Australian Securities and Investment Commission v Drury Management Pty Ltd & Ors [2002] QSC 331

State Reporting Bure Queensland Government Department of Justice and Attorney-General jaooa]6isc S3) Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. ________ revised copies issued State Reporting Bureau n *..3 7/0 7/ OX SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MOYNIHAN J Application No 464 of 2002 AUSTRALIAN SECURITIES AND INVESTMENT Applicant COMMISSION and DRURY MANAGEMENT PTY LTD First Respondent ACN 089 253 958 and PIET CORNELIUS WALTERS Second Respondent and Third Respondent MARK SAMUEL EVANS and RANSOM HOUSE PTY LTD ACN 072 391 407 Fourth Respondent CAIRNS . .DATE 27/09/2002 JUDGMENT WARNING: The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal offence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for their protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those categories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings. 1 4th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 7 -- HIS HONOUR: The Australian Securities and Investment 27092002 D.l T7/LVT M/T CNS1/2002 (Moynihan J) Commission seeks, by way of interim relief, the appointment of a receiver pursuant to section 1323 of the Corporations Act, and an injunction pursuant to section 1324. There is no disagreement in terms of the granting of the injunction; there 1C is, in respect of the appointment of a receiver. The relevant test is whether the Court is of the opinion that it is desirable to grant it. The respondents oppose the order for the appointment of the receiver, essentially on the basis that they have not had sufficient time to prepare a proper and full response; that the injunctions will preserve the status quo; and that the material does not establish such a degree of urgency as to warrant the appointment of a receiver now, rather than adjourn. There is an adjournment sought for 14 days in order to permit the respondents to deal with the considerations raised on the material. % 30 I should say that I am indebted to counsel for their comprehensive and pertinent written submissions which have been usefully supplemented in the oral submissions. The principles which are applicable here are now reasonably well established by the cases that are canvassed in the written submissions. It is important to recognise that the statutory scheme differs in some important respects from the exercise of a comparable equitable jurisdiction. In particular, as I have said, the determinant consideration is whether it is desirable to grant the relief. 40 50 2 JUDGMENT 80 -- 2 of 7 -- The respondents properly concede - I say "properly" because it 1 seems to me the material quite strongly makes out - that there is an arguable case that there was an unregistered managed investment scheme in which the respondents have been involved. The funds raised pursuant to the scheme have been mixed with 10 other funds and have been used to acquire assets in this country, in Holland and Brazil, and in the United States. There is also evidence of funds transferred from this country to other countries, including but beyond those that I just mentioned. 20 There is evidence of a failure to properly keep the records or accounts which it would be appropriate to keep for a managed investment scheme. It may be that the position of the respondents is that they seek to ultimately demonstrate that 30 they were not conducting such a scheme. The point is, however, that the material before me including the respondents' acknowledgment, means that for the purpose of an interim injunction the threshhold is crossed. 40 The respondents argue that if the first respondent is able to pay its debts, as and when they fall due, there would be no necessity for the Court to intervene at an interlocutory stage. That may be so, but the basis of the Court's intervention at an interlocutory stage is to be found 50 elsewhere, not in issues about the solvency of the company, the first respondent. 27092002 D.l T7/LVT M/T CNSl/2002 (Moynihan J) 3 JUDGMENT 60 -- 3 of 7 -- 27092002 D.l T7/LVT M/T CNS1/2002 (Moynihan J) The submissions made on behalf of the applicant conveniently 1 collect in paragraph 28 (c) (d) and (e) the factual considerations which support the appointment of a receiver. I say factual considerations because I am not to be taken as accepting the characterisation of some of the transactions. 10 It remains to be seen, for example, whether some of the investments were wise investments or other than wise investments. It is rather the factual situation summarised there, and which is supported by the material which is referenced there, which go to whether it is desirable to appoint a receiver. In other words, it seems to me that the primary concerns which arise here, a prima facie case having been made out, and issues of proper accountability for funds obtained in the circumstances constituting a scheme. 30 I am satisfied that it is desirable to appoint a receiver in order that the matters which are there identified, and perhaps other matters which appear on the material or which may emerge, are properly and promptly investigated and dealt with. 40 Mr Ryall, have you seen the draft order and ---- MR RYALL: Yes, your Honour. HIS HONOUR: ---- and do you have any concerns about it in the light of what I have indicated I propose to do? I don ' t mind, 50 for example, if you want to - it may not be Court, but if you want to leave the ability, for example, in paragraph 5 or generally to come back to the Court for the resolution of questions in respect of matters such as that; I don't mind that . MR RYALL: I would have thought that - that it still sits with your Honour's reasons to ---- 4 JUDGMENT 60 -- 4 of 7 -- 27092002 D.l T7/LVT M/T CNS1/2002 (Moynihan J) MR RYALL: ---- leave the question of who pays for the receiver for another day. HIS HONOUR: Yes. Well, I'm not inclined to leave it for another day because the receiver won't go in, I don't imagine, unless his funds are assured. But I'm not - but I'm prepared to leave it open if---- MR RYALL: I'm just trying to think of a formulation that allows that to be ---- HIS HONOUR: Well, one thing ---- MR RYALL: ---- a starting position and then there can be an order about who---- HIS HONOUR: Well, maybe one of the ways you can do it is simply to give liberty to apply, because liberty to apply allows you to come back for the working out of an order. MR RYALL: Yes. HIS HONOUR: And the other way to do it is to give liberty - would be to give liberty to apply and, lest there be any doubt, you could say that "until further order, the receiver's remuneration be determined", et cetera. MR RYALL: I think that's probably the neatest way of doing it, your Honour. I'm happy with that suggestion. HIS HONOUR: Have you got any view about that, Mr Flanagan? MR FLANAGAN: That's rather a convenient way to do it, your Honour, until further order. HIS HONOUR: Yes. Well, what I will do is I will insert that in front of what is already there, so it now reads that "until further order the receiver's remuneration" et cetera, et cetera, et cetera. MR FLANAGAN: Your Honour, the only costs order I was going to seek was the reserve costs. HIS HONOUR: I think that's right, and what I'll do - that's not provided anywhere, is it? MR FLANAGAN : No . 5 JUDGMENT -- 5 of 7 -- HIS HONOUR: No. So, all right. So, I will add a paragraph 18, costs reserved, and I will add a paragraph 19, liberty to apply. 27092002 D .1 T7/LVT M/T CNS1/2002 (Moynihan J) MR RYALL: Your Honour, the - I'm sorry. There was just one very minor point. HIS HONOUR: Yes, certainly. MR RYALL: In relation to the third respondent, he's been given an allowance of $1500 per week for ordinary living expenses. He makes it clear in his affidavit that it won't be $1500 every week; it will be 3,000 one week and $500 a week for the rest because he has his fixed commitments fall due in one week in each month. HIS HONOUR: Well ---- MR RYALL: It's a matter of interpretation. HIS HONOUR: Which paragraph is it? MR RYALL: It's 9 - it's 10(b), and it just says "not exceeding 1500 per week". My suggestion was 6,000 ---- HIS HONOUR: Well, maybe make that a month? MR RYALL: ---- 6,000 per month would make - make it very clear . HIS HONOUR: It probably sounds better, doesn't it, Mr Flanagan? MR FLANAGAN: Yes, thank you, your Honour. HIS HONOUR: Yes. Sorry, now which paragraph - 16(b), is it? MR RYALL: Sorry, 10(b). 10 4 30 40 HIS HONOUR: 10(b), sorry. Yes, "The respondent be at liberty to spend not exceeding $6,000 per month" ---- MR RYALL: Yes. HIS HONOUR: All right. MR RYALL: Thank you, your Honour. MR FLANAGAN: Your Honour, may we impose on your Honour's associate for the purpose of getting this order out as quickly as possible? 50 6 JUDGMENT 60 -- 6 of 7 -- 27092002 D.l HIS HONOUR: MR FLANAGAN: HIS HONOUR: T7/LVT M/T CNSI/ 2002 (Moynihan J) Yes . Thank you. Yes. I will get her to do that. 4 20 30 40 50 7 JUDGMENT 60 -- 7 of 7 --