land was to be regarded as an asset to be developed for the members of the Bond family.

51 There was a debate whether Carindale was the beneficial as well as the legal owner of the Carindale land. There is no document evidencing the terms of the joint venture. I note that

(1) Carindale is the registered proprietor of the Carindale land;

(2) there is no caveat protecting any equitable interest in the land;

(3) Redmond does not state that Carindale holds the land as trustee for the joint venture;

(4) in returns lodged with the Australian Securities Commission in 1994 and 1995, Carindale stated that the company did not act as trustee. The annual return of companies then included as question, "Does the company act as a trustee?". Carindale answered that question, "no";

(5) the accounts of the Carindale Joint Venture do not show it to be a trustee;

(6) Ms Caboche said in her evidence, when examined by the liquidator, that Carindale owns the land;

(7) in the annual financial statements of Carindale, the land is shown as an asset of Carindale;

(8) in its income tax returns, Carindale states that its business is land development.

I infer from those facts that Carindale has always been both the legal and beneficial owner of the land. In any event, I think it is unnecessary to resolve that question since it is quite clear that Carindale has made the land available to the joint venture in order that the joint venture may generate profits which are then distributed to Hastings Finance and then, in turn, to the Bond family.

52 The respondents to the application placed some reliance on the fact that only part of the purchase price of the Carindale land has been paid by monies held by Carindale, the balance being paid out of income derived from the development and sale of the land. That does not mean that the land is not an asset of Carindale. It must be noted that the money has been borrowed on the security of the Carindale land to provide working capital for the joint venture. Carindale would not be the first land developer to have used borrowed funds to develop land. But it must not be forgotten that a substantial part of the payment for the land was made by Carindale with monies it received through Redmond's trust account, monies which it seems were treated as belonging to Carindale. That payment was $2,103,030. More significantly, land which is an asset of Carindale is not being developed for its benefit but for the benefit of others.

53 This is a case where the court should be prepared to go behind the structure of this scheme and remove the corporate veil of the participating companies: cf. Coxton Pty Ltd v Milne (unreported, 20 December 1985, Court of Appeal NSW, Hope JA, Glass and Priestley JA concurring). The commercial reality is that the land held by Carindale has been developed and sold to provide income for members of the Bond family.

54 The orders sought will affect the persons who are not parties to proceedings, namely Carindale, Fairoak, Topsfield and Hastings Finance. The order will not affect the interests of Suncorp Metway as it is a secured creditor: Capital Camera Ltd v Harold Lines Ltd [1991] 1 WLR 54. Where the court is asked to make orders against parties to the proceedings, the focus of the relief is the frustration of the court's process. When the orders are sought against persons not party to the proceedings, the focus must be the administration of justice: Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 73 ALJR 657 at para 42. In my view, the interests of justice require this order to be made. In Cardile (supra) at para 57, the majority of the High Court held that an order may be made (emphasising the word "may") against persons not parties to proceedings in circumstances in which

"(i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including 'claims and expectancies', of the judgment debtor or potential judgment debtor; or

(ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor."

Both of these conditions are satisfied. Third parties are dealing with an asset of Carindale, not for the benefit of Carindale, but for the benefit of members of the Bond family. Secondly, if the plaintiffs are successful they will, as judgment creditors, be able to obtain orders which will enable them to wind up Carindale and gain access to its assets.

55 For these reasons, I am satisfied that the only asset of Carindale, its land and its development potential, is being dissipated by being made available to others to generate income in their hands. It is, therefore, appropriate to make a Mareva order. In reaching this conclusion, I have regard to the fact that a Mareva order is a drastic remedy which should not be granted lightly and its purpose is to preserve the status quo, not to change it in favour of the plaintiffs: Cardile v LED Builders Pty Ltd (supra) para 51.

56 The making of the order will not impair or restrict commerce in that it will not impair or restrict the capacity of the joint venture to continue to develop and sell the land. I do not accept the submission that, if a Mareva order was made, Carindale and the joint venture companies would have to walk away from the development. The development is well advanced. Essentially, all that remains is to sell the residential allotments. The order will be framed so as to enable those dealings to continue. All that will be restrained is the ultimate disposition of the profits. The order will not, therefore, impose a burden upon any of the respondents to this application, a conclusion confirmed by the fact that those same respondents offered to consent to a Mareva order up to the sum of $1 million upon the basis that net proceeds of future land sales of the Carindale land would be retained by Carindale. In this context, net proceeds of sale would be the proceeds of sale less any monies required to discharge any mortgages as well as any legal costs, commissions and disbursements associated with such sale. The order will preserve the status quo in that it enables the development to proceed and the profits to be realised. It will change the status quo only in that the profits will be retained pending the resolution of this action instead of being distributed to Hastings Finance and thence to members of the Bond family. The order will not cause damage because it will be framed in terms which will enable profits to be realised: cf. Cardile para 52.

57 I have regard to the fact that this application has been made a long time after the action had been instituted. Although the defendants were not served until May 1997, this application was made almost three years after service. The delay is in large part explained by the fact that Mr England, as liquidator of SECL, has been conducting examinations seeking to ascertain, among other things, what assets are held by the defendants and what has become of the works of art. The defendants, Craig Bond and Ms Caboche, have sought to prevent the examination. This has delayed the liquidator in obtaining information. In addition, there are inconsistencies between the evidence given by those who have been examined. More particularly, information concerning Carindale and the dealings in the Carindale land has been disclosed relatively recently. There is also the task of assimilating the information obtained at the examination and assessing its utility. The delay is therefore not entirely due to the plaintiffs and such delay as might lie at their door is not sufficient to cause me, in the exercise of my discretion, to refuse the orders sought.

58 The claim that the Mareva order has the potential to cause financial embarrassment is not supported by evidence. I am not therefore prepared to accede to it.

59 For these reasons, I will dismiss the application of the eighth defendant to strike out the plaintiffs' application as an abuse of process and will make orders restraining the distribution of the profits of the joint venture and requiring the three named defendants to swear affidavits as to their assets. I will hear counsel as to the terms of the order.