Australian Competition & Consumer Commision v Top Snack Foods Pty Ltd [1999] FCA 1618

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 There is currently in force a Mareva order against a non-party in this proceeding, namely Gatsios Holdings Pty Limited ("Gatsios"). 2 On 7 November 1997, the Court granted a Mareva order restraining Gatsios until determination of the proceedings or further order from dealing with certain of its assets. Some additions were made to this order on 16 December 1997. Following judgment on the substantive issues in this proceeding, four of the respondents (excluding Selina Manera) were ordered to pay to the applicant ("ACCC") an amount of $406,129.79. The Court also ordered the judgment debtors to pay the applicant's costs including any reserved costs. On 26 August 1999, the Court ordered that the existing orders continue against Gatsios until further order. 3 The ACCC now seeks a continuation of the Mareva orders against Gatsios. This is opposed by the respondents. 4 The respondents oppose the application on the ground that Gatsios is not a party to this proceeding. The sole director of Gatsios is Mr Anastasios Gatsios. He is a trustee of an entity known as the K N Trust, which has as its primary beneficiary Mr Dimitrios Kritharas. Mr Dimitrios Kritharas is not a party to the proceedings. Two of the three general beneficiaries of the K N Trust are the children of Mr Nicholas Kritharas, and a third is the Nick Kritharas Family Trust for which Nick Kritharas Holdings Pty Ltd ("N K Holdings") is the trustee. Mr Nicholas Kritharas is the third respondent and together with his wife controls N K Holdings, the sixth respondent. That company has a paid up capital of $100. 5 The respondents submit that no cause of action has been pleaded against Gatsios and therefore the injunction cannot be supported on the principles recently applied by the High Court in Cardile v LED Builders Pty Ltd (1999) 162 ALR 294. In that case the Court emphasised the need for caution in granting Mareva injunctions against third parties. The United States Supreme Court has recently held that the grant of such relief was not "historically unavailable from a Court of Equity": see Grupo Mexicano de Desarollo S.A v Alliance Bond Fund Inc (US Supreme Court, 17 June 1999). 6 The respondents claim that a concession was made by the applicant in its application for injunctive relief, for which reasons were published on 7 November 1997, that it was necessary for the applicant to amend its pleadings to spell out the precise cause of action against Gatsios. They submit therefore, that because no cause of action has been pleaded against Gatsios, the Mareva order should not be granted. 7 I do not accept the submission on this basis. The need for pleadings against Gatsios, discussed in the judgment of 7 November 1997, was in relation to an application by the ACCC to add Gatsios as a respondent to this proceeding. The Mareva relief however was granted against Gatsios and others on the basis of the history of the matter and the evidence before the Court, from which it was satisfied that there was a real danger that the assets of the respondents would be diminished or totally dissipated. 8 In accordance with the decision of the High Court in Cardile, the respondents admit that Gatsios holds or has a power of disposition over assets of the judgment debtor. They submit however that the accounts of the K N Trust in evidence demonstrate that it earned income from sources other than Top Snack Foods, which is the business name under which the infringing conduct was conducted. These independent sources of income are said to be unrelated to the activities of Top Snack Foods which led to the judgment debt. Accordingly, it is submitted that it is inappropriate in light of the High Court's decision in Cardile to continue the Mareva injunction. 9 As the corporate and trust arrangement is somewhat complex, I set out below a diagram which illustrates the relative corporate entities and trusts.