Developers Group (Qld) Pty Ltd v James & Ors [2004] QDC 431

DISTRICT COURT OF QUEENSLAND CITATION: Developers Group (Qld) Pty Ltd v James & Ors [2004] QDC 431 PARTIES: DEVELOPERS GROUP (QLD) PTY LTD ACN 065994176 (Plaintiff) v TERRENCE ROBERT JAMES (1st Defendant) AND KINLAKE PTY LTD ACN 010822652 (2nd Defendant) AND ROBERT HEDLEY SLOGGETT (3rd Defendant) AND ONEWORLD SEMINARS PTY LTD ACN 060 701 644 (4th Defendant) AND JACK WAVERS (ALSO KNOWN AS MUHUMMED ALENADAAF) (5th Defendant) AND DENISE ALENADAAF (6th Defendant) AND GOLDNOTE PTY LTD ACN 095768022 (7th Defendant) FILE NO/S: 2763/04 DIVISION: Civil PROCEEDING: Application -- 1 of 11 -- 2 ORIGINATING COURT: District Court Brisbane DELIVERED ON: 29th October 2004 DELIVERED AT: Brisbane HEARING DATE: 22nd October 2004 JUDGE: Forde DCJ ORDER: Upon the Applicant by it counsel giving the usual undertaking as to damages, it is ordered that: 1. Until further order, the sixth defendant be restrained from further encumbering or disposing of any of her real property to a limit of $173,115.00 plus interest from 5th August 2003 at the rate of 10% per annum, which real property includes the following: (a) Lot 29 on Registered Plan 215188, County of Ward, Parish of Gilston, having Title Reference 7117179; (b) Lot 63 on Registered Plan 224344, County of Ward, Parish of Gilston, having Title Reference 17288057; (c) Lot 16 on Survey Plan 157841, County of Ward, Parish of Nerang, having Title Reference 50452083; (d) Lot 21 on Survey Plan 157841, County of Ward, Parish of Nerang, having Title Reference 50452088 without first giving the Plaintiff 14 days’ written notice of her intention to do so with particulars of the proposed encumbrance or disposal. 2. Until further order , the seventh defendant be restrained from further encumbering or disposing of its real property (including the property situated at 11 Laurel Oak Drive, Robina) to a limit of $173, 115.00 plus interest from 5th August 2003 at the rate of 10% per annum, without first giving the Plaintiff 14 days’ written notice of its intention to do so with the particulars of the proposed encumbrance or disposal. 3.That the costs of and incidental to this application be costs in the cause. 4. Liberty to apply. CATCHWORDS: MAREVA INJUNCTION – Requirements – Risk of disposal of assets – Jurisdiction – Trade Practices Act – District Court Act Cardile v Led Builders Pty Ltd (1999) 73 ALJR 657. -- 2 of 11 -- 3 Henjo Investments Pty Ltd v Collins (1988) 79 ALR 83. Mareva Compania Naviera SA v International Bulkcarriers SA (The Mareva) [1975] 2 Lloyd’s Rep 509, C.A. Northcorp Limited v Allman Properties (Aust) Pty Ltd (1994) 2 Qd. R 405. Patterson v BTR /engineering (Aust) Ltd (1989) 18 NSWLR 319. Re Raybould [1900] 1 Ch. 199. Startune Pty Ltd Ultratune Systems (Aust) Pty Ltd [1991] 1 Qd R 192. Taco Co. of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177. Nimenia Maritime Corporation v Trave Schiffahrtsgesellschaft m.b.H. UND CO. K.G. [1983] 1 WLR 1412. Trautwein v Richardson [1946] ALR 129. District Court Act 1967 (Qld) ss 68 & 69. Trade Practices Act 1974 (Cth) s 52. COUNSEL: Mr D Tucker for the Applicant/Plaintiff Mr S Cousins for the Respondents/Sixth and Seventh Defendants SOLICITORS: Tucker & Cowen Solicitors Canning Craymer Lawyers Introduction [1] This application for a mareva injunction1 concerns only the plaintiff (“the “applicant”) and the sixth and seventh defendants (the “respondents”). The applicant caused to be developed and constructed an apartment on land situated at 82-83 Mein Street, Scarborough, known as “Tranquil Quays”. At all material times the applicant was the registered proprietor of units 2 and 5 at “Tranquil Quays”. The seventh defendant was nominated as the purchaser of Units 2 and 5. It was intended that part of the purchase price be in EBanc trade dollars (30% of the -- 3 of 11 -- 4 purchase price on each unit). The component of the purchase price in EBanc dollars was $92,085.00 and $81,030.00 respectively on units 2 and 5. [2] Prior to entering into the sale of the said units, the fourth, fifth, sixth and seventh defendants represented to the applicant that EBanc trade dollars “would be readily and easily convertible on a dollar for dollar basis”. The applicant was represented by Michael Foster and Phillip Carlson. It is alleged that the sixth defendant acted on her own behalf and on behalf of the seventh defendant. The sixth defendant was the sole director of the seventh defendant. [3] The sales were completed upon payment of the said EBanc trade dollars and the cash balance and the seventh defendant became the registered proprietor of the said units. The applicant alleged that contrary to the said representations, the EBanc trade dollars were not easily convertible on a dollar for dollar basis into assets that would be suitable for the applicant’s business. It sues for damages for misleading and deceptive conduct (s.52 Trade Practices Act 1974) and negligent misstatement. Nature of the application [4] The original application related to Units 2 and 5. An interim order was made on 20 October 2004.The interim order restrained the respondents from further encumbering or disposing of their real property or assets to a limit of $173,115.00 without giving notice to the plaintiff to do so. Counsel for the respondents indicated that units 2 and 5 had been sold. The order required the respondents to pay the net proceeds of sale of units 2 and 5 into court pending the trial. A further hearing 1 Mareva Compania Naviera SA v International Bulkcarriers SA (The Mareva) [1975] 2 Lloys’s Rep 509, C.A. -- 4 of 11 -- 5 occurred on 22 October. Affidavit material filed by the sixth defendant on that hearing deposed to the following: a. The first move to sell units 2 and 5 occurred in late July 2004. b. The first time that the sixth defendant became aware of the application for injunctive relief was on 28 August 2004 when she was served. c. The sixth defendant says that she has not taken steps to sell the properties in order to attempt to frustrate any judgment which may be made in favour of the plaintiff. d. Contracts for sale for units 2 and 5 were entered into on 26 and 27 August 2004. These were arms length transactions according to the sixth defendant. e. Settlement took place on 4 and 8 October for units 2 and 5 respectively. The proceeds of sale were distributed as set out in her affidavit. The sixth defendant received a cheque in the sum of $29,229.63 plus 54,750.00 Bartercard trade dollars for unit 2. For unit 5 she received a cheque for $39,000.99 plus 53,600 EBanc trade dollars. [5] In view of the dissipation of the proceeds, the application was varied to include other property owned by the sixth defendant. The seventh defendant had sold units 2 and 5 and a substantial part of the proceeds had been used to pay debts. As at the date of the first hearing on 20 October, the seventh defendant was still the registered proprietor of both units. Obviously, the necessary documentation to give effect to the settlements was not recorded. [6] By way of a further interim order pending judgment, the respondents were restrained from encumbering or disposing their real property and assets up to the -- 5 of 11 -- 6 limit of $173,115.00 plus interest. For the sixth defendant this included some five properties and for the seventh defendant it included 11 Laurel Oak Drive, Robina. [7] Since that order was made, the parties have presented a consent order in relation to the payment into court of the proceeds of sale of Lot 17 on Survey Plan 157841 which is referred to in the order made on 22 October. In effect, in the future once one of the properties is to be sold an order will have to be made by the court to allow payment in up to the limit of $173,115 plus interest from 5 August 2003 at the rate of 10% per annum. Since the respondents have had notice of this application, three properties have been sold. The net proceeds from the first two have been dissipated. The net proceeds of Lot 17 are by consent to be paid into court. Jurisdiction [8] In view of the increased number of properties, the question of jurisdiction was raised with the parties. There was no evidence of the most recent valuation of each property. The arguments of the applicant have convinced me that there is jurisdiction: a) S.68 of the District Court Act allows the court to hear and determine all personal actions where the amount to be recovered does not exceed the monetary limit. The amount involved in the present case is $173,115.00. The valuation of all of the property which may be affected by the order is unknown. The applicant argues that the claim is not in respect of land and so the unimproved value is not relevant. The application for the injunction is merely ancillary to the claim for damages, the latter being within the jurisdiction. -- 6 of 11 -- 7 b. S.69(2) allows the court to grant an injunction “in any proceedings in which jurisdiction is conferred under this part” which includes s.68. This gives the court jurisdiction.2 [9] It is also relevant that the order sought does not seek to tie up all of the assets of the respondents. It is limited to the amount claimed. It will therefore create “minimum disturbance” and is in accord with the proper approach.3 It is accepted that there is jurisdiction to entertain this application. Requirements for a mareva injunction (Rule 260 UCPR) “cause of action” [10] It is only necessary for the applicant to establish that it has an existing or prospective cause of action. The representation, if made, is capable of being misleading and deceptive.4 It is not necessary to determine on this application that in fact EBanc trade dollars could not easily be converted. The pleading alleges that the EBanc trade dollars cannot be converted by the applicant for any worthwhile consideration. The facts sworn to by Mr. Foster5 are sufficient to establish a “good arguable case” or a “prima facie case”.6 2 Startune Pty Ltd Ultratune Systems (Aust) Pty Ltd [1991] 1 Qd R 192 at 197 per McPherson J. with whom de Jersey J. and Lee J. agreed. 3 Cardile v Led Builders Pty Ltd (1999) 73 ALJR 657 at 683-4 para.124. 4 Taco Co. of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 at 183; Henjo Investments Pty Ltd v Collins (1988) 79 ALR 83 at 92-93. 5 Para 19 of the Affidavit filed 14th of October 2004. -- 7 of 11 -- 8 “assets of the respondents within the jurisdiction” [11] It is clear that the respondents have assets in Queensland. Some have been sold. The sixth defendant has some four properties still registered in her name. The seventh defendant has one at Robina. The sixth respondent says that the Robina property is held by the seventh defendant as trustee but not as trustee for The Iron Trust. A transfer and trust deed was tendered by the applicant.7 It shows that the seventh defendant holds the Robina property being lot 92 on Survey Plan 126906 as trustee for Oneworld Trust. The principal of the trust is the sixth defendant. The beneficiaries include the fifth defendant, her husband. The fourth defendant is Oneworld Seminars Pty Ltd. If the property is to be subject to a mareva injunction and a third party with no interest in these proceedings is affected, the sixth respondent can apply and place proper material before the court and have the order varied. She did not do so when she had the opportunity. It was suggested in the written submissions of the respondents that there was no evidence as to the beneficiary or beneficiaries of The Iron Trust and how they would be affected. There was an inconsistency between the submissions8 and the sworn material as to the beneficiaries of any trust.9 The latter referred to some other trust. [12] A trustee is personally liable for his tortious acts as trustee.10 A trust imposes on the beneficiary a personal obligation to indemnify the trustee against liabilities incurred in the course of his acting as trustee.11 The liability of the various defendants in the 6 Ninemia Maritime Coporation v Trave Schiffahrtsgesellschaft m.b.H, UND CO. K.G.; Patterson v BTR /engineering (Aust) Ltd (1989) 18 NSWLR 319 at 326 referred to in Northcorp Limited v Allman Properties (Aust) Pty Ltd (1994) 2 Qd. R 405 at 407. 7 Exhibit 3. 8 Exhibit 2. 9 para. 10 affidavit of Denise Alenaddaf sworn 20 October 2004. 10 Re Raybould [1900] 1 Ch. 199. 11 Trautwein v Richardson [1946] ALR 129 at 134-135. -- 8 of 11 -- 9 present case is unknown at the present time. The sixth defendant on behalf of the seventh defendant as trustee for The Iron Trust, has executed contracts for sale for units 2 and 5. Until the seventh defendant’s position as trustee is clarified, the conduct of the sixth defendant to date warrants a limited restraining order on the dissipation of any further assets of the seventh defendant. “a real risk of removal or disposal of assets” [13] Of some concern in the present case is that Lot 17 on Survey Plan 157841 has been sold. It was one of the properties registered in the name of the sixth defendant. No mention was made in the affidavit of the sixth defendant sworn on 20 October that there was a contract for sale. Settlement occurred on 27 October 2004. That sale is consistent with the sixth defendant attempting to avoid meeting her legal obligations to satisfy any judgment against her. It was certainly a failure to be candid with the court. In relation to units 2 and 5, the proceeds were dissipated even though the sixth respondent was aware of the application pending. The net proceeds belonged to the seventh defendant but the sixth defendant failed to explain why and in what manner she disposed of any cash received on the settlement. [14] It is contended by the respondents that there is no evidence as to the asset position of the other defendants and their ability to meet a judgment. The applicant is entitled to seek judgment against any defendant. This would apply even if they were held to be jointly liable. [15] Undertakings were sought by the applicant and refused by the respondents. The conduct of the sixth respondent and her lack of candour leads to a finding that there is a danger of dissipation of assets by the respondents likely to prevent recovery of a -- 9 of 11 -- 10 judgment in the action.12 A limited order is made in this case to restrict the sale of the properties without notice to the applicant. It is accepted by counsel for the respondents that if an order is to be made to restrain the respondents that that type of order would be more practical even though it may mean further applications to the court. It would also provide some supervision of the action pending a trial. It would be more convenient to the court if such applications were made before me and liberty to apply will be given to do so. [16] There is no evidence as to any assets apart from the real property. If the properties are sold the monies can be paid into court up to the limit sought. An order which binds other assets (the existence of which is uncertain) is too wide. The applicant’s position can be protected by the notice provision relating to proven assets namely the real property. The question of the need for legal or living expenses can be raised later if necessary. [17] The applicant sought to lead evidence of proceedings by ASIC against the fourth defendant. I do not see that it is relevant at this point and have not relied upon it in deciding the issues on this application. Orders Upon the Applicant by it counsel giving the usual undertaking as to damages, it is ordered that: 1. Until further order, the sixth defendant be restrained from further encumbering or disposing of any of her real property to a limit of $173,115.00 plus interest from 5th August 2003 at the rate of 10% per annum, which real property includes the following: (a) Lot 29 on Registered Plan 215188, County of Ward, Parish of Gilston, having Title Reference 7117179; (b) Lot 63 on Registered Plan 224344, County of Ward, Parish of Gilston, having Title Reference 17288057; (c) Lot 16 on Survey Plan 157841, County of Ward, Parish of Nerang, having Title Reference 50452083; 12 Northcorp Limited op. cit. at 407. -- 10 of 11 -- 11 (d) Lot 21 on Survey Plan 157841, County of Ward, Parish of Nerang, having Title Reference 50452088 without first giving the Plaintiff 14 days’ written notice of her intention to do so with particulars of the proposed encumbrance or disposal. 2. Until further order , the seventh defendant be restrained from further encumbering or disposing of its real property (including the property situated at 11 Laurel Oak Drive, Robina) to a limit of $173, 115.00 plus interest from 5th August 2003 at the rate of 10% per annum, without first giving the Plaintiff 14 days’ written notice of its intention to do so with the particulars of the proposed encumbrance or disposal. 3. That the costs of and incidental to this application be costs in the cause. 4. Liberty to apply. -- 11 of 11 --