New South Wales Supreme Court CITATION : Burwood Project Management Pty Ltd (ACN 082 712 409) v Polar Technologies International Pty Ltd (ACN 060 576 025) & Ors [1999] NSWSC 982 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 3693/99 HEARING DATE(S) : 6 - 7 September 1999 JUDGMENT DATE : 7 September 1999 Burwood Project Management Pty Ltd (ACN 082 712 409) (Plaintiff) Polar Technologies International Pty Ltd (ACN 060 576 025) (First Defendant) Noel Arthur Kneale (Second Defendant) PARTIES : John William (aka Jack) Graham (Third Defendant) Janis Richard Neimanis (Fourth Defendant) Illawarra Catholic Club Limited (ACN 000 361 660) (Fifth Defendant) David Blyth Pty Ltd (ACN 002 019 730) Sixth Defendant) Kevin Manson Pty Ltd (Seventh Defendant) JUDGMENT OF : Hamilton J MB Evans (Plaintiff) COUNSEL : JE Armfield (First, Second, Third & Fourth Defendants) N/A (Fifth to Seventh Defendants) George Loupos & Associates (Plaintiff) SOLICITORS : Nesci & Romano (First, Second, Third & Fourth Defendants) N/A (Fifth to Seventh Defendants) CATCHWORDS : EQUITY [378] - Equitable Remedies - Injunctions - Practice and Procedure - Other Matters - Costs - Interlocutory injunction - No order as to costs. DECISION : No order as to costs. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J TUESDAY, 7 SEPTEMBER 1999 3693/99 BURWOOD PROJECT MANAGEMENT PTY LTD (ACN 082 712 409) v POLAR TECHNOLOGIES INTERNATIONAL PTY LTD (ACN 060 576 025) & ORS JUDGMENT HIS HONOUR: 1 The fifth defendant in this matter granted to the first defendant an option to purchase land in West Botany Street, Rockdale by a deed of option dated 8 June 1999. Under the deed, for the grant of the option it paid a consideration of $100,000. The option was to be exercised by 31 July 1999. The deposit payable under the contract which would come into existence on exercise of the option was $250,000 and, on exercise, the first defendant was to top up the $100,000 already paid as the option fee by a further $150,000 to constitute the $250,000 deposit under the contract. There certainly was some move to exercise the option at the material time. There is a dispute between the parties as to whether the contract ever came into existence. Certainly the first defendant, which was apparently unable to provide the additional $150,000 itself, bargained with the plaintiff for the plaintiff to provide the $150,000 and ultimately to take the benefit of the contract. Whatever did or did not occur as to the effectuation of the contract, the plaintiff paid to the fifth defendant the sum of $150,000 for the purpose indicated above. Subsequently, the first defendant and the fifth defendant settled the controversies between them by means of a deed dated 13 August 1999. They take the stance that there is no contract in force and, there is no doubt that, pursuant to that deed, the $150,000 was refunded by the fifth defendant to the first defendant. The plaintiff claims that the money should now be paid to a stakeholder to abide the result of the proceedings. o0o 2 Yesterday I granted an injunction ex parte restraining the first, second, third and fourth defendants (''the defendants'') from dealing with that sum of $150,000. The matter returned to Court today, Mr Armfield of counsel appearing for the defendants. He says that although the money refunded by the fifth defendant to the first defendant has not been placed into the solicitors' trust account, it is held by the solicitors in the form of a cheque which has not been negotiated. The plaintiff now seeks that those moneys be paid into Court to abide the further order of the Court. The defendants' counsel has cooperated in settling a proposed form of order to achieve that end, but has informed the Court that he does not have instructions to consent to the order. However, he offers no opposition to the making of the order in the form so agreed and that order will be made. The usual undertaking as to damages is given to the Court by Mr M B Evans of counsel on behalf of the plaintiff. Upon that undertaking, there will be an order in accordance with the short minutes of order initialled by me and placed with the papers. 3 Now that the substantive matter has been disposed of, Mr Armfield, of counsel for the defendants, says that the defendants ought have their costs of the motion for the Mareva injunction on the basis that no proper requirement was made by the plaintiff of the defendants to account for the whereabouts of the moneys or to give an undertaking in relation to them before ex parte relief was sought. Mr M B Evans, of counsel for the plaintiff, says that the plaintiff should have its costs of the motion including the ex parte application, or at least the usual order, that the costs be the plaintiff's costs in the proceedings. 4 I have now heard argument concerning the costs. By about 20 August 1999, it would seem that the plaintiff was possessed of knowledge of the refund of the $150,000 being made. Mr Armfield says that whilst various other matters concerning the litigation were passing between the parties in late August and early September this year, the question of the whereabouts of the refunded $150,000 or any fear that it might be being dealt with in an untoward way, was not raised by the plaintiff with the defendants. However, in a letter written by the plaintiff's solicitors to the defendants' solicitors on 2 September 1999, the plaintiff enquired as follows: "Please also confirm whether your firm holds our client's $150,000. If you do, please indicate if you are entitled to hold the amount in your trust account pending the outcome of the hearing." In a letter dated 3 September 1999 the defendants' solicitors replied: "We are instructed that in so far as the $150,000 is concerned, this sum is not to be held in trust pending the outcome of the hearing." On the same day the plaintiff's solicitor again wrote: "We note you have not answered our question, do you hold the $150,000 belonging to your client in your trust account? Please respond to this question as a matter of urgency." The defendants' solicitor replied by a further letter of the same date which is as follows: "We refer to your letter dated 2 September 1999 and advise we do not hold the $150,000 in our trust account". Without further warning to or requirement of the defendants, the plaintiff moved the Court yesterday for relief of a Mareva nature and an order was made ex parte up to and including today forbidding the disposal by the first defendant of the $150,000. 5 Concerning the correspondence, Mr Armfield says that his clients were asked simple questions to which they gave direct answers, that those answers were not sufficient to raise alarm, particularly in a situation where there had been a course of dealings between the parties up to that point, and certainly not sufficient to justify the peremptory application for a Mareva injunction without notice. It is now stated by Mr Armfield and it is not in doubt that, whilst the $150,000 was not his solicitor's trust account, it was, at all material times, in the form of the cheque by which it had been refunded by the fifth defendant to the first defendant, inside the file of the solicitor for the defendants. 6 I am unable to agree with Mr Armfield that there was nothing in the defendants' conduct to raise apprehension on the part of the plaintiff. It is true that the questions asked on behalf of the plaintiff may have been better asked. Mr Armfield says that it simply was not understood what was meant or sought by the questions, but I must say that I should have thought that their fairly plain meaning to a recipient was that the plaintiff was concerned as to the whereabouts of the money. Whilst it may be said that a wider question should have been asked, it would have been very easy for the defendants' solicitor to reply that the cheque was not in his trust account but being held in his file; to give a reassurance that it was not intended to be disbursed by the clients; and enquiring what the agreed regime pending the hearing of the proceedings might be. It was at all times quite easy to come to an agreement concerning an interlocutory arrangement, as demonstrated by the course which has been adopted today to hold the funds pending the hearing of the proceedings. Mr Armfield also draws attention to the fact that relief was obtained against all four of his clients, whereas in his submission what evidence there was related only to the first defendant into whose possession it was shown that the $150,000 had come. However, the second, third and fourth defendants are directors of the first defendant and appear in the proceedings by the same solicitors and counsel as the first defendant. 7 In those circumstances I am certainly not inclined to order costs in the defendants' favour. Particularly in the case of Mareva relief, once a plaintiff has a real apprehension that a fund may be being dealt with in an inappropriate way, then it is not surprising if that plaintiff applies without further notice for relief to ensure that the fund is held, without giving a warning which would enable defendants who did have improper intentions in relation to the money to effectuate those intentions before an order could be obtained from the Court. I should add that, in the event, there is no evidence that there was any such intention on the part of any of Mr Armfield's clients. Nonetheless, in my view the course of action taken by the plaintiff was not at all unreasonable and I certainly do not propose to order costs against it. 8 Mr Evans presses me for costs in favour of the successful plaintiff in the usual course. However, bearing in mind that it turns out that on the evidence the funds were not under actual threat at any time and that the plaintiff's own questions were limited in scope, were not entirely clear and may have led to misunderstanding, I think that the appropriate course in all the circumstances is that there should be no order as to the costs of the ex parte application or the motion today for the continuation of relief. …oOo… Last Modified: 10/01/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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