Australian Securities and Investments Commission v Oceanic Asset Management Pty Ltd, in the matter of Oceanic Asset Management Pty Ltd

[8]

Time for service of this originating process and the supporting affidavit be abridged to 4pm on 20 August 2015.
This originating process be returnable immediately before Justice Barker at 2:45pm on 24 August 2015.
Until further order: (1) Under section 472(2) of the Corporations Act 2001 (Cth) (Corporations Act), Vincent Smith of Ernst & Young, 11 Mounts Bay Road, Perth, WA, be appointed as provisional liquidator of each of the Defendants. (2) Pursuant to section 1323(1)(h) of the Corporations Act, Kim Wallman of HLB Mann Judd (Insolvency WA), Ground Floor, 15 Rheola Street, West Perth, WA, be appointed as trustee (Trustee) to the deceased estate of Mr Jones, without security, of all of the property (as defined in the Corporations Act) of the deceased estate of Mr Jones. (3) The Trustee have the powers set out in sections 420(1), (2)(a), (b), (e), (f), (g), (k), (n), (p), (q), (r), (t) and (u) of the Corporations Act and can exercise those powers in respect of all of the property (as defined in the Corporations Act) of the deceased estate of Mr Jones. (4) Further to the orders sought in paragraphs 3(1), (2) and (3) above, the Public Trustee and the personal representative, executor or administrator of the deceased estates of Mr Jones or Mrs Jones by themselves and their servants, agents and employees be restrained from: (a) moving, or causing or permitting to be removed from Australia all or any of the property (as defined in the Corporations Act) of the Defendants and Mr Jones, including, but not limited to, funds in bank accounts held by the Defendants in their names or Mr Jones' name or the joint name of Mr and Mrs Jones with Westpac Banking Corporation, being: First Defendant Business Max-I Direct 036001 280 934 Business Cheque Plus 036067 249 796 Second Defendant Business Max-I Direct 036001 280 969 Business Cheque Plus 036001 280950 Third Defendant Business Cash Reserve 036001 506462 Business Cheque Account 036067 641165 Fifth Defendant Business One Low 036001 309637 Business Max-I Direct 036001 309645 Sixth Defendant Housing Loan 037125 60032 Classic Plus Account 036001 591847

[11]

(the Property) (c) causing or permitting to be sold, charged, mortgaged or otherwise dealt with, disposed of, or diminished in value, all or any of their property of the Defendants or Mr or Mrs Jones (as defined in the Corporations Act) including, but not limited to, the monies in the Westpac Accounts and the Property; (d) without limiting the terms of subparagraphs (a) to (c) above, incurring new liabilities for the Defendants or Mr or Mrs Jones including, without limitation, liabilities incurred either directly or indirectly, through the use of a credit card, a credit facility, a drawdown facility or a re-draw facility; and (e) without limiting the terms of subparagraphs (a) to (d) above, withdrawing, transferring or otherwise disposing of or dealing with, any monies available to the Defendants or Mr or Mrs Jones in any account with any bank, building society or other financial institution, (in Australia and the United Kingdom), in which the Defendants or Mr Jones or Mrs Jones have any legal or equitable interest including, but not limited to, the monies standing to the credit of the Westpac Accounts. 4. To the extent necessary, the Plaintiff has leave to give to: (1) the relevant authorities that record, control and regulate the ownership of real property; (2) the relevant authorities that record, control and regulate the ownership of motor vehicles; (3) the relevant authorities that record, control and regulate the ownership of maritime vessels and craft; (4) any bank, building society or other financial institution through which, to the best of the Plaintiff's belief, the Defendants operate any account; and (5) any other person or entity, holding or controlling property, which, to the best of the Plaintiff's belief, belongs to the Defendants, notice of these Orders, by delivering a copy of them to a person apparently in the employ of that entity or person. 5. The costs of today be in the application. 6. There be liberty to any interested person to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

[19]

Factual circumstances 4 ASIC's application is supported by the affidavit of Mr Gary Martyn Bertram dated 18 August 2015. Mr Bertram is a senior manager in the Enforcement Western Australia team within the Perth office of ASIC. 5 Pursuant to s 102 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), ASIC has delegated to Mr Bertram certain functions and powers including its functions and powers under Pt 3 of the ASIC Act relating to conduct of investigations. 6 In mid-July 2015, ASIC's Misconduct and Breach Report (M&BR) team received what Mr Bertram described as "complaints" alleging that Mr and Mrs Jones had committed suicide leaving a note confessing that Mr Jones had defrauded investors through Mulato Nominees Pty Ltd, the fifth defendant. 7 On 24 July 2015, Mr Bertram and two other member of the M&BR team met with Mr Chris Jones, a nephew of Mr Jones and employed by Oceanic Asset Management Pty Ltd (OAM), the first defendant, as an investment manager, and Mr David Lees, employed by OAM as a fund manager and a consultant to Mulato. 8 At this initial meeting, Mr Bertram says Chris Jones advised that Mr and Mrs Jones were deceased and that they had died intestate, that is to say, without a will. 9 Mr Bertram says that in July, his M&BR team became aware of various news articles reporting the suicide of Mr and Mrs Jones. 10 Mr Bertram says that on 24 July 2015, at his request, Mr Lees sent him by email copies of two suicide notes apparently made by Mr and Mrs Jones. He produces those notes to the Court. 11 On or about 28 July 2015, Mr Bertram says ASIC commenced a formal investigation pursuant to s 13 of the ASIC Act into suspected contraventions of s 1041E (false or misleading statements), s 1041G (dishonest conduct) and s 1041H (misleading or deceptive conduct) of the Corporations Act and s 378 (stealing) and s 409 (fraud) of the Criminal Code Act Compilation Act 1913 (WA) by officers of OAM, the second defendant Oceanic Equities Pty Ltd (OE), the third defendant Australian Global Capital Pty Ltd (AGC), the fourth defendant Mulato Management Services Pty Ltd (MMS) and the fifth defendant, Mulato, during the period between 15 June 2010 and 15 June 2015. 12 On 3 August 2015, Ms McCormick, one of the M&BR team, on Mr Bertram's instructions, sent an email to Chris Jones requesting a copy of the death certificates for Mr and Mrs Jones. 13 Mr Bertram says that ASIC's investigation is ongoing.

[33]

Should a provisional liquidator be appointed to each defendant 66 By s 472(1) and (2) of the Corporations Act the Court has the power to appoint an official liquidator or an official liquidator provisionally. 67 In Australian Securities Commission v Solomon (1996) 19 ACSR 73, at 80, Tamberlin J identified six principles to be considered when exercising the power to appoint a provisional liquidator: (1) The Court should only appoint a provisional liquidator where it is satisfied that there is a valid and duly authorised winding up application and that there is a reasonable prospect that a winding up order will be made. See Debelle J in Re J N Taylor Holdings Ltd; Zempilas v JN Taylor Holdings Ltd (1990) 3 ACSR 600 at 614. (2) The fact that the assets of the corporation may be at risk is a relevant consideration. (3) The provisional liquidator's primary duty is to preserve the status quo to ensure the least possible harm to all concerned and to enable the Court to decide, after a further examination, whether the company should be wound up: Re Carapark Industries Pty Ltd (in liq) (1966) 9 FLR 297 at 303. (4) The Court should consider the degree of urgency, the need established by the applicant creditor and the balance of convenience: Re Club Mediterranean Pty Ltd (1975) 11 SASR 481 at 484. The power is a broad one and circumstances will vary greatly. Commercial affairs are infinitely complex and various and it is inappropriate to limit the power by restricting its exercise to fixed categories or classes of circumstances or fact. (5) It may be appropriate to appoint a provisional liquidator in the public interest where there is a need for an independent examination of the state of accounts of the corporation by someone other than the directors. See Tickle v Crest Insurance Co of Australia Ltd (1984) 2 ACLC 493. (6) Where the affairs of the company have been carried on casually and without due regard to legal requirements so as to leave the Court with no confidence that the company's affairs would be properly conducted with due regard for the interests of shareholders, it may be appropriate to appoint a provisional liquidator. See Montgomery Windsor (NSW) Pty Ltd v Ilopa Pty Ltd (1984) 2 ACLC 224. 68 These principles have also been considered appropriate in the recent decisions of Australian Securities and Investments Commission v ActiveSuper Pty Ltd (2013) 93 ACSR 189 at [16]; [2013] FCA 234 and Australian Securities and Investments Commission v Planet Platinum Limited [2015] VSC 273 at [43]. 69 Consequently, it is understood that the appointment of a provisional liquidator pending the determination of a winding up application is something done rarely. In some authorities it is referred to as a "drastic measure", but one that may be required to preserve the status quo: Zempilas v JN Taylor Holdings Ltd (No 2) (1990) 55 SASR 103 at 106; Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625 at 635; Lubavitch Mazal Pty Ltd v Yeshiva Properties No 1 Pty Ltd (2003) 47 ACSR 197 at [105]; [2003] NSWSC 535; Australian Securities and Investments Commission, in the matter of Bennett Street Developments Pty Ltd v Weerappah (No 2) [2009] FCA 249 at [8]; Australian Securities and Investments Commission v Tax Returns Australia Dot Com Pty Ltd [2010] FCA 715 at [86]. 70 In the circumstances of this case, as they appear at the time of the hearing of the application for interim orders, it is difficult to imagine otherwise than that a final winding up order of each of the defendants will be made under the just and equitable ground, s 461(1)(k) of the Corporations Act, in due course. 71 Applying the principles set out above in the circumstances of this case, where the possible financial circumstances of a range of aggrieved persons may be affected by the management and administration of the defendant companies, where the former guiding mind of each company, Mr Jones, has died, and none of the defendants appear to be carrying on any business, occupying any premises, engaging employees or otherwise, in a practical sense, existing, it is appropriate that the interim relief sought be granted to enable ASIC to complete its investigation, under the ASIC Act, in relation to the affairs of the companies.

[34]

Should an interim trustee be appointed? 72 By s 1323 of the Corporations Act, the Court has the power to prohibit payment or transfer of money, financial products or other property. By subs (1), where an investigation is being carried out under the ASIC Act, as it is here, in relation to an act or omission by a person that may constitute a contravention of the Act, the Court has the express power under (e) to make an order prohibiting a person holding money, financial products or other property on behalf 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. Further, the Court has the power under subs (f) to prohibit the taking or sending out of the jurisdiction or out of Australia by a person of money of the relevant person or of an associate of the relevant person. Under (g) the Court may also make an order prohibiting the taking, sending or transfer by a person of financial products or other property of the relevant person or an associate of the relevant person from a place in the jurisdiction to a place outside the jurisdiction or from a place within Australia to a place outside Australia. And under subs (h) the Court may appoint a receiver or trustee of the property or part of the property of a person, if the relevant person is a natural person, or a receiver or receiver and manager of the property or part of the property of that person if it is a body corporate. 73 Under s 1323(3) where an application is made for an order subs (1), as here, the Court may, if it is of the opinion that 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. 74 In these circumstances, the Court is empowered to make an order appointing a trustee in respect of the property or part of the property of Mr Jones. 75 In all the circumstances as they exist here, it is indeed appropriate, if not necessary, to make the interim appointment of a trustee to the property of Mr Jones so that the ASIC investigation may be completed. 76 At this point, it appears there is otherwise no personal representative for the estate of Mr Jones; or, for that matter, Mrs Jones. 77 There should, however, be liberty to apply to the plaintiff as well as to any person who may be affected by the order.

Australian Securities and Investments Commission v Oceanic Asset Management Pty Ltd, in the matter of Oceanic Asset Management Pty Ltd - [2015] FCA 966 - FCA 2015 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (36 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (8)

Cited By (1)