PARTIES:	JAMES HUGH MALCOLM TAYLOR
		and ROBYN GRACE VINCENT

		v

		DIAMAND & ZIKOS 
		DEVELOPMENTS PTY LTD

TITLE OF COURT:	SUPREME COURT OF THE 
		NORTHERN TERRITORY

JURISDICTION:	SUPREME COURT EXERCISING
		TERRITORY JURISDICTION

FILE NO:	146 of 1996

DELIVERED:	11 December 1996

HEARING DATES:	28 November, 4 and 6 December 1996

JUDGMENT OF:	Kearney J

REPRESENTATION:

Counsel:

	Plaintiff:	S.R. Southwood, M.F. Michaels
	Defendant:	M.P. Spargo

Solicitors:

	Plaintiff:	Clayton Utz
	Defendant:	Close & Carter

Judgment category classification:	B
Judgment ID Number:	kea96034
Number of pages:	10

kea96034

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

No. 146 of 1996

		BETWEEN:

		JAMES HUGH MALCOLM TAYLOR
		and ROBYN GRACE VINCENT
			Plaintiffs

		AND:

		DIAMAND & ZIKOS
		DEVELOPMENTS PTY LTD
			Defendant

CORAM:	KEARNEY J

REASONS FOR JUDGMENT

(Delivered 11 December 1996)

	The Application
	By summons of 20 November 1996 the plaintiff sought the following relief:

1.1	until further order, the Defendant, whether by itself, or its
servants or agents or otherwise, be restrained from selling, transferring, mortgaging, encumbering or otherwise dealing with or disposing of its interest in the land described in the Schedule;

1.2	until further order, the Defendant, whether by itself, its servants
or agents otherwise, be restrained from selling, transferring, mortgaging, encumbering or otherwise dealing with or disposing of its assets within the Northern Territory of Australia otherwise than for the payment of any debts bona fide incurred, for defraying legal expenses that are bona fide incurred in defending these proceedings or for paying any insurance, mortgage payments, rates, taxes and other statutory charges properly payable in respect of its assets;

1.3	until further order, the Defendant whether by itself, its servants
or agents otherwise, be restrained from removing any of its assets from the Northern Territory of Australia.

I rule on the application today.

	Background
	The defendant has constructed a block of units on Lot 5893 Town of Darwin, known as “The Anchorage”.  By originating motion of 2 August 1996 the plaintiffs claimed against the defendant as follows.  The defendant is the registered proprietor of Lot 5893.  It represented to the plaintiffs between November 1994 and January 1995, before The Anchorage was built, that proposed Unit 24 “would have an uninterrupted view of, and breezes from, Mindil Beach”.  In reliance on this representation the plaintiffs agreed to purchase Unit 24 from the defendant, ‘off the plan’.  In breach of this contract, the defendant had - 

“…  constructed a weather awning over the rear balcony of the Unit below the line of sight, thereby obstructing views of, and breezes from, Mindil Beach from inside the Unit and from the balcony of the Unit.”

The plaintiffs founded their claim, as an alternative to breach of contract, on misleading and deceptive conduct by the defendant under s52 of the Trade Practices Act.   By way of remedy the plaintiffs sought that the weather awning be remedied so as to avoid the consequences alleged above, and specific performance of the contract; alternatively, damages.  

	The defendant entered an Appearance.  The plaintiffs provided further and better particulars of their claim on 3 September.  The defendant filed a Defence and Counterclaim on 10 September; it relied mainly on estoppel.  The plaintiffs filed their Defence to the Counterclaim on 18 September.

	The materials relied on
	In support of the application of 20 November the plaintiffs relied on the affidavits of that date of one Michael North and the plaintiff James Taylor.  In his affidavit Mr North stated that he had purchased a unit in ‘Baywatch’, a different block of units also owned by the defendant.  Mr North deposed to the contents of a telephone conversation of 18 November 1996 which he had with one George Zikos, a director of the defendant. He stated that Mr Zikos had raised the subject of a ‘class action’ being brought against the defendant; in relation to that he deposed that Mr Zikos said:

“7.	… 
We are not going to oppose or argue with the claims from them [that is, the persons bringing the ‘class action’] because at the end of the day we don’t have any money.  Diamand and Zikos have (sic) disposed of all its assets.  It doesn’t have any money in its bank account.”

Mr North deposed that he responded:

“8.	I then said words to the effect:
“What about the 4 flats you have in Anchorage?”

George Zikos replied:
“They are fully mortgaged to the National Bank.  They are no longer in our names.  We no longer have any assets.””

	Mr Taylor’s affidavit deposed in detail to the alleged representation by the defendant which founded the plaintiffs’originating motion of 2 August, to the plaintiffs’ purchase of Unit 24, to their ascertaining in March 1996 that the weather awning had been constructed, to Mr Zikos stating that “we will get the architect to sort it out”, and to the plaintiffs completing their contract for purchase of Unit 24 on 10 September.  

	Ms Michaels for the plaintiffs appeared before me, ex parte, on 20 November and, on giving the usual undertaking as to damages, obtained an interim order along the lines sought in the summons of 20 November.

	On 28 November and 4 and 6 December the plaintiffs renewed their application for that relief; Mr Southwood appeared for the plaintiffs and Mr Spargo for the defendant.  The defendant relied on the affidavit of Mr Zikos of 25 November and its annexures, in reply in particular to Mr North’s affidavit  of 20 November.  In his affidavit Mr Zikos gave an account of his telephone conversation of 18 November with Mr North, which differed  substantially from Mr North’s account.  Inter alia, Mr Zikos deposed:

“7.	During the conversation [of 18 November] with Mr North I 
did not make any reference to Diamand & Zikos Developments Pty Ltd having disposed of all of its assets or having no money in its bank accounts or that the Directors did not have any money.

8.	Diamand & Zikos Developments Pty Ltd owns four units in the
Anchorage Development at Cullen Bay and four residential units in the Marina Crescent Development at Cullen Bay.  Based on an average of sale prices in those developments at Cullen Bay I believe that the value of the said eight units exceeds $2,000,000.

9.	The Defendant Company has given a charge to Esanda Finance
Corporation Limited and to National Australia Bank.  Esanda Finance Corporation Limited provided project finance to the Defendant Company for the Anchorage Development but this has now been repaid from the proceeds of sale of units in that Development.  The Defendant’s Company liability to the National Australia Bank is its overdraft facility which presently does not exceed $200,000.

10.	The titles to the Defendant’s four units in the Anchorage 
Development are not subject to any freehold mortgage.  The Defendant’s four units at Marina Crescent are subject to a freehold mortgage to Esanda Finance Corporation Limited but no monies are now owed to that company.

…

15.	Chris Diamandopolous and myself are both the sole shareholders
and Directors of Diamand & Zikos Holdings Pty Ltd ACN 071 150 395 a company which is committed to purchasing Lot 5894 in the Town of Darwin which adjoins the Anchorage Development in Cullen Bay [on Lot 5893].  Approximately $900,000 is due for the completion of the purchase of Lot 5894 at the end of January 1997.   Planning approval and architects and engineering drawings have already been obtained and prepared in respect of a 35 Unit residential development proposed for Lot 5894.

…

17.	The Defendant Company will be involved in the development of
Lot 5894 by acting as the guarantor for purchase and project finance.  Diamand & Zikos Holdings Pty Ltd owns other substantial assets in Darwin namely a squash court and supermarket in Sabine Road, Millner.  If Diamand & Zikos Developments (sic, Holdings) Pty Ltd does not obtain project finance for its development of Lot 5894, Cullen Bay, it will incur significant loss including the loss of a deposit of $100,000 already paid.”

	For the purposes of the application of 20 November, the plaintiffs subpoenaed Diamand & Zikos Holdings Pty Ltd, Esanda Finance Corporation Limited, National Australia Bank and the defendant’s solicitors Messrs Close & Carter, to produce various documentation relating to the defendant and its dealings.  Nothing was sought to be made of the results of these subpoenas, before me.

	Mr Zikos was cross-examined at length by Mr Southwood on 28 November and 6 December.  Counsel then addressed, and I reserved my decision.

	Conclusions
	The plaintiffs’ application of 20 November is for a Mareva injunction.  In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321-2 Gleeson CJ noted that it was now clear that Mareva injunctions were:

“… accepted as an established part of the armoury of a court of law and equity to prevent the use or frustration of its process in relation to matters coming within its jurisdiction.”

His Honour cited the authorities which support that proposition; to that list I add Mitchell v Saengjan (unreported, Supreme Court (Mildren J) 23 March 1994, at pp14-16). Gleeson CJ dealt at p321 with what a plaintiff must establish to obtain a Mareva injunction, viz:

“The [Mareva] 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 the present case the danger alleged is that the defendant may dissipate its present assets.  The Court in Patterson (supra) considered that it was undesirable to formulate a precise definition of the standard of proof of this danger,  and it was not appropriate to apply as the test that the Court only intervenes if there is “more than a usual likelihood” that the danger exists. I consider that it must be shown that the danger is sufficiently substantial to warrant the injunction; there must be a real risk of a dissipation of assets by the defendant such that there is a real danger that the plaintiffs, if successful, would not be able to have their judgment satisfied.  In saying that, I am not formulating some general test; it is for the Court in the particular circumstances of each case to decide whether sufficient danger has been shown.

	It is common ground between the parties that the two requirements identified in Patterson’s case (supra) (p6) are the requirements which the plaintiffs must satisfy in this case:  a prima facie case against the defendant, and a danger that the defendant will so dispose of its assets that there is a danger that the plaintiffs, if successful, could not have their judgment satisfied.  I consider that the evidence relating to both requirements must be considered as a whole, in deciding whether the injunction sought should be granted.

	The defendant by its counsel Mr Spargo rightly conceded that in the light of Mr Taylor’s affidavit of 20 November and its annexures, the plaintiffs have  established a prima facie case for the purposes of this application.  I consider that this is not one of those exceptional cases where the danger of the dissipation of assets can be inferred from the existence of the prima facie case.

	Having considered in particular what emerged in the cross-examination of Mr Zikos, I am not satisfied that he has been shown to have responded dishonestly to Mr North’s affidavit.  Mr Southwood submitted that there were logical inconsistencies in Mr Zikos’ affidavit; however,  I am not satisfied that what is said in that affidavit is such that it can be concluded that what Mr North said in his affidavit is more likely to be the correct and preferable version of their conversation.  Further, I am not satisfied that Mr Zikos’ evidence, both affidavit and oral, relating to the financial position of the defendant and its commercial intentions, is such as to lead to a legitimate concern that the defendant will dissipate its present substantial assets to such a degree as to put the plaintiffs at risk as to the satisfaction of any judgment which they may ultimately recover.  I do not consider that it is accurate to assess Mr Zikos’ evidence as ‘equivocal’ or ‘rather nonsensical’, as Mr Southwood submitted.

	Despite Mr Southwood’s submissions, I consider that there is nothing to suggest that the proposed business transactions of the defendant are anything other than those commonly found in a developer such as the defendant.  This includes the guarantee it has given in relation to the adjoining development by Diamand & Zikos Holdings Pty Ltd.  I do not accept that the giving of that guarantee itself indicates a danger of the dissipation of the defendant’s assets.

	Applying the test expressed by Lawton LJ in Third Chandris Shipping Corporation v Unimarine SA (1979) QB 645 - the capacity of an honest man to spot a likely defaulter - I see nothing in Mr Zikos’ evidence to give rise to a concern that the defendant will dissipate its assets.  In reaching that conclusion I should record that I am well aware of the abuse of company structures in the Territory designed to render valueless the rights of persons who enter into arrangements with such companies.  

	I accept that the draft minutes of order handed up by Mr Southwood on 6 December minimise any prejudice to the defendant.  That, however, does not address the question of whether a Mareva injunction should issue in the first place.  It is for the plaintiffs to show that a Mareva injunction should be granted.

	It is not the function of the Court on an application for a Mareva injunction, to resolve conflicts in the affidavit evidence.  At the end of the day, for present purposes, the contents of the telephone conversation North/Zikos remain in dispute.  It is a fact that the defendant presently has substantial assets in the form of units.  The plaintiff’s claim is quantified in par45 of Mr Taylor’s affidavit of 20 November at “some tens of thousands of dollars at least”; the defendant’s current assets are far in excess of that.

	While the existence of a prima facie case against the defendant is not in issue, I am not satisfied on the facts of this case that a sufficient risk has been shown that the defendant will dissipate its assets such as to give rise to a danger that the plaintiffs, if successful, will not be able to have their judgment satisfied.  Accordingly, I do not consider that it is appropriate on the facts of this case to grant a Mareva injunction  The plaintiffs’ application of 20 November is refused.

	Order accordingly.
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