FEDERAL COURT OF AUSTRALIA

Transerve Pte Ltd v Blue Ridge WA Pty Ltd (No 3) [2015] FCA 1318

THE COURT ORDERS THAT:

1.    Subject to Order 2, the Second Respondent do within 10 working days after being served with this order, swear, file and serve on the Applicants an affidavit setting out to the best of his ability all of his assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject), including any assets whether or not they are in his name and whether or not they are solely or co-owned and any assets which he has the power, directly or indirectly, to dispose of or deal with as if it were his own (the Second Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with the Second Respondent’s direct or indirect instructions) and the extent of his interest in the assets.

2.    (a)    This Order 2 applies if the Second Respondent wishes to object to complying with Order 1 on the grounds that some or all of the information required to be disclosed may tend to prove that the Second Respondent:

(i)    has committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    is liable to a civil penalty.

(b)    The Second Respondent must:

(i)    disclose so much of the information required to be disclosed to which no objection is taken; and

(ii)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

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

REASONS FOR JUDGMENT

1    In Transerve Pte Ltd v Blue Ridge WA Pty Ltd (No 2) [2015] FCA 1222 (Transerve No 2), I gave reasons for indicating that I would provide certain freezing orders in favour of Transerve pending determination of the appeal.

2    Shortly stated, my reasons took into account:

(a)    on the one hand, the importance of recognising that following an extensive trial on which numerous assertions against Mr Mackenzie by Transerve were unsuccessful on the pleaded case; and

(b)    on the other hand, notwithstanding this, there was evidence of some possible non-disclosure of assets contrary to previous orders and possible disposition of assets by Mr Mackenzie contrary to previous orders.

3    I directed the parties to provide minutes to reflect the reasons. The parties have not agreed in respect of those minutes.

4    Again, broadly speaking, in my view, the Transerve minute discussed below ignores the importance of the matter referred to in [2(a)] above. Further, the provision of only $25,000 in legal costs for the appeal, having regard to the very extensive nature of the litigation to date, is unrealistically inadequate.

5    Equally, the minute prepared by Mr Mackenzie gives insufficient information and security to Transerve in light of the matters referred to in [2(b)] above. Further, in light of the matters referred to in [2(b)] above, I consider it is appropriate that Mr Mackenzie should make his asset position clear as sought by Transerve.

Transerve’s minute

6    The orders sought by Transerve are as follows:

1.    (a)    The Second Respondent must not remove from Australia or in any way dispose of, deal with or diminish the value of any of his assets in Australia (“the Australian Assets”) up to the unencumbered value of AUD$2,500,000 (“the Relevant Amount”).

(b)    If the unencumbered value of the Australian Assets exceeds the Relevant Amount, the Second Respondent may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of the Australian Assets still exceeds the Relevant Amount.

2.    For the purposes of this order:

(a)    the Second Respondent’s assets include:

(i)    all of his assets, whether or not they are in his name and whether they are solely or co-owned;

(ii)    any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own (the Second Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with the Second Respondent’s direct or indirect instructions); and

(iii)    the following assets in particular:

(A)    the property known as Certificate of Title (Volume 2667, Folio 665), Unit 65, 996 Hay St, Perth (Lot 65 on strata plan 53042) or, if it has been sold, the net proceeds of sale (“the Hay Street Property”);

(B)    the property known as Certificate of Title (Volume 2154, Folio 200), 18 The Corniche, Hillarys (Lot 71 on Plan 23161) or if it has been sold, the net proceeds of sale (“the Hillarys Property”);

(C)    the property known as Certificate of Title (Volume 2675, Folio 877), 14 Jacamar Drive, Northam (lot 625 on deposited plan 55394) or if it has been sold, the net proceeds of sale (“the Northam Property”);

(D)    the net proceeds of sale of the property known as Certificate of Title (Volume 2219, Folio 288), 6/16 Bellevue Terrace, West Perth (Lot 6 on Strata Plan 4199) (“the Bellevue Terrace Property”);

(E)    the property known as 66/37 Duncan Street West End, Brisbane or if it has been sold, the net proceeds of sale (“the Brisbane Property”);

(F)    shares in:

a.    Kintail Investments Pty Ltd (A.C.N. 109 225 685);

b.    Anjil Investments Pty Ltd (A.C.N. 120 153 264);

c.    M & C Development Pty Ltd (A.C.N. 128 270 459); and

d.    Kintail Nominees (WA) Pty Ltd (A.C.N. 131 507 401);

(G)    all assets held by, or, if any or all of the assets have been sold, the net proceeds of the sale:

a.    Kintail Investments Pty Ltd (A.C.N. 109 225 685);

b.    Anjil Investments Pty Ltd (A.C.N. 120 153 264);

c.    M & C Development Pty Ltd (A.C.N. 128 270 459); and

d.    Kintail Nominees (WA) Pty Ltd (A.C.N. 131 507 401);

(b)    the value of the Second Respondent’s assets is the value of the interest he has individually in his assets.

3.    Subject to Order 4, the Second Respondent must within 10 working days after being served with this order, swear and serve on the Applicants an affidavit setting out to the best of his ability all of his assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject), including any assets whether or not they are in his name and whether or not they are solely or co-owned and any assets which he has the power, directly or indirectly, to dispose of or deal with as if it were his own (the Second Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with the Second Respondent’s direct or indirect instructions) and the extent of his interest in the assets.

4.    (a)    This Order 4 applies if the Second Respondent wishes to object to complying with Order 3 on the grounds that some or all of the information required to be disclosed may tend to prove that the Second Respondent:

(i)    has committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    is liable to a civil penalty.

(b)    The Second Respondent must:

(i)    disclose so much of the information required to be disclosed to which no objection is taken; and

(ii)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

5.    These Orders do not prohibit the Second Respondent from:

(a)    paying up to $10,000 per month on his ordinary living expenses;

(b)    paying up to $25,000 towards his reasonable legal expenses in relation to the appeal from the decision of Justice Barker.

6.    (a)    This order will cease to have effect if the Second Respondent:

(i)    pays the sum of AUD$2,500,000 into Court; or

(ii)    pays that sum into a joint bank account in the name of the Second Respondent’s lawyer and the lawyer for the Applicants as agreed in writing between them; or

(iii)    provides security in that sum by a method agreed in writing with the Applicants to be held subject to the order of the Court.

(b)    Any such payment and any such security will not provide the Applicants with any priority over the Second Respondent’s other creditors in the event of the Second Respondent’s bankruptcy.

(c)    If this order ceases to have effect pursuant to (a), the Second Respondent must as soon as practicable file with the Court and serve on the Applicants notice of that fact.

7.    These Orders do not prevent any bank from exercising any right of set off it has in respect of any facility which it gave to the Second Respondent before it was notified of this order.

8.    No bank need inquire as to the application or proposed application of any money withdrawn by the Second Respondent if the withdrawal appears to be permitted by this order.

9.    Liberty to apply on short notice.

7    As to the items set out in proposed order 2(a)(iii), a competing draft minute from Mr Mackenzie does not include the Hay Street Property as defined or the Bellevue Terrace Property as defined. This may be due, as I understand it, to the fact that one or both of those properties has already been sold. In order to bring matters up to date, I propose to make an order as sought by Transerve that a current statement of assets and liabilities be filed in the terms sought by Transerve.

8    In a supporting affidavit filed by Mr Mackenzie, he gives evidence that there is a monthly deficiency of some $3,300 in regard to the Brisbane Property and that due to his current financial position and circumstances he is no longer able to afford the mortgage on the Hillarys Property of some $5,700 per month and that he is required to meet tax liability commitments in respect of Kintail Investments Pty Ltd in the sum of $1,000 per month.

9    For those reasons, he has also sought an order (M4) in these terms:

4.    To enable the Second Respondent to pay his ongoing living and legal expenses [referred to in paragraph 3(a) and 3 (b) above], the Second Respondent is hereby authorised to sell the properties listed [at paragraph 2(iii)(A)-(C) above], and at settlement of any such sales the Second Respondent is to preserve and hold the net proceeds of any such sales of the properties in Granich Partners Trust Account, less the sum of $250,000, representing $150,000 for legal expenses and 10 months of living expenses at $10,000 per month, pending the determination of the appeal.

10    I would not be prepared to make an order quite in terms of M4 as sought by Mr Mackenzie at this stage, but subject to provision of a further affidavit of assets and liabilities being filed, then it does appear to me to be reasonable for the order to be made in terms of M4 as the proceeds of any sale must be held in a solicitor’s trust account, subject to release of funds for certain purposes. The sale proceeds on trust could be reduced by provision for costs of the appeal of $75,000 and provision in respect of a 6 month period for drawing down monthly in advance, $10,000 per month for living expenses. I do not accept that 10 months of living expenses at $10,000 per month should be paid, let alone in advance, pending the determination of the appeal. Amongst other reasons, it may well be that the appeal can be disposed of earlier than that 10 month period. But, if not, there can be liberty to apply to extend the time over which funds should be released, monthly in advance.

11    I will make orders in terms of order 3 and order 4 of the Transerve minute.

12    As indicated in relation to order 5 of the Transerve minute, I propose allowing $75,000 towards legal expenses in relation to the appeal.

13    I do not propose making order 6 of the Transerve minute as I consider that order to have been appropriate only in relation to the trial. Orders 7, 8 and 9 of the Transerve minute will be made.

14    For the time being, the current freezing orders will continue. Upon the filing of the further statement of assets and liabilities, the orders adverted to in these reasons can then be made.

15    Accordingly, the only further order I now make are orders 3 and 4 of the Transerve minute. When that affidavit is filed, Transerve should file a minute reflecting the balance of these reasons. I order:

1.    Subject to Order 2, the Second Respondent do within 10 working days after being served with this order, swear, file and serve on the Applicants an affidavit setting out to the best of his ability all of his assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject), including any assets whether or not they are in his name and whether or not they are solely or co-owned and any assets which he has the power, directly or indirectly, to dispose of or deal with as if it were his own (the Second Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with the Second Respondent’s direct or indirect instructions) and the extent of his interest in the assets.

2.    (a)    This Order 2 applies if the Second Respondent wishes to object to complying with Order 1 on the grounds that some or all of the information required to be disclosed may tend to prove that the Second Respondent:

(i)    has committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    is liable to a civil penalty.

(b)    The Second Respondent must:

(i)    disclose so much of the information required to be disclosed to which no objection is taken; and

(ii)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

A/Associate:

Dated:    24 November 2015