Get Qualified
25 In Get Qualified, Beach J initially made ex parte freezing orders under s 23 of the FCA, r 7.01 and Div 7.4 of Pt 7 of Ch 2 of the Rules and under s 137F of the CCA (at [9] of his Honour's reasons). The respondents to the orders subsequently opposed their continuation.
26 At [35(a)], his Honour observed that:
[W]hatever may be the construction and operation of s 137F, the freezing orders are separately justifiable as an exercise of power under r 7.01 and Div 7.4 of Pt 7, Ch 2 of the [Rules] and s 23 of the [FCA].
27 However, at [38], Beach J concluded that the Court could not make an order under s 137F(1) in respect of protecting the position for the payment of a pecuniary penalty which, his Honour considered, was an extraneous subject matter to s 137F(2)(d) (being the relevant "kind of proceeding"). At [39]-[42], his Honour said:
[39] But although I do not need to presently decide the question, let it be assumed that the ACCC had taken proceedings seeking all the remedies in s 137F(2). The various subparagraphs of s 137F(2) do not, it seems to me, encompass proceedings for a pecuniary penalty under s 224 of the Australian Consumer Law for contraventions of a provision in Ch 2; only the remedies under ss 232, 237(1) and 239(1) are mentioned concerning contraventions of a provision in Ch 2 (see ss 137F(2)(b) and (d)). Moreover, s 137F(2)(a) is not relevant; it is dealing with offences. Moreover, they are offences under Ch 4.
[40] The ACCC has contended that a pecuniary penalty would fit within the phrase in s 137F(1)(b) as a "fine" (I do not think so), alternatively "or otherwise". Perhaps it might fit within the latter phrase if decontextualised, but one must read s 137F(1)(b) in the context of s 137F(1)(a). Any order made under s 137F(1)(b) must be ancillary to and protective of the principal relief that might be granted in proceedings of the type identified in s 137F(1) and its enforcement. But that takes you back to s 137F(2) which is not addressing proceedings for a pecuniary penalty under s 224 with respect to contraventions of a provision in Ch 2.
[41] I am satisfied that s 137F cannot be used to freeze and preserve property to meet or enforce a pecuniary penalty order payable under s 224 in relation to a contravention of a provision in Ch 2.
[42] But that conclusion leaves open the possibility that r 7.32 could be used for that purpose. The text of r 7.32(1) does not exclude that possibility. Moreover, as I say, there is nothing in s 137F that indicates any express or implied override of, for example, r 7.32 so that it cannot be used for that purpose. Indeed s 137F(5)(b) indicates the opposite.
(Original emphasis.)
28 At [72]-[74], his Honour added:
[72] Further, it is appropriate that I say something further on whether the freezing orders are in place to deal, in part, with the preservation of assets to meet any pecuniary penalty order or enforcement thereof as distinct from the other remedies foreshadowed by the ACCC. As I have said, such a justification cannot be used for any freezing order under s 137F. Nevertheless, strictly, such a justification is open under the Federal Court Rules and s 23 of the Federal Court of Australia Act. The question is whether an exercise of discretion could be so justified. I would make the following points:
(a) First, the Clinica decisions seem to proceed on the basis or assume that that would be an appropriate exercise of discretion.
(b) Second, the concept is not novel. Indeed, although s 137F does not apply, it permits a freezing order to facilitate payment of a fine for an offence. By parity of reasoning, in concept a freezing order to facilitate payment of a pecuniary penalty for a contravention is of a similar genus (albeit not expressly encompassed under s 137F, which is a separate point).
(c) Third, my attention has been drawn to Spender J's decision in [Chaste], but I do not propose to follow it. It does not seem to me to be fully consistent with the doctrinal basis for freezing orders (and its breadth), as expounded in the passages from PT Bayan Resources [TBK v BCBC Singapore Pty Ltd [2015] HCA 36; (2015) 258 CLR 1] that I have referred to earlier.
[73] The prospective respondents have raised the issue that the ACCC has no right or interest in the enforcement of a pecuniary penalty. Only the Commonwealth of Australia has such an interest. Accordingly it is said that the ACCC has no business in seeking a freezing order for that purpose. That lens is too narrow as the cited passages from PT Bayan Resources explain.
[74] I am inclined to the view that it is an appropriate exercise of discretion to make a freezing order in relation to the preservation of assets to meet a potential pecuniary penalty, but in one sense I do not need to finally decide this question because of the form of order that I have made. The order is a general prohibition with carve outs reasonably justified. It is not an order to positively preserve a quantified amount. I am not in a position to make any such quantification. Given the alleged pattern of GQA's behaviour as it affects its customers and third parties, there may be orders for substantial reimbursement or repayment to such consumers, which presently is not capable of quantification but could well equal or exceed GQA's tangible assets (contrary to GQA's submissions). Thus the general form of order with the carve out is justifiable whether or not a freezing order could be used to preserve assets for a later pecuniary penalty or its enforcement.
29 The Clinica decisions referred to by Beach J are Australian Competition and Consumer Commission v Clinica [2015] FCA 1006 and Australian Competition and Consumer Commission v Clinica (No 3) [2016] FCA 284. In that matter, the Court made and continued a freezing order in the context of the ACCC's claims for declarations, penalties and injunctions in respect of alleged false, misleading or deceptive conduct and representations and unconscionable conduct in breach of the ACL. The judgments do not refer to Chaste and therefore it is not clear whether the judges who made and continued the freezing order were informed of that authority.
30 In PT Bayan Resources TBK v BCBC Singapore Pty Ltd [2015] HCA 36; (2015) 258 CLR 1, the High Court held that the Supreme Court of Western Australia had power to make a freezing order in relation to a prospective judgment of a foreign court which would be registrable by order of the Supreme Court under the Foreign Judgments Act 1991 (Cth). The plurality (French CJ, Kiefel, Bell, Gageler and Gordon JJ) explained the relevant scope of the Supreme Court's inherent power at [43] to [46] as follows:
[43] There is no need here to attempt any novel or exhaustive exposition. It is well established by decisions of this Court that the inherent power of the Supreme Court of a State includes the power to make such orders as that Court may determine to be appropriate "to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction" [Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 at 623]. And it has been noted more than once in this Court that a freezing order is "the paradigm example of an order to prevent the frustration of a court's process" [Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 at 32 quoted in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 at [41].
…
[46] … Even where a court makes a freezing order in circumstances in which a substantive proceeding in that court has commenced or is imminent, the process which the order is designed to protect is "a prospective enforcement process". That description is drawn from the explanation of the nature of a freezing order given by Lord Nicholls of Birkenhead in Mercedes Benz AG v Leiduck [[1996] AC 284 at 306]. That passage was cited with approval by five members of this Court in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia in a passage which (subject to presently immaterial qualifications) was itself adopted as a correct statement of principle by four members of this Court in Cardile v LED Builders Pty Ltd [(1999) 198 CLR 380 at 400 [41]). Lord Nicholls explained:
"Although normally granted in the proceedings in which the judgment is being sought, [a freezing order] is not granted in aid of the cause of action asserted in the proceedings, at any rate in any ordinary sense. It is not so much relief appurtenant to a money claim as relief appurtenant to a prospective money judgment. It is relief granted to facilitate the process of execution or enforcement which will arise when, but only when, the judgment for payment of an amount of money has been obtained."
31 Keane and Nettle JJ said, relevantly at [64]:
The doctrinal basis of the inherent power of superior courts in Australia to grant a freezing order is not confined to the protection of a pending action or an immediately justiciable cause of action. A superior court has an inherent power to grant a freezing order proleptically to ensure the efficacy of its exercise of judicial power in accordance with the exigencies of its exercise. When it is demonstrated to a superior court that there is a likelihood that its processes will be abused or frustrated, it is within the court's power to make orders considered to be appropriate to prevent that from occurring.
32 At [65], Keane and Nettle JJ noted that the content of the power of the Federal Court under s 23 was not different, for the purposes of the case before them, from the inherent power of a superior court to protect its processes.