Wawa Trading Co Pty Ltd v Lie Tat Swie Lie, also known as Gunawan Santoso, and Bank of New South Wales (PNG) Ltd [1982] PGLawRp 444; [1982] PNGLR 375 (12 November 1982)

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[1982] PNGLR 375 - Wawa Trading Co Pty Ltd v Lie Tat Swie Lie, also known as Gunawan Santoso, and Bank of New South Wales (PNG) Ltd

INJUNCTIONS - Mareva injunction - Terms of - Qualification permissible - Purpose of not to be defeated.

PRACTICE AND PROCEDURE - Interlocutory orders - Variation - Mareva injunction - Qualification permissible - Purpose of injunction not to be defeated.

JUDGMENTS AND ORDERS - Variation of - Interlocutory injunction - Mareva injunction - Qualification permissible - Purpose of injunction not to be defeated.

The purpose of a Mareva injunction is to prevent a foreign defendant from removing his assets from the jurisdiction when they might otherwise have been available to satisfy any judgment obtained.

The injunction may be qualified to allow a transfer of assets from the defendant where the money is required for a purpose which does not conflict with the policy underlying the Mareva injunction.

Accordingly, the terms of an interlocutory injunction freezing the defendants’ bank accounts should be varied so as to enable the defendant to use a fixed deposit pledged as security to repay a loan.

This was an interlocutory application seeking orders varying the terms of a Mareva injunction and other orders.

WOODS AJ: This is an application by the Bank of New South Wales (P.N.G.) Ltd. the second defendant in this matter, firstly to vary an order made on 25th June, 1982, whereby all moneys in the name of the first defendant in the said Bank were frozen, such that the Bank be able to recover moneys owed to it pursuant to a loan agreement with the first defendant made in March, 1982, and secondly that the Bank be struck from the proceedings as a defendant.

The order made by this Court in June is what is known as a Mareva injunction which, in the words of the New South Wales Court of Appeal, is an order which restrains a defendant from dealing with assets so as to remove them from the reach of the plaintiff and thereby render any future judgment fruitless and barren. This type of order is a relatively new equity procedure and principles are still being evolved. With respect to the application now before me I adopt the statement of Goff J. in the case Iraqi Ministry of Defence and Others v. Arcepey [1980] 1 All E.R. 480, when he said although the whole point of the Mareva jurisdiction was to enable the plaintiff to proceed by stealth so as to pre-empt any action by the defendant to remove his assets from the jurisdiction and to achieve that result a Mareva injunction was necessarily in a wide form, it did not follow that, having granted such an injunction, the court should not thereafter permit a qualification to it to allow a transfer of assets by the defendant if the money was required for a purpose which did not conflict with the policy underlying the Mareva jurisdiction. And see Turner v. Sylvester [1981] 2 N.S.W.L.R. 295.

Looking at this application before me, apparently the defendant Lie Tat Swie had with another person an interest bearing deposit in the Bank of New South Wales which was used as a security for a loan agreement arranged in March this year before the current proceedings were instituted. The defendant, presumably because of these proceedings and because all moneys in the Bank were frozen by the order of this Court, has now defaulted under the loan agreement and the Bank is calling up its money and seeking recovery from the security it holds.

The Mareva injunction cannot be used as a means of giving priority to a client in an insolvency. It is not a form of a pre-trial attachment which gives the plaintiff priority. It is purely to prevent a foreign defendant from removing his assets from the jurisdiction when they might otherwise have been available to satisfy a judgment. I am not concerned as to whether, as the plaintiff may try and suggest, the asset frozen has been created from the failure to account as alleged in the principal claim. It is not inconsistent with the policy underlying the Mareva injunction for a defendant to be free to repay a loan secured by the asset since he is not seeking to avoid his responsibilities to the plaintiff if the latter should ultimately obtain a judgment but is merely seeking in good faith to make a payment which he considers he should make in the ordinary course of business.

I therefore find that this Court should allow a qualification of the order made to allow the Bank to recover moneys owed to it under the loan agreement. I use the figures supplied in support of the application but they can presumably be consolidated for the purposes of the order and I order that the order of 25th June, 1980, be varied to enable the first named defendant to withdraw from interest bearing deposit No. 1159 the amount of K3,633.19 plus an administration fee of K25 plus interest which to 25th August, 1982, amounts to K99.74 together with interest from that date of K1.79 per day to the date of this order which amount is to be paid to the Bank of New South Wales (P.N.G.) Ltd. (Waigani Branch). And I further order that the order in all other respects shall remain the same.

With respect to the second application by the Bank of New South Wales (P.N.G.) Ltd. I am satisfied that in the main action there is no cause of action or claim against the second defendant. It would appear that the second defendant was joined as a party for the purposes of the interlocutory application for the injunction against the bank accounts. There is now an order in existence restraining the first defendant and the Bank from dealing with any accounts with the Bank over which the first defendant has any authority until the trial of the action or until further order. Such an order does not require the presence of the Bank as a second defendant in the whole proceedings unless the Bank has some further interest not disclosed at this stage. I see no reason why the Bank should continue to be joined as a defendant and I therefore order that the name of the second defendant be struck from the proceedings herein.

Costs: Because of the first part of this application it is clear the Bank has had an interest in this matter. And whilst it was an interest of more than passing concern to the plaintiff because of its effect on the amount of assets held by the defendant in the jurisdiction it was not an interest for which the plaintiff should be held responsible. It was a matter purely between the two named defendants. The Bank has in effect been able to use this procedure to secure payment of money owing to them by the first defendant. The first defendant has not come to this Court to deny this claim. I therefore feel that with respect to this part of the application the first defendant should be liable for the costs of the applicant/second defendant.

With respect to the second part of the application that the name of the second defendant be struck from the proceedings clearly the applicant is entitled to his costs as it was not his will that he was joined in this action. The plaintiff joined him, the plaintiff has now got the security he sought, the plaintiff therefore must pay for this. With respect to this part of the application the applicant is entitled to his costs from the plaintiff.

I award the applicant namely the Bank of New South Wales (P.N.G.) Ltd. costs of and incidental to this application to be paid as to 50 per cent by the plaintiff and as to 50 per cent by the first defendant.

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Papua New Guinea Law Reports

Wawa Trading Co Pty Ltd v Lie Tat Swie Lie, also known as Gunawan Santoso, and Bank of New South Wales (PNG) Ltd [1982] PGLawRp 444; [1982] PNGLR 375 (12 November 1982)

Papua New Guinea Law Reports - 1982