Australian Securities and Investments Commission v Alshakshir

1. The plaintiff's application for interim relief be dismissed.
2. The plaintiff pay the defendant's costs of and incidental to the application in an amount to be assessed in default of agreement. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

SNADEN J: 1 In the afternoon of Monday, 20 January 2025, the plaintiff, the Australian Securities and Investments Commission ("ASIC"), filed (or foreshadowed its intention to file) an urgent application for orders under, amongst other sources, s 1323(1) and (3) of the Corporations Act 2001 (Cth) ("the Corporations Act"). That application was the subject of an urgent ex parte hearing held on Tuesday, 21 January 2025. The orders that were sought concerned plans by the defendant, Mr Alshakshir, to leave Australia by means of a commercial flight that is scheduled to depart in the morning of Thursday, 23 January 2025. After a brief hearing - and for reasons that accord with observations that the court made on transcript - ex parte orders were made substantially in the form that ASIC had proposed. The matter was adjourned for further consideration on Wednesday, 22 January 2025. 2 Service of the application and supporting documentation was then effected in what appears to have been an orthodox way. ASIC now presses for inter partes interim relief consistent with the ex parte relief that was granted on Tuesday, 21 January 2025. Mr Alshakshir opposes that course. Three affidavits are relied upon: two affirmed by ASIC's solicitor, Ms Nicola Catherine Gunn, and one affirmed by Mr Alshakshir himself. 3 For the reasons that follow, I am not satisfied that it is appropriate to extend on an interim inter partes basis the orders made ex parte on Tuesday, 21 January 2025. 4 The circumstances relevant to the application can briefly be stated. They emerge from the affidavit affirmed in support of the ex parte application on 20 January 2025 by Ms Gunn. ASIC is presently undertaking an investigation into breaches of the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") that are said potentially to have been committed by Mr Alshakshir and corporate entities with which he is involved. At its core, the investigation concerns the provision by those entities (or some of them) of financial services to people who later invested in a fund that has since failed; and the receipt by at least one of those entities of a significant sum of money from or associated with that fund. ASIC is investigating whether such services were provided in a way or ways prohibited under the Corporations Act; and whether their provision involved misleading conduct in contravention of the ASIC Act. Additionally, it is concerned to ascertain whether an entity with which Mr Alshakshir is associated unlawfully received (that is to say, received in a way or ways prohibited by the Corporations Act) funds totalling in excess of $35 million; and whether there might be some basis to require that some or all of those funds be repaid to the failed investment fund from which they appear to have originated. 5 In connection with that investigation and a related investigation into the operation of the investment fund apparently known as "Shield", ASIC has had occasion to issue several notices pursuant to investigatory powers conferred upon it by statute. Amongst other things, it has had occasion to require that Mr Alshakshir be examined in relation to various activities in which he and entities with which he is apparently associated have engaged. The investigation is complex and ongoing, and ASIC intends imminently to require Mr Alshakshir for further compulsory examination. Given his apparent role in the entities that are the subject of inquiry (or some of them), Mr Alshakshir's significance to ASIC's investigation is undoubted. 6 The interim orders that are sought are sought under s 1323(1) and (3) of the Corporations Act. Amongst other things, s 1323 (in particular, sub-paras (j) and (k) of sub-s (1) of s 1323) invest in the court a power to make orders of the kind for which ASIC moves where (amongst other circumstances): (a) ASIC has an investigation underway in relation to a person's conduct that was or may have been engaged in in contravention of the ASIC Act; and (b) the court considers that the making of such orders is necessary or desirable for the purposes of protecting others to whom he or she is or may become liable to pay money (including - and probably only - by reason of that conduct). 7 Section 1323(3) of the Corporations Act empowers the court to make equivalent orders on an interim basis. 8 On the strength of the matters to which Ms Gunn deposes, it is apparent that the first of the considerations just identified is established for present purposes. As much is properly conceded and I needn't say more about it. 9 The application turns more prominently upon whether or not the court considers it necessary or desirable to make orders for the purposes of protecting those to whom Mr Alshakshir is, or may be or become, liable to pay money in relation to conduct that is the subject of ASIC's investigation. 10 Whether it might be thought to be necessary or desirable to make orders as requested turns upon consideration of various matters. In Australian Securities and Investments Commission v Johnston [2009] FCA 1276, [10]-[12], Siopis J identified the following as relevant, namely: 10 First, the fact that the investigation being carried out cannot be properly or effectively conducted in the absence of the person. 11 Secondly, the importance of the person in the ongoing investigation, the character of the potential offences, the fact that the person has a base overseas and the stage at which the investigation is at. 12 Thirdly, whether there is evidence that by examination of the person (which may be thwarted if the person flees Australia) ASIC is likely to improve the chances of the aggrieved persons retrieving their moneys. 11 The court was also referred to Gordon's J judgment in Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318, in which her Honour identified similar considerations that should guide the court's discretion. In Re Richstar Enterprises Pty Ltd; Australian Securities and Investments Commission v Carey (No 3) (2006) 232 ALR 577, 586-7 [25]-[26], French J observed as follows in relation to orders under s 1323 (references omitted): 25 …The orders are made in circumstances where "an investigation is being carried out", "a prosecution has been begun" or "a civil proceeding has been begun". That is to say the orders can be made before liability is established and indeed before the evidence necessary to establish liability has been collected. While an application under the section is not interlocutory in an existing criminal or civil proceeding, it is interlocutory in a wider sense. It preserves the status quo and the assets of the relevant person pending the outcome of the investigation, prosecution or civil proceedings which are on foot... At the stage an order is sought the court may not be in a position to identify with precision any particular liability owed by the person the subject of the proposed order. This consideration applies to final orders made under the section as well as to interim orders for which it expressly provides in s 1323(3). The final orders made under the section are necessarily of a temporary or holding character rather than finally disposing of the rights and liabilities of the relevant persons affected by them. 26 The circumstances in which the court may make orders under s 1323(1) are wide as indicated by the words "necessary or desirable … for the purpose of protecting the interests of a person …". There is an element of risk assessment and risk management in the judgment the court is called on to make. It follows, and has been accepted, that there is no requirement on the part of ASIC to demonstrate a prima facie case of liability on the part of the relevant person or that the person's assets have been or are about to be dissipated… 12 In the present matter, the evidence establishes at least some scope for concern that Mr Alshakshir is preparing to leave Australia and that he might not return. He is known to have (and it is not controversial that he has) purchased a ticket on a flight that will leave for Indonesia in the morning of Thursday, 23 January 2025. There are other indicators that his departure might not be temporary. The evidence discloses that he has recently put up for sale the property in which he lives and there is no evidence as to why or where he might reside upon its sale (although the court was told during oral submissions that he intends to rent, apparently in Melbourne). Further, he has wound up (or taken steps substantially to wind up) a Melbourne hospitality business in which he has an interest (and which, it appears, he intends imminently to move to Indonesia). He has also foreshadowed on previously-completed travel documentation that he does not intend to remain in Australia on an ongoing basis and is understood to have overseas commercial interests that are well-established. ASIC maintains that those circumstances accumulate to a point at which Mr Alshakshir is legitimately to be considered a "flight risk". 13 Against that, Mr Alshakshir's evidence discloses unmistakeable ties to the jurisdiction that bespeak a much lower risk that, were he to leave Australia, he might do so permanently. In that regard, Mr Alshakshir has a three-year-old son, whom he sees regularly (in particular on Wednesdays and Saturdays). He is currently the applicant in proceedings in the Federal Circuit and Family Court of Australia by which he hopes to secure 50% custody of his son. That proceeding is to be the subject of a mediation in February 2025, which Mr Alshakshir will attend. All of his immediate family connections are in Australia. His trip to Indonesia is, he maintains, a business trip not unlike the many others that he has taken over the course of recent years. It is the subject of a return ticket, which is scheduled to have him back in Australia next Tuesday, in time to accommodate his scheduled time with his son. The trip has, he says, no bearing upon his continued intention to assist ASIC with its investigation, as he has done to date. 14 Mr Alshakshir does not contest that he has, in the past, indicated on travel documentation that he does not intend to remain in Australia for more than 12 months. However, he maintains that he did so because he travels frequently and did not wish wrongly to indicate any intention to remain in Australia for an uninterrupted 12-month period. 15 It is, of course, a serious matter to restrain a person from travelling beyond Australia's borders: Australian Securities and Investments Commission v Wiggins (1998) 90 FCR 314, 320 (Finkelstein J). Nonetheless, a defendant's private right to travel may be outweighed by the public interest in ensuring that ASIC is able to pursue its investigations and for the purpose of protecting the interests of others. In this matter, I am not persuaded that circumstances accumulate to the point that it is necessary and desirable to make interim orders as ASIC requests. Plainly, Mr Alshakshir has a central or important role to play in the investigation that ASIC has underway. Equally, the potential contraventions about which he might provide information are significant or serious, and his absconding from the country could inhibit the plaintiff's efforts to recover funds if, in the fullness of time, the circumstances are such as to require them. All of those considerations may be accepted. 16 Likewise, Mr Alshakshir's affidavit evidence is open to criticism for what it doesn't say, including as to his reasons for selling the property in which he resides, and winding up and/or relocating the Melbourne hospitality business in which he has previously been engaged. In saying so, I intend no criticism of Mr Alshakshir or his representatives and I acknowledge both the time of year and the very tight timeframe within which the matter has progressed so far. 17 On balance, I consider on the material before me that the risk that Mr Alshakshir's departure from Australia will be anything other than temporary is not sufficient to warrant the very serious restrictions on his movement for which ASIC moves. His description as a flight risk, though not improperly advanced, is not just. That is, I think, the most significant consideration upon which the exercise of the court's discretion turns. I do not consider that it would be necessary and desirable, in the circumstances as they currently present, to grant relief on an ongoing, interim basis under s 1323(3) of the Corporations Act. In saying so, I acknowledge the possibility that those circumstances might change between now and the final determination of the matter, but that can be left for consideration if or when there is an occasion for it. 18 In the meantime, ASIC's application for interim inter partes relief should and will be dismissed. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Snaden.