Kristine Anne Patterson v Sureslim Australia Pty Ltd and anor and Julie Anfield and anor v Sureslim Australia Pty Ltd and ors [2006] NSWIRComm 349 (27 October 2006)

Last Updated: 8 December 2006

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Kristine Anne Patterson v Sureslim Australia Pty Ltd and anor and Julie Anfield and anor v Sureslim Australia Pty Ltd and ors [2006] NSWIRComm 349



FILE NUMBER(S): IRC 4254 and 5396

HEARING DATE(S): 27/10/06

EX TEMPORE DATE: 27/10/2006
PARTIES:
APPLICANTS:
Kristine Anne Patterson; Julie Anfield and anor


RESPONDENTS:
Calvin Nesbitt Tulloch, Petro Hettie Tulloch, Sureslim Australia and ors.








JUDGMENT OF: Haylen J


LEGAL REPRESENTATIVES


APPLICANTS:
Mr G Hatcher SC with Mr R Moore of counsel
SOLICITORS:
Maguire & McInerney


RESPONDENTS:
Mr R Kenzie QC with Mr M Gibian of counsel
SOLICITORS:
Mason Sier Turnbull


CASES CITED: Cardile & Ors v LED Builders Pty Limited (1999) 198 CLR 380
Electric Mobility Company Pty Limited v Whizz Enterprises Pty Limited (2006) NSWSC 580
Frigo v Culhaci (1998) NSWSC 393
Lawindi v Elkateb (2001) NSWSC 865
Nimenia Maritime Corp v Trave Schiffahrtsgesellschaft MB & Co KG [1984] 1 All ER 398.
Patterson v BTR Engineering Australia Pty Limited (1989) 18 NSWLR 319
Patrick Stevedores Operations No 2 Pty Ltd & ors v Maritime Union of Australia (No 3) (1998) 72 ALJR 873 at 892
VisyBoard Pty Ltd v AFMEPKIU & ors (1999) 91 IR 88

LEGISLATION CITED:



JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Haylen J
27 October 2006

Matter No IRC 4254 of 2005
KRISTINE ANNE PATTERSON v SURESLIM AUSTRALIA PTY LTD AND ANOR
Application under s 106 of the Industrial Relations Act 1996
Matter No 5396 of 2005
JULIE ANFIELD AND ANOR v SURESLIM AUSTRALIA PTY LTD AND ORS
Application under s 106 of the Industrial Relations Act 1996

EX TEMPORE JUDGMENT
[2006] NSWIRComm 349

1 The Court has before it a notice of motion to dissolve an asset preservation order and that notice of motion has been before the Court since 15 August 2006 in circumstances that will be explained and briefly dealt with in the judgment.

I have just completed the second full day of hearing, these proceedings commencing at 9.30 am today, and it is now well after 4.00 pm. The nature of the orders made requires prompt attention to the notice of motion. I do not believe it is appropriate to reserve my judgment. I propose to deliver judgment now, but unfortunately the terms of the judgment will lack the felicity of expression and structure that one might otherwise expect.

2 In August 2005, the applicant (Mrs Patterson) commenced proceedings against the respondents pursuant to the provisions of s 106 of the Industrial Relations Act 1996. Those proceedings concerned a franchise arrangement for the operation of a weight loss clinic in circumstances where there were alleged misrepresentations made to the applicant about the nature of the business and the returns that could reasonably be expected from that business. There were also allegations of conduct by the respondents that rendered the arrangement unfair to the applicant in its operation.
3 On 30 June 2006, the first respondent SureSlim Australia Pty Ltd, the entity with which the applicant entered the franchise, was placed into voluntary administration. By 2 July 2006 new holders were named of the master franchise for SureSlim in Australia. On 11 July 2006 the applicant filed a notice of motion seeking asset preservation orders against the second and third respondents, Calvin Tulloch and Petro Tulloch. Mr and Mrs Tulloch were officers of and shareholders in the first respondent and in ordinary parlance the first respondent was their business.

4 An affidavit of urgency was filed at the same time seeking an urgent hearing of the notice of motion. The applicant's solicitor, Mr Mark MacDonald, swore an affidavit in support of the notice of motion. In that affidavit it was stated there were rumours in June 2006 that Mrs Tulloch would announce the sale of the first respondent.

In July 2006 the name of the first respondent was changed to Program Systems Analysis Pty Ltd. On 30 June 2006 notice had been given of the appointment of an administrator of the first respondent. On 2 July 2006 Mr and Mrs Adams from New Zealand had sent an email to franchise holders in Australia introducing themselves as the new master franchisor of SureSlim Australia.

On 5 July 2006, solicitors for the respondents advised they had ceased to act in the proceedings in this Court and in proceedings in the Supreme Court. On 29 June 2006, SureSlim International advised it had terminated the Master franchise agreement with the first respondent.

5 Searches conducted by Mr McDonald revealed the connection between SureSlim Australia and a variety of overseas entities including companies registered in Switzerland with offices located in Jersey and the Channel Islands. Mr McDonald was unable to locate a jurisdiction in which SureSlim International was registered but from searches he conducted believed they operated from the offices of a company whose services included incorporating companies in offshore jurisdictions, including Guernsey and the British Virgin Islands. He referred to the Channel Islands and Guernsey as being well-known tax havens.

6 The address of the first respondent was also the address of Mr and Mrs Tulloch in Bayview NSW. They were the registered proprietors of the property and there were mortgages against that property, including a mortgage entered into with the National Australia Bank. His research had shown that the property was to be auctioned on 22 July 2006 with an expected price of over $2,250,000.

Mr and Mrs Tulloch were citizens of South Africa. The applicants' claim was not less than $275,000 and Mrs Anfield's claim (made on similar grounds under s 106) referred to as the Anfield claim, involved approximately $100,000.

7 His affidavit expressed concerns held about Mr and Mrs Tulloch that led to the applicant's solicitors making inquiries as to their assets and movements of those assets in November 2005. A letter of assurance was received from the solicitors acting for the respondents indicating they had dual citizenship and had no intention of leaving Australia, that there was no disposition of the first respondent's assets since the proceedings had commenced and that there were no grounds for Mareva orders.

Mr McDonald formed the view that matters had "changed markedly" since that exchange of correspondence had taken place. The respondents appeared to be involved with overseas entities and off shore tax havens, and may seek to move offshore the proceeds of the sale of the Bayview property.

8 Mr Macdonald was unaware of other assets including cash assets other than that the Bayview property appeared to be the main asset. He proposed that action would be taken for SureSlim International to be joined as a respondent, especially having regard to the shareholding of that company held by Mr and Mrs Tulloch. Mr McDonald expressed the fear that assets may be transferred from Australia to SureSlim International, as appeared to be the case over the purchase of the Australian master franchise from SureSlim International by Mr and Mrs Adams.

9 The assets preserving order sought by the applicant in the proceedings, Ms Patterson, was granted ex parte by Marks J on 11 July 2006 and the matter was listed again on 13 July 2006. On that date solicitors for the respondents appeared. The orders were modified to allow certain expenses to be paid and a sufficient amount made available for living expenses and legal costs.

It appears that in the ex parte proceedings on 11 July 2006 and at the 13 July 2006 hearing, the applicant offered no undertaking as to damages. On 13 July 2006 no undertaking as to damages was sought by solicitors appearing for the respondents.

In correspondence dated 31 July 2006 solicitors for Mr and Mrs Tulloch demanded that the orders be removed and noted the failure of the applicant to provide an undertaking as to damages.

10 On 7 August 2006, Mr and Mrs Tulloch filed a notice of motion seeking to set aside the asset preservation orders. This motion was listed before Marks J on 15 August 2006 and the orders were further varied without resolving the respondent's motion, as his Honour had insufficient time that day to hear what was clearly to be complex and lengthy arguments, and where the parties assessment of the hearing time was accepted to be inadequate.

The respondents' notice of motion was reallocated and listed before the Court as presently constituted. That took place on 5 October 2006 commencing at 9.30 am and proceeded past 4.00 pm and again was not completed and was listed today, 27 October 2006.

Because of the urgency of the matter, it is not appropriate to engage in a lengthy recitation of the evidence, the submissions or the applicable law. It is accepted that the granting of Mareva orders is an exceptional remedy, not to be granted lightly and that the Court must exercise caution in respect of the terms of any orders made.

11 The second and third respondents raise a number of matters as warranting the dissolution of the orders made and continued by Marks J. They firstly raise the failure of the applicant to give an undertaking as to damages from the ex parte proceedings until the August proceeding before his Honour, a period of approximately one month, when an undertaking as to damages was given. They also argue that there is no risk of assets being disposed of, or disposed of such as to frustrate or abuse the Court's processes. They argue that there is no prima facie case established by the applicant, or a reasonably arguable case. They submit that the balance of convenience favours the dissolution of the orders, citing the fact that the main assets, the home and the motor launch, have been sold or that there are arrangements to sell the motor launch and the proceeds from both those sales are required to meet debts.

12 They also argue they now need funds to develop the business, pay their debts and to continue their defence in the proceedings in this Court. They raise delay in the prosecution of the proceedings and note the amended summons filed in May 2006 has not been followed by any further step to expedite the proceedings.

13 At the outset I should state briefly that, firstly, if I am satisfied there is sufficient evidence, especially in relation to the representations made by the respondents as alleged by the applicant, to conclude that there is a reasonably arguable case under s 106 and if need be (if there is any material difference) that there is a prima facie case: for myself, I would prefer the test of a reasonably arguable case in the circumstances of orders of this nature.

Secondly, while no undertaking has been given or sought as to the prompt prosecution of the proceedings, the Mareva orders only arose in the middle of July 2006 and have been occupying the parties since that time. If I were minded to effectively allow continuation of the orders, I would require an undertaking of this nature.

14 In my view, the most significant matters raised by the respondents were the effect of the failure to give an undertaking as to damages in the ex parte hearing or in the first hearing, and, the evidence of risk that the assets are or may be dissipated, frustrating any orders that might be made by the Court. The submissions as to balance of convenience perhaps overlap this last consideration.

15 In relation to the undertakings as to damages, the respondents refer to the decision of the Court of Appeal in Frigo v Culhaci [1998) NSWSC 393. The judgment in that case represents a powerful statement as to the obligations of counsel seeking asset preservation orders. The issue in that case revolved around proceedings in the District Court, a claim for something over $160,000 in damages, and an apartment (that was the subject of a mortgage) transferred to the defendant's sister. While I have indicated that I do not wish to conduct a wide ranging survey of the law, it is convenient to refer to the following extracts from that judgment:

A Mareva injunction is an exceptional interlocutory remedy. 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 after judgment.

There are cases cited supportive of that proposition. Reference is made to the well-known text, Equity Doctrines and Remedies, in these terms:

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 them.

The judgement continues:

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 to a plaintiff whose status as a creditor is in dispute, who need not be a secured creditor. It's purpose is to preserve the status quo, not to change it in favour of the plaintiff.. The function of the orders is not to provide a plaintiff with security in advance, nor to provide a plaintiff for 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 a plaintiff in the event of the defendant's insolvency. (Abella v Anderson [1987] 2 QdR 1at 203 per McPherson j)

There is reference to the judgment in Patrick Stevedores Operations No 2 Pty Ltd & ors v Maritime Union of Australia (No 3) (1998) 72 ALJR 873 at 892 in the High Court:

[The Mareva injunction] exists not to create additional rights but to enable the Court to protect its process from abuse in relation to the enforcement of its orders. It is neither a species of anticipatory execution nor does it give a form of security for any judgment which may ultimately be awarded. Many authorities attest to the care with which the Courts are required to scrutinise applications for Mareva injunctions.

Reference is then made to the well known case of Patterson v BTR Engineering Australia Pty Limited (1989) 18 NSWLR 319, and especially to the words of Gleeson, CJ at 321 and 322 as follows:

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.

In framing the order, counsel for the plaintiff should bear in mind that a court exercising equitable jurisdiction generally will only grant to a plaintiff by way of interlocutory relief the minimum relief necessary to do justice between the parties: see eg Commonwealth of Australia v Verwiyin (1990) 170 CLR 394 at 411.

The Court then deals with the failure in that case to give an undertaking as to damages and says this:

We cannot conceive of circumstances where an ex parte Mareva injunction should be granted otherwise than subject to an undertaking as to damages. See generally Kerridge v Foley (1968) 70 SR(NSW) 251. The continuing absence of the undertaking should have led to the dissolution of the ex parte orders, including those requiring the defendants to file an affidavit disclosing their assets and liabilities.

The Court then deals with the affidavit that was filed in the matter, and while counsel accepted that the undertaking had not been given, proffered the undertaking during argument, nunc pro tunc. His Honour Judge Christie, who was hearing the matter in the District Court, had the issue of the failure to give the undertaking raised with him. He appeared to have been prepared to do something about it, but ultimately did not, and he was not reminded of that fact by counsel appearing in that matter. In that circumstance, the Court said the onus was on the plaintiff through his counsel to ensure that the undertaking was offered, and that the Judge be reminded of his intention to include such undertaking in any combination of his orders.

A little later in the judgment the Court stated:

It was quite wrong of counsel for the plaintiff to take the stance that an undertaking as to damages would be offered if and when, but only if and when it was sought. He should have reminded the Judge of this invariable incident of an interlocutory injunction of this nature at the time that the injunction was sought ex parte. Judge Christie should have refused to continue the interim judgment beyond 5 June unless and until such undertakings were proffered and counsel for the plaintiff should have reminded the judge about this if it were thought, as has been submitted before us, that his omission to engraft this condition was an oversight. The absence of an undertaking as to damages has a severe detriment to a defendant, who, if the proceedings fail, will be left without remedy against the plaintiff with respect to any loss flowing from obedience to the injunction.

Before us, counsel for the plaintiff offered the undertaking nunc pro tunc. In the circumstances of the case where the omissions to give the undertaking at the outset and on 5 June were not an oversight, we would dissolve the injunction on this ground alone.

16 The respondents also drew attention to the judgment of the High Court in Cardile & Ors v LED Builders Pty Limited (1999) 198 CLR 380. There are two passages of significance. The first is in the joint judgment of Gaudron, McHugh, Gummow and Callinan JJ and appear in para [50] at page 403. There the joint judgment said as follows:

As LED submits, the development of this ancillary jurisdiction to grant Mareva orders has been an evolving process and the Courts have approached the different factual situations as they have arisen "flexibly".

A little later in that paragraph the court continued:

It has been truly said that a Mareva order does not deprive the parties subject to its restraint either of title to or possession of the assets to which the order extends ... nor does the order improve the position of claimants in an insolvency of the judgment debtor ... it operates in personam ... and not as an attachment. Nevertheless, those statements should not obscure the reality that the granting of a Mareva order is bound to have a significant impact on the property of the person against whom it is made: in a practical sense it operates as a very tight 'negative pledge' species of security over property to which the contempt section is attached. It requires a higher degree of caution on the part of the court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct.

In para [51], the joint judgment continued:

We agree with the tenor of what was said with particular respect to Mareva relief before judgment by the Court of Appeal in New South Wales (Mason P, Sheller JA, Sheppard A-AJ) in Frigo v Culhaci ... :[A Mareva order] is a drastic remedy which should not be granted lightly ...

[A Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant's right to deal with his or her assets ... many authorities attest to the care which courts are required to scrutinise applications for [Mareva orders].

The remaining part of that quote by the High Court I have already referred to.

17 In a separate judgment, Kirby J, page 427 at para [142], dealing with the form of the order said:

In framing asset preservation orders, certain features must be observed ... they take effect in personam. They are thus distinguished from remedies, such as tracing, which affect proprietary rights ... they are interlocutory orders, subservient to the main proceedings but potentially vital to their utility. The grant of such relief is discretionary. They must often be provided (or withheld) in urgent circumstances where a propensity to shift assets, apparently to defeat a judgment, has already been manifested. The plaintiff must establish a real risk of assets being disposed of ... no such relief should be contemplated without the provision of an undertaking as to damages ... this is protective both of the defendant and of non-parties made subject to such orders. It acts as a sanction against ill-considered applications or unjustified orders. It is the duty of the lawyer of the parties to remind the judge of this pre-requisite ... Various qualifications to the operation of such asset preservation orders are now settled ... Thus, provision should be made for liberty to apply to vary the orders on short notice should it emerge that something has been overlooked in the exigencies. Or should some inconvenience arise, proof of which would warrant variation of, or further exceptions to, the orders as initially framed.

In para [123] his Honour continued:

The fact that application for asset preservation orders must often be decided in urgent circumstances cannot, of course, excuse the making of orders of a kind that are not, in law, 'appropriate'. The fact that the orders are interlocutory does not relieve the court asked to make them of the obligation to consider the utility and the ultimate right of the judgment creditor to gain access to the assets and property made the subject of them. However, these considerations require that a very large measure of latitude be allowed to judges as to when they consider it 'appropriate' to provide such relief, with the aim of protecting the position of an actual potential judgment creditor and the process of the court itself.

18 In relation to these matters, the applicant has drawn attention to the judgment of Dunford J sitting in the Supreme Court of New South Wales in VisyBoard Pty Ltd v AFMEPKIU & ors, a case reported in (1999) 91 IR 88. In that case, the interlocutory injunctions were of a different nature concerning alleged picketing of the business.

That order was challenged on the basis that there had not been a frank disclosure to the Court. On that ground, the orders issued were dissolved. From paragraph 20 onwards and without setting it out in detail, his Honour expressed his satisfaction that the ex parte injunction should not have been obtained, because of the failure to make relevant disclosure, but he noted a number of cases that he cited that would not prevent the plaintiffs from applying de novo for an injunction on the merits as they then appeared. He noted in particular that the Court might dissolve the injunction, but the Court might be immediately moved to continue the injunction or make a new injunction on evidence then before the Court.

19 In submissions this afternoon, my attention has also been drawn to the judgment of Hamilton J in Electric Mobility Company Pty Limited v Whizz Enterprises Pty Limited (2006) NSWSC 580. Having stated that it was clear that a mere assertion that a defendant is likely to put assets beyond the plaintiff's reach would not be enough, citing as authority Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH [1984] 1 All ER 398, his Honour then said in para [6]:

The relevant passage in the judgment of Mustill J in Ninemia Maritime Corp ... at 406 was as follows:

It is not enough for the plaintiff to assert a risk that the assets will be dissipated. He must demonstrate this by solid evidence. This evidence may take a number of different forms. It may consist of direct evidence that the defendant has previously acted in a way which shows that his probity is not to be relied on. Or the plaintiff may show what type of company the defendant is (where it is incorporated, what are its corporate structure and assets, and so on) so as to raise an inference that the company is not to be relied on. Or, again, the plaintiff may be able to found his case on the fact that inquiries about the characteristics of the defendant have led to a blank wall. Precisely what form the evidence may take will depend on the particular circumstances of the case. But the evidence must always be there. Mere proof that the company is incorporated abroad, accompanied by the allegation that there are no reachable assets in the United Kingdom apart from those which it is sought to enjoin, will not be enough.

20 Lastly, the applicant drew attention to the decision of Young CJ in Equity in Lawindi v Elkateb (2001) NSWSC 865, a judgment delivered on 3 October 2001, where his Honour granted a Mareva order against a bankrupt. Those are the particular cases which I have chosen to guide me in the task that I have in dealing with this notice of motion.

21 I then turn to the evidence. The evidence shows that the applicant was moved by a concern at the removal of proceeds following the sale or proposed sale of the Bayview premises, and also the possible sale of a motor launch. That property has now been sold. The proceeds were insufficient to meet the mortgage liability. There are arrangements for the sale of the motor launch, but when that is concluded, the proceeds available will not satisfy the extent of the respondents' debt.

22 Therefore, the two most important assets raising the applicant’s concern have been dealt with and have been realised to meet the respondent’s existing debt. There can be no longer a fear that those assets will be deliberately depleted and transferred outside of the jurisdiction. The present assets preservation order allowed those assets to be sold, allowing for proceeds to be available to the respondents over the sum of $500,000. As I have indicated, there are no such proceeds. The present orders operate also for the provision of $25,000 for the existing known immediate expenses of the respondents. There were other sums made available: $1,920 for weekly living expenses, the payment of legal fees and legitimate business expenses. As I understand the evidence before me, the adequacy of those amounts is unchallenged, but it is the other matters which I have already referred to that are pressed.

23 Mrs Tulloch’s evidence is the respondents wish to develop the business of SureSlim International in order to make money to pay their debts and to maintain their defence of these proceedings. The respondents in a number of ways asserted the viability of the SureSlim product, pointing to its success in other countries. Mrs Tulloch was unable to say what costs would be involved in developing a new package, although a general figure was suggested.

Somewhat curiously, her affidavit was used as the main vehicle for disclosing the detail of the assets held by the respondents, and the way in which the company operated. Yet she repeatedly sought refuge, during cross-examination, in the advice given by the accountant, and a lack of understanding as to why many business decisions were made.

24 Today some further explanation has been given in relation to some of those matters. The evidence has shown that Mr and Mrs Tulloch received royalties, on Mrs Tulloch’s evidence, up to and possibly over $25,000 per month from their business interests in the United Kingdom, Canada and New Zealand and in many ways through SureSlim International, in which they owned the shares. There appeared to be varying amounts available in recipe royalties, on one view averaging between $18,000 and $20,000 in the last few months. This money was to be used to again build the business.

On today’s evidence, Mr Tulloch suggests the amounts received on this account may be $10,000 or something less. Whatever money is being received from those sources, and probably within those amounts, the respondents wish to access the money to build up the business.

25 The evidence shows that Mr and Mrs Tulloch have recently taken Australian citizenship. They have entered into a long term lease of a new property and they propose to buy that property when they are back on their feet financially.

Whilst they hold dual Australian and South African citizenship, and have international and complex business arrangements, the evidence does not establish that they are a risk of fleeing the jurisdiction, or fleeing the jurisdiction with assets improperly removed from the jurisdiction or otherwise unscrupulously dissipated.

26 The cross-examination of Mr and Mrs Tulloch may suggest that there are other assets, but ultimately the evidence does not identify those assets. In my view the evidence is that the assets remaining are the royalties received each month from the international operation of the business.

I am unable on the evidence to find an intention to remove this money from the jurisdiction and I accept the oft made submission by the respondents that the flow of money is rather the other way round - it is coming into Australia.

27 Counsel for the applicant points to the fact that money received by the respondents may be diverted overseas using the complex group structure and that a lot of money had been moved from Australia to Guernsey and that there had been a deliberate decision to sink SureSlim Australia leaving it with the largest possible tax liability burden as could be arranged. He points to the structure of the group of companies, the fact that the Australian franchise was purchased by New Zealanders, and not all the money paid into Australia, although it does appear from the evidence that at least $100,000 was being made available to the liquidator and the sum of $50,000 was sent to SureSlim International and $90,000 paid in fees and consultancies.

28 Reference is also made to the fact that over four or five years of operation the respondents appear to have taken $3.6 million from the business. That collection of facts, they say, raise the types of inferences that might be made as to the way in which the company has operated and what has happened to it and establishes a level of risk warranting a continuation of the Mareva orders.

Again it is pointed out that both the Tullochs hold South African passports. They have no permanent abode in Australia. They have arranged their affairs in these companies to bring income through Guernsey into Australia in amounts that they dictate. It is said that they had not put on evidence of the cause of the downturn of their Australian business. A number of these matters highlighted, on behalf of the applicant, are valid matters for consideration.

29 In my view the evidence, such as it is, shows that the Tullochs removed themselves from the business for a period of time. It was in the hands of others. There is perhaps some small indication in Ms Patterson’s own summons for relief that at much the same relevant time her business was suffering, at least partly because of a lack of promotion and marketing. I think there is force in the respondent’s submission that it does not make a great deal of sense in being asked to draw the inferences that the court has been asked to draw by the applicant, that this multimillion dollars business had been deliberately put into administration and had been closed so that the individual defendants and the remaining defendants could avoid a total payment of some $300,000. It seems to me that is not attractive as an available inference.
30 I have already expressed the view that I am unable to accept that there is risk of flight. I have referred to the relevant assets now being cash assets and they seem to be coming into Australia. I can find no real evidence of doubtful or improper disposition of funds or funds being diverted. I am guided by what the majority said in Cardile about restricting commerce and the evidence of the respondents that their business plans are for the resurrection of this business so they can pay their debts as well as live and defend the proceedings, in circumstances where there is evidence that the business appears to be otherwise a viable concern, at least in other countries.

31 Ultimately I should say that the undertaking as to damages, although a serious matter, is not the issue that is determinative in this case. I accept what is said generally by the Court of Appeal in Frigo, although the circumstances of each case need to be considered. There are aspects of the judgment of the Court of Appeal in Frigo which may suggest that the result in that case was brought about by particular actions of counsel.

32 In those circumstances, I grant order 1 in the respondents' notice of motion and dissolve the orders made by Marks J on 11 July 2006, as modified on 13 July 2006.

I note the agreement between the parties that the orders in Ms Patterson’s matter would be dealt with in the same way as the Anfield matter. It is sufficient that I release the respondents from the undertaking given in the Anfield proceedings. It is appropriate for the

respondents to prepare Short Minutes of Order and forward them to my Associate by Wednesday, 1 November 2006. I will deal with those orders in chambers.

ORDERS

1. The orders made by His Honour Mr Justice Marks on 13 July 2006 and 15 August 2006 are set aside.

2. The second and third respondents are released from the undertaking given by them to this Court on 25 July 2006 in proceeding Number IRC 5396 of 2005.

3. The costs of and incidental to the applicant's Notice of Motion filed on 11 July 2006 and the second and third respondents' Notice of Motion filed on 7 August 2006 are costs in the cause,

oo00oo

LAST UPDATED: 03/11/2006