ASIC v Australian Investors Forum Pty Ltd

D R Stack (P) COUNSEL : N J Kidd (D2) No appearances (D1, D3-28) Jan Redfern (P) Selby Anderson (D1) LMG Solicitors & Attorneys (D2) SOLICITORS : Marsdens (D3 & 19) Kemp Strang (D4, 8, 9, 16, 20 & 27) Anderson Lawyers (D5, 22 & 28) Freidman Reeves (D6, 10, 13-15, 24 & 25) No appearances (D7, 11, 12, 17, 18, 21, 23 & 26) CATCHWORDS : CORPORATIONS [324] - Supervision, regulation and correction - Offences - Generally - Order prohibiting person from leaving Australia without the consent of the Court - Whether consent ought be granted. LEGISLATION CITED : Corporations Act 2001 (Cth) s 1323 Australian Securities and Investments Commission v Viney (1998) 29 ACSR 391 CASES CITED : Australian Securities and Investments Commission v Wiggins (1998) 30 ACSR 190 Corporate Affairs Commission v Price Commodities Pty Ltd (1987) 5 ACLC 787 DECISION : Consent to leave Australia refused.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5164/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v AUSTRALIAN INVESTORS FORUM PTY LTD & ORS JUDGMENT 1 HIS HONOUR: These proceedings were originally commenced on 24 October 2001 when the plaintiff obtained ex parte orders from Knight AJ against various defendants. Included in those orders so far as the present applicant, Dennis Ralph Anthony, is concerned were orders that he surrender his passport to the Court and also a ticket for travel to and from the Philippines. The orders were made in the first instance until further order. The matter has been back before the Court on at least three occasions since that time, but it is not until now that the applicant applies to the Court for his passport and the ticket to be returned to him for the purpose of his travelling before Christmas to Manila in the Philippines with the intention, he says, of returning late in January 2002. 2 There is good reason why the application is made late. The relevant assets of the many entities involved are under the receivership of Mr McIntosh and Mr McIntosh has yet to give an interim report to the Court. It is apparent from the material before the Court there is an intricate web of transactions to be investigated. It is not surprising that not even an interim report has been available before now. It is indicated that Mr McIntosh's report should be available later this week, but this week is the last week of term and it is also at the end of this week the applicant wants to travel to Manila. 3 The evidence suggests that the applicant played a central role in the affairs of a large number of entities, although it is contested as to the extent to which he played that part alone or in conjunction with others. The activities involved were in the course of a management investment scheme whereby amounts of money were raised from members of the public for specified investments. The deposit of the applicant's passport and airline ticket were ordered under s 1323 of the Corporations Act 2001 (Cth) ("the CA"). The triggering event that justified the making of those orders is that an investigation is being carried out in relation to an act or omission by a person, being an act or omission that may establish a contravention of the CA. No civil proceedings for recovery against anyone, including the applicant, have yet been commenced, nor have any criminal proceedings been commenced against the applicant or other persons, although the evidence suggests that such proceedings are at least in contemplation. However, it is by reference to s 1323 of the CA that the plaintiff opposes the application for the applicant to recover his passport and ticket to travel, rather than by reference to any principles of Mareva relief in respect of prospective recovery actions against the applicant. 4 What authority there is in relation to s 1323 emphasises the importance of the right of freedom of travel and the caution which should be exercised when interfering with that important right of individuals. That was referred to by Young J (as his Honour then was) in Corporate Affairs Commission v Price Commodities Pty Ltd (1987) 5 ACLC 787 at 789 - 790. His Honour emphasised the importance of the private right to which I have just referred but also indicated that the public interest will in appropriate cases outweigh the private right where a sufficient case is made out. The caution which should be exercised in interfering with the right to travel was emphasised by Finkelstein J in Australian Securities and Investments Commission v Wiggins (1998) 30 ACSR 190. In that case, referring to the exigencies of an investigation justifying restriction of the right to travel, his Honour said that the restriction should not be maintained unless it can be shown that that investigation cannot properly or effectively be conducted in the absence of the person. Again, in Australian Securities and Investments Commission v Viney (1998) 29 ACSR 391 R D Nicholson J referred to Young J's decision, which I have mentioned above, and the countervailing public interest which may outweigh those rights. His Honour noted at 393 that the Court is required to engage in a balancing exercise which includes a balancing of public and private rights. One of the considerations that must weigh in favour of the private right is the consideration there is a right of a person to have a passport and to move freely in and out of Australia. Matters which may be weighed on the other hand are the character of potential offences, the fact that the person has a base overseas, the importance of the person in the ongoing investigation and the stage which that investigation is at. 5 Among the facts special to this case are the following. It is common ground that the applicant lives between Sydney and Manila; in Australia he has grownup children, a grandchild and an aged mother with whom he spends considerable time when in Australia; in the Philippines he has a wife, a six year old son and some foster children who are relatives of the wife and who live with them. He thus has a base in the Philippines. He also has business dealings there and litigation, which was at some stage put forward as a reason for the necessity for him to be there, but the material before the Court is not sufficient or clear to make it plain that his presence is really required there at this time. Equally, whilst it is a consideration that he will be separated from his wife and young child at Christmas if he cannot travel, unless they are able to be brought to Australia temporarily, and that there are some family problems arising from his absence from Manila, the evidence concerning those things is not sufficient or clear for them to weigh heavily at the present time in favour of the application now made. 6 It does seem clear from the evidence that some $4.5 million was collected in investors' funds and that the present whereabouts of about $2 million cannot fully be accounted for. It is clear on the evidence that the applicant, who is at present an undischarged bankrupt, had been involved in the transactions attending the movement of these moneys. It appears, from evidence given on s 19 examinations already carried out of some operatives in the web of companies involved, that the applicant played a role in the movement of moneys and in the control and direction of the companies. As I have said, the receiver has not been able yet to present any interim report which gives any realistic statement of what has occurred, where moneys are, where and how they ought be recovered and what further steps should be pursued. 7 There has been some argument about the ambit of a possible s 19 examination of the applicant bearing in mind the possibility of proceedings against him, but Mr Thompson, the plaintiff's senior investigator dealing with the matter, has given evidence that, once the receiver's interim report is available, it is certainly the plaintiff's intention to pursue the investigation of the matter with the applicant, if not by way of s 19 examination then certainly by way of interview, with which the applicant has deposed that he will cooperate. 8 The applicant has deposed that he will return to Australia in January. He has not been cross examined before me. I am not asked to assess his credibility, which I think in any event would be very undesirable at this stage of the proceedings and on the very short cross examination that would have been possible in the time available, if cross examination had been permitted. There is, therefore, no reflection on his personal credibility in what I proceed to say. 9 There is no doubt that there are potentially serious allegations that may be made against the applicant. There is some possibility of him being charged with criminal offences and there is the possibility of him being involved in civil proceedings for the recovery of moneys, damages or compensation and, in addition, perhaps, civil penalties. There have been dealings with money; the sums involved are considerable and the matter must be regarded as serious. Whilst it is understandable that the investigation has not been able to be taken further at this stage, it behoves the plaintiff certainly to pursue any investigation that it wishes with this applicant as soon as possible. It cannot go on for a long time, keeping him in the country on the basis that he is needed for the investigation. But it has made out in my view that the correct choice in the exercise of the Court's discretion on this application is that the return of the passport and ticket should be refused at this stage to prevent his immediate travel to Manila or out of the country. No doubt this matter may come up for review at a future time in the light of the circumstances that then prevail. In the meantime the Court will ensure, if application is made, that the plaintiff cooperate, and I am sure it will in any event, in the return of the ticket to any place where its return is necessary to ensure that any refund is obtained upon it. 10 The application to vary the order of 24 October 2001 is refused. Costs reserved. 11 I should say that Mr Kidd has been tenacious in his prosecution of the applicant's application and has said all that he could to convince the Court that the result should have been otherwise.

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