(1) Where:
(a) an investigation is being carried out under the ASIC Act or this Act in relation to an act or omission by a person, being an act or omission that constitutes or may constitute a contravention of this Act; or
(b) a prosecution has been begun against a person for a contravention of this Act; or
(c) a civil proceeding has been begun against a person under this Act;
and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of a person (in this section called an aggrieved person ) to whom the person referred to in paragraph (a), (b) or (c), as the case may be, (in this section called the relevant person ), is liable, or may be or become liable, to pay money, whether in respect of a debt, by way of damages or compensation or otherwise, or to account for financial products or other property, the Court may, on application by ASIC or by an aggrieved person, make one or more of the following orders:
(d) an order prohibiting a person who is indebted to the relevant person or to an associate of the relevant person from making a payment in total or partial discharge of the debt to, or to another person at the direction or request of, the person to whom the debt is owed;
(e) an order prohibiting a person holding money, financial products or other property, on behalf of the relevant person, or on behalf of an associate of the relevant person, from paying all or any of the money, or transferring, or otherwise parting with possession of, the financial products or other property, to, or to another person at the direction or request of, the person on whose behalf the money, financial products or other property, is or are held;
(f) an order prohibiting the taking or sending out of this jurisdiction, or out of Australia, by a person of money of the relevant person or of an associate of the relevant person;
(g) an order prohibiting the taking, sending or transfer by a person of financial products or other property of the relevant person, or of an associate of the relevant person:
(i) from a place in this jurisdiction to a place outside this jurisdiction (including the transfer of financial products from a register in this jurisdiction to a register outside this jurisdiction); or
(ii) from a place in Australia to a place outside Australia (including the transfer of financial products from a register in Australia to a register outside Australia);
(h) an order appointing:
(i) if the relevant person is a natural person - a receiver or trustee, having such powers as the Court orders, of the property or of part of the property of that person; or
(ii) if the relevant person is a body corporate - a receiver or receiver and manager, having such powers as the Court orders, of the property or of part of the property of that person;
(j) if the relevant person is a natural person - an order requiring that person to deliver up to the Court his or her passport and such other documents as the Court thinks fit;
(k) if the relevant person is a natural person - an order prohibiting that person from leaving this jurisdiction, or Australia, without the consent of the Court.
(2A) A reference in paragraph (1)(g) or (h) to property of a person includes a reference to property that the person holds otherwise than as sole beneficial owner, for example:
(a) as trustee for, as nominee for, or otherwise on behalf of or on account of, another person; or
(b) in a fiduciary capacity.
(2B) Subsection (2A) is to avoid doubt, is not to limit the generality of anything in subsection (1) and is not to affect by implication the interpretation of any other provision of this Act.
(2) An order under subsection (1) prohibiting conduct may prohibit the conduct either absolutely or subject to conditions.
(3) Where an application is made to the Court for an order under subsection (1), the Court may, if in the opinion of the Court it is desirable to do so, before considering the application, grant an interim order, being an order of the kind applied for that is expressed to have effect pending the determination of the application.
(4) On an application under subsection (1), the Court must not require the applicant or any other person, as a condition of granting an interim order under subsection (3), to give an undertaking as to damages.
(5) Where the Court has made an order under this section on a person's application, the Court may, on application by that person or by any person affected by the order, make a further order discharging or varying the first-mentioned order.
(6) An order made under subsection (1) or (2) may be expressed to operate for a specified period or until the order is discharged by a further order under this section.
(7) Nothing in this section affects the powers that the Court has apart from this section.
(8) This section has effect subject to the Bankruptcy Act 1966.
(9) A person must not contravene an order by the Court under this section that is applicable to the person.
(10) An offence based on subsection (9) is an offence of strict liability.
Note: For strict liability , see section 6.1 of the Criminal Code. "
4 The orders sought by ASIC which do not fall within the express terms of s 1323(1)(d)-(k) are orders that the defendant be restrained from dealing or disposing with moneys held for clients, or with property acquired from moneys received by him from clients; that he be restrained from dealing with or disposing of any of his assets other than to pay ordinary living expenses up to $3,000 per week or costs reasonably incurred; and that he be restrained from coming within 100 metres of an Australian point of overseas departure.
5 Jurisdiction to make orders under s 1323 is conferred on the Court by s 1337B(2) of the Act. Subsection 1323(1) contains an express grant of power to make the orders in paragraphs (d)-(k) where the preconditions in paragraphs (a)-(b), or (c) are satisfied and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of an aggrieved person to whom the relevant person is liable, or may be or become liable, to pay money, or to account for financial products or other property. The application may be made by ASIC or by an aggrieved person. None of the express grants of power in paragraphs (d)-(k), extends to restraining a relevant person from dealing with or disposing of his or her money or property within the jurisdiction. Paragraphs (d) and (e) empower a Court to make orders prohibiting a person who owes money to a relevant person or who holds money or property for a relevant person from paying the debt or transferring the money or property to that person, or to an associate of that person, or from paying the money or transferring the property at that person's direction. Paragraphs (f) and (g) confer power to make orders prohibiting the transfer of money or property out of Australia. Paragraph (h) confers power to appoint a receiver or trustee, or in the case of a body corporate, a receiver or receiver and manager, of the property of the relevant person.
6 The purpose of the conferral of these powers is to protect the interests of aggrieved persons by preserving the relevant person's assets pending the outcome of the investigation, prosecution, or proceeding, so that the relevant person's assets will be available to meet the claims of the aggrieved persons (Corporate Affairs Commission v Smithson [1984] 3 NSWLR 547 at 553; Corporate Affairs Commission (NSW) v Lombard Nash International Pty Ltd & Ors (No. 3) (1987) 12 ACLR 113 at 116; Corporate Affairs Commission v Walker (1987) 11 ACLR 884 at 888 and 896; Corporate Affairs Commission v Lone Star Exploration NL (1988) 50 SASR 24 at 28-29; Corporate Affairs Commission of NSW v Transphere Pty Ltd (1988) 15 NSWLR 596 at 611; Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 525).
7 Counsel for ASIC stressed that the grant of power to a Court should be given the most liberal and ample construction as its terms and context permit (Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 205; PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313; Australian Gas Light Company v Mine Subsidence Board (2006) 147 LGERA 433 at 448 [46]-[48]). Counsel for ASIC submitted that as the purpose of the express powers granted in paragraphs (d)-(k) was to protect aggrieved persons from being left without recompense, the express powers should be construed as setting the outer limits of the power, and there was an implied ancillary or incidental power to make orders to restrain the dissipation of assets within the jurisdiction. Counsel submitted that the purpose of the orders for which express power was given could be undermined if such orders were not accompanied by orders restricting the relevant person's ability to dissipate assets within the jurisdiction. Hence, it was submitted, it was proper or appropriate to imply the grant of a power to make orders restraining the relevant person from dealing with his or her assets within the jurisdiction. It was submitted that the test for determining whether such an implication arises is not whether the implication is necessary, but whether the implication appropriately or properly arises from the language used (FAR Bennion, Statutory Interpretation, 4th ed (2002) London, Butterworths at 427-428).
8 Counsel submitted that it would be very odd if the Court could make orders preventing the transfer of assets offshore and preventing debtors of the relevant person from putting him or her in funds so as to prevent the dissipation of assets, but did not have the power to restrain a relevant person from dissipating his or her assets within the jurisdiction. It was submitted that such a power should be implied.
9 Counsel also submitted that an order restraining a relevant person from dealing with his or her assets was an order having a lesser impact than an order appointing a receiver to such a person's property. It was submitted that the grant of a greater power to interfere with a relevant person's property by appointing a receiver to it imported a grant of the lesser power to make the usual asset preservation orders.
10 In support of the submission that the conferral of the power to appoint a receiver implied a power to make a lesser order, counsel referred to Beach Petroleum NL v Johnson (1992) 9 ACSR 404 at 406 where von Doussa J said:
" The Mareva remedy is discretionary. So, too, is the remedy under s 1323 of the Corporations Law. Under the statute the discretion is to be exercised having regard to the need or the desirability of protecting the interests of people to whom the company may be or become liable to pay moneys. The discretion is a general one. In the exercise of the discretion the court may have regard to all the circumstances of the case: see Corporate Affairs Commission (SA) v Lone Star Exploration NL (1988) 50 SASR 24 ; 14 ACLR 499.
The appointment of a receiver or receiver and manager, whether in aid of a Mareva injunction or under s 1323(1)(h), is a drastic step not lightly to be taken. The party seeking such a remedy must make out a clear case not only that the protection of the interests of people to whom the company may be or become liable require protection, but also that a lesser remedy which does not involve removing the administration of the company from the directors would fit the circumstances of the case. "
11 In Beach Petroleum NL v Johnson, the application for Mareva injunctions and orders under s 1323(1)(h) of the Corporations Law were brought by plaintiffs asserting causes of action against the defendant in circumstances which justified the grant of an asset preservation order under established principles.
12 ASIC submitted that the courts have for many years granted asset preservation relief in s 1323 proceedings, citing as examples Australian Securities and Investments Commission v Burke [2000] NSWSC 694; Australian Securities and Investments Commission v Adler (2001) 38 ACSR 266; Australian Securities and Investments Commission v Rajnoch [2003] QSC 46; Australian Securities and Investments Commission v Michalik (2004) 211 ALR 285; and Australian Securities and Investments Commission v Burnard [2006] NSWSC 611).
13 In Australian Securities and Investments Commission v Burke, civil proceedings had been instituted by ASIC against the defendants for contravention of sections of the Corporations Law prohibiting unlicensed persons from dealing in securities or conducting an investment advice business or operating an unlicensed managed investment scheme. Mareva orders restraining the defendants from dealing with or removing their assets had already been made. Austin J concluded that the Mareva orders were not enough to ensure that the defendants' assets were preserved and protected, or even identified and brought in for the benefit of investors, and concluded that an order appointing a receiver was justified. His Honour also made orders preventing one of the defendants from leaving Australia. These orders were made under s 1323. There is no discussion as to the basis upon which the earlier asset preservation orders had been made.
14 In Australian Securities and Investments Commission v Adler, ASIC's application for asset preservation orders was made under ss 1323 and 1324 of the Corporations Law. Santow J (as his Honour then was) declined to grant ex parte relief. The application was resolved by consent by the proffering of undertakings without admission. Santow J discussed the proper approach to the exercise of discretion to make what his Honour summarised accurately as "asset preservation orders" under s 1323 of the Corporations Law. His Honour did not discuss the question whether the "asset preservation orders" which could be granted under s 1323 went beyond the orders expressly provided for in paragraphs (d)-(k). His Honour did observe that there may be a basis for persuading the Court that asset preservation orders "proportionate to the circumstances should be made" (at 269), but it is not clear from that that his Honour was considering whether orders could be made under s 1323 to restrain a person within the jurisdiction from dealing with his assets. Nor does the report disclose the terms of the undertakings which were accepted.
15 In Australian Securities and Investments Commission v Rajnoch, ASIC had instituted proceedings for declarations that a director had contravened ss 180, 181 and 182 of the Corporations Act and sought both pecuniary penalties and compensation orders. There was evidence of dissipation of the company's moneys. The respondent was restrained until trial or further order from dealing with any or all of her assets or money. It appears that the order was made under s 1323 of the Corporations Act and not in the Court's inherent jurisdiction, although the application was described as one for "Mareva orders". However, there was no discussion as to whether such an order could be made under s 1323.
16 In Australian Securities and Investments Commission v Michalik, orders were made against the defendants under s 1323 of the Act. Asset preservation orders were also made restraining the defendants from dealing with their assets within the jurisdiction. The latter orders were made by consent. In dealing with the question as to whether the defendants should be required to make an affidavit of discovery of their assets, Barrett J observed (at [4], 286):
" The asset preservation orders were made until further order and affected all three defendants. There can be no doubt that asset preservation orders have a part to play in proceedings of the present kind (see for example the observations of Santow J in Australian Securities and Investments Commission v Adler (2001) 38 ACSR 266) but, since the orders in this case were made by consent, I do not wish to be taken to express any opinion on the question whether circumstances warranting the making of them existed on 16 August 2004. "
17 In Australian Securities and Investments Commission v Burnard, ASIC was conducting an investigation into the solicitation of investments from members of the public in the Westpoint Group of companies which had collapsed in mid 2005 with a substantial deficiency of assets. The investigation was at a very preliminary stage. There was a possibility of contraventions of the Corporations Act and the general law by two of the defendants of sufficient strength to require that ASIC continue its investigations. The possibility of contraventions of the Act by those defendants was sufficient to enliven the power under s 1323 if the Court considered it necessary or desirable to make an order to protect the interest of aggrieved persons. Palmer J refused to make an order for the appointment of a receiver to the property of those defendants and refused to appoint a provisional liquidator to the corporate defendant, but continued asset preservation orders which restrained them from dealing with their assets. A claim for a Mareva injunction against the third defendant, who evidently was not a relevant person within the meaning of s 1323, was refused.
18 I think counsel for ASIC is correct in submitting that in both Australian Securities and Investments Commission v Burnard and Australian Securities and Investments Commission v Rajnoch, it was assumed that s 1323 empowered the Court to make an asset preservation order to restrain a relevant person from dealing with his or her assets within the jurisdiction once the conditions in paras (a), (b) or (c) were established and the Court was satisfied that it was necessary or desirable to make such an order to protect the interests of an aggrieved person to whom the relevant person was, or might become, liable to pay money. However, the question of the source of such a power was not argued. Australian Securities and Investments Commission v Burnard was an ex-tempore judgment in the duty judge list.
19 Counsel for the defendant emphasised that s 1323 unequivocally states that where a condition in para (a), (b) or (c) is satisfied and the Court thinks it necessary or desirable to do so in the interests of an aggrieved person, then, it may "make one or more of the following orders". Counsel submitted that there then followed detailed provisions in which the legislature established clear parameters to grant specific remedies against a defendant which entail the exercise of a "drastic power". Counsel submitted that there was the potential for the powers under s 1323 to operate oppressively. The exercise of jurisdiction under s 1323 involves a balancing exercise in the nature of risk assessment and risk management (Australian Securities and Investments Commission v Carey (2006) 57 ACSR 307 at [26]). Counsel submitted that:
" The thin veil that separates a proportionate remedy and balancing exercise from metamorphosing into oppression is twofold (a) discretion afforded to the Court to judge the evidence and adjust the remedy and (b) a defined parameter within which to permit the drastic remedy to operate ."
20 If s 1323 of the Act does not impliedly confer power on the Court to restrain a relevant person from dissipating his or her assets within the jurisdiction, it does not follow that such a power is not found elsewhere. Counsel for ASIC submit that if such a power is not found in s 1323, the Court is nonetheless empowered to make such orders either in its inherent jurisdiction, or pursuant to s 23 of the Supreme Court Act 1970 (NSW), or pursuant to subs 66(4) of the Supreme Court Act. Any such power is preserved by s 1323(7). Nonetheless, it is important to identify the source of power to make such orders. If power to make the orders were impliedly conferred by subs 1323(1), then the Court could not require the applicant or any other person to give an undertaking as to damages as a condition of granting an interim order under subs (3) (s 1323(4)). There would be no such restriction if the source of the power to make such an asset preservation order were found outside s 1323. Secondly, a person who contravenes an order made under s 1323 does not only commit a contempt. He or she commits an offence of strict liability under subs 1323(9) (s 1323(9) and (10)).
21 In Australian Securities and Investments Commission v Wiggins (1998) 90 FCR 314, Finkelstein J held that s 1323 did not empower the Court to restrain the disposition by a relevant person of property that was in the possession of that person (at 319-320). His Honour refused an order sought by ASIC restraining the respondent from transferring patent or patent applications. His Honour said (at 320) that:
" I do not doubt that, on proper material, I have power to make an order along the lines sought by ASIC but it would not be an order in pursuance of the powers conferred by s 1323. However, the ASIC has indicated that it does not seek to base the order on some other power because it would not thereby obtain the advantage conferred by s 1323(4), namely, the advantage of not being required to give an undertaking as to damages. "
22 In Australian Securities and Investments Commission v Carey (No. 14) (2007) 158 FCR 92; 25 ACLC 184, ASIC sought "freezing or Mareva type orders", or alternatively, an order for the appointment of receivers to the property of a defendant who was the subject of an ongoing investigation by ASIC. The defendant was a "relevant person" within the meaning of s 1323 being a person who was, or might become liable, to pay money to an "aggrieved person", being Westpoint Corporation. The application was said to be made both under s 1323 of the Corporations Act, and pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth), and what was said to be the implied jurisdiction of the Federal Court (at 94 [4]). Section 23 of the Federal Court of Australia Act provides that the Federal Court "has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate." French J said that s 23 of the Federal Court of Australia Act did not confer jurisdiction to make the orders sought. Section 23 did not confer jurisdiction, but conferred power on that Court to make orders in the exercise of the Court's jurisdiction. The source of the jurisdiction had to be found elsewhere (at 94 [6] and 101 [34]) (see also Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 619, 620-621, 622, 632). French J held (at 101 [33]):
"...I accept that where, in an application under s 1323, the grounds for the appointment of receivers are made out, then a lesser order restricting or prohibiting dealings with the relevant property may be made instead. While s 1323 sets out the specific orders which may be made on an application brought under it, it does not, in my opinion, provide an exhaustive code of remedies to the extent that the power to appoint receivers excludes the lesser alternative of orders restricting or prohibiting dealings with the subject property. It may be, for example, that the appointment of receivers would be necessary or desirable to protect the interests of a potential claimant against the property of the company or individual to which the receivers are to be appointed. At the same time, such an appointment might inflict significant damage on an ongoing business which is detrimental to that business and perhaps also to third parties. In that event a lesser order freezing or limiting dealings with the subject property could be regarded as an exercise of the power under s 23."