Supabarn has failed in a bid to freeze the assets of Kaleen Plaza's owner, despite fears it will funnel millions of dollars offshore to thwart a $16 million lawsuit.
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The supermarket chain has been locked in a high-stakes ACT Supreme Court battle with the Kaleen Plaza's owner, Cotrell Pty Ltd, since 2009.
Supabarn is claiming it is owed $16 million, including $8 million in damages, for breaches of the lease at the Kaleen shopping centre, where it still runs one of its stores.
The case was heard in August 2014, but no final decision has been made yet.
Last week, however, Supabarn was forced to take urgent action in the ACT Supreme Court, after learning that Cotrell was selling Kaleen Plaza.
It feared the proceeds of the sale, estimated by Supabarn at between $4 million and 6 million, would be sent overseas to Malaysia, where Cotrell's two directors live.
Supabarn sought a freezing order on Supabarn's assets, arguing the money would be beyond its reach if moved offshore.
The proceeds of the Kaleen Plaza sale would be the company's single most significant asset.
Supabarn said if Cotrell moved the money overseas it would frustrate the court's judgment, should it find in the supermarket chain's favour in the $16 million civil case.
The supermarket's lawyers sent a letter to Cotrell, asking that it undertake to retain "at least $16 million" so it was able to pay out Supabarn when the judgment was handed down.
If Cotrell refused, Supabarn warned it would take immediate action to obtain a freezing order.
Cotrell told the supermarket chain it would give no such undertaking and said Supabarn would not be able to justify a freezing order to the courts.
The matter came before Justice Richard Refshauge in the ACT Supreme Court last week. He declined to make the freezing order, saying:
"I am not satisfied that the case justifies going so far."
He agreed there was some danger that the money might be moved to Malaysia, but that there was no reason such a transfer would occur in the ordinary course of the business of Cotrell, which said it had plans to invest and expand its operations in Australia.
Justice Refshauge did, however, order that Cotrell give three working days' notice of any intention to move the proceeds of the sale offshore.
Once that notice was given, Supabarn could apply again for a freezing order.
"Were the proceeds of the sale to be transferred to Malaysia, therefore, I consider that, in the circumstances, Supabarn may be able to make out a case for a freezing order, given that such a transfer would be inconsistent with the expressed intentions of Cotrell at present," Justice Refshauge said.
Supabarn had said Cotrell had a history of not meeting its debts. It said two of Cotrell's other properties were the subject of a seizure and sale order in Western Australia in 2006.
Director James Koundouris said he had learned of Cotrell's plans to sell the plaza only from "industry sources". The plaza's owner hadn't told them of the sale plans when Supabarn was communicating with the plaza about its plans to sell the supermarket to Coles.
The supermarket's lawyers said it would not be able to do anything to prevent Cotrell from shifting the funds overseas, and once they were out of Australia little could be done to bring the money back.
But Cotrell said it was not enough to merely assert that the funds "could" be transferred overseas.
It also said it had other Australian assets and planned to expand them, not move them offshore.
