Parsram v Australian Foods [2001] NSWSC 436

New South Wales Supreme Court

CITATION : Parsram v Australian Foods [2001] NSWSC 436 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 2498/01 HEARING DATE(S) : 15/05/01 JUDGMENT DATE : 15 May 2001

PARTIES : Parsram Brothers (Australia) Pty Ltd - Plaintiff Australian Foods Company Pty Ltd - Defendant JUDGMENT OF : Barrett J

COUNSEL : Mr R.J. Horsley - Plaintiff Ms R. Sofroniou - Defendant SOLICITORS : Jones King Lawyers - Plaintiff Norton White - Defendant CATCHWORDS : EQUITY - Mareva orders - Whether assets in danger of dissipation - Meaning of "out of the jurisdiction" in modern Australia Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 Patterson v BTR Engineering Australia Ltd (1989) 18 NSWLR 319 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 CASES CITED : Wise v Icons Worldwide Marketing Pty Ltd [2000] FCA 1800 Woodvale Nominees Pty Ltd v Western Australia Real Estate Investments Ltd [2000] WASCA 189 Aquasun Pty Ltd v Coverdale Ram Pty Ltd [2000] NSWSC 1146 John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36 DECISION : Mareva orders dissolved

6 THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

TUESDAY 15 MAY 2001

2498/01 - PARSRAM BROTHERS (AUSTRALIA) PTY LTD v AUSTRALIAN FOODS COMPANY PTY LTD JUDGMENT

HIS HONOUR: 1 The plaintiff seeks the extension of certain Mareva orders which were made ex parte by Young CJ in Eq on 7 May 2001. The orders relate to funds to the extent of $54,580 held on behalf of the defendant by a firm of Sydney solicitors. The defendant opposes extension of the orders. 2 The capacity in which the plaintiff asserts a claim to have the orders continued is that of a creditor of the defendant who has been successful in an arbitration of a contractual dispute between them. The arbitration took place under the auspices of the National Agricultural Commodities Marketing Association (NACMA). There is in evidence correspondence between NACMA and the defendant about the present state of the arbitration. NACMA says that the arbitrators have found in favour of the plaintiff in the absence of a response or rebuttal by the defendant. However, the detailed award has not yet been determined. NACMA has informed the defendant that it has the right of appeal against the award when issued, should it wish to take advantage of that right. 3 The information from NACMA about the arbitration proceedings thus indicates a prima facie outcome in favour of the plaintiff. 4 The plaintiff then points to evidence of matters which it says should enliven suspicion or concern sufficient to justify orders protecting the property of the defendant from dissipation. Those matters mainly involve legal proceedings against the defendant in courts of Western Australia, where the defendant's operations are centred. In one matter judgment was entered against the defendant and the judgment debt was paid only after execution had been levied. In other Western Australian proceedings, various parties make claims against the defendant and the defendant has filed defences. The present plaintiff says that the defences are to an extent misconceived or unmeritorious, but while I can see from the aspects that have been pointed out to me that the defences are not perhaps as well formulated as they might be, I am in no position to come to any view about the merits or otherwise of those defences. 5 Turning to the basis for the grant of relief in a case such as this, I begin with the statement of Brennan CJ and McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 that the Mareva order: "exists not to create additional rights but to enable a court to protect its process from abuse in relation to the enforcement of its orders. It is neither a species of anticipatory execution, nor does it give a form of security for any judgment which may ultimately be awarded." 6 To that I would add the observation of Gleeson CJ in this Court in Patterson v BTR Engineering Australia Ltd (1989) 18 NSWLR 319, that the remedy is discretionary: "...but it has been held that in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant and, secondly, a danger that by reason of the defendant's absconding or of assets being removed out of the jurisdiction, or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied." 7 The foundation of the jurisdiction in apprehension of dissipation of assets is underlined in subsequent decisions, not the least of them, of course, the decision of the High Court in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 where it is emphasised that frustration of the processes of the court is the central matter with which the jurisdiction is concerned. 8 In the same vein, I have picked at random two subsequent dicta which illustrate the overriding importance of the concept of dissipation or disappearance of assets. In Wise v Icons Worldwide Marketing Pty Ltd [2000] FCA 1800, Goldberg J observed that he was not satisfied that the party concerned was seeking to put his assets out of the reach of any potential creditor. In Woodvale Nominees Pty Ltd v Western Australia Real Estate Investments Ltd [2000] WASCA 189, a decision of the Full Court of Western Australia, Wallwork J said there had not been sufficient evidence to enable the trial Judge to infer that the relevant party was likely to defeat the ends of justice by dissipating the relevant monies. 9 A useful commentary appears in the judgment of Bryson J of this Division in Aquasun Pty Ltd v Coverdale Ram Pty Ltd [2000] NSWSC 1146. His Honour said: "The facts in evidence reveal no conduct on the part of the defendants which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments, or of being intended to do so, or of being in any way evasive indicating dishonesty, or otherwise indicating actually or potentially that the assets of the company have been or will be dealt with in an irregular way. I should not assume that the directors would behave irresponsibly or dishonestly unless some substantial ground for fearing that they may do so has been shown." 10 That is the position in which I find myself in this matter. The evidence before me would justify a finding that the plaintiff is prima facie a creditor of the defendant as a result of the almost completed arbitration proceedings, but I do not consider that it enables me to conclude that the defendant will dissipate this particular asset or seek to put it beyond the reach of its creditors by somehow spiriting it away. 11 In this connection, I should make particular reference to the fact that, as I understood the case put by Mr Horsley of counsel for the plaintiff, significance was attached to the fact that the funds held for the defendant by the Sydney solicitors will probably be sent to Western Australia where the defendant is based. While that possibility or likelihood involves, in one narrow literal sense, what Gleeson CJ in Patterson's case described as a danger "of assets being removed out of the jurisdiction", I do not accept that movement of assets from one State of Australia to another is of itself intended to be within that description. 12 The words "out of the jurisdiction" in this formulation must be given a meaning consistent with the realities of modern Australia. For a century now, the customs posts which once stood on either side of our internal borders have been deserted and the Constitution has guaranteed full recognition in one State of the laws and judicial proceedings of another. Commonwealth laws facilitate the service and execution of process throughout the country. Increasingly, we live under one common law of Australia which causes rules of private international law to have modified operation within the federation: John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36. 13 Given the relative ease with which residents of different States may commence and prosecute legal proceedings against one another and given also the emphasis, particularly in Cardile v LED Builders Pty Ltd, upon frustration of the processes of the Court as the basis for Mareva relief, an apprehension of movement of assets from one part of Australia to another simply cannot be sufficient to justify the grant of such relief. 14 Ms Sofroniou, counsel for the defendant, submitted that continuation of the Mareva orders in this case would in reality amount to conferring upon the plaintiff an advantage in the nature of security or anticipatory execution. I agree. When the situation is viewed from the perspective of the defendant's creditors generally, the funds concerned are not in the kind of jeopardy Mareva orders are intended to counteract. 15 The plaintiff has not made out a case for continuing the relief that was obtained ex parte, and I now dissolve the orders made by Young CJ in Eq when the matter was last before the Court. The plaintiff will pay the defendant's costs. ******