Re Hiero Pty Limited v William Anthony Somers; PA Business Acquisitions Pty Limited; Kelaw Pty Limited; Alfred Knight Pty Limited; Beale Pianos Pty Limited; Music Houses of Australia Pty Limited; Nicholson'S Pty Limited; WH Paling Pty Limit [1983] FCA 18 (11 February 1983)

FEDERAL COURT OF AUSTRALIA

Re: HIERO PTY. LIMITED
And: WILLIAM ANTHONY SOMERS; P.A. BUSINESS ACQUISITIONS PTY. LIMITED; KELAW
PTY. LIMITED; ALFRED KNIGHT PTY. LIMITED; BEALE PIANOS PTY. LIMITED; MUSIC
HOUSES OF AUSTRALIA PTY. LIMITED; NICHOLSON'S PTY. LIMITED; W.H. PALING PTY.
LIMITED
(1983) 68 FLR 171
No. G240 of 1982
Injunction - High Court and Federal Judiciary

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Ellicott J.(1)

CATCHWORDS

Injunction - Federal Court - Mareva injunctions - Application under Trade Practices Act for damages for misleading and deceptive conduct - Associated claims for negligent and fraudulent misrepresentation and breach of warranty - Injunctions sought restraining appointment of receiver and disposal of assets by respondents pending hearing of application - Respondents in Australia - Whether Federal Court has jurisdiction to grant injunctions - Test to be applied - Whether real risk of respondents' removing or dissipating assets

Federal Court of Australia Act 1976, ss. 22, 23, 32

Trade Practices Act 1974, s.87

High Court and Federal Judiciary - Federal Court - Jurisdiction - Mareva injunctions - Application under Trade Practices Act for damages for misleading and deceptive conduct - Associated claims for negligent and fraudulent misrepresentation and breach of warranty - Injunctions sought restraining appointment of receiver and disposal of assets by respondents pending hearing of application - Respondents in Australia - Whether Federal Court has jurisdiction to grant such injunctions - Whether real risk of respondents removing or dissipating assets - Federal Court of Australia Act 1976 (Cth) ss 22, 23, 32 - Trade Practices Act 1974 (Cth) s. 87.

Injunctions - Mareva injunctions - Whether Federal Court has jurisdiction to grant Mareva injunction. The applicant commenced an action against the respondents seeking an order for damages against all of them by reason of alleged contravention of s. 52 of the Trade Practices Act 1974 (Cth) and their alleged negligent and fraudulent misrepresentation and against the third to eighth respondents for breach of warranty. The action arose out of the sale of a business by certain of the respondents to the applicant. The applicant sought an order pending the trial restraining the appointment of a receiver of the business sold to the applicant and a Mareva injunction to restrain the disposal of the assets of certain respondents directed to ensuring that they would not dissipate their assets or remove them from Australia.

Held: (1) The Federal Court has jurisdiction to grant injunctions restraining a respondent, pending the hearing of an application from removing or dissipating his assets.

Riley McKay Pty Ltd v. McKay (1982) 1 NSWLR 264, referred to.

Lister v. Stubbs (1890) 45 Ch D 1, discussed.

(2) The jurisdiction should only be exercised where on the evidence there is a real risk of the respondent removing or dissipating his assets and thereby depriving the applicant of the fruits of any judgment he may obtain in his application.

(3) The source of the Federal Court's jurisdiction in this respect was s. 23 of the Federal Court of Australia Act 1976 (Cth) and s. 87 of the Trade Practices Act 1974 (Cth). It was not supported by any inherent jurisdiction.

Thomson Australian Holdings Pty Ltd v. Trade Practices Commission [1981] HCA 48; (1981) 37 ALR 66, discussed.

(4) The Court was not satisfied there was a real risk of the third to eighth respondents, or any of them, so acting as to remove or dissipate any of their assets with a view to or with the effect of depriving the applicant of any order for damages it may obtain in the proceedings.

(5) Notice of Motion dismissed.

HEARING

Sydney, 1983, January 28; February 11. 11:2:1983
NOTICE OF MOTION.

In an action under the Trade Practices Act 1974 (Cth) and raising various associated claims, the applicant sought orders pending the hearing restraining the appointment by certain of the respondents of a receiver and manager of a business purchased from them by the applicant and restraining the disposal of assets by those respondents.

J.D. Heydon, for the applicant.

R.P. Meagher Q.C. and I.A. Macfarlane, for the respondents.

Cur. adv. vult.

Solicitors for the applicant: Freehill, Hollingdale & Page.

Solicitors for the respondents: Sly & Russell.
T.J.G.

ORDER

1. The Notice of Motion dated 25 January 1983 be dismissed.

2. The costs of the third to eighth respondents of this Notice of Motion be part of their costs of the main application. Orders accordingly.

DECISION

On 9 December 1982, Hiero Pty. Limited, ("the applicant") commenced proceedings against the eight respondents. It has filed a statement of claim seeking an order for damages against all of them by reason of their alleged contravention of s.52 of the Trade Practices Act 1974 and their alleged negligent and fraudulent misrepresentations. It also seeks damages against the second to eighth respondents for breach of warranty.

The claims for damages for negligent and fraudulent misrepresentation and breach of warranty are brought in purported reliance on the Court's jurisdiction over associated matters under s.32 of the Federal Court of Australia Act 1976. The third to eighth respondents have filed a defence putting in issue the bulk of the claims made by the applicant.

On 25 January 1983, the applicant took proceedings by notice of motion seeking orders against the third to eighth respondents pending the hearing of the main application which were directed to ensuring that those respondents would not dissipate their assets or remove them from Australia. The respondents have resisted the making of these orders.

On 28 July 1982, the applicant entered into an agreement with the fourth to eighth respondents inclusive, in essence to purchase certain goodwill, stock on hand and fixtures and fittings associated with a business conducted under trade names which include (inter alia) the names "Palings" and "Nicholsons". The business was conducted in New South Wales and Queensland. Under the agreement, the purchase price was to be calculated on the basis of certain stocktaking. It was payable, as to $150,000, on the date of the agreement, $950,000 on 27 August 1982 and the balance in certain amounts and on certain dates, which included 31 January 1983, 28 February 1983 and 31 March 1983. The agreement also provided that a period of grace of 14 days would be allowed to the purchaser for payment provided interest was paid. To secure the purchase price, a floating charge dated 30 August 1982, was executed by the applicant in favour of the fourth to eighth respondents. Under this security, if default is made in payment of the principal sum (in effect, the balance of the purchase price), the fourth to eighth respondents are entitled to appoint a receiver of the business, that is to say, the business sold pursuant to the agreement for sale.

The business was taken over on or about 30 August 1982. In order to deal with the financial aspects of the sale of the business the sixth respondent, Music Houses of Australia Pty. Limited, engaged William Hubert Hutchinson as a financial controller. He was, in fact, engaged through his own company, Frenchgate Management Services Pty. Limited. At all relevant times after 30 August 1982, Mr Hutchinson was located, with the consent of the applicant, in an office at 416 George Street, Sydney, which was the head office of the Palings business. His duties were to control the financial recording and records of the sixth respondent, including the finalisation of the financial details of the sale to the applicant.

Peter Reginald Hayward is a director of the applicant and was closely involved in the purchase and take-over by it of the goodwill and other assets of the business. At all relevant times, Bernard Owen Stephens was a director of the fourth to eighth respondents and he was closely involved in the management of those companies.

Mr Hayward says that in September, Mr Stephens told him that Mr Hutchinson was the financial controller of Music Houses (the sixth respondent) and was their representative and would be based in Palings' office to sort out the documents and to do the final figures. Mr Hayward says that when Mr Hutchinson took up his position in the office, he told him he was the financial controller of Music Houses and he would be working in the building to sort out Music Houses' documents for Bill Hughes until they were in order. Mr Hughes, I have assumed, is the main beneficial shareholder or the controller of the group of which the third to eighth respondents form part. Since that date, Mr Hutchinson has been in the office on most days and many discussions have taken place between him and Mr Hayward which have related to the business which was acquired. Mr Hayward says that when problems arose out of the inter-relationship between those parts of the business which were purchased and the other assets of the vendors, he would raise them with Mr Hutchinson who, at a later time, would reply indicating that he had discussed them with Mr Stephens. On occasions, when he raised these matters, Mr Hutchinson told him that he would, in effect, have to check it out with Mr Stephens.

Kevin Kay Hayes is an accountant and is financial director of the applicant. He, too, was involved in the acquisition of the business by the applicant. He says he was told by Mr Stephens in August 1982 that Mr Hutchinson was the financial controller of Music Houses and would be looking after their interests during and after the takeover. He, too, had a number of conversations with Mr Hutchinson. Shortly prior to Christmas, he says he discussed with him the creditors of the Palings business. He asked him - "What position would Music Houses take with regard to those creditors which are not included in the terms of the agreement? In some instances, creditors may present a problem because they will look to Palings for settlement but Palings has no liability to creditors. It is Music Houses' responsibility to settle with creditors". He says that Mr Hutchinson replied - "There may not be a problem because Music Houses will be wound up within a month".

On 5 January 1983, Mr Hayward, Mr Hayes and Mr Hutchinson, had lunch at a restaurant in North Sydney. It commenced at 12:30 p.m. but they appear to have stayed at the restaurant talking and drinking until 7:00 or 7:30 p.m. Mr Hayward says that during the course of the conversation, the following took place:-

Bill Hutchinson:-

"This is off the record, of course, but if you had not made the December payment of the purchase price, a receiver would have been appointed straight away and I would have been the new managing director of Palings on the next day."

Peter Hayward:-

"I believe that there will be an article in tomorrow's Financial Review about Music Houses' disposal of its properties."

Bill Hutchinson:-

"We know that you will probably win the case but there will be no assets left in Kelaw. Bill Hughes is a pretty astute commercial animal and he is making sure that there is nothing left behind if the case goes against us."

Mr Hayes' version of the conversation is as follows:-

Peter Hayward:-

"I believe there will be an article in tomorrow's Financial Review about Music Houses disposal of its properties."

Bill Hutchinson:-

"This is all off the record but I firmly believe that you were quite right in taking the course of action which you have as I would do precisely what you are doing if I were in your position. You should win, however Bill Hughes is a good businessman and there will be nothing left in any of the companies by way of assets in the event that you succeed."

Kevin Hayes:

"You mean that we will win the battle but lose the war?"

Bill Hutchinson:-

"Yes".

Needless to say there was other conversation, but this is the portion which is relevant for present purposes.

Both Mr Hayward and Mr Hayes were cross-examined in relation to these conversations and each affirmed that this was what was said.

An affidavit by Mr Hutchinson was read in which he disputed their version. He says that Mr Hayward referred to the article in the "Financial Review" and said:-

"We feel we have been duped on this deal and we are prepared to go all the way to get satisfaction. It is more a moral than financial issue and as such we would be prepared to spend $200,000.00 or more and perhaps even jeopardise the operations of Australis to get satisfaction. We have solicited the help of the press and a senior officer of Hill Samuel who has first hand knowledge of this deal. It is our plan to use both the Court and the sumpathy of the press to bring this matter to a conclusion."

To this Mr Hutchinson replied:-

"I will look for the article".

Mr Hutchinson was not available for cross-examination and I was informed by counsel for the third to eighth respondents that he had had a heart attack and was in intensive care.

It is not disputed between the parties that, pursuant to the terms of the agreement (taking into account the period of grace for payment) and, no doubt, after the valuation of stock that the following amounts are now payable by the applicant on account of the purchase price and on the dates mentioned:-

"$200,000 on 14 February 1983 $100,000 on 14 March 1983 $100,000 on 14 April 1983"

It is also agreed that pursuant to the deed of charge dated 30 August 1982, the third to eighth respondents would be entitled to appoint a receiver or receiver and manager of the business and assets acquired in the event of non-payment of any of those amounts on or before the dates mentioned.

The applicant has filed several affidavits which are directed to establishing a prima facie case that the respondents contravened s.52 of the Trade Practices Act or were liable for negligent and fraudulent misrepresentation and breach of warranty. The third to eighth respondents will contest these assertions at the final hearing but are content to have the present application dealt with on the basis that the applicant has established a prima facie case for relief.

It is against this background that the applicant seeks two injunctions. The first is to restrain the fourth to eighth respondents, until further order, from appointing a receiver or receiver and manager of the business pursuant to the deed of charge, by reason of the non-payment of the amounts mentioned above on the due dates. The second is to restrain the third to eighth respondents, until further order, from dealing in any of their real property, the proceeds of sale of any of their real property or any of their other assets, so as to cause their assets within Australia to fall below the value of $1M or so as to cause their assets to that value to be beyond the reach of the applicant in the event of the applicant recovering damages against them in these proceedings.

The applicant has adduced evidence to establish that the damages to which they are entitled is of the order of $900,000 or more.

Both orders are sought on the basis that the evidence establishes that the third to eighth respondents intend to dissipate their assets within the jurisdiction or to remove them from the jurisdiction. What they seek, therefore, are orders in the nature of what are now termed "Mareva" injunctions. So far as I am aware, this is the first occasion on which the Federal Court has had to make a positive finding as to whether or not such an injunction should be granted.

Senior counsel for the respondents has argued strenously that this Court has no power to grant such an injunction. Alternatively, he argues that, if it has, the circumstances have not been established to justify it.

Counsel for the applicant relies on ss.22 and 23 of the Federal Court of Australia Act 1976 and s.87 of the Trade Practices Act 1974 as providing a basis for the making of the orders which the applicant seeks. He has also submitted that this Court has an inherent jurisdiction to prevent an abuse of its process and that the making of such orders would, in this case, prevent such an abuse.

Before dealing with this court's jurisdiction to make orders of the nature sought, it is necessary to bear in mind the basis upon which "Mareva" type injunctions have been granted in other courts.

Until several decisions of the English Court of Appeal in 1975, it had not been the practice to make orders restraining a defendant from dealing with his assets on application by a plaintiff unless the plaintiff could establish some legal or equitable right in the assets to which the order was directed. This was based on a number of early decisions such as Lister v. Stubbs (1890) 45 Ch. D.I. Robinson v. Pickering (1881) 16 Ch. D. 660 and Mills v. Northern Railway of Buenos Ayres (1870) L.R. 5 Ch. App. 621.

What have become known as "Mareva" injunctions were first granted in 1975 by the Court of Appeal in England. (See Nippon Yusen Kaisha v. Karageorgis (1975) 3 All E.R. 282; Mareva Compania Naviera S.A. v. International Bulkcarriers S.A. (1975) (1980) 1 All E.R. 213).

The statutory basis for granting these injunctions was found in s.45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 (U.K.) which provided:-

"(1) The High Court may grant a mandamus or an injunction or appoint a Receiver, by an interlocutory order in all cases in which it appears to the Court to be just or convenient so to do."

The predecessor of s.45(1) was s.23(8) of the Supreme Court of Judicature Act 1873. Section 23(8) was therefore available as a source of jurisdiction when Lister v. Stubbs and the earlier cases, to which I have referred, were decided.

The reasoning lying behind the grant of "Mareva" type injunctions was explained by Sir Robert Megarry V.C. in Barclay-Johnson v. Yuill (1980) 3 All E.R. 190 at p.195 as follows:-

"It seems to me that the heart and core of the Mareva injunction is the risk of the defendant removing his assets from the jurisdiction and so stultifying any judgment given by the courts in the action. If there is no real risk of this, such an injunction should be refused; if there is a real risk, then if the other requirements are satisfied the injunction ought to be granted. If the assets are likely to remain in the jurisdiction, then the plaintiff, like all others with claims against the defendant, must run the risk, common to all, that the defendant may dissipate his assets, or consume them in discharging other liabilities, and so leave nothing with which to satisfy any judgment. On the other hand, if there is a real risk of the assets being removed from the jurisdiction, a Mareva injunction will prevent their removal. It is not enough for such an injunction merely to forbid the defendant to remove them from the jurisdiction, for otherwise he might transfer them to some collaborator who would then remove them; accordingly, the injunction will restrain the defendant from disposing of them even within the jurisdiction. Buth that does not mean that the assets will remain sterilised for the benefit of the plaintiff, for the court will permit the defendant to use them for paying debts as they fall due: see Iraqi Ministry of Defence v. Arcepey Shipping Co. SA (1980) 1 All ER 480 at 486, (1980) 1 WLR 488 at 494 per Robert Goff J."

Since 1975 s.45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 has been replaced by s.37 of the Supreme Court Act 1981 (U.K.), which has been treated as conferring on the English Courts an explicit statutory jurisdiction to grant such injunctions.

When first granted, the injunctions were directed to foreigners, but in time the English Courts held that there was no reason, in principle, why they should not be granted against an English person or company where it was "just or convenient" to do so. This did not mean that the question of nationality, residence or domicile became irrelevant. Clearly, it could have a bearing on the question whether there was a risk of removal.

It is fair to say that the initial decision to grant such injunctions was largely the result of Lord Denning's reforming zeal. By 1980 he had approved the grant of such injunctions in circumstances going well beyond the facts in Nippon and Mareva.

In Prince Abdul Rahman v. Abu-Taha(1980)3 All E.R. 409, he said, at p.412:-

"So I would hold that a Mareva injunction can be granted against a man even though he is based in this country if the circumstances are such that there is a danger of his absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied."

Since 1975 "Mareva" type injunctions have been granted in four Australian States (Victoria, Western Australia, Queensland and New South Wales) and in New Zealand. In South Australia, the jurisdiction to grant them has been denied. (See generally Riley McKay Pty. Limited v. McKay (1982) 1 N.S.W. L.R. 264 which contains a very useful summary of the relevant decisions and legislation).

In some states the jurisdiction to grant such injunctions has been found in provisions similar to the English provisions. In New South Wales, however, the Court of Appeal in Riley McKay declined to treat the equivalent of the English provisions (s.66(4) of the Supreme Court Act 1970 (N.S.W.)) as a foundation for jurisdiction. Instead, it relied on s.23 of that Act, which provides:-

"The Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales."

It also relied upon the Court's inherent power.

Senior Counsel for the third to eighth respondents urged me not to follow these decisions when considering whether the Federal Court has jurisdiction to grant them.

They are, of course, persuasive only. They are not binding on this Court and, clearly, they relate to the jurisdiction of Courts established under different statutory provisions. However, they do emphasise that other Courts, in the course of administering justice, have found it desirable to restrain a defendant from removing or dissipating assets where the plaintiff would thereby be deprived of the fruits of any judgment that might be obtained in the action. A consideration of the cases also shows that the limits of the jurisdiction of other courts to grant such injunctions have not yet been fully worked out and that these courts are conscious of the danger of the jurisdiction being used to give a plaintiff an unfair advantage over a defendant. (See Z Ltd. v. A (1982)1 All E.R. 556 per Kerr L.J. at pp.571-2).

In this application, the applicant's case is based partly on an alleged breach of the Trade Practices Act 1974 and partly on the Court's associated jurisdiction. The respondents do not dispute that the applicant has made out a prima facie case. Before I could grant the injunctions sought I would also have to consider the balance of convenience.

The first questions I have to resolve, however, are whether this Court has jurisdiction to grant injunctions of this type and if so, whether a case has been made out for the particular orders sought.

In my opinion, this Court has jurisdiction to grant injunctions restraining a respondent, pending the hearing of an application, from removing or dissipating his assets. That jurisdiction, however, should, as a general rule, only be exercised where the Court is satisfied, on the evidence, that there is a real risk of the respondent removing or dissipating his assets and thereby depriving the applicant of the fruits of any judgment he may obtain in the application. This may be proved, for example, by evidence of a deliberate intention on the part of the respondent so to deal with assets for the very purpose of defeating the applicant's claim or by evidence that the respondent is dealing or proposing to deal with his assets in such a way that it will have this effect. The jurisdiction, in my view, is not confined to cases where a respondent is a foreigner who proposes to remove assets from the jurisdiction. The gravamen of the jurisdiction is the consequence that the respondent's threatened action, if it occurred, would stultify any order the Court might make in favour of the applicant and this consequence does not seem to me to be confined to cases where the respondent is a foreigner who is about to remove assets from the jurisdiction.

The source of the Court's jurisdiction, in my opinion, in relation to all aspects of the applicant's claim, is to be found in s.23 of the Federal Court of Australia Act. In relation to the applicant's claim under the Trade Practices Act, it is to be found in that section and in s.87 of the Trade Practices Act. It is not supported by any inherent jurisdiction.

Section 23 of the Federal Court of Australia Act provides:-

"The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue or direct the issue of writs of such kinds, as the Court thinks appropriate."

Whilst bearing in mind the comments of the High Court in Thomson's Case [1981] HCA 48; (1981) 37 A.L.R. 66, this section plays an important role in defining the powers of the Court in all matters within its jurisdiction. It should not be given a narrow interpretation. The Federal Court is established by the Act to exercise (inter alia) original jurisdiction vested in it by Parliament in respect of matters arising under laws of the Parliament. It is consistent with the object and purpose for which the Court was established that it should have all the powers necessary for it to do justice in exercising the judicial power of the Commonwealth in matters over which it has jurisdiction.

In my opinion, the section is wide enough to empower the Court to make an interlocutory order which would ensure that a respondent did not so act as to deprive an applicant unfairly of the fruits of any judgment the applicant might obtain in a matter. Such an order, it seems to me, is clearly one which the Court could consider "appropriate" in dealing with matters over which it has jurisdiction. The "appropriateness" of it is confirmed by the approach adopted by other Courts in similar circumstances.

Senior counsel for the respondents urged upon me the line of authority instanced by Lister v. Stubbs. In my view, a respondent's right to deal with property in which an applicant has no legal or equitable interest can be adequately protected by the Court limiting the circumstances in which it will grant injunctions of this nature. Clearly, the Court should not allow an applicant to use the injunction to obtain an unfair advantage over a respondent. Nor should the Court intervene if there is no real risk of the respondent removing or dissipating assets.

Section 23 would be available to the Court as a source of power in matters within its associated jurisdiction. In so far as this is an application for damages under the Trade Practices Act, s.87 of that Act, in my view, can also be treated as a source of power. I do not think it is confined to final orders. Nor does it, in my opinion, limit the powers conferred by s.23 of the Federal Court of Australia Act. Indeed, it seems to be fully consistent with it. If, because of the reasoning in Thomson's Case s.87 is to be regarded as the sole source of power, it is, in my view, adequate for the purpose. It confers power to make such order or orders as the Court thinks appropriate against the person who engaged in the conduct if the Court considers that the order or orders will compensate the applicant for the loss or damage suffered.

In my opinion, it is open to the Court under this provision, to make an interlocutory order designed to ensure that an applicant or person who has suffered damage will in fact be able to recover the amount of any damage found by the Court to have been suffered. It is an order of a type which could properly be said to "compensate" the applicant or the person suffering damage.

The question which remains is whether, in exercise of these powers, I should make the orders sought.

I am satisfied, on the evidence, that the applicant was justified in being apprehensive about the conduct of the third to eighth respondents with regard to their assets. In the absence of any cross-examination of Mr Hutchinson, I accept the evidence of Mr Hayes that in December 1982 a statement was made by Mr Hutchinson to the effect that Music Houses would be wound up. I also accept the evidence of Mr Hayes and Mr Hayward that Mr Hutchinson at the luncheon in January last, also made a statement to the effect that Mr Hughes was making sure that there would be nothing left in the companies if the case (which the applicant had then commenced) went against the respondents. Both were cross-examined and I find no reason, at this stage, not to accept their evidence.

In coming to this view, I have taken into account (inter alia) the circumstances surrounding Mr Hutchinson's engagement and his relationship to the third to eighth respondents, the correspondence between the parties' solicitors and the nature of the luncheon. Although Mr Hutchinson was a financial controller engaged on a contractual basis, I think that Mr Hayward and Mr Hayes, and therefore the applicant, were entitled to assume that he may well be reflecting the true position. He was in constant touch with Mr Stephens and he was located at the premises of the newly acquired business for the purpose of supervising for the respondents the financial aspects of the take-over.

However, this is not enough to justify making an order. Before I do so, I must, in my opinion, be satisfied that there is a real risk that the third to eighth respondents will remove their assets or dissipate them.

At the hearing before me, evidence was adduced on behalf of the respondents to establish that they have no intention of so dealing with their assets. Music Houses has not been wound up and reasons were given relating to tax losses, why that company would not be wound up. Some companies in the group may be wound up but they have no assets or liabilities.

Mr Stephens, who is closely involved in the operation of the respondents, and who makes all executive decisions with respect to the property transactions of the group (subject to final approval by Mr Hughes) gave evidence and was cross-examined. He denies that they are conducting their affairs so as to ensure that they will be unable to satisfy any verdict. He says that such a course of action has never been discussed, nor has anything been done for the purpose of achieving that end. Certain real estate is in the course of realisation, but he says this is in accordance with an intention to do so in the ordinary course of business. Evidence has been adduced that the present net value of the assets of the group is approximately $2.4 million. He regards the business of the group as that of an investor. It does not invest abroad. It is their intention to deal with their assets in an ordinary manner, that is, to repay loans and invest money in other directions, such as on the money market or in other areas.

The property at 416 George Street has been sold but the proceeds have been dealt with to pay off loans. Other properties in Brisbane, Wollongong and Lismore are for sale. The Brisbane property is the subject of an oral offer to purchase. The others are not currently the subject of any offer.

Mr Hutchinson, in his affidavit, denies any knowledge of any intention to wind up Music Houses or to dissipate assets.

On the basis of the evidence at present before me, I am not satisfied that there is a real risk of the third to eighth respondents, or any of them, so acting as to remove or dissipate any of their assets with a view to or with the effect of depriving the applicant of any order for damages it may obtain in these proceedings. Although the applicant was, as I have held, justified in being apprehensive about the respondents future conduct, I must look at the whole of the evidence now before me. Mr Stephens is in a position to know what the intention of the respondents is with regard to their assets and I accept his evidence.

Although, as I have found on the evidence, Mr Hutchinson made the statements alleged, I am satisfied, at this stage, that they did not reflect the true intentions of the respondents or Mr Hughes.

For these reasons, although I consider the Court has jurisdiction, I am not prepared to make the orders sought in the notice of motion.

I therefore propose to dismiss the notice of motion. Because I consider that, in the light of Mr Hutchinson's statements, the applicant was justified in commencing these proceedings, I think that the proper order for costs is that the third to eighth respondents' costs of this notice of motion be part of their costs of the main application.