JFT CONSTRUCTIONS PTY LTD v WELLS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY JA 8 April 1994 [1994] NSWCA 156 Mahoney JA MOTION This application comes before the Court this afternoon at 4.15pm. It is an application ex-parte in the sense that an endeavour has been made to serve the respondent, the defendant, but that effort has been unsuccessful. Mr Martin, for the company, the claimant and/or plaintiff, seeks relief in the absence of the defendant. The relief sought arises in the following circumstances: I take the facts from what has been told to me by Mr Martin on the basis of material which has been placed before Giles J on a previous application. It is said that the defendant Kerry Lucardu Wells, was an employee of JFT Constructions Pty Ltd. It is said that over a period of time from August 1993 until April 1994 he committed frauds upon the company and that it is believed that an amount of some $300,000 has been wrongly obtained from the company by Mr Wells. The company, it is said, became suspicious of untoward happenings somewhere about 24 or 25 March last. On 6 April 1994, Mr Wells was arrested in the course, or in the context, of an attempt to commit a further fraud. He has been charged with various frauds and is held in custody pending the matters being dealt with. I am told he was granted bail in the sum of $10,000 cash, but that that cash has not yet been lodged and he is at present in Long Bay Gaol. It is said that he has had previous convictions, or a conviction, for fraud. There is no evidence as to where the money, which it is said that he has obtained, now is. The only evidence of an asset available to be executed upon, if the money were to be repaid by him, is a home of which he is a co-owner at Baulkham Hills. The property, it is said, is subject to a mortgage with the State Bank of New South Wales. In these circumstances an application was made to his Honour Giles J sitting, I assume, in the Commercial Division, for a Mareva-type injunction to restrain Mr Wells dealing with his property. It is not necessary to recite the full details of the relief that was sought. His Honour, on 8 April 1994, heard the matter ex-parte and, I am informed, refused the application. I have before me a note of the reasons which his Honour gave for refusing the application. The basis of the application is, or at least one of the bases is, that there was no sufficient demonstration that the defendant was likely to dispose of assets for the purpose or to the effect of defeating the company's claim against him or that there was any relevant danger established. I am paraphrasing inadequately the notes of the judgment which are attached to the affidavit of Louise Annette Clegg of 8 April 1994 which have been placed before me. 2 UNREPORTED JUDGMENTS An application has been filed seeking leave to appeal against his Honour's, as it was, interlocutory order. That application has, I believe, been filed and is to be brought on short notice before this Court the Court of Appeal, on Monday next. Application will then be made for leave to appeal against that judgment against the judgment of Giles J. The application made to me this afternoon is to grant a Mareva-type injunction up to and including the determination of that application for leave to appeal. No doubt when that application comes on and if it is successful, further relief, in the nature of an injunction, will be sought. The question that faces me is twofold: whether there is before the Court sufficient evidence of a danger that the defendant will dispose of his assets so as to defeat the Court process - I am paraphrasing, no doubt again inadequately and inaccurately, the principles of law in this regard; and, secondly, whether, in the circumstances of the refusal by the judge to grant the injunction, I should myself grant an injunction in the meantime to the effect of that which the learned judge refused to grant. Ihave considered the matter as it has been put to me by Mr Martin. Mr Martin has referred me to material which was before the learned judge and, in addition, to the affidavit of Miss Clegg of 8 April 1994. In the exigencies of the matter, I have not had the opportunity to read in detail the material that was placed before the judge. It was, to say the least, voluminous. It runs into a large number of pages of material. Mr Martin has summarised the material for the purposes of this application and, of course, I accept his summary of the material as a matter of fact. I will use that summary, the matter he has given me from the bar table, to deal with the application. Iam conscious of the possibility that a fraudster, who has been found out and notwithstanding that he has been arrested, may desire to dispose of his assets so that if and when he is released from custody he will be able to have the advantage of them. In saying this, I do not prejudge the matter of his innocence or guilt but I will assume, on the basis of what has been put to me, that he is guilty. However, with the learned judge, I am not satisfied that there is sufficient evidence of a danger of the relevant kind in that regard. Mr Wells is in gaol. The only suggestion made as to how he could dispose of the property was based upon conjecture and in saying that I an not criticising the way Mr Martin has put it, but Iam summarising it. The money is now somewhere. It is submitted that it could be dealt with by Mr Wells, that he has ability to do this by, for example, obtaining the co- operation of his wife or some other person and that between now and Monday he will do it. These at least are the hypotheses involved and, no doubt, there may be others. I appreciate that it is not necessary to establish, for example, a probability of dealing with property so as to defeat the Court process in the sense to which I have referred. But there must, I think, at least be a sufficient danger - and I paraphrase the judge's words - in order that the power of the Court be exercised. To grant an injunction of this kind is a serious matter. I appreciate the context of fraud in which it is now sought and I have accepted that this is not a case in which an apparently honest man's property is being affected. But, as I said during argument, it is not sufficient for the grant of this kind of injunction to conclude merely that It will not do any harm'. There must, I think be something to indicate some degree of danger that the defendant will dispose of his assets in a way which should be restrained. With the learned judge, I am not satisfied that that has been shown. URJ JFT CONSTRUCTIONS PTY LTD v WELLS (Mahoney JA) 3 Reference has been made to the fact that on or about 24 or 25 March 1994. Mr Wells asked a co-employee of the company to obtain for him an application form from the National Australia Bank with a view, it is said, to refinancing his housing loan. I presume it is meant by this that the loan which was obtained from the State Bank of New South Wales would be repaid with money obtained from the National Australia Bank. Whether this could be done, what the amount of the loan to the State Bank is, and how and when it would be done, have not been referred to in evidence, at least in the matter which has been placed before me. Nothing has been done to put the National Bank on notice as to the dangers involved, or presented here, and perhaps that can be done in the interim. But nothing has been suggested to indicate that anything further has been done in that regard. In all the circumstances, I am not satisfied that a case has been made out for a Mareva injunction. In addition to this, I am asked to exercise what is in effect this Court's own jurisdiction to restrain action which the judge refused to restrain, pending an application, not on appeal, but by way of leave to appeal. In my opinion, an appropriately strong case must be made out for the exercise of that jurisdiction. I am simply not satisfied that that kind of case is made out. In all the circumstances I would refuse the application. I would add this: what I have said does not, of course, pre-empt the decision of any judge of the Court before whom the matter comes on Monday next. It may be that the Court hearing the leave application, and particularly if the leave application is granted, may take a view of the matter which is different from mine. It may be that events may occur in the meantime, or evidence can be presented in the meantime, which would warrant a different view. Secondly, if there has been any indication between now and Monday morning when the matter comes before the Court of a change in the position then, of course, it would be open to the applicant to make an application to me or to any other judge of the Court for relief. I do not by this mean to invite an application over the weekend unless there is real and substantial reason for it, but I indicate that if there was an appropriate case for it, the Court will, of course, be available to deal with the matter. The order I make is merely that the application before me is dismissed; the application made to me is refused. I do not dismiss the motion and, of course, I do not dismiss the summons for leave. These are matters which, no doubt, will be dealt with before the Court on Monday next.