Supreme Court New South Wales Medium Neutral Citation: Abignano Nominees Pty Limited v Altius Pty Limited (No 2) [2017] NSWSC 1493 Hearing dates: 26 October 2017 Date of orders: 26 October 2017 Decision date: 26 October 2017 Jurisdiction: Common Law Before: Campbell J Decision: (1) Pursuant to r 25.14 Uniform Civil Procedure Rules 2005 (NSW), and upon the plaintiffs by their Counsel giving the usual undertaking as to damages, order that: (a) The defendant, and its sole director, Mr Paul Peterkin, not further encumber the property known as "Pasadena", located at 1585 Pittwater Road, Church Point, NSW (being Lot 142 in deposited plan 752046) (the "Property") without 7 days' written notice to the plaintiff's solicitor. (b) The defendant, and its sole director, Mr Paul Peterkin, not pay or cause to be paid the proceeds of any sale, compulsory acquisition, or any other disposal of the Property, or any part thereof, up to the amount of $951,444.10, without 7 days' written notice to the plaintiffs' solicitor. (c) In the case of a sale of the Property, the defendant is to provide the plaintiffs with 7 days' notice in writing to the plaintiffs' solicitor of an intention to enter into a contract for the sale of the Property. (d) In the case of the Property being acquired compulsorily, the defendant is to provide the plaintiffs with written notice within 7 days of receiving any formal notification that the Property is to be compulsorily acquired. (2) The plaintiffs are to file and serve an amended statement of claim by 23 November 2017. (3) The defendant is to file and serve a defence to the amended statement of claim by 21 December 2017. (4) The matter be listed for directions before the Registrar on 5 February 2018. (5) Liberty to restore on 3 days' notice. (6) The costs of the parties be costs in the cause. Catchwords: CIVIL PROCEDURE – Interim preservation – Freezing orders – Requirements to be met before order made –whether there is a good arguable case – whether there is a danger of judgment not being satisfied – where the balance of convenience lies Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Abignano Nominees Pty Limited v Altius Pty Limited [2017] NSWSC 1452 Category: Procedural and other rulings Parties: Abignano Nominees Pty Limited (Applicant) Altius Pty Limited (Respondent) Representation: Counsel: Mr D Neggo (Plaintiff ); R Weaver (Defendant) Solicitors: M&K Lawyers Group (Applicant) File Number(s): 2017/320112 Publication restriction: Nil EX TEMPORE Judgment (REVISED) 1. The plaintiff seeks a freezing order of a limited kind under r 25.14 Uniform Civil Procedure Rules 2005 (NSW). The proceedings were commenced by statement of claim on 23 October 2017 and relate to what are alleged to be loans advanced to the defendant by a number of entities between 1 February 2013 and 12 May 2016. The total amount involved is around about $950,000. The statement of claim is propounded in the form of a series of common money counts, and the time for the defendant to file a defence has yet to expire. 2. I made orders on Tuesday, 24 October 2017, for short service of the application for the order (see [2017] NSWSC 1452), and the matter has been argued before me today by Mr Neggo of Counsel for the plaintiff and Mr Weaver of Counsel for the defendant. 3. Essentially there are three matters which inform the exercise of the Court's discretion to make the orders sought. Without glossing the rule, the first consideration is whether there is a good arguable case. The second consideration is whether there is a danger that judgment for the plaintiff would be unsatisfied because the property of the defendant will be dissipated. The third matter relates to general discretionary considerations which might be referred to, and often is, as the balance of convenience. 4. It is concerning the first matter, that is, the arguable case that the closest contest was engaged. Without doing any injustice I hope to the detailed arguments of the parties, the plaintiff and the defendant have been involved over a number of years in property development together. The plaintiffs are companies associated with Mr Biagio Abignano, and the defendant is a company associated with Mr Paul Peterkin. 5. Another development in which the parties were involved resulted in litigation in the Equity Division, which is still unresolved inasmuch as the question of an account has been referred out, and I am informed that the referee's report is expected soon. 6. This litigation relates to a development of a site which may be referred to as "Pasadena on Pittwater". The development was originally conceived as a joint venture. Both learned Counsel have succinctly and efficiently taken me through the various contractual documents relating to that joint venture. Effectively, the plaintiff's case is that the monies advanced, which it characterises as loans, were to the Peterkin parties for the acquisition of the Pasadena property. It is said that, on the proper construction of the contractual documentation, such advances are excluded from the contributions it was otherwise required to make under the joint venture agreement, which consists of more than one complex document. I am putting it very broadly. 7. A particular issue is that the Abignano interests extracted themselves from the joint venture by agreement with the Peterkin interests by way of the performance of a put and call option agreement originally dated 14 March 2016. Under the terms of that agreement the Peterkin interests bought out the Abignano interests for a purchase price of $2,600,000, subject to certain adjustments I need not go into. It was a term of that agreement that the parties were to do all things necessary to terminate by mutual agreement the joint venture agreement entered into on 3 May 2012. 8. Although I am putting this very generally for present purposes, it is the defendant's argument that any entitlement to reimbursement which may have subsisted prior to the performance of that put and call option agreement merged in the completion of that agreement. Alternatively, the defendant says that on its proper construction - and I was taken through various aspects of the documentation, as I have said - the advances, if they be such, were matters which the Abignano interests were required to contribute under the joint venture agreement and were not extraneous to it. 9. The argument of the plaintiff, if I may put it this way, is that because there was the sole obligation of the Peterkin interests to acquire the property, any funds utilised to purchase the property were outside the terms of the joint venture agreement. It puts its case this way: originally the Peterkin interests borrowed the money from a party which it is unnecessary to name to purchase the property; that loan was repaid when a mortgage from a bank was taken out. The Abignano parties say that the advances the subject of the statement of claim were used to discharge the mortgage. Even though those advances are later in time than the actual acquisition of the property by the Peterkin interests, the Abignano parties say that given that the funds were used to discharge loans necessary for the acquisition of the property by the Peterkin interests, the monies advanced by them to discharge the mortgages retain the character of separate loans for the acquisition of the property. 10. All of this is a little difficult to set out in detail because of the form of the pleading. Whatever order I make today, doubtless it will be necessary to direct at some stage, given the nature of the dispute, that the facts ought to be pleaded. But I press on. 11. Mr Weaver submits that in assessing whether there is a good arguable case, I should bear in mind not only the arguments he has advanced in relation to the proper construction of the various contracts made between the parties over the years, but also that this claim was never advanced before 23 October 2017 notwithstanding the other litigation in the Equity Division concerning the other development, and notwithstanding the detailed provisions of the put and call option agreement. 12. In deciding whether a party has a good arguable case, it is of course not possible to set down any hard and fast criteria. The decision has to be made at the very outset of the litigation on the basis of limited and imperfect materials and, as in this case, often on the run by a duty judge dealing with an interlocutory application. The plaintiff does not have to show that it will more probably than not be successful, but it does need to show that there are materials available from the evidence brought in support of the application which demonstrate that the case is capable of being made good at the final hearing; that is to say, that I can be satisfied that there will be evidence available at the hearing which, if accepted, is capable of persuading a judge of the plaintiff's case. 13. The commercial relations between the Abignano interests and the Peterkin interests are complex. Although one cannot forecast with confidence the outcome of this litigation, it does seem to me that, notwithstanding the force of the arguments put against it, the case has been shown to have sufficient prospects of success to satisfy the imprecise test of good arguable case, and I am so satisfied. 14. I move on to the second consideration as to whether there is any real risk of dissipation. It was drawn to my attention that in relation to the other litigation, there was a dispute about an undertaking which the Peterkin interests had given to the Court, requiring notice to be given to the Abignano interests if certain property was to be sold. There had been a dispute between the parties about the meaning of that undertaking. There was no argument put to me that the undertaking had been breached. It was accepted for the purpose of the application before me that the interpretation of the undertaking adopted by the Peterkin interests was available to it. In those circumstances, I propose to put those considerations arising out of the sale of that property entirely to one side for the purpose of making this decision. 15. It is not put that I should find that the Peterkin interests might engage in any sharp practice in relation to the property the subject of this application. Indeed, Mr Neggo submits that it is unnecessary for him to go that far. He submits that it is sufficient that he persuades me that the risks involved, even in the absence of any demonstrable positive intention to frustrate a judgment, are such that the order is in the interests of justice. The circumstances he points to include the indisputable consideration that so far as the defendant is concerned, the Pasadena property, of which it is the registered proprietor, is the only demonstrable property it holds. Although I have referred to the Peterkin interests in giving these reasons, it is necessary to focus upon the position of the named defendant, Altius Pty Ltd, even though it is a company controlled by the Peterkin interests. 16. The other factor is that there is evidence that the property may well be sold or compulsorily acquired by government interests. There are a number of press reports in evidence which demonstrate that the Northern Beaches Council, the local government authority, wishes to acquire the property to further its redevelopment of the Church Point waterfront on Pittwater. Now, certainly those same press reports do indicate that the Peterkin interests have asserted that they are not interested in parting with the property but are interested in developing it. Although the development has lain dormant for some years, they have recently acquired a Crown lease to adjoining property, which they say makes the development more attractive. Moreover, they have received advice that notwithstanding the rejection of a more recent development application, they can proceed on the basis of an approval that was given in the 1960s. 17. Now, it is not possible for me to know whether those bullish statements attributed to the Peterkin interests are no more than a negotiating stance adopted vis-à-vis the Council for the purpose of upping the ante in relation to what might be offered. Given that the development has lain dormant for some years, there is at least a very real chance that those comments do fall into that category. It seems to me that there is a real risk that the defendant will be separated from its only asset by the temptation of an attractive offer from or on behalf of the local government authority. It is also apparent - and I think I can infer this - that the Peterkin interests are professional developers. As Mr Weaver pointed out in the course of his argument, property is their stock and trade and the viability of the business model depends upon - my expression, not his - turning over property. It is quite clear that if there was no restraint then the Peterkin interests, if the property is sold, will be able to redirect the money out of the defendant and into other entities for use in the general development enterprise of the group. 18. Now, it is implicit in the arguments that you cannot sell real estate overnight, and if there is to be a sale to government, it is hardly likely to happen in secret, given that there is significant local interest in the prospect of the property being returned to public hands. 19. This brings me to the question of the balance of convenience. Mr Neggo emphasised that four of the orders sought under r 25.14 UCPR are of limited scope: effectively, it is merely a requirement that the Peterkin interests, in general terms, not further deal with the property by way of encumbrance or sale or by engaging in negotiations relating to compulsory acquisition without giving prior written notice of seven days to the plaintiff's solicitor. It is also sought that if indeed there is a sale or compulsory acquisition, the sum of $951,000 be quarantined from the proceeds of sale at least until notice is given to the plaintiff's solicitor. It is common ground that the property is likely to be worth some millions of dollars and that the amount sought to be quarantined is relatively modest and not such, in the argument of the plaintiff, as to unreasonably entrench upon the Peterkins' legitimate interests in carrying on their enterprise as a property developer. 20. Mr Weaver, on the other hand, points to a number of matters. He emphasises what he submits is the relative weakness of the substantive claim. He emphasises the value of the property. He relies upon the relative delay in bringing forward this claim and points out that according to the public statements to which I have referred, the Peterkin interests have commenced work on the property and are unlikely to seek to sell it until development is complete. I take it to be implicit in those submissions that if there was to be any sale or proposed acquisition of the property, it would happen in the full glare of publicity, giving the plaintiff plenty of time to move the Court for relief at that time. There is force in those arguments. Naturally, however, mortgaging the property falls into a different category and that would most likely occur as a private transaction without any publicity or it otherwise coming to the attention of the plaintiff. 21. Although it might be said that the competing interests of the parties are finely, if not evenly, balanced, it seems to me that, given that the real gravamen of the orders sought in this case is the requirement that seven days' written notice be given to the plaintiff's solicitors of certain events which are reasonably within contemplation, no great hardship is really imposed upon the Peterkin interests by making the orders sought. Naturally, the Court should be appropriately slow to put restraints upon the capacity of members of the community to deal with their own property. But, given what I have said, I think there is no great restraint imposed upon the Peterkin interests by the orders proposed, and I am satisfied that the balance of convenience favours making the orders sought. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 November 2017