- Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd

Judgment - EX TEMPORE 1By Interlocutory Process filed on 2 November 2012, the Plaintiffs, Stephen James Parbery, Mark Robinson and Nicholas Martin as liquidators ("Liquidators") of Trio Capital Limited (in liquidation) ("Trio") sought urgent ex parte orders under ss 486B and 1323 of the Corporations Act 2001 (Cth) in respect of Mr Tony Maher (also known as Paul Gresham). I made orders on that day and indicated I would later deliver my reasons for doing so. These are my reasons for making those orders. 2By way of background, Trio was formerly known as Astarra Capital Limited and held a registrable superannuation entity licence and, prior to 16 December 2009, an Australian financial services licence. Prior to that date, Trio was responsible entity for managed investment schemes, and a trustee of superannuation entities and unregistered managed investment schemes. In October 2009, the Australian Securities and Investments Commission ("ASIC") commenced investigations concerning the affairs of Trio and the Australian Prudential Regulation Authority ("APRA") commenced investigations into the affairs of various superannuation funds of which Trio was trustee. Administrators were appointed to Trio in anticipation that ASIC and APRA would suspend Trio's Australian financial services licence and registrable superannuation entity licence as a result of their investigations. APRA issued notices of suspension of trustee to Trio on 16 December 2009 and ASIC suspended its Australian financial services licence from 17 December 2009. The administrators were appointed joint and several liquidators of Trio on 22 June 2010. 3Mr Tony Maher (formerly known as Paul Gresham) was involved with the Trio business. The Liquidators' evidence is that Mr Maher provided Trio with month end valuations of investments of the ARP Growth Fund ("ARP") which was established by Trio and continued to do so after the investment adviser and administrator of another entity, PPARP, ceased to provide valuations after the unit pricing of both funds in which PPARP invested had been suspended. Between August 2007 and September 2009, Mr Maher prepared purported month end valuations of that investment by reference to the hedge fund market generally and did not disclose to Trio or ARP investors the methodology that was being used to prepare those valuations. The Liquidators rely on an enforceable undertaking signed by Mr Maher in which the relevant facts were recited; ASIC expressed concerns in respect of those matters and Mr Maher acknowledged ASIC's concerns were reasonably held. 4The Liquidators have engaged process servers to seek to serve an examination order on Mr Maher and attempts to effect service have been made at various addresses during October 2012. On 30 October 2012, a process server had a conversation with Mr Maher seeking to obtain his address in order to serve that order. The process server advised Mr Maher that the documents were Supreme Court process relating to the Trio matter, Mr Maher indicated that he was "not interested in receiving those papers" and that: "I won't accept any documents about this matter. I am going overseas shortly and this will not matter then." 5Section 1323 of the Corporations Act 2001 (Cth) authorises the Court to make orders in specified circumstances, including where an investigation is being carried out under the Australian Securities and Investments Commission Act 2001 (Cth) in relation to an act or omission by the defendant that constitutes or may constitute a contravention of the Corporations Act. If one of the prerequisites to the making of an order under this section is satisfied, the court has a discretion whether to make that order, and relevant factors include the balance of the public interest and the private rights of the defendant: Beach Petroleum NL v Johnson (1992) 9 ACSR 404 at 407; 11 ACLC 75; Australian Securities and Investments Commission v Hawley [2008] FCA 1423; (2008) 250 ALR 57; 68 ASCR 79 at [6], [8]. Orders under this section may be made to preserve the status quo pending investigation, and even before evidence necessary to establish liability has been collected, or before that liability has been established: Re Richstar Enterprises Pty Ltd; Australian Securities and Investments Commission v Carey (No 3) [2006] FCA 433; (2006) 232 ALR 577; 57 ACSR 307 at [25], followed Australian Securities and Investments Commission v Krecichwost [2007] NSWSC 948; (2007) 213 FLR 314; 64 ACSR 411. The evidence establishes that investigations are presently being carried out under the Australian Securities and Investments Commission Act in relation to an act or omission by Mr Maher that constitutes or may constitute a contravention of the Corporations Act and this gives the Court jurisdiction to make an order under s 1323 of the Act. 6The orders that may be made under that section include, where a person is a natural person, an order prohibiting that person from leaving this jurisdiction, or Australia, without the consent of the Court. I am conscious of the need for caution in making an order under this section in restricting an individual's freedom of travel: Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd [2003] NSWSC 130; (2003) 44 ACSR 503; Australian Securities and Investments Commission v Ludgates Corporate and Investment Advisory Services Pty Ltd [2003] FCA 625; (2003) 21 ACLC 1366; Australian Securities and Investments Commission v Hawley above. However, the matters which are the subject of the Liquidators' inquiry are serious and Mr Maher's departure from Australia would frustrate the examination ordered by the Court and may frustrate civil proceedings which the Liquidators may bring against him. I am satisfied that this is a proper case for an order, to take effect pending Mr Maher's appearance before the Court, restraining Mr Maher from leaving Australia without the Court's consent for the purposes of s 1323(1)(k) of the Corporations Act. 7Section 486B of the Corporations Act also provides that the Court may issue a warrant for a person to be arrested and brought before the Court if, relevantly, a company is being wound up in insolvency or by the Court and the Court is satisfied that a person is about to leave this jurisdiction or Australia in order to avoid being examined about the company's affairs. I am satisfied that there is sufficient evidence to support an inference that Mr Maher is about to leave Australia in order to avoid being examined about Trio's affairs. The Liquidators have pointed to the risk, or likelihood, of significant prejudice to their investigations and any subsequent proceedings that were to occur and the balance of convenience favours relief to preserve the status quo. I am satisfied that this is a proper case for the making of an order under s 486B of the Corporations Act, recognising the public expectation that, if persons have not complied with the Corporations Act in respect of failed companies, they can expect to be pursued: Re Rainbow Systems of Australia Pty Ltd; Wily v Parker (1996) 21 ACSR 171 at 172; Quest Enterprises (NSW) Pty Ltd v Cassaniti [2007] NSWSC 519. 8I am satisfied that this is a proper case for the issue of a warrant for Mr Maher's arrest under s 486B of the Corporations Act to avoid the frustration of the examination powers conferred on the Liquidators under the Corporations Act. However, I consider that the execution of that warrant should be stayed, to take effect only if Mr Maher enters an international airport or other place of international departure from Australia. The warrant will therefore not be executed if Mr Maher complies with the order that the Court has made under s 1323 of the Corporations Act. 9I initially made orders and then amended them by inserting in them a reference to the other name by which Mr Maher was known and by amending order 4 to replace the words "order 3 to take effect if and only if" with the words "stay the execution of warrant unless and until" and added the words "the warrant then to have immediate effect" at the end of that order. The amendment to order 4 is intended to make clear that a warrant is now to be issued, although its execution is stayed unless the event referred to in that order occurs. The orders set out below incorporate those amendments. 10I make the following orders: