Electric Mobility Company Pty Ltd v Whiz Enterprises Pty Ltd [2006] NSWSC 580

New South Wales Supreme Court

CITATION : Electric Mobility Company Pty Ltd v Whiz Enterprises Pty Ltd [2006] NSWSC 580

HEARING DATE(S) : 11 and 12 May 2006

JUDGMENT DATE : 12 May 2006

JURISDICTION : Equity

JUDGMENT OF : Hamilton J

DECISION : Mareva relief refused.

CATCHWORDS : EQUITY [340] - Equitable remedies - Injunctions - Interlocutory injunctions - Injunctions to preserve property pending determination of rights - Mareva injunctions - Other matters - Nature of evidence required – Standard of proof.

Frigo v Culhaci [1998] NSWCA 17 CASES CITED : Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft GmbH [1984] 1 All ER 398 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319

Electric Mobility Company Pty Limited (P) PARTIES : Whiz Enterprises Pty Limited (D1) Steven Reginald Grayson (D2)

FILE NUMBER(S) : SC 2290/06

COUNSEL : M K Minehan (P) D R Pritchard & E C Muston (Ds)

SOLICITORS : McCabe Terrill (P) McLaughlins Solicitors (Ds)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

FRIDAY, 12 MAY 2006

2290/06 ELECTRIC MOBILITY COMPANY PTY LTD v WHIZ ENTERPRISES PTY LTD & ANOR JUDGMENT 1 HIS HONOUR: This is an application for Mareva relief. The proceedings arise from a failed dealership arrangement between the plaintiff and the defendant in respect of electric mobility carts imported from China by the plaintiff. The second defendant was the principal of the first defendant. The relationship has broken down. The plaintiff has sued the first defendant for damages for breach of contact and under the Trade Practices Act 1974 (Cth) ("the TPA"). The second defendant is sued in relation to the same matter by reason of an indemnity given by him in respect of the first defendant's liability under the contract and by reason of his alleged involvement in the misconduct under the TPA. 2 This application is against the second defendant only. It has not been seriously argued that the plaintiff has not established a prima facie cause of action against the second defendant. Similarly it is not really controverted that the plaintiff has demonstrated that there is potential for the quantum of damages being in six figures. 3 However, there has been serious controversy as to whether or not the plaintiff has established in the requisite way a sufficient danger of the disposal of assets to support Mareva relief at this stage. 4 What is generally regarded as the locus classicus in relation to the requirements for Mareva relief is the statement of Gleeson CJ (when Chief Justice of this Court) in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321 - 322. "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." 5 The requirement as to evidence to establish the threat to dispose of the assets was further discussed in the Court of Appeal in Frigo v Culhaci [1998] NSWCA 17. The Court (Mason P, Sheller JA and Sheppard AJA) said: "A plaintiff must establish, by evidence and not assertion, that there is a real danger that, by reason of the defendant absconding or removing assets out of the jurisdiction or disposing of assets within the jurisdiction, the plaintiff will not be able to have the judgment satisfied if successful in the proceedings. There has been much debate as to the precise degree of risk which must be shown: see generally Patterson . What is clear is that mere assertions that the defendant is likely to put assets beyond the plaintiffs reach will not be enough: Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [19 8411 All ER 398; Patterson .