Australian Securities Commission v Cook & Cook [1991] QSC 26

10 30 50 60 IN THE SUPREME COURT OF QUEENSLAND i. R.EVISEO~COPI.ES,1SSUED·1 J Court Rer:icrting Bureau [ I Date, / · CIVIL JURISDICTION Sc... "1( /o~Jo BEFORE MR JUSTICE SHEPHERDSON BRISBANE, 1 FEBRUARY 1991 (Copyright in this transcript is vested ;n the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: AUSTRALIAN SECURITIES COMMISSION -and- MAXWELL LEONARD COOK -and- GLENYCE DEVELLE COOK ., ORDER- Plaintiff First Defendant SecondDefendant HIS HONOUR: · In writ No. 116 of 1991 John Angus Reyment, suing as administrator and trustee of the property of Family Security Friendly Society, has sued Maxwell Leonard Cook and Glenyce Develle Cook and 11 other defendants. Various relief is sought against the defendants. I do not propose to refer to it all now. The relief includes allegations of breach of fiduciary duties against the Cooks as directors and, in effect, wrongful application by them of moneys which were the property of the Family Security Friendly Society. The Australian Securities Commission has commenced 12 actions against -the same parties, one action for each part~ When all the actions came before me late today, with Mr. J.S. 10 20 30 40 50 Douglas Q.C. and Mr R.J. Douglas appearing for the Cornrnission, 60 -Govt. Printer, Old. 1 -- 1 of 7 -- r 10 20 30 40 50 60 Mr Gotterson Q.C. and Miss Atkinson appearing for Mr Reyment, and Mr Sofronoff Q.C. and Miss O'Reilly appearing for all the defendants in all the actions, certain consent orders were made, and these included directions as to the conduct of the actions. Mr Gotterson then in Action No.116 of 1991 sought mandatory injunctions or mandatory orders against the Cooks directing tha they countermand or stop certain cheques which they had signed against an account in their names with the Commonwealth Bank, Pacific Fair. Mr Gotterson handed me up a two-page document, which I do not think I made an exhibit, and which I will make Exhibit 2, on which appears a list of cheques showing numbers drawn between 15 January 1991 and 31 January 1991 (both dates inclusive) on that account. The total amount of the cheques is not accurately calculable but it seems that leaving aside cheque No.511 for colicitors, totalling $50,000, the balance is some $90,000. Mr Gotterson also handed me a photocopy of a facsimile transmission from the Commonwealth Bank at Pacific Fair. It was sent today at 12.39 p.m. to Australian Securities Commission. It shows that it is on account No. 240347 in the names of Maxwell Leonard Cook and Glenyce Develle Cook. It details those cheques which have been honoured between 22 and 31 January. It also shows that the balance in the account as at today, presumably 12.39 p.m., was $236,926.08. Mr Gotterson referred me to certain evidence, particularly an affidavit of Gregory Paterson, in particular, where that affidavit related to the dealings in respect of certain of the companies which are defendants. He referred me to para.8 of that affidavit and advances said to have been made by the Friendly Society to companies. He also referred to material -povt Printer, Old. 2 10 30 40 50 60 -- 2 of 7 -- 10 30 40 50 60 which he said showed that some $20,000,000 had been advanced on the security of properties which are now said to be worth $2,000,000. He referred to an affidavit of Mr Love· a valuer. He referred also to para.15 of Mr Paterson's affidavit from which it is said the payments totalling $734,486 were drawn on the account of Lawford and that of that-sum, $397,000 went towards a property in Allambi Street, which I gather is a property of the Cooks. Mr Gotterson in general submissions said that the evidence showed there was a very large shortfall in the funds of the Friendly Society. Initially he submitted, in support of the application for the mandatory injunction, that there was at least a reasonable prospect that the moneys in the Cooks~. bank account No.240347 had their origins in moneys paid by Lawford Investments and therefore should be treated as held by the Cooks. on trust for Lawford Tnvestments 10 20 Alternatively, he argued that there was an arguable case of 30 breach of fiduciary duty and he therefore sought a Mareva-typ injunction. Mr Sofronoff next addressed me and he properly pointed out that what was being sought was for me to exercise what he called an "extraordinary power". He had very short notice': 40 of the application made by Mr Gotterson, and I gather that the parties had spent most of the day sorting out the consent~ orders which I have already mentioned. He submitted that there was no evidence that themoneys in account No.240347 were other than the Cooks and that the Cooks had already given undertakLngs that in respect of each of the companies controlled by them they would not use any of the assets compla~ned of for any purpose. He submitted that Mr Cook would have had to have paid dues for certain of the companies -Govt. Printer, Old. 3 50 60 -- 3 of 7 -- 10 20 30. 40 50 60 but was unable to tell me on what basis the payments listed in Exhibit 2 were made. At that stage it seemed to me that as then advised, Mr Gotterson had not shown me there was a hi h degree .of assurance that .if I made the mandatory injunctions required he would ultimately succeed in showing that the money in the bank in the names of the Cooks was in fact really money coming from the company. Mr Douglas, who, as I have said, appeared for the Australian Securities Commission, then rose to support Mr Gotterson and, in the event, finished up making a separat application based on s.1323 of the Corporations Act. He aske me to make an order under s.1323(1) (d) prohibiting the compan from paying any of the cheques which, so far as is known, are still not paid. He relied on subs.1323 (1) (a) by saying that an investigation has been carried out in relation to an act or omission by the CookB, being an act or omission that constitutes or may constitute a contravention of the Corporations Act. He referred me to an affidavit by Mr Wallbank, para.9, and to an affidavit of Mr Gregory Kirk, para.10, as well as Exhibit GK5 to his affidavit. I am satisfied that the conditions of s.1323(1) (a) have been met. Mr Kirk's affidavit I found interesting. Mr Kirk is the manager of the Brisbane branch of Chase-A.M.P. Bank. He deposes to having had a conversation with Maxwell Cook on 14 January 1991 in which Cook directed all funds in the 10 30 40 accounts of Portfolio Holdings Limited and Lawford Investments so Pty. Ltd. be transferred to the account of M.L. and G.D. Cook. Exhibit GK5 is his diary note of that conversation and the diary note shows! "These transfers were done today." Para.11 refers to a pr~nt~out of a statement of account -Govt. Printer, Old. .4 60 -- 4 of 7 -- ,,-.. ( 10 30 50 60 No.020632822, and I gather that that account is the account in the name of the Cooks with Chase-A.M.P. He deposes in para.11 to that print-out regarding an amount of $199,000 being credited to that account of 14 January 1991, that amount having been transferred from account No.020189947 in the name of Portfolio Holdings Limited, and that an amount of $118,000 was credited to "this account" on 14 January 1991, that amount being transferred from account No. 020089524 in the name of Lawford Investments Pty. Ltd. I should hear add, in case it is not clear, that Portfolio Holidngs Ltd. and Lawford Ili\vestments Ltd. are two of the companies sued in the actions and, more particularly, in Action No.116. Para.12 of Mr Kirk's affidavit swears or shows that on 16 January 1991 the bank received a facsimile from Mr M.L. Coo 1 directing that account No.020632822 in the name of M.L. and G.D. Cook be debited with $286,330 and the amount credited to M.L. and G.D. Cook, account No.00240347 with the Commonwealth Bank, Pacific Fair. Exhibit GK6 is a photocopy of this facsimile an so it seems to me to be tolerably clear that on or about 16 January 1986 the sum of $286,330 went from the Cooks'· account with Chase-A.M.P. Bank to the Cooks' account, Commonwealth Bank, Pacific Fair, which account is the one shown in Exhibit 1. Tt is also clear that of the $286,330 probably $118,000, or a substantial part thereof, came from Lawford Investments Pty. Ltd. and a substantial part of the $199,000 came from Portfolio Holdings Ltd. The general impression I have of this matter viewed overall is that the plaintiffs in the actions - and I am including Action No. 116 - have high prospects of showing that of the $236,926.08 held in the Cook~' Pacific Fair accoun G 214-Govt. Printer, Old. 5 10 20 30 40 50 60 -- 5 of 7 -- 10 20 30 40 so today, a very large pait is fraceabl~ to Lawford's Pty. Ltd. and Portfolio Hoidin~s ~ty. Ltd. As I have said, Mr Gotterson's clients have claims for damages for breach of fiduciary duty. Mr Douglas' clients, on the other hand, have the benefit of s.1323. I note from subs.3 thereof· that I have power, if I think it desirable to do so, even before considering the application, to make an interim order, being an order of the.kind applied for, that is, expressed to have ef feet pending the determination of the application. It seems to me at the end of the day not to matter terribly much whether the injunction or the order is made under s.1323 or the mandatory order is made as sought by Mr Gotterson. I favour the view that it is better and quicker in the long run to enjoin the Commonwealth Bank, which I propose to do. There are obvious problems in the mandatory injunction 10 requiring the Cooks to authorise the Bank to stop the cheques. 30 The cheques when presented a~e orders by the Cooks to the - Bank to pay and until those instmc:tions:~are_ countermanded by the Cooks themselves, the, Bank is obliged to pay. What I propose to do is to make an order on the application of Mr Douglas requiring the Bank until 12 midnight on 5 February 1991 not to honour or pay any cheque drawn on account No.240347 with the Commonwealth Bank, Pacific Fair, Broadbeach, such account being in the name of Maxwell Leonard Cook and Glenyce Develle Cook. I further direct the said Bank when not honouring or paying any such cheques to hold such cheques and not return them until directed by this Court so to do. HIS HONOUR: I further order that service of notice of this order be so 60 60 --r.ovt. Printer, Old. 6 -- 6 of 7 -- 10 30 50 60 effected by telephone to the manager of the Commonwealth Bank, Pacific Fair, Broadbeach or any other officer of a Commonwealt Bank in Queensland. HIS HONOUR: The purport of my order. is to enable you tq notify the bank.of the making of the order by telephone. G 214-Govt. Prin.ter, Qld. '7 10 20 30 40 50 60 -- 7 of 7 --