Cole, Robert Molesworth Hobill as Liquidator of Ivas Holdings Pty Ltd v Bosiljevac, Michael & Ors [1996] FCA 219

CATCHWORDS PRACTICE - interlocutory injunction restraining operation of bank account - application to dissolve - attempt to relitigate merits of order granting injunction - appropriate remedy leave to appeal Corporations Law: ss 500(3), 588FF(1)(c) and 588FF(1)(d) A v Hayden (No. 1) (1985) 59 ALJR 1 Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170 Attorney General (Cth) v Davids Holdings Pty Ltd (No. 4) (1993) 15 ATPR 41-213 Regent Oil Co Ltd v J T Leavesley (Lichfield) Ltd [1966] 1 WLR 1210 Woods v Sheriff of Queensland (1895) QLJ 163 Robert Molesworth Hobill Cole as Liquidator of Ivas Holdings Pty Ltd v Michael Bosiljevac, Paul Lester and Lourdes Investments Pty Ltd (No. VG 3494 of 1995) Judge: Heerey J Date: 22 March 1996 Place: Melbourne

IN THE FEDERAL COURT OF AUSTRALIA) ) VICTORIA DISTRICT REGISTRY ) No. VG 3494 of 1995 ) GENERAL DIVISION ) B E T W E E N: ROBERT MOLESWORTH HOBILL COLE as Liquidator of IVAS HOLDINGS PTY LTD (in Liquidation) ACN 010 033 913) - and - IVAS HOLDINGS PTY LTD (in Liquidation) (ACN 010 033 913) Applicants - and - MICHAEL BOSILJEVAC PAUL LESTER, and LOURDES INVESTMENTS PTY LTD Respondents JUDGE: Heerey J DATE: 22 March 1996 PLACE: Melbourne MINUTE OF ORDERS The Court Orders that: 1. The respondents' notice of motion dated 2 November 1995 is dismissed. 2. The Respondents pay the applicants' costs of the notice of motion forthwith pursuant to O 62 r 3(2). 3. Within 14 days of 22 March 1996 the applicants file and serve a statement of claim and the respondents file and serve a defence within 14 days thereafter. 4. Directions hearing adjourned to 26 April 1996. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUSTRALIA) ) VICTORIA DISTRICT REGISTRY ) No. VG 3494 of 1995 ) GENERAL DIVISION ) B E T W E E N: ROBERT MOLESWORTH HOBILL COLE as Liquidator of IVAS HOLDINGS PTY LTD (in Liquidation) ACN 010 033 913) - and - IVAS HOLDINGS PTY LTD (in Liquidation) (ACN 010 033 913) Applicants - and - MICHAEL BOSILJEVAC PAUL LESTER, and LOURDES INVESTMENTS PTY LTD Respondents JUDGE: Heerey J DATE: 22 March 1996 PLACE: Melbourne REASONS FOR JUDGMENT On 15 March 1996 I ordered that the respondents' notice of motion dated 2 November 1995 be dismissed with costs. I briefly explained the reasons for that order and said that more detailed reasons would be published subsequently. Those reasons now follow. The first applicant was on 2 May 1995 appointed liquidator of the second applicant Ivas Holdings Pty Ltd (the company) upon a resolution of creditors of the company. On 1 September 1995 the liquidator filed an application seeking a declaration that all moneys standing in the account at the Westpac Banking Corporation Ltd, 22 Malop Street, Geelong branch, in the names of the respondents was the property of the company. At that stage the respondents were Mr Michael Bosiljevac and Mr Paul Lester. The first respondent was the son-in-law of the previous directors of the company and the second respondent had been its general manager. The application went on to seek orders under ss 500(3), 588FF(1)(c) and 588FF(1)(d) of the Corporations Law requiring the proceeds of the account to be paid to the company or to the liquidator. On the same day counsel on behalf of the liquidator obtained ex parte from Sundberg J an injunction restraining the respondents from dealing with funds in the account. By the time the order was made the liquidator had become aware of the number of the account and the identity of the holder, although only in terms of its Australian company number. A company identified by that number was joined as a respondent. It subsequently emerged that the company's name was Lourdes Investments Pty Ltd. The affidavit material placed before Sundberg J indicated that the company was previously the registered proprietor of some 18 properties, being either subdivisional land or buildings, and that the company had been the trustee of a trust and in November 1994 had purported to resign and relinquish its position as trustee of the trust and to appoint in its place a company called Monacraft Pty Ltd. The liquidator's investigations revealed a deficiency in the company of approximately $1.5 million. Between November 1994 and March 1995 substantial sums had been paid to the former directors of the company, to their son and to a company called Limid Pty Ltd, the directors of which were the son and daughter of the directors of the company. At the hearing before Sundberg J a fax was tendered from the Westpac branch at Malop Street advising that the account in question had been opened on 16 March 1995 and that between that date and 4 April 1995 cash deposits totalling $139,320 had been deposited, and that on 8 August 1995 a cheque for $94,210.51 had been deposited. The fax confirmed that: ... we have received instructions to close account, with principal due to collect current balance in cash. The injunction granted by Sundberg J's order was due to expire at 4.00 pm on Tuesday 5 September 1995. On the morning of 5 September application was made before Jenkinson J to continue the injunction. The liquidator and respondents were both represented by counsel. The respondents did not file any affidavits. No application for adjournment was made. Neither of the counsel appearing before me appeared on that occasion, but it appears from the record of listing that the matter proceeded for about 10 minutes, was stood down for a little over an hour, and then resumed for 20 minutes whereupon his Honour pronounced orders. Those orders on their face are not stated to be by consent, but I infer from the circumstances that they were at least not opposed. His Honour made a number of procedural directions, including directions that each respondent file by 2 October a notice setting forth the grounds for opposition to the applicants' claims and any affidavit on which it was sought to rely at trial and that the applicants file any affidavits in reply by 14 October. Liberty to apply was reserved. Upon the applicants giving the usual undertaking as to damages an injunction was granted restraining each respondent (which by this time included the account holder Lourdes Investment Pty Ltd) from dealing with funds in the Westpac account. Although the order is not explicitly stated to be until the trial of the action, there can be no doubt that in substance it was, and was understood to be, an interlocutory injunction pending trial. On 20 October the respondents filed notice of grounds of opposition and affidavits by five deponents. Those affidavits mounted a detailed case that funds in the account were not the property of the company. They would appear to be affidavits for trial pursuant to Jenkinson J's directions. On 2 November the respondents filed the notice of motion which is now before me. By para 1 that motion sought an order that The order for an injunction contained in paragraph 10 of orders made by the Honourable Justice Jenkinson on 5 September 1995 be discharged. The reference is to that part of Jenkinson J's orders which granted the injunction. In argument before me counsel for the respondents in support of the motion sought to advance a number of arguments as to why the sections of the Corporations Law referred to in the initiating application were not applicable. He argued that the affidavit material now filed by the respondents showed that "there was no foundation in law" and "no proper legal basis" for the injunction. He said that it "should not be on the record of this Court". There is no doubt that an interlocutory injunction may be dissolved or varied. In Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170 at 178 Gibbs CJ, Aickin, Wilson and Brennan JJ said: A Court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust. I do not think the jurisdiction to dissolve or vary injunctions is limited to specific categories of factual circumstances as a literal reading of Halsbury (4th edition) vol 24 par 1112 might indicate. Amongst other things, it might be appropriate to dissolve an injunction if it subsequently emerged from an appellate decision that a view of the law on which the injunction was granted was wrong: Regent Oil Co Ltd v J T Leavesley (Lichfield) Ltd [1966] 1 WLR 1210. In A v Hayden (No. 1) (1985) 59 ALJR 1 at 3 Dawson J said: It is quite clear that if the circumstances have changed since the injunctions were granted and the undertakings were given so that their enforcement would be unjust to the defendants, I should exercise the power which I have to make a further order eliminating the injustice, if necessary dissolving the injunctions and releasing the second defendant from its undertaking. After citing Adam P Brown his Honour went on to say: I am not, in my view confined in the exercise of my discretion to the application of those principles which govern the granting of interlocutory relief in the first instance. In particular, it does not automatically follow that the plaintiffs should be deprived of the relief which they have merely because it would not have been granted if the defendants had maintained their opposition to it. But however wide be the discretion to dissolve or vary an interlocutory injunction, it does not in my opinion extend to an application which in substance seeks to relitigate the merits of the order granting the injunction. If the complaint in substance is that the injunction should not have been granted at all, or should have been granted on different terms, the only appropriate remedy is an application for leave to appeal. The distinction appears from what was said by Griffith J in Woods v Sheriff of Queensland (1895) QLJ 163 at 165, cited by Spender J in Attorney General (Cth) v Davids Holdings Pty Ltd (No. 4) (1993) 15 ATPR 41-213 at 40,922. Griffith J said: An application for such relief against an interlocutory order is not in the nature of an appeal or rehearing; each of these [ie appeal or rehearing] is founded on the contention that the order appealed from ought not to have been made. An application for a new order which has the effect of suspending in whole or in part the operation of a previous order starts with the assumption that the order was rightly made. There is therefore no question of reversing or varying or rehearing the original decision or order. It follows that the application for relief from it need not be made to the Court or judge by whom the original order was made but may be made to any judge who can exercise the jurisdiction of the Court, although it would ordinarily be made to the same Court or judge ... If it should turn out that the application is based upon the assumption that the order, the operation of which it is desired to modify, was wrongly made, it must fail. The only question is whether the party applying is entitled under the altered circumstances to be relieved from the operation of the order. Spender J went on to say: It is clear that I am in no way sitting as some form of review of the circumstances before Gummow J [who had granted the earlier injunction].