Jackson v Sterling Industries

From Uni Study Guides
Jump to: navigation, search

Citation: Jackson v Sterling Industries (1987) 162 CLR 612.

This information can be found in the Textbook: Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters, pp. 306-10.

Contents

Background facts

  • The Plaintiff sued the Defendant for breach under the Trade Practices Act (Now the Australian Consumer Law).
  • The Plaintiff also applied to the Federal Court for an order that the respondent pay $3 million into court as security for the satisfaction of any judgement that might be entered against him in the application.
  • The Federal court found that the Plaintiff had a good chance of success and made the order. The Defendant appealed.

Legal issues

Judgement

  • Orders preventing a defendant from disposing of his assets are comparatively recent, however, they have become accepted in superior courts throughout most of the common law world.
  • Initially, injunctive orders to preserve assets were made to prevent a non-resident defendant from removing assets from the territorial limits of a court’s jurisdiction so as to frustrate the effectiveness of any judgement that might be obtained.
  • As a general proposition, it should now be accepted in this country that a “Mareva injunction can be granted…if the circumstances are such that there is a danger of [the defendant’s] 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 judgement, will not be able to get it satisfied”: per Lord Denning MR in Rahman (Prince Abdul) v Abu-Taha.[1]
  • The Federal Court's power to grant such relief is conferred by the express grant in s 23 of the Federal Court Act.
  • However, in the present case, the order which the Federal Court made was different: it was not a mere injunction against disposing or diminishing assets (ie, a freezing order) but rather it was an order to provide security to the court. This goes well beyond a mere freezing order.
    • There are obvious differences with providing a security: (a) it requires the party to pay not the actual money identified as being in its possession but simply to provide x amount of money regardless of the source; (b) it goes beyond the 'preservation' of assets and into the turning them into 'security' and (c) it fails to really identify what the money was to secure or what the entitlement to it was.
  • When an order for the preservation of assets goes beyond the mere preservation of assets, it must be framed so as to come within the limits set by the purpose which it can properly be intended to serve.
    • That purpose is not to create security for the plaintiff or to require a defendant to provide security as a condition of being allowed to defend the action against him. Rather, it is to prevent a defendant from disposing of his actual assets in a way which frustrates the process of the court by depriving the plaintiff of the fruits of any judgement obtained in the action.
    • Only in the most exceptional cases would a party be required to deliver assets into the hands of the court.
  • Thus, the Federal Court did not have the power to make those orders and the appeal is allowed. More generally though, freezing orders are recognised as within the powers of the courts.

References

  1. [1980] 1 WLR 1268.
Personal tools
Namespaces

Variants
Actions
Navigation
Toolbox