FEDERAL COURT OF AUSTRALIA

Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2012] FCA 746

THE COURT ORDERS THAT:

1.    The Interlocutory Application filed by the applicant on 4 July 2012 be dismissed.

2.    The applicant pay the second and fourth respondents’ costs of and incidental to that Application as taxed or agreed.

3.    In the event that the amount of the said costs is not agreed within fourteen (14) days of today’s date, the said costs may be taxed forthwith thereafter.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction

1    Late in the afternoon of Tuesday last (3 July 2012), the applicant’s solicitor approached my Associate and requested that I relist this matter urgently so that the applicant could make an application for Mareva injunctive relief (now called “Freezing Orders” under the Federal Court Rules 2011: As to which see Pt 7, Div 7.4 of those Rules).

2    In order to accommodate that request, I listed the applicant’s Interlocutory Application at 2.15 pm today and made appropriate orders for the filing of that Interlocutory Application and the evidence in support and for the service of that material upon the second and fourth respondents, who are the only remaining active respondents in the proceeding.

3    By that Interlocutory Application, the applicant claims orders that:

1.    Service of this Interlocutory Application be dispensed with.

2.    The Second Respondent be restrained from dealing with, or disposing of, any of its assets other than in the normal course of business.

3.    The Fourth Respondent pay into Court the net proceeds of the sale (after real estate agent and conveyancing fees and discharge of Westpac mortgage No. 545814 (Dealing No. 1597915) of the property known as 9 Punch Place, Monash contained in Vol 1226 Folio 3 in the Australian Capital Territory.

4.    The Fourth Respondent file and serve an affidavit setting out his assets and liabilities, on or before 4.00 pm on 5 July 2012.

5.    The Second Respondent file and serve an affidavit setting out its assets and liabilities, and a statement of its financial position, on or before 4.00 pm on 4 July 2012.

6.    The second and fourth respondents pay the applicant’s costs of this application.

4    The applicant also claims any further or other orders that the Court considers appropriate.

5    At the hearing today, the applicant provided to the Court draft Orders in the format required by Form 35 of the Federal Court Forms. The substance of the relief remained the same.

The Applicant’s Claims for Final Relief

6    In the proceeding, the applicant claims against the second and fourth respondents declaratory relief and, at its election, either compensation or an account of profits, based upon the following causes of action:

(a)    Breach of fiduciary duty;

(b)    Breach of an equitable duty of confidence; and

(c)    Infringement of copyright.

It also sues for damages for breach of contract.

7    In very brief terms, the applicant alleges that the fourth respondent, who was formerly employed by the applicant in a relatively senior position, used that position and the opportunities it afforded to him, both while employed by the applicant and after his employment had ceased, to take for the benefit of the second respondent and himself a number of existing and potential clients of the applicant and several business opportunities which the applicant contends properly should have been exploited by it. The applicant also contends that the second and fourth respondents infringed the applicant’s copyright in certain teaching materials.

8    It is not necessary to say very much about these claims. It is sufficient to record that, when due regard is paid to the evidence tendered at the liability hearing held in June 2012, the applicant has established a prima facie case for some relief sufficient to support appropriate freezing orders if the intervention by the Court was otherwise warranted.

9    The final hearing of the first part of the proceeding dealing with liability only was heard by me on 12, 13, 14, 15 and 28 June 2012 (the liability hearing). The liability hearing was concluded on 28 June 2012, at which time I reserved my decision. Thus, the applicant is, at the moment, a prospective judgment creditor but one whose case on liability has been fully ventilated.

10    As I have indicated, the question of what (if any) pecuniary relief might be granted to the applicant has been deferred to a second stage for determination in the future. There was, however, in the evidence before me at the liability hearing some evidence of some financial loss. As I recall that material, there were instances of fees allegedly being diverted from the applicant to the second respondent, the quantum of which has not been articulated with any precision for the purposes of the present hearing, although my recollection is that it would be no more than approximately $20,000. In addition, there was material suggesting that one of the valuable contracts secured by the second respondent from Defence Signals Directorate, a client of the applicant and also of the second respondent, had a gross value in excess of $300,000. That contract was a contract which the applicant contends should have come to it. Apart from those matters, there was no evidence before me in support of the applicant’s Interlocutory Application as to what the likely quantum of the applicant’s claim will be, assuming in its favour that it is ultimately successful in the case.

The Relevant Facts

11    The catalyst for the present application was some recent internet browsing or searching carried out by Ms Bayley, who is a director of the applicant. As a result of that activity, Ms Bayley discovered that the fourth respondent and his wife had advertised their family home for sale. That home is at 9 Punch Place, Monash, ACT (the Monash property). On the evidence before me, the Monash property was put on the market by no later than 3 May 2012. The asking price for the property, according to the advertisements tendered in evidence in support of the present Interlocutory Application, was $679,000.

12    When she discovered that the Monash property was on the market, Ms Bayley immediately contacted her solicitor and instructed him to write to the lawyers for the second and fourth respondents, seeking certain undertakings.

13    By letter dated 29 June 2012 sent to the lawyers for the second and fourth respondents, the applicant’s solicitors sought an undertaking that the fourth respondent would not proceed with the sale of the Monash property (which I take to be an undertaking that he would withdraw the property from sale) and that, if he declined to provide such an undertaking, the applicant would apply to the Court for orders that:

1.    The fourth respondent be restrained from taking any steps in relation to the sale of the property situate at 9 Punch Place Monash aka Block 36 Section 38 Monash;

2.    Alternatively, the Fourth respondent pay into court the net proceeds of any sale of the property;

3.    Such further or other order; and

4.    Costs.

14    I pause to observe that the Monash property is owned by the fourth respondent and his wife as joint tenants. The evidence discloses also that, until very recently, the Monash property has been the family home of the fourth respondent, his wife and their children.

15    The demand made by the lawyers for the applicant on 29 June 2012 was promptly answered by the lawyers for the second and fourth respondents by letter sent on the same day (29 June 2012). Those lawyers confirmed that the Monash property was on the market and that it was jointly owned by the fourth respondent and his wife. The letter also disclosed that the fourth respondent was now living in a rented property in East Fremantle, Western Australia. The letter went on to state that it was anticipated that the wife of the fourth respondent and his children would move to Western Australia in the near future and resume living with him.

16    The letter went on to point out to the lawyers for the applicant that the fourth respondent and his wife were having difficulty meeting the mortgage payments on the Monash property and that they had minimal equity in the property. The author of the letter observed that it would not be in anyone’s interests for the proposed sale of the property to be prevented by orders of the nature sought by the applicant. The author of the letter ended the letter by giving an inter partes undertaking to the applicant that the fourth respondent and his wife would not enter into any contract for sale of the Monash property at any time over the weekend, 30 June 2012 to 1 July 2012.

17    Later the same day (29 June 2012), the lawyers for the applicant sent a further letter to the lawyers for the second and fourth respondents. In that letter, after complaining that the second and fourth respondents should have informed the Court of the fact that he had moved to Western Australia (a doubtful proposition in my view), the author went on to demand that the second and fourth respondents provide details of their financial position as a matter of urgency. In addition, in that letter, the author stated:

We will require your client (along with Stacey Huckstep) to provide an undertaking to not enter into any contract for sale of the 9 Punch Place, Monash property for a period of 7 days from today. That will allow sufficient time for you to provide our office with the financial details of your client referred to above, by no later than 4.00 pm on Tuesday, 3 July 2012, and for us to be able to seek and receive our client’s instructions in response.

If your client and his wife provide an undertaking as described above, we confirm that we will refrain from filing an application as foreshadowed in our earlier [letter] until at least after we have received the financial information of your client.

18    The author went on to reserve the applicant’s rights to approach the Court in any event.

19    I again pause to observe that Stacey Huckstep is not a party to the present proceeding. At the moment, I can see no basis upon which the undertaking sought in respect of her interest in the property could have been demanded.

20    On 2 July 2012, the lawyers for the second and fourth respondents wrote to the lawyers for the applicant in the following terms (omitting formal parts):

DBR Australia Pty Ltd ats Bayley & Associates Pty Ltd

Federal Court proceeding no. ACD 20 of 2010

We refer to our recent correspondence of 29 June 2012.

We are instructed our client’s property at 9 Punch Place, Monash in the Australian Capital Territory has received a purchase offer in the sum of $640,000.00. We confirm our client has not accepted this offer and has told the real estate agent that he will not be in a position to do so for at least 7 days in light of your most recent letter of 29 June 2012 for which we are instructed our client (and Stacey Huckstep) gives your requested undertaking from Friday 29 June 2012. The offer does however given [sic] an indication of the expected value of the property.

From the settlement sum of the property, we are instructed our client has a number of debts to be paid which will leave little equity remaining. We note that as a potential judgment creditor, your client does not take any priority over our client’s other creditors and we propose our client ought to be entitled to pay the current creditors.

As at 1 July 2012 we are instructed the status of our client’s financial situation is as follows:

Taking into account real estate and conveyancing fees for the sale of the Monash property, it is not anticipated that a significant balance will remain. Notwithstanding that Stacey Huckstep is entitled to a 50% share of the sale proceeds, we are instructed that our client is agreeable for the balance of the sale proceeds following payment of the above outstanding debts being held on trust in an interest bearing account pending the decision of Justice Foster.

We otherwise reiterate that preventing the sale will only increase our client’s debt which is not in the interests of either party. Given that our client has provided an undertaking not to enter into a contract for sale as requested, could you please also seek your client’s instructions on providing the usual undertaking as to damages.

We look forward to your reply.

21    Later that same day, the lawyers for the applicant responded to that letter in the following terms (omitting formal parts):

Bayley & Associates Pty Ltd v Stuart Jenkins and Ors

In the Federal Court of Australia – ACD 20 of 2010

We refer to your letter of 2 July 2012.

We note your instructions in relation to the debts of your client, Nigel Huckstep. Our view is that of the 6 items of debt listed, only item 1 appears to be secured by the property based upon a title search conducted earlier today.

The remaining items may be debts of your client but are not secured by the Monash property therefore the property, or the sale proceeds save for the mortgage, are likely to be injuncted.

Our client is prepared to agree to the following:

(i)    Subject to your client providing us with evidence as to the outstanding balance of the mortgage, our client agrees to the net proceeds of sale (after payment of real estate and conveyancing fees and the discharge of the mortgage) being held in trust in an interest bearing account pending the decision of the court, and that you give us 7 days notice of any request from your client to disburse those funds prior to the decision of the court.

(ii)    Your client, Mr Huckstep, to provide us with a sworn statement of his assets and liabilities, on or before 4.00pm, 4 July 2012.

(iii)     Mr Huckstep to provide, on behalf of DBR Australia Pty Ltd (“DBR”), a sworn asset and liability statement of DBR and a statement of DBR’s financial position, on or before 4.00pm, 4 July 2012.

(iv)    DBR to provide an undertaking that it will not dispose of, or deal with, any assets of DBR other than in the normal course of business.

Please find enclosed a proposed Federal Court of Australia Interlocutory Application.

If your client does not agree with the above conditions, and provide written confirmation of his agreement to those conditions, by 12.00pm on Tuesday, 3 July 2012, we will approach the court for the orders sought in the application.

We confirm that, if we are required to approach the court, we are instructed that our client will proffer the usual undertaking as to damages.

We look forward to your urgent response.

22    The orders sought in the draft Interlocutory Application enclosed with the applicant’s lawyers’ letter of 2 July 2012 were in the following terms:

Interlocutory orders sought

1.    Service of this Interlocutory Application be dispensed with.

2.    That the Second Respondent be restrained from dealing with, or disposing of, any of its assets other than in the normal course of business.

3.    That the Fourth Respondent pay into Court the net proceeds of the sale (after real estate agent and conveyancing fees and discharge of mortgage Dealing No. 1597915) of the property known as 9 Punch Place, Monash contained in Vol 1226 Folio 3 in the Australian Capital Territory.

4.    That the Fourth Respondent file and serve an affidavit setting out his assets and liabilities, on or before 4.00 pm on 4 July 2012.

5.    That the Second Respondent file and serve an affidavit setting out its assets and liabilities, and a statement of its financial position, on or before 4.00 pm on 4 July 2012.

6.    That the second and fourth respondents pay the applicant’s costs of this application.

7.    Any further order or orders that this Honourable Court considers appropriate.

23    On 3 July 2012, the lawyers for the second and fourth respondents sent a further letter to the lawyers for the applicant. That letter was in the following terms (omitting formal parts):

DBR Australia Pty Ltd ats Bayley & Associates Pty Ltd

Federal Court proceeding no. ACD 20 of 2010

We refer to your letter of 2 July 2012.

We have forwarded your correspondence to our client to seek the evidence requested of our client’s mortgage. However, your deadline requiring a response by 12.00pm on 3 July 2012 is not reasonable given our client will have to make enquiries with his broker to provide the documentation required. We also note that our client has provided an undertaking until the end of the week not to enter into any contract for the sale of the property which protects your client’s interests while the requested documentation is requested.

We are instructed our client’s investment loan account is secured by the Monash property. We have requested our client provided [sic] documentation to confirm this. Again, this documentation is not likely to be available by 12.00pm on 3 July 2012 but we shall endeavour to have it provided as soon as possible.

The offer provided by our correspondence of 2 July 2012 would have resulted in approximately $28,000.00 being placed in trust. As an alternative, we are instructed our client will place his share of the sale proceeds (after the repayment of the mortgage, the secured loan and the real estate and conveyancing fees) into an interest bearing trust account pending the decision of Justice Foster. This will however amount to less than the earlier proposal as our client’s wife is entitled to 50% of the sale proceeds.

Given that our client has agreed to place in trust the entire balance of what is owing to him from the sale proceeds, we are unsure on what basis your client requires or is entitled to a sworn statement of his assets and liabilities.

If your client insists on bringing her proposed injunction application, please note that our Counsel is currently involved in a case before the ACT Supreme Court and we request you advise the proposed time of the application prior to filing. Noting that our client has already provided an undertaking not to enter into any contract, we do not consider that the application needs to be brought as an urgent listing.

We look forward to your reply.

24    It appears that, either under cover of the letter of 3 July 2012, or shortly afterwards, the lawyers for the second and fourth respondents provided to the lawyers for the applicant a Westpac “Loan Offer” document dated 19 December 2011 addressed to the fourth respondent and his wife. That document related to the liability identified by the lawyers for the second and fourth respondents as “Investment loan secured over 9 Punch Place, Monash” in an amount of $184,648.32 in the letter dated 2 July 2012 from those lawyers to the lawyers for the applicant. It is not necessary to say much about the Loan Offer document other than to note that the amounts advanced pursuant to the transaction referred to in that document are secured by the existing Westpac mortgage over the Monash property, a mortgage which was granted in 2008, I infer, in ordinary circumstances at the point in time when the property was acquired by the fourth respondent and his wife.

25    At 2.01 pm on 3 July 2012, the lawyer for the second and fourth respondents emailed to the lawyers for the applicant a screen shot of the state of the accounts of the fourth respondent with Westpac which confirmed the detail of the liabilities previously notified by those lawyers in their letter dated 2 July 2012.

26    As I have said, notwithstanding the fact that the lawyers for the second and fourth respondents were actively engaged in dealing with the correspondence emanating from the applicant’s lawyers, the applicant then approached the Court for a listing of its Interlocutory Application.

27    In support of the Freezing Orders which it claims, the applicant relies upon two affidavits affirmed by Steven John Gavagna, its solicitor. The first was affirmed on 3 July 2012 and the second was affirmed today (6 July 2012).

28    The second and fourth respondents read an affidavit sworn by the fourth respondent yesterday. In that affidavit the fourth respondent says:

(a)    He had intended to move to Western Australia in 2008, but had changed his mind. However, moving there in 2012 is consistent with his earlier plans. The inference is that his move was not motivated by a desire to abscond.

(b)    In February 2012, an opportunity arose for full-time employment with Western Power. On 21 May 2012, the fourth respondent accepted a full-time position with Western Power.

(c)    The move to Perth to take up employment with Western Power is to be permanent. For that reason, the fourth respondent and his wife decided to sell their home in Canberra (the Monash property).

(d)    The Monash property is jointly owned by the fourth respondent and his wife.

(e)    It is not in the best interests of the fourth respondent and his wife to attempt to rent out the Monash property rather than sell it in the present climate.

(f)    Given the level of his personal debt, the fourth respondent and his wife are not in a position to purchase a property in Perth at this time. For that reason, the fourth respondent is renting a property in East Fremantle.

(g)    In his position with Western Power, the fourth respondent has a gross salary of $185,000 per annum.

(h)    The only assets owned by the second respondent are one printer valued at approximately $1,500 and three laptops which are over two years old and are valued at about $2,000 each.

(i)    The second respondent currently earns less than it did in the 2010–2011 financial year. The average current earnings of the second respondent is $3,360 gross per fortnight.

29    The evidence discloses that the only real property in Australia owned by either the second respondent or the fourth respondent is the Monash property. The evidence also discloses that, although the Monash property was put on the market at $679,000, the only offer received since early May 2012 was at a figure of $640,000. That offer was made very recently. There is no suggestion in the material before me that that offer of $640,000 is anything but an arm’s length offer indicative of the current market value of the property. The fourth respondent has debts to Westpac totalling approximately $512,000, being $327,324.35 owing under the original mortgage and $184,648.32 owing under the additional loan drawn down at the end of 2011.

30    The fourth respondent has MasterCard credit card debts totalling $17,856.80. He is liable to pay outstanding school fees in the amount of $12,000 to a private school in Canberra. The second respondent has MasterCard credit card debts totalling $16,412.63 as well as a tax debt of approximately $31,000. The fourth respondent estimates that the value of household furniture and electrical goods owned by him and his wife is $100,000. The evidence discloses that the only cash available to the fourth respondent, apart from his salary, is a few thousand dollars in one of the Westpac accounts.

Consideration

31    It is well established that this Court has jurisdiction to grant Freezing Orders in an appropriate case. However, the grant of such orders is an exceptional interlocutory remedy and must be granted only when the circumstances of the case justify such a significant interference in the personal affairs of a citizen. As was said by the New South Wales Court of Appeal in Frigo v Culhaci [1998] NSWCA 88 (BC9803225) at 9–10 in the BC report:

Its function is to minimise the possibility of an unscrupulous defendant seeking to render himself or herself “Judgment proof” by taking steps to ensure that no assets within the jurisdiction can be found on the day of judgment: see generally Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 622. However it is a drastic remedy which should not be granted lightly. We agree with the comment in Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 3rd ed § [2188] that:

“It is obvious that by obtaining a Mareva injunction even an innocent plaintiff can wreak havoc with the defendant’s business, and an unscrupulous plaintiff can ruin his opponent ....”

A mareva injunction is an interlocutory order which, if granted, imposes a severe restriction upon a defendant’s right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to “provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant’s insolvency.” (Abella v Anderson (1987) 12 Qd R 1 at 2–3 per McPherson J)

32    In Frigo, the Court went on to observe that the point of the exercise is not to create additional rights in favour of a putative judgment creditor, but rather to enable a court to protect its process from abuse in relation to the enforcement of its orders. A Mareva injunction is not a species of anticipatory execution nor does it provide a form of security for any judgment which may ultimately be awarded.

33    In New South Wales, the leading case in which the principles upon which this extraordinary remedy will be granted were explained, is Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319. In that case, Gleeson CJ (when he was Chief Justice of New South Wales) at 321–322 said:

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.

34    At 323, the Chief Justice went on to explain what was meant by the element requiring a risk to the assets. In that passage, his Honour referred to a number of cases where different expressions such as “a ‘real risk’”, “a ‘risk demonstrated by solid evidence’” and “a real cause to apprehend” were used to describe the necessary degree of risk. The phrases chosen by the Chief Justice suggest that the risk must be palpable and demonstrated by evidence, not reside, only as a suspicion, in the mind of an overly anxious plaintiff.

35    In Frigo, the Court of Appeal looked at a number of aspects of what had occurred in the District Court of New South Wales when a judge of that Court had granted a Mareva injunction in circumstances which the Court of Appeal ultimately held did not justify the grant of such relief. In Frigo, there was a suggestion that, from the mere fact that a parcel of real property had been put on the market, the Court should infer that the defendant was moving to dispose of his assets in order to render himself judgment proof. In dealing with that point, the Court said the following:

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 [1984] 1 All ER 398; Patterson.

The evidence relied upon at the contested hearing fell far short. The admissions in the “without prejudice” correspondence should have been ignored. The sale of an encumbered home unit at a figure above market value does not, standing alone, imply disposal of assets in order to defeat a prospective judgment, even where the purchaser is a close relative. Even if, which is doubtful, the appellant's suspension of work in the building contract could have been regarded as evidence of financial difficulties, it was not argued below that it had such effect. More importantly, that alone is not enough. A mareva injunction is not designed to stop a person from sliding into insolvency.

36    Another element in Frigo which attracted strong criticism from the Court of Appeal was the form of orders which had been sought by the plaintiff and granted by the District Court Judge. The orders did not recognise the long-held view that Mareva orders should be expressed by reference to the amounts claimed in the substantive proceedings and should allow a person affected by them to keep specified amounts in order to meet reasonable expenses, both for living purposes and in order to enable him to defend the proceedings. It is not appropriate, and never has been appropriate, for blanket orders restricting the disposition of assets to be made under these principles. The constraints on the litigant’s freedom to deal with his assets imposed by such orders must not exceed those which are reasonably necessary to protect the applicant’s legitimate claims.

37    I now turn to the present case.

38    The first matter relied upon by the applicant as evidence of the necessary threat is that the Monash property has been put on the market with an asking price which appears to equate to its market value or a figure slightly above its market value. The second matter relied upon is that the fourth respondent has decamped to Western Australia and sought and obtained permanent employment there. The third matter is that apparently, in 2008, the fourth respondent had received some monies as a beneficiary of a discretionary investment trust with which he had some kind of connection and that he failed in his affidavit, sworn and filed yesterday, to refer to any current or likely future entitlements under that trust. It was said that this failure on the part of the fourth respondent was an indication that he was intending to dissipate his assets or put them beyond the reach of the applicant.

39    It will be readily apparent from the authorities to which I have referred that none of these matters, whether taken individually or together, constitute the necessary threat that would be the starting point for the grant of the extraordinary relief which the applicant seeks. In the absence of other compelling evidence, it is not appropriate for the Court to restrain an arm’s length sale of a residential property, jointly owned by a litigant and his wife, at a figure which is at or close to market value in circumstances where nothing about that sale indicates any intention to spirit away the remaining equity in the property. The property is heavily mortgaged in favour of Westpac and the fourth respondent’s equity is likely to be around the $50,000 mark. Furthermore, the evidence shows that, far from absconding from the jurisdiction, the fourth respondent has accepted and commenced permanent employment within the jurisdiction (Western Australia). Finally, there was no evidence as to the current position with the discretionary investment trust from which the fourth respondent received a distribution in 2008, some four years ago. The evidence showed that that trust was probably still in existence, but nothing more.

40    As far as the evidence of threat to assets on the part of the second respondent is concerned, there is simply no evidence of any such threat. One cannot manufacture such a threat by asserting that, because the second respondent’s lawyers did not reply to or answer unjustified demands made by the lawyers for the applicant, somehow that constitutes the kind of threat that might engage the Mareva principles.

41    For those reasons, it seems to me that the applicant’s current Application fails at the outset because the applicant has failed to demonstrate any relevant threat to the assets of either the second or the fourth respondent.

42    There are further difficulties with the Application. The orders which the applicant seeks are inappropriate and would not have been granted, even if the Court had thought that there was some justification for its intervention. As I have already indicated, the proper form of order is for the defendant litigants to be restrained from removing or otherwise disposing of assets so as not to leave available within the jurisdiction assets of a certain specified value but allowing those defendants to keep sufficient funds for their reasonable living expenses and further reasonable expenditure on legal fees in connection with the relevant proceeding. None of this was accommodated in the orders sought by the applicant with the consequence that, for this reason as well, I would have refused the Application.

43    For all of the above reasons, it seems to me that the applicant’s Interlocutory Application must fail. I propose to dismiss it.

44    The second and fourth respondents seek their costs of having to meet the applicant’s Interlocutory Application. Counsel for the applicant has pressed upon me that there should be no order as to costs because his client behaved reasonably at all times and because the lawyers for the second and fourth respondents were not completely forthcoming in their responses to the correspondence initiated by the lawyers for the applicant and, in particular, had only brought forward information about the second respondent’s financial position in the affidavit filed by the fourth respondent yesterday.

45    It seems to me that the true complexion of what occurred is that the applicant made unreasonable and unjustified demands upon the second and fourth respondents which were answered openly, frankly and with a great deal of detail in a short space of time and under significant unnecessary pressure. The substance of the financial position of the fourth respondent was conveyed to the lawyers for the applicant in the letter sent by them on 2 July 2012 which was, after all, the next business day after the initial correspondence from the lawyers for the applicant. What has happened here is that the applicant has elevated its suspicions to a level which caused it to make its Interlocutory Application in circumstances where that Application should never have been made.

46    I will therefore order the applicant to pay the second and fourth respondents’ costs of and incidental to the applicant’s Interlocutory Application. I also order that, unless the quantum of those costs is promptly agreed, they may be taxed forthwith.

47    There will be orders accordingly.

Associate:

Dated:    12 July 2012