Jaken Properties Australia Pty Limited v Naaman

1. [1]

   Before the Court are three notices of motion each dated 15 July 2022. First, Mr Anthony Naaman, the defendant and cross-claimant, seeks asset preservation orders against certain cross-defendants and others who are third parties to these proceedings, directed at preventing the disposal or other dealing with a property known as the Royal Hotel Granville. Second, Samanril Pty Limited, Saphire Mortgage Pty Limited, Ms Samantha Panetta and Ms Riley Panetta-Sleiman (the Samanril parties) seek the discharge of certain asset preservation orders made against them by Kunc J on 28 January 2022. Third, RHG Nominees Pty Ltd, RHG Properties Pty Ltd, Connells Point Holdings Pty Ltd, Ms Angela Michael and Mr Jake Sleiman (the RHG parties) seek the discharge of certain asset preservation orders made against them by Rees J on 3 November 2020.

2. [2]

   Each notice of motion was filed pursuant to leave given by Kunc J as part of the final orders made on 1 July 2022 in respect of the proceedings in which his Honour delivered judgment on 29 April 2022 (2019 proceedings and Judgment, respectively). These proceedings essentially concern the enforcement of a judgment obtained by Mr Naaman in 2016 against Jaken Property Group Pty Ltd (JPG), a former trustee of a trust known as the Sly Fox Family Trust (Sly Fox Trust), through subrogation to JPG’s right of indemnity against the assets of the Sly Fox Trust. An appeal from the decision of Kunc J was heard by the Court of Appeal on 6 and 7 February 2022 and judgment is reserved.

3. [3]

   Mr Naaman’s motion seeks further asset preservation orders against additional companies connected with Mr Peter Sleiman directed principally to preserving Mr Naaman’s claim to be subrogated against an asset in which those entities have an interest, being the Royal Hotel Granville.

4. [4]

   At the heart of the submissions made by the Samanril parties and the RHG parties for why the orders previously made against them should now be discharged is that they were not parties to the 2019 proceedings. They submit that, as a consequence, it would be unjust if the orders against them were continued, relying on John Alexanders Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 (JACS) and alternatively, “Anshun estoppel”. As mentioned at [18] below, while the Samanril parties and the RHG parties are not parties to the 2019 proceedings, Mr Naaman has now commenced new proceedings against them by a statement of claim filed on 17 October 2022 (Statement of Claim) which sets out the claims he makes against them in support of both the existing asset preservation orders against them and the new ones the subject of Mr Naaman’s motion referred to below.

Mr Naaman’s motion

1. [5]

   The relief sought by Mr Naaman is as follows:

2. [6]

   In summary:

3. [7]

   These asset preservation orders relate to the Royal Hotel Granville which was acquired as part of the transaction in which the Kings Head Tavern was sold by Powerhouse (see [15(29) and (32)] below) except for proposed Order 6 and proposed Order 7(5) which relate to the sale of the Granville Land to Samanril Pty Ltd (see [15(37)] below).

Samanril parties’ motion

1. [8]

   By order 25 of the orders made by Kunc J on 1 July 2022, his Honour extended until further order of the Court orders 1 and 2 of the orders his Honour had previously made on 28 January 2022. The Samanril parties’ motion only seeks the discharge of these orders in so far as they apply to the Samanril parties, being Samanril Pty Ltd, Saphire Mortgage Solutions Pty Ltd, Samantha Panetta and Riley Panetta-Sleiman. The last two persons are the wife and son of Peter Sleiman respectively and are directors of Samanril Pty Ltd (which holds the Granville Land as trustee of the Samanril Unit Trust).

2. [9]

   Orders 1 and 2 made by Kunc J which affect those parties are as follows:

3. [10]

   Order 1 refers to undertakings in prayers 7(a), (b), (c) and (d) of the Notice of Motion filed on 23 December 2021. While the undertakings which are sought to be discharged relate only to prayers 7(b), (c) and (d), I will set out prayer 7 in full because para 7(a) sets out relevant definitions for the remaining sub-paragraphs:

4. [11]

   In summary:

RHG parties’ motion

1. [12]

   By Order 24 of the orders made by Kunc J on 1 July 2022, his Honour extended Orders 1 to 9 of the orders made by Rees J on 3 November 2020 until further order of the Court. Orders 1 to 9 made by Rees J were as follows:

2. [13]

   The RHG parties’ motion seeks the discharge of some of the orders made by Rees J being those made in Orders 2, 3, 4 and 6 above against the RHG parties, (RHG Nominees Pty Ltd, RHG Properties Pty Ltd, Connells Point Holdings Pty Ltd, Angela Michael and Jake Sleiman). In addition, the RHG parties seek an enquiry as to damages.

Background

1. [14]

   In order to address the arguments raised by the parties, it is necessary to set out some background to the dispute.

2. [15]

   The following is a summary of key events prior to delivery of the Judgment:

   1. (1)

      On 21 June 2005, a discretionary trust known as the Sly Fox Family Trust (Sly Fox Trust) was established with JPG as trustee. Peter Sleiman was identified in the schedule to the deed as the specified beneficiary, the default beneficiary and appointor. The transactions referred to below to which JPG (or its successor as trustee, Jaken) was a party were entered into by each of them in their capacity as trustee of the Sly Fox Trust.

   2. (2)

      On 23 June 2005, a discretionary trust known as the PeteJake Family Trust (PJF Trust) was established with Powerhouse Corporation Pty Ltd (Powerhouse) as trustee. Peter Sleiman was identified in the schedule to the deed as the specified beneficiary, the default beneficiary and appointor. The transactions referred to below to which Powerhouse was a party were entered into by it in its capacity as trustee of the PJF Trust.

   3. (3)

      On 15 July 2005, JPG entered into a Deed of Guarantee and Restraint with Mr Naaman from which the dispute the subject of the 2019 proceedings arose.

   4. (4)

      In November 2005, JPG purchased a property in William Street, Kings Cross and the business located at that property known as “O’Malley’s Hotel” (the Kings Cross Property). JPG granted a mortgage over the Kings Cross Property and a fixed and floating charge over all JPG’s assets (including the business known as the O’Malley’s Hotel) to St George Bank to secure funds borrowed for the purchase.

   5. (5)

      In April 2006, JPG purchased the Granville Land for $750,000. JPG gave a mortgage over the Granville Land to St George Bank to secure a borrowing to fund the purchase.

   6. (6)

      In October 2006, Powerhouse purchased the Kings Head Tavern (Kings Head Tavern) at Hurstville for $13m.

   7. (7)

      In November 2006, Mr Naaman commenced proceedings in the Common Law Division of this Court against JPG for judgment in the sum of $2m relying upon, among other things, the Deed (Common Law proceedings). JPG did not file a defence to those proceedings.

   8. (8)

      On 13 February 2007, a deed of appointment of new trustee was entered into between JPG, Jaken Properties Australia Pty Ltd (Jaken) and Peter Sleiman under which JPG retired as trustee of the Sly Fox Trust and Jaken was appointed in its place. Under cl 1.5, Jaken indemnified JPG against all debts which JPG had incurred as trustee and agreed to discharge such debts out of the assets of the trust.

   9. (9)

      On 27 February 2007, a liquidator was appointed to JPG in a voluntary winding up by creditors, which resulted in the Common Law proceedings being stayed.

   10. (10)

       In March 2007, Mr Naaman lodged a caveat over the Kings Cross Property and the Granville Land.

   11. (11)

       In October 2008, Jaken became the registered proprietor of the Kings Cross Property and the Granville Land in its capacity as trustee of the Sly Fox Trust.

   12. (12)

       On 20 March 2009, the trust deed of the Sly Fox Trust was amended to replace Peter Sleiman with his brother, Tony Sleiman, as specified beneficiary, default beneficiary and appointor.

   13. (13)

       In July 2009, Mr Naaman commenced proceedings against Peter Sleiman and Jaken as trustee of the Sly Fox Trust seeking, amongst other things, judgment against Jaken in the sum of $2m (2009 proceeding)

   14. (14)

       On 17 June 2011, Jaken purportedly granted a lease of the Kings Cross Property to O’Malley’s Hotel Pty Ltd (a company then controlled by Tony Sleiman) for a term of 10 years commencing on 20 June 2011. Kunc J found that the lease could not possibly have been entered into on its purported date of 17 June 2011 and it was likely to have been prepared in around May 2014 for the purpose of attempting to persuade the Court that the Kings Cross Property was worth less than it in fact was: Judgment, [318]-[321].

   15. (15)

       In October 2011, Jaken borrowed $8.75m from National Australia Bank (NAB), which was used to repay the amount owing to St George Bank. NAB took a mortgage over the Kings Cross Property and the Granville Land to secure the borrowing. Around the same time, Powerhouse (the owner of the Kings Head Tavern) also entered into a loan facility agreement with NAB for $13,250,000. Jaken and Powerhouse gave cross-guarantees to NAB in respect of their borrowings.

   16. (16)

       On 5 October 2012, Jaken transferred the Granville Land to Superior Family Investments Pty Ltd (Superior) as trustee for the Superior Family Investments Trust, for $500,000. Kunc J found in the Judgment that no consideration was paid by Superior, or received by Jaken, for the transfer of the Granville Land, which was a transaction undertaken for no apparent commercial purpose and void under s 37A of the Conveyancing Act 1919: Judgment at [429].

   17. (17)

       In 2013, the registration of JPG (which had been liquidated) was reinstated and orders were made adding it as a defendant in the 2009 proceedings.

   18. (18)

       On 3 March 2014, Pembroke J determined part of the 2009 proceedings, and made, relevantly, the following orders in favour of Mr Naaman:

   19. (19)

       On 17 March 2014, Peter Sleiman and Jaken filed a Notice of Motion in the 2009 proceeding seeking to set aside Pembroke J’s orders against JPG.

   20. (20)

       On 18 June 2014, Rein J made orders which, among other things, set aside orders 1, 2 and 4 made by Pembroke J on 3 March 2014 and made asset preservation orders against Jaken in relation to the Kings Cross Property.

   21. (21)

       On 8 September 2014, Jaken and Powerhouse entered into a number of transactions referred to in the Judgment as the “3.6 Million Drawdown” which are central to the decision of Kunc J and also the present application. These transactions were:

   22. (22)

       In December 2014, the 2009 proceedings were heard by Stevenson J and on 24 December 2014, his Honour delivered judgment dismissing Mr Naaman’s claims.

   23. (23)

       On 20 January 2015, a Deed of Change of Trustee was purportedly executed appointing AVS Group Australia Pty Limited as the trustee of the Sly Fox Trust.

   24. (24)

       On 1 September 2015, the Court of Appeal allowed Mr Naaman’s appeal against JPG and Jaken, and the proceedings were remitted to the trial division for an assessment of damages.

   25. (25)

       On 22 February 2016, Young AJ made various orders in favour of Mr Naaman, the plaintiff, to dispose of the 2009 proceeding, including the following:

   26. (26)

       On 13 March 2016, Mr Naaman lodged a caveat over the Kings Cross Property in support of his claim to be subrogated to JPG’s right of indemnity from the assets of the Sly Fox Trust.

   27. (27)

       On 23 January 2019, Jaken commenced the 2019 proceedings by summons in which the principal relief sought was the removal of the caveat lodged by Mr Naaman.

   28. (28)

       On 29 March 2019, Mr Naaman filed a cross claim in the 2019 proceedings, in which he brought claims against Jaken and Powerhouse challenging the effectiveness of the $3.6 Million Drawdown and claims against Jaken and Superior regarding the transfer of the Granville Land to Superior, all which were ultimately upheld in the Judgment.

   29. (29)

       On 13 December 2019, a transaction was entered into by, among others, Powerhouse and Red Cape Hotel Group Pty Ltd, an unrelated third party, which was documented by 4 contracts all expressed to be interdependent, with completion of one depending on completion of all the others.

   30. (30)

       On 5 February 2020, Powerhouse retired as trustee of the PJF Trust and Connells Point Holdings Pty Ltd was appointed in its place.

   31. (31)

       On 28 February 2020, the ANZ Bank provided a letter of offer to Grand Royal Nominees Pty Ltd (as trustee of the Grand Royal Trust) as borrower for a facility in the total amount of $31,200,000 to fund the purchase of the Royal Hotel Granville, as well as another facility to Royal Granville Operations Pty Ltd for $100,000.

   32. (32)

       On 11 March 2020, settlement of the 4 contracts referred to at (29) above occurred. According to the settlement sheets, after adjustments:

   33. (33)

       On 3 November 2020, Rees J made asset preservation orders, including relevantly those set out at [12] above, in relation to the proceeds of sale of the Kings Head Tavern and the Royal Hotel Granville which was purchased with those proceeds.

   34. (34)

       On 16 November 2020, the hearing of the 2019 proceedings before Kunc J commenced and judgment was reserved on 27 November 2020.

   35. (35)

       On 16 March 2021, NAB appointed receivers to, among other things, the Kings Cross Property.

   36. (36)

       On 1 July 2021, Superior granted a lease of the Granville Land to Litt Up Management Pty Ltd, a related company, on 1 July 2021 for a term of 5 years with an option to renew for a further 5 years at a rent of $120,000 per annum.

   37. (37)

       On 4 August 2021 (while Kunc J was still reserved), Superior entered into a contract for the sale of the Granville Land to Samanril (as trustee of the Samanril Unit Trust) for a price of $1.3m. The contract was settled on 5 November 2021. At settlement, payments were made on behalf of Superior in an amount of $263,500 to NAB to discharge a loan by it, and in an amount of $516,261.15 to Saphire Mortgage Solutions Pty Ltd, a company of which Samantha Sleiman and Jake Sleiman were directors (SMS Payment). In the Statement of Claim (see [18] below) Mr Naaman challenges the sale of the Granville Land (and the lease granted on 1 July 2021) on various grounds.

   38. (38)

       On 28 January 2022, Kunc J made asset preservations orders against inter alia the Samanril parties (see [8] above).

The Judgment

1. [16]

   In the Judgment at [8], Kunc J summarised his key findings in respect of three transactions defined at [7] as the “Impugned Transactions”. Relevantly for present purposes the Impugned Transactions include the transfer of the Granville Land to Superior (see [15(16)] above) and the increase of Jaken’s indebtedness to NAB by the $3.6 Million Drawdown (see [15(21)] above). So far as relevant, the key findings were:

2. [17]

   Kunc J subsequently made final orders (now the subject of the appeal referred to earlier) which inter alia declared that:

The Statement of Claim

1. [18]

   The existing asset preservation orders against the Samanril parties and the RHG parties referred to at [9] and [12] above were made in accordance with the principles stated in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18. In that decision the plurality stated at [53] that discretionary considerations should be carefully weighed before an order is made, including whether, if proceedings are available against the third party and have not been taken, the making of the order should be conditioned upon an undertaking being given by the applicant to commence such proceedings. Such an undertaking was not required for the orders made against the Samanril parties and the RHG parties who are not parties to the 2019 proceedings. At the first hearing of Mr Naaman’s motion on 14 September 2022, counsel for Mr Naaman was directed by the Court to commence new proceedings against each of the non-parties in respect of the relief sought and this was done by the Statement of Claim filed on 17 October 2022.

2. [19]

   The Statement of Claim commences new proceedings against all but one of the Samanril parties and the RHG parties setting out the nature of Mr Naaman’s claims against them, the exception being Mr Jake Sleiman. The only current asset preservation orders against Mr Jake Sleiman are Orders 4 and 8 made by Rees J, which restrain him from causing Connells Point Holdings Pty Ltd (which replaced Powerhouse as trustee of the PJF Trust on 5 February 2020) from disposing of any of the proceeds of the sale of the Kings Head Tavern (Order 4) or from causing or entering into any document to amend the terms of 3 identified trust deeds (Order 8). Each of those orders is made against him in his capacity as a director of Connells Point Holdings Pty Ltd which is a named defendant in the Statement of Claim.

3. [20]

   The delay or failure to commence proceedings against a third party who is the subject of asset preservation orders is a discretionary consideration to be taken into account when an application is made for the discharge of that asset preservation order: Lloyds Bowmaker Ltd v Britannia Arrow Holdings plc [1988] 1 WLR 1337 at 1347. I do not regard the delay in commencing proceedings in the present case as a reason to discharge the orders previously made against the Samanril parties and the RHG parties, or to deny Mr Naaman the relief he seeks in his motion, for two reasons. First, Mr Naaman had previously provided “Points of Claim” in the submissions made at the hearing before Rees J on 2 November 2020 which made clear the nature of the claims made against them. Second, the delay in formalising those claims into a pleading is explained by the fact that the claims are predicated on Mr Naaman’s success in the 2019 proceedings heard by Kunc J, and that is still to be finalised given the appeal. Nevertheless, it is appropriate given the nature of the asset preservation orders against the Samanril parties and the RHG parties that the “Points of Claim” be formalised into a pleading and this has now occurred.

4. [21]

   In the Statement of Claim, Mr Naaman advances claims against the RHG parties and the Samanril parties include the following:

Relevant principles

1. [22]

   The Court has a broad power to make an asset preservation (or freezing) order under both its inherent jurisdiction and Part 25 of the UCPR. Rule 25.11 confers power to make an order “for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied”. Rule 25.11 does not prescribe the form of the order; rather, the power to make the order is defined by reference to its purpose, consistently with its juridical basis which is the Court’s inherent and statutory jurisdiction to make such orders as it considers appropriate to prevent the abuse or frustration of its processes in relation to matters coming within its jurisdiction: Cardile at [41] – [42]; PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 at [43]. It is accepted that r 25.11 confers a broad and flexible power with the form of the order being crafted to meet the exigencies of the case: Cardile at [41]; Deputy Commissioner of Taxation v Huang (2021) 96 ALJR 43; [2021] HCA 43 at [31].

2. [23]

   While the power conferred by r 25.11 is broad, it is a drastic remedy and must not be granted lightly: Cardile at [51].

3. [24]

   Three requirements must be satisfied for the grant of an asset preservation order under r 25.11 read with r 25.14: P Biscoe, Freezing and Search Orders (3rd ed. LexisNexis Australia, 2023) at [2.52]. First, the applicant must have a good arguable case on an accrued or prospective cause of action that is justiciable in the Court, or a judgment of the Court. A “good arguable case” is one which is more than barely capable of serious argument, and yet not necessarily one the judge believes to have a better than 50% chance of success: Guan v Li (No 2) [2022] NSWCA 261 at [30]. Second, the Court must be satisfied, having regard to all the circumstances, that there is a danger that the actual or prospective judgment debt will be wholly or partly unsatisfied because any of the events set out in r 25.14(4) or (5), as applicable, might occur. Third, if those two requirements are met, the Court must be satisfied that as a matter of discretion it is in the interests of justice to grant an order bearing in mind, among other things, the balance of convenience and that the jurisdiction is to be exercised with a high degree or caution.

Application for discharge of the existing orders against the Samanril parties and the RHG parties

1. [25]

   It is convenient to deal first with the question whether the existing asset preservation orders against the Samanril parties and the RHG parties should be discharged. The Samanril parties and RHG parties, although separately represented, advanced what were in substance the same submissions in support of their contention that the existing asset preservation orders against them should be discharged.

2. [26]

   First, they submit that it will be unjust if the Court was to permit Mr Naaman to bring his claims in the Statement of Claim against the Samanril parties and the RHG parties because those claims could and should have been raised in the 2019 proceedings. The submission was based principally on the principles stated in JACS.

3. [27]

   It is clear from JACS at [131] – [132] that where a court is invited to make or proposes to make orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined to the proceeding. That principle was infringed in that case because the relief claimed and granted to the plaintiff (a constructive trust over land and the transfer of the land subject to the trust to the plaintiff so as to make the interest transferred indefeasible on registration) directly affected the interests of another person, Walker Corporation, which claimed an interest in the land under an unregistered mortgage.

4. [28]

   The Court at [132] approved the following statement of the Full Federal Court in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 524 – 525 (emphasis added):

5. [29]

   In my view it cannot be said that the Samanril parties and the RHG parties are directly affected, in the relevant sense, by the orders made by Kunc J for several reasons. First, at the time of the $3.6 Million Drawdown the RHG parties did not claim any interest in the property held by Jaken or Powerhouse, and similarly at the time of the transfer of the Granville Land to Superior, the Samanril parties did not claim any interest in the Granville Land. Accordingly, they cannot be said to “claim an interest in the subject matter” of the 2019 proceeding: Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 580 at [120]. Second, at the heart of the decision of Kunc J is that s 37A applied to render both transactions void. The RHG parties and the Samanril parties were not relevant parties to the application of s 37A to those transactions. Third, in relation to the RHG parties, they do not have or claim an interest in the $3.6 million which was paid by Jaken to Powerhouse. Fourth, it is difficult to see on what basis the Samanril parties could have been parties to the 2019 proceeding because at the time of the hearing Superior had not entered into any transaction in respect of the Granville Land with any of the Samanril parties. The principles stated in JACS rest on general principles of natural justice being that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case: JACS at [137], citing Cameron v Cole (1944) 68 CLR 571 at 589, and [153]. There is no denial of natural justice to the Samanril parties in their not being given an opportunity to be heard at a hearing which took place prior to the transaction under which they acquired their interest, particularly where (as here) they can be taken to have had full knowledge of the claims in the 2019 proceeding made by Mr Naaman.

6. [30]

   Hence, while the interests of the Samanril parties and the RHG parties were affected in a general way by the decision and orders of Kunc J, they were not directly affected by them in the relevant way: see Chickabo at [44] – [126].

7. [31]

   Second, they submit that the claims brought against the Samanril parties and the RHG parties in the Statement of Claim are an abuse of process and precluded by the “Anshun estoppel” principle: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Tomlinson v Ramsey Food Processing Pty Ltd (2016) 256 CLR 507; [2015] HCA 28 at [22].

8. [32]

   The Anshun estoppel principle is that if a claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding, the assertion of that claim or the raising of that issue will be precluded in a later proceeding: Anshun at 602-603; Tomlinson at [22]. In my view for the same reasons that it was not necessary for the Samanril parties and the RHG parties to be joined to the 2019 proceeding, it was not unreasonable for the claims brought in the Statement of Claim against the Samanril parties and the RHG parties not to have been raised in the 2019 proceedings.

9. [33]

   In so far as the RHG parties submitted that it is an abuse of process for Mr Naaman to bring fresh proceedings against the RHG parties (and the Samanril parties) I understood that this was based on the proposition that the fresh proceedings are based on findings of fact about which the RHG parties (and the Samanril parties) were entitled to be heard and in circumstances where those fresh proceedings could have been determined in the 2019 proceedings. In my view, this submission does not raise any new point to the one based on JACS. The RHG parties and the Samanril parties were not necessary parties to the 2019 proceeding. Given their close relationship to the cross-defendants to the 2019 proceeding there is no apparent unfairness in the failure to join them. Further, no submission was made to me giving a clear indication as to what they would have done differently had they been joined.

10. [34]

    Third, they submit that no relief is sought in the Statement of Claim against certain of the Samanril parties (Samantha Sleiman and Riley Panetta-Sleiman) and the RHG parties (Jake Sleiman, Angela Michael, Connells Point Holdings Pty Ltd or Powerhouse Corporation Pty Ltd). I reject that submission. It is clear that relief by way of either declaration or equitable compensation is claimed against each of the Samanril parties and the RHG parties with the exception, as noted above, of Jake Sleiman. The continuation of the limited form of asset preservation order against him referred to at [19] above is, in my view, appropriate given that the entities in relation to which he exercises authority (as a director) are entities in respect of which relief is sought by Mr Naaman.

11. [35]

    Fourth, they submit that the Statement of Claim is defective because: (i) it pleads as facts certain of the critical findings in the Judgment which do not bind the Samanril parties and the RHG parties because they were not parties to the 2019 proceedings; and (ii) there are various defects in the pleading. In my view, each of these submissions is misplaced.

12. [36]

    In relation to the first point, I have concluded that the Samanril parties and the RHG parties were not directly affected by the 2019 proceedings and hence were not necessary parties to those proceedings. It follows that they are bound by the findings made in the Judgment: see Executor Trustee and Agency Company South Australia Limited v Deputy Commissioner of Taxes (South Australia) (1939) 62 CLR 545 at 562; Chickabo at [129] – [142]; KR Handley, Spencer Bower and Handley: Res Judicata (5th ed, 2019, LexisNexis) at [9.31] – [9.33].

13. [37]

    In relation to the second point, what is necessary for the applicant to establish when seeking to preserve an asset preservation order is that he has a good arguable case on an accrued or prospective cause of action that is justiciable in the Court: UCPR r 25.14(1). In my view, the Statement of Claim satisfies this requirement. In particular, it pleads all the elements required to satisfy s 37A of the Conveyancing Act 1919 in relation to the relevant transactions, being the purchase of the Royal Hotel Granville with funds sourced from the sale of the Kings Head Tavern and the transfer of the Granville Land by Superior to Samanril. It is not necessary or appropriate on an interlocutory application of this nature to address potential pleading defects in the Statement of Claim, which is a matter for the defendants to raise on an application to the Court in proceedings either to strike out the Statement of Claim under UCPR r 14.28 or for orders that the defects be cured by amendment.

14. [38]

    Finally, I note that I do not need to determine whether the submissions of the Samanril parties and the RHG parties based on JACS, Anshun estoppel or defective pleading are correct as the asset preservation orders are only interlocutory relief. The Samanril parties and the RHG parties can put these arguments in the substantive proceedings, either by seeking to set aside the orders of Kunc J (in the case of the JACS argument) or seeking to strike out the Statement of Claim. For present purposes I only need to be satisfied that none of these arguments have the consequence that Mr Naaman has failed to establish that he has a good arguable case for the relief sought against the Samanril parties and the RHG parties. For the above reasons I am satisfied that none of these arguments detract from the conclusion I have reached that Mr Naaman does have a good arguable case.

15. [39]

    For these reasons, in my view the Samanril parties and the RHG parties have not established that the existing asset preservation orders should be discharged. Further, given that, in the meantime, Mr Naaman has the benefit of the findings in the Judgment and orders made by Kunc J, the reasons for the original making of those asset preservation orders remain valid.

Mr Naaman’s motion

1. [40]

   The Samanril parties and the RHG parties made the same submissions addressed above in relation to Mr Naaman’s motion which I reject for the same reasons.

2. [41]

   The Samanril parties also submitted that proposed Orders 6 and 7 were too wide. In relation to Order 6, they submitted that the blanket restraint against any change, variation or amendment of any of the terms of the trust deed for the Samanril Unit Trust takes no account of hypothetical changes, variations or amendments that might have a legitimate commercial and legal justification, and at the very least the ability to make those changes ought to be preserved. In my view, Order 6 (like the other orders) does this because it is expressed to be subject to further order and this allows for the Samanril parties to apply to the Court for a variation of the order to allow for any change to the terms of the trust deed which does not affect the status quo in relation to Mr Naaman’s claims.

3. [42]

   In relation to proposed Order 7, the Samanril parties submitted that it was too wide in its original form which was expressed to apply to any trust and not just named trusts. Mr Naaman accepted this complaint and the revised version of proposed Order 7 set out at [5] above now limits it to the named trusts each of which, on the evidence, is involved in the transactions in respect of which Mr Naaman brings claims under the Statement of Claim. Accordingly, I do not regard that order as being too wide in its now amended form.

4. [43]

   The RHG parties also submitted that Mr Naaman has not established that the four companies the subject of the freezing order in proposed Order 8 have an interest in the Royal Hotel Granville and/or business. I reject that submission. It is apparent from the evidence that one of the companies (RHG Trading Pty Ltd) purchased the Royal Hotel Granville business; that two of them (Grand Royal Nominees Pty Ltd and Royal Granville Operations Pty Ltd) are borrowers under the facility provided by the ANZ Bank to fund the acquisition of the Royal Hotel Granville land and business; and that all four of them were required to provide security to the ANZ Bank in respect of that facility. It is a reasonable inference that this reflects that they have an interest in the Royal Hotel Granville land and business in respect of which Mr Naaman claims a proprietary interest, by way of subrogation, under the Statement of Claim.

5. [44]

   I will now turn to the three requirements that need to be satisfied for Mr Naaman to obtain the asset preservation orders set out at [5] above.

6. [45]

   In my opinion Mr Naaman has a good arguable case that the transaction by which Powerhouse sold the Kings Head Tavern and RHG Nominees Pty Ltd and RHG Trading Pty Ltd acquired the Royal Hotel Granville land and business involved a transfer of property by Powerhouse to RHG Nominees Pty Ltd and/or RHG Trading Pty Ltd in a manner designed to defeat creditors so that it is void under s 37A of the Conveyancing Act. Similarly, in my opinion Mr Naaman has a good arguable case that the transfer of the Granville Land by Superior to Samanril is liable to be set aside on the same basis.

7. [46]

   I am satisfied that there is a danger that a prospective judgment against the parties to the transactions referred to in the previous paragraph will be wholly or partly unsatisfied because assets of those parties are disposed of, dealt with or diminished in value. This is due to the findings in the Judgment indicating that steps have been taken to seek to frustrate the enforcement of the judgment obtained by Mr Naaman in 2016 and that there is a real danger that further steps will be taken to achieve that result.

8. [47]

   As to discretion, I am satisfied that it is in the interests of justice to grant the orders sought in Mr Naaman’s motion, subject to Mr Naaman giving the usual undertaking as to damages. In particular, as explained in [6] above, each of the orders sought is focused on an aspect of the ownership of the Royal Hotel Granville and will have the effect of preserving the status quo until Mr Naaman’s claims in the Statement of Claim in relation to that asset are determined.

9. [48]

   At the hearing, it was suggested that the amount of the freezing order to be made against RHG Trading Pty Ltd, Royal Granville Operations Pty Ltd, Grand Royal Nominees Pty Ltd and Hotel Grand Holdings Pty Ltd should be increased from $4,783,343 to $5,033,531.62 (which is the amount of the judgment debt as at 12 September 2022). I will not make that amendment because the effect of granting the orders sought in relation to Mr Naaman’s motion is that he will have freezing orders against 8 companies all in the amount of $4,783,343. In the circumstances, that provides him with adequate protection.

Conclusion

1. [49]

   For these reasons, I will make orders in accordance with Mr Naaman’s motion set out at [5] above subject to Mr Naaman giving the usual undertaking as to damages, and dismiss the motions of the Samanril parties and the RHG parties.

2. [50]

   The parties did not make submissions on costs. In my view the appropriate course is to reserve costs in respect of all three motions.