Australian Securities & Investments Commission, In the Matter of Richstar... [2006] FCA 1208 | Case summary

Judgment (15 paragraphs)

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ON THE PLAINTIFF'S AMENDED MOTION FILED 4 SEPTEMBER 2006, THE COURT ORDERS THAT:

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The First Defendant do serve on the Plaintiff within seven days of the date of these orders documents within his possession, custody or power falling within the following categories: 1.1 Documentation relating to the engagement of Mercator Trust Company Limited (Mercator) by the following: 1.1.1 Halter Limited (Halter); 1.1.2 the Hilton Trust; and 1.1.3 the First Defendant; or any servants or agents of these entities or persons. 1.2 Documentation from 1 January 2000 to date containing or referring to all communications between the First Defendant and any of his servants or agents (including but not limited to Graeme Rundle and Donald Kennerly) and Mercator. 1.3 All documents from 1 January 2000 to date containing or referring to written advice given by Mercator to the First Defendant or any of his servants or agents (including Halter and the Hilton Trust). 1.4 All documents from 1 January 2000 to date between the First Defendant and any or all of Mercator, Halter and the Hilton Trust. 1.5 All documents from 1 January 2000 to date between Halter and either or both of Anson Limited and Cabot Limited. 1.6 All documents from 1 January 2000 to date between Halter and Mercator Secretaries Limited. 1.7 Minutes of meetings of Halter from 1 January 2000 to date. 1.8 Minutes of meetings of Anson Limited and Cabot Limited relating to the operations of Halter from 1 January 2000 to date. 1.9 All documents relating to the Hilton Trust including but not limited to: 1.9.1 the Hilton Trust Deed document; 1.9.2 variations to the Hilton Trust Deed; and 1.9.3 financial statements of the Hilton Trust from 1 January 2000 to date; 1.10 All documents from 1 January 2000 to date, containing or referring to a request or authorisation by the First Defendant and/or any of his servants or agents for monies to be transferred to or to the credit of Halter and/or the Hilton Trust, whether recorded as a loan or otherwise, including: 1.10.1 the date(s) of receipt of funds; 1.10.2 the amount received; and 1.10.3 the source of the funds. 1.11 All documents from 1 January 2000 to date containing or referring to a request or authorisation by the First Defendant or any of his servants or agents for monies to be transferred from or from the credit of Halter and/or the Hilton Trust, whether characterised as a loan or otherwise, including: 1.11.1 the date(s) of transfer of funds; 1.11.2 the amount transferred; and 1.11.3 the recipient of the funds. 1.12 All financial documents of statements from 1 January 2000 to date, held by Mercator in relation to Halter and the Hilton Trust Client Account including but not limited to: 1.12.1 profit and loss statements; 1.12.2 balance sheets; and 1.12.3 Mercator's Client Account. 1.13 All documents from 1 January 2000 to date which concern loans to or from Mercator and/or the Hilton Trust. 1.14 All documentation from 1 January 2000 to date (including, but not limited to, bank statements) relating to any current or former bank accounts of the First Defendant, Halter and/or the Hilton Trust held with: 1.14.1 ING Bank NV Singapore Branch; 1.14.2 ING Asia Private Bank Limited; 1.14.3 ING Bank NV; and/or 1.14.4 ING Barings South East Asia Ltd (collectively referred to as 'ING'). 1.15 All documentation from 1 January 2000 to date, containing or referring to all communications between the First Defendant and any of his servants or agents (including, but not limited to, Graeme Rundle and Donald Kennerly) and ING. 1.16 All documentation from 1 January 2000 to date (including, but not limited to, bank statements) relating to any current or former bank accounts in the name of the First Defendant or in respect of where he is or previously was a signatory, Halter, the Hilton Trust and/or Mr Ho Ping Kuen held with Citibank NA Singapore, Orchard Branch; and 1.17 All documentation from 1 January 2000 to date, containing or referring to all communications between the First Defendant and any of his servants or agents (including, but not limited to, Graeme Rundle and Donald Kennerly) and Citibank NA Singapore, Orchard Branch. PROVIDED THAT this Order does not require the production within seven days of documents within the First Defendant's power which are presently in the custody or control of ING Asia Private Bank Limited, Mercator Trust Company Limited and Citibank NA Singapore Orchard Branch. 2. The First Defendant do within 48 hours of this Order send letters addressed to Mercator Trust Company Limited, ING Asia Private Bank Limited and Citibank NA Singapore Orchard Branch in the terms annexed to this Order. 3. The Plaintiff is at liberty to communicate with Mercator, ING and Citibank NA Singapore Orchard Branch so that arrangements may be made for the payment of the costs concerned with the copying and forwarding of the documents pursuant to the First Defendant's letters required, by these Orders, to be sent. 4. The First Defendant by his agents, employees or representatives is hereby restrained from otherwise communicating with Mercator, ING or Citibank NA Singapore Orchard Branch to suggest or require that they not comply with the written requests sent by him pursuant to the preceding orders. 5. The First Defendant to file and serve within 7 days an affidavit verifying his compliance with Order 2. 6. The First Defendant is to pay the Plaintiff's costs of the amended motion to be taxed. ON THE FIRST DEFENDANT'S MOTION FILED 16 AUGUST 2006, THE COURT ORDERS THAT:

Mercator Trust Company Limited PO Box 336 Anson Court La Route des Camps 'St Martin GUERNSEY GY 1 3 UQ CHANNEL ISLANDS Dear Sir/Madam, ASIC v Norman Phillip Carey & Others Federal Court of Australia No WAD 83/2006 I authorise and request Mercator Trust Company Limited to urgently forward to the District Registrar of the Federal Court of Australia at Level 6, 1 Victoria Avenue, Perth, Western Australia copies of documents that are within your possession, custody or control that fall within the following categories: 1. All documentation concerning or referring to the engagement of Mercator Trust Company Limited (Mercator) by the following: 1.1 Halter Limited (Halter); 1.2 the Hilton Trust; and 1.3 myself or any of my servants or agents or any servants or agents of Halter or the Hilton Trust. 2. Documentation from 1 January 2000 to date, containing or referring to all communications between myself and any of my servants or agents (including, but not limited to, Graeme Rundle and Donald Kennerly) on the one hand, and Mercator on the other. 3. All documents from 1 January 2000 to date containing written advice given by Mercator to me or any of my servants or agents (including Halter and the Hilton Trust). 4. All documents from 1 January 2000 to date between myself and any or all of Mercator, Halter and the Hilton Trust. 5. All documents from 1 January 2000 to date between Halter and either or both of Anson Limited and Cabot Limited. 6. All documents from 1 January 2000 to date between Halter and Mercator Secretaries Limited. 7. Minutes of meetings of Halter from 1 January 2000 to date. 8. Minutes of meetings of Anson Limited and Cabot Limited relating to the operations of Halter from 1 January 2000 to date. 9. All documents relating to the Hilton Trust including but not limited to: 9.1 the Hilton Trust Deed document; 9.2 variations to the Hilton Trust Deed; and 9.3 financial statements of the Hilton Trust from 1 January 2000 to date. 10. All documents from 1 January 2000 to date, containing or referring to a request or authorisation by myself and/or any of my servants or agents for monies to be transferred to or to the credit of Halter and/or the Hilton Trust, whether recorded as a loan or otherwise, including: 10.1 the date(s) of receipt of funds; 10.2 the amount received; and 10.3 the source of the funds; 11. All documents from 1 January 2000 to date containing or referring to a request or authorisation by me or any of my servants or agents for monies to be transferred from or from the credit of Halter and/or the Hilton Trust, whether recorded as a loan or otherwise, including: 11.1 the date(s) of transfer of funds; 11.2 the amount transferred; and 11.3 the recipient of the funds. 12. All financial documents or statements from 1 January 2000 to date, held by Mercator in relation to Halter and the Hilton Trust Client Account including but not limited to: 12.1 profit and loss statements; 12.2 balance sheets; and 121.3 Mercator's Client Account. 13. All documents from 1 January 2000 to date which refer to loans to or from Mercator and/or the Hilton Trust.

REASONS FOR JUDGMENT 1 On 20 April 2006 the Court made orders appointing receivers to the property of the first defendant, Norman Phillip Carey and a number of other defendants. Those orders included an order requiring Mr Carey by 5pm on Thursday 4 May 2006 to deliver to the Australian Securities and Investments Commission (ASIC) and his receivers a full and detailed affidavit setting out a number of matters thus: '4.1 The name and address of any bank, building society or other financial institution at which there is an account in the name of or under the control of the respective Defendant, together with the number of such account, the name of such account and the balance of that account at the date of this Order; 4.2 the name and address of any person or persons indebted to the respective Defendant at the date of this Order and the amount of the indebtedness; 4.3 an itemised inventory of the respective Defendant's assets and liabilities; 4.4 an itemised inventory of any and all property whether real or personal: 4.4.1 owned by the respective Defendant; 4.4.2 controlled by the respective Defendant; and 4.4.3 in which the respective Defendant has an interest, and which includes details of that property; and 4.5 in respect of any of the property referred to in sub-paragraphs 4.1 to 4.4 above, whether that property has been given as security for any debt, and if so, the nature of the security and the debt so incurred.' Mr Carey was also required to immediately deliver up to the receivers books and records which related to his property and otherwise to use his best endeavours to assist the receivers in the performance of their obligations. 2 The orders were made pursuant to s 1323 of the Corporations Act 2001 (Cth) (the Act) and s 23 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act). 3 On 1 June 2006 the Court made a further order requiring Mr Carey to attend before a Registrar on a date to be fixed by the Registrar for examination on oath by ASIC and the receivers on matters relevant to: '(i) The information required to be produced by Mr Carey pursuant to paragraph 4 of the orders made in relation to him on 20 April 2006. (ii) The affidavits he swore on 4 and 22 May 2006 purportedly pursuant to those orders.' The Court also ordered that Mr Carey produce such books, documents, records or other papers which he might be directed by the Registrar from time to time to produce in aid of such examination. In the reasons for judgment published at that time I stated that I was satisfied that there was a real possibility that Mr Carey's disclosure affidavits had not provided all the information which he was required to provide. 4 An oral examination of Mr Carey proceeded before Registrar Stanley on 5 July, 24 July and 25 July 2006. On 25 July 2006 Registrar Stanley made orders which recited requests made by ASIC that Mr Carey on or before 28 July 2006 should himself request in writing from Mercator Trust Company Limited (Mercator) and ING Asia Private Bank Limited (ING) documents falling into various categories. 5 The Registrar ordered that Mr Carey should serve forthwith on ASIC and the receivers a copy of any written request made to Mercator and ING pursuant to ASIC's request and a copy of any written response from those organisations. No such documents have been provided to ASIC or the receivers by Mr Carey and I am informed by his counsel, Mr Nixon, that no such requests have been made of Mercator and ING. Mr Nixon has indicated that this statement from the bar table will be verified on affidavit. 6 Mr Carey moves to set aside the Registrar's order of 25 July 2006. However given his counsel's contention that no request has been sent to Mercator or ING as requested by ASIC it seems the order has nothing upon which it can operate. Subject to his filing the affidavit foreshadowed by his counsel, I will dismiss this motion with no order as to costs as that exercise is entirely academic. 7 ASIC moves for orders requiring the production by Mr Carey of a range of documents relating to dealings between a company called Halter Limited, Mercator, members of the ING Bank Group and Citibank NA Singapore, Orchard Branch. It also seeks documents relating to a trust called the Hilton Trust and documentation relating to the corporate directors of Halter which are two companies called Anson Limited and Cabot Limited. 8 ASIC's motion arises out of Mr Carey's responses to questions put to him in the examination before the Registrar. Affidavits filed by ASIC exhibited documentary evidence of: 1. A company called Dosius Pty Ltd of which Mr Carey and his sister are co-directors. 2. Transfers of funds from Dosius' bank account in Perth to offshore accounts in Singapore and to Westpoint Corporation accounts. Documents for some of the transfers effected in 2001 and 2003 evidenced Mr Carey's personal direction. 3. Transfers from the Dosius Challenge Bank account by overseas telegraphic transfer of specific amounts including $300,000 on 1 July 1999, $60,900 on 8 July 2001, $70,000 on 12 September 2001, $150,000 on 29 July 2003 and $500,000 on 4 November 2003. 4. Evidence of the existence of Halter Ltd, a company incorporated in the Channel Islands on 15 February 1989 whose directors are Anson Ltd incorporated in Anguilla and Cabot Ltd incorporated in Antigua, and whose shareholders are Mercator and Mercator Nominees Pty Ltd. 5. Evidence of the existence of a trust named the Hilton Trust of which Halter is trustee and of which it appears Mr Carey is a beneficiary, if not the principal beneficiary. 6. Evidence of three bank accounts in Singapore with ING over which Mr Carey has or has had control. 9 There was also evidence that Mercator has been engaged by Mr Carey and/or Halter to perform transactions related to the Hilton Trust, Halter and ING. Evidence obtained from the Guernsey Financial Services Commission (the Commission) includes a letter from Mercator to the Commission dated 8 August 2006 responding to a notice issued to Mercator by the Commission on 7 July 2006, apparently following a request from ASIC. In that letter Mercator provided, inter alia, the following information: '1. The shares of Halter Limited, a Guernsey registered company incorporated on 15 February 1989 ("Halter"), are held on trust by the trustees of the Hilton Trust ("Hilton"). We have always treated Mr Norman Carey as the principal beneficiary of Hilton. 2. As stated above, Halter was incorporated on 15 February 1989 and on its incorporation the shares in Halter were held by nominees for Mr Carey personally. After Hilton was established on 27 February 1989 the shares in the company were held by Hilton. Apart from the transfer of the shares to Hilton, there has been no change in Halter's ownership since incorporation. 3. You have asked for the accounts of Halter from 2002 to date. Accounts were not prepared for 2002 and have not been finalised post 2003…' The letter attached accounts for Halter for the three years ended 31 December 2003. It further stated that no funds, so far as Mercator was aware, had been paid in since 1994. Those funds that had been received had been treated as settled into Hilton, although it was not clear to Mercator whether that was a loan and they were reviewing the evidence to determine the correct accounting treatment. Mercator also advised thatHalter held bank accounts with ING Baring South East Asia Ltd and named three account numbers. The accounts were said to have been closed. The balance was being transferred into Mercator's client account. On receipt of the transfer, the available balance would be approximately AU$164,500. The only other asset of Halter was said to be a loan to Hilton in the sum of AU$965,577.32, which it was said was not likely to be recoverable. 10 ASIC pointed in its submissions to responses made by Mr Carey on his examination. In those responses it was said he denied:

owning, controlling or operating any overseas bank accounts;
establishing any bank account with ING;
being a director or shareholder of Halter;
having an involvement with Halter;
having given any instructions to a Mr Kennerly to incorporate Halter on his behalf;
having travelled to Guernsey or the Channel Islands;
writing, drafting or preparing correspondence signed by him to ING or Mercator;
recalling having had any discussions with any servants or agents of Mercator or ING;
being aware that he was a beneficiary of the Hilton Trust; and
having heard of Anson Limited and Cabot Limited. 11 ASIC submitted that the evidence given by Mr Carey in this respect was inconsistent with documentary evidence put to him. It is not necessary for present purposes to refer to all the passages cited by ASIC in its submissions, but I refer to pages 56 and 57 of the transcript in which Mr Carey was referred to the company Halter and asked: 'What business was that company conducting?---I'm not aware of what business it was conducting. Is that a true answer?---Yes.' He was referred to his signature against his name as an authorised signatory of Halter's account. It was put to him that this was clear authority to open an account with a bank in the name of Halter. He responded: 'Well, it seems to be the situation, but Don dealt with this not myself.' At 57 he was asked again what was his involvement with Halter. He said: 'I haven't got an involvement with that company.' Asked why he signed as an authorised signatory, he said: 'Because Don has put me there.' And at pages 87 and 88 the following exchange occurred: 'And you are the sole signatory on the Halter Ltd bank account are you?---Look, I don't know that. What business are you conducting on behalf of Halter Ltd Mr Carey?---I'm not conducting any business.' And at 88: 'The fact of the matter, Mr Carey, is that Halter Ltd is a company under your control, is it not?---No, no. And the fact of the matter is you are in regular correspondence with Mercator Trust Company Ltd in Guernsey, are you not?---Well, certainly not regular communication.' 12 There is evidence from a reading of the transcript of the examination, from which one could infer that Mr Carey's answers have been evasive and uncooperative. An adverse inference would be that he has been involved in so many companies and transactions that he has no real command of the detail of those involvements. Whichever inference is to be preferred, does not matter for present purposes. Whether Mr Carey has a bad memory or was lying to the Registrar, the process of investigating his assets will, it seems to me, be materially assisted by orders for the production of documents of the kind now sought by ASIC in its amended motion. 13 I propose to make orders requiring Mr Carey to produce documents in his custody, possession or power in the categories specified by ASIC, other than those held by Mercator, ING and Citibank Singapore. As to those, I will require him to send letters within the next 48 hours to Mercator, ING and Citibank Singapore requesting the delivery of such documents to the Federal Court Registry. There is likely to be a cost involvement so I will authorise ASIC, if it be necessary to do so, to communicate with those parties to arrange to cover the cost of copying and delivering the documents. I will also enjoin Mr Carey from making any communication with those parties which would effectively require non-compliance with his letters of authority. I will allow liberty to apply in relation to any further issues about the implementation of these orders. There will be an order that Mr Carey pay the costs of ASIC's amended motion. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Australian Securities & Investments Commission, In the Matter of Richstar Enterprises Pty Ltd ACN 099 071 968 (No 8) v Carey

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