Australian Securities & Investments Commission v Landy DFK Securities Limited [2002] FCA 1056 | Case summary

REASONS FOR JUDGMENT 1 On 19 April 2002 the Australian Securities and Investments Commission ("ASIC") commenced a proceeding in the Court against Landy DFK Securities Limited and certain other parties seeking relief under the Corporations Act 2001 (Cth) ("the Act"). An amended application was filed on 3 May 2002. 2 ASIC claimed, inter alia, that the Faithful Street (Wangaratta) Property Trust ("the Trust") was a managed investment scheme that was required to be, but was not, registered under ss 601EB and 601ED of the Act. ASIC's proceeding in respect of the Trust was brought under s 601EE, which provides: "(1) If a person operates a managed investment scheme in contravention of subsection 601ED(5), the following may apply to the Court to have the scheme wound up: (a) ASIC; (b) the person operating the scheme; (c) a member of the scheme. (2) The Court may make any orders it considers appropriate for the winding up of the scheme." 3 Under s 58AA of the Act the "Court" is defined as including the Federal Court. The Court also has jurisdiction in any matter arising under Pt 5C.1 of the Act: see s 39B(1A)(c) of the Judiciary Act 1903 (Cth). 4 ASIC sought the following relief under s 601EE of the Act in respect of the Trust: "6. An order pursuant to section 601EE(1) of the Corporations Act that the Faithful Street (Wangaratta) Property Trust be wound up. 7. An order that Terra Firma Project Management Pty Ltd be removed as trustee of Faithful Street (Wangaratta) Property Trust. 8. An order that Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne be appointed as the new trustees of Faithful Street (Wangaratta) Property Trust. 9. An order that all the property held by Terra Firma Project Management Pty Ltd upon trust for the beneficiaries of the Faithful Street (Wangaratta) Property Trust be vested in Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne for the purposes of this winding up and otherwise for the purposes of or in connection with the Faithful Street (Wangaratta) Property Trust. 10. An order that Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne be appointed joint and several liquidators for the purposes of the winding-up of the Faithful Street (Wangaratta) Property Trust, with the following powers: (a) the powers that a liquidator of a company would have pursuant to section 477 of the Corporations Act as if the Faithful Street (Wangaratta) Property Trust was a company; (b) the power to investigate or cause to be investigated any deficiency in the Faithful Street (Wangaratta) Property Trust and to exercise the powers under Part 5.9 of Division 1 of the Corporations Act as if the Faithful Street (Wangaratta) Property Trust was a company being wound up. 11. The exercise by Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne of the powers conferred by order 10 in relation to the Faithful Street (Wangaratta) Property Trust is subject to the control of the Court and the plaintiff may apply to the Court with respect to the exercise or proposed exercise of any of those powers." 5 On 2 May 2002 Finkelstein J made the following interlocutory orders: "7. Until the hearing and determination of this proceeding or further order, Terra Firma Project Management Pty Ltd be removed as trustee of Faithful Street (Wangaratta) Property Trust. 8. Until the hearing and determination of the proceeding or further order, Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne be appointed as the new trustees of Faithful Street (Wangaratta) Property Trust. 9. Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne shall have the powers conferred on them by the Trust Deed of the Faithful Street (Wangaratta) Property Trust, being exhibit JH-72 to the affidavit of Jason Holandsjo sworn 19 April 2002 but shall not have the power to wind up the Faithful Street (Wangaratta) Property Trust and distribute the property of the Faithful Street (Wangaratta) Property Trust. 10. The exercise by Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne of the powers conferred by order 9 in relation to the Faithful Street (Wangaratta) Property Trust is subject to the control of the Court, and they, or any of the parties, may apply to the Court with respect to the exercise or proposed exercise of any of those powers. 11. Until the hearing and determination of this proceeding or further order, all the property held by Terra Firma Project Management Pty Ltd upon trust for the beneficiaries of the Faithful Street (Wangaratta) Property Trust be vested in Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne. 12. Terra Firma Project Management Pty Ltd shall deliver all the books and records of the Faithful Street (Wangaratta) Property Trust to Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne by 4 pm on Friday 3 May 2002. 13. Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne shall be entitled to reasonable remuneration and reasonable costs and expenses properly incurred in the performance of their duties and the exercise of their powers as trustees of the Faithful Street (Wangaratta) Property Trust to be calculated on the basis of time reasonably spent by them and their staff, such remuneration, costs and expenses to be paid out of the assets of the Faithful Street (Wangaratta) Property Trust, and Phillip Newman and Clyde White shall deliver an account for all amounts drawn by them for their remuneration, costs and expenses to the Court every two months, and immediately provide a copy of that account to the plaintiff, until further order." 6 One of the properties that vested in Philip Newman and Clyde White ("the applicants") pursuant to [11] of the interlocutory orders was the property at 2 Mitcham Road, Donvale in the State of Victoria ("the property"). At the date of the interlocutory orders Lifetime Nutrition Pty Ltd ("Lifetime") was in possession of the property as a lessee under a lease. After Lifetime failed to pay the rent due and payable under the terms of the lease the applicants, in their capacity as new trustees of the Trust, gave notice of their intention to re-enter the property. On 5 June 2002 the applicants took possession of the property and changed the locks but their possession was short lived as Lifetime then re-changed the locks, re-entered the property and has continued to remain in possession of it. Lifetime claims that by reason of an arrangement with the previous trustee it is not obliged to pay the rent payable under the lease beyond August 2001 and contends it is entitled to purchase the property under an option set out in the lease, notwithstanding that it appears not to have paid a deposit or any part of the purchase price as required by the option. 7 On 11 July 2002 the applicants filed a notice of motion returnable before Finkelstein J on 12 July. The relief sought by the applicants in the motion was as follows: "A. An order for the possession of the property at 2 Mitcham Road Donvale in the State of Victoria more particularly described in Certificate of Title Volume 10100 Folio 137; B. Further and alternatively to A an injunction (permanent) restraining Lifetime Nutrition Pty Ltd (ACN 089 388 027), together by itself, its servants, agents or otherwise howsoever from entering into or upon or remaining in possession of the property at 2 Mitcham Road Donvale in the State of Victoria more particularly described in Certificate of Title Volume 10100 Folio 137 ('the property'); C. Further and alternatively to A and B directions or orders with respect to the exercise or proposed exercise of the powers by the Trustees under the Faithful Street (Wangaratta) Property Trust pursuant to paragraph 10 of the Orders of the Court made 2 May 2002; D. Such further or other order, relief or direction as this Honourable Court deems appropriate; E. Costs." 8 On 12 July 2002 Finkelstein J adjourned the motion to 26 July 2002 and directed that the parties file their contentions as to whether the Court has jurisdiction to grant the relief sought in the motion. Later on 12 July 2002 his Honour made the following final orders by consent in ASIC's proceeding in relation to the Trust: "5. The Faithful Street (Wangaratta) Property Trust be wound up pursuant to section 601EE(1) of the Corporations Act. 6. Terra Firma Project Management Pty Ltd be removed as trustee of Faithful Street (Wangaratta) Property Trust. 7. Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne be appointed as joint and several trustees of Faithful Street (Wangaratta) Property Trust. 8. All the property held by Terra Firma Project Management Pty Ltd upon trust for the beneficiaries of the Faithful Street (Wangaratta) Property Trust be vested in Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne for the purposes of this winding up and otherwise for the purposes of or in connection with the Faithful Street (Wangaratta) Property Trust. 9. Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne be appointed joint and several liquidators for the purposes of the winding-up of the Faithful Street (Wangaratta) Property Trust, with the following powers: (a) the powers that a liquidator of a company would have pursuant to section 477 of the Corporations Act as if the Faithful Street (Wangaratta) Property Trust was a company; (b) the power to investigate or cause to be investigated any deficiency in the Faithful Street (Wangaratta) Property Trust and to exercise the powers under Part 5.9 of Division 1 of the Corporations Act as if the Faithful Street (Wangaratta) Property Trust was a company being wound up. 10. The exercise by Phillip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne of the powers conferred by order 9 in relation to the Faithful Street (Wangaratta) Property Trust is subject to the control of the Court and the plaintiff may apply to the Court with respect to the exercise or proposed exercise of any of those powers. 11. Philip Newman and Clyde White of MGI Meyrick Webster, 160 Queen Street, Melbourne shall be entitled to reasonable remuneration and reasonable costs and expenses properly incurred in the performance of their duties and the exercise of their powers as trustees and liquidators of the Faithful Street (Wangaratta) Property Trust to be calculated on the basis of time reasonably spent by them and their staff, such remuneration, costs and expenses to be paid out of the assets of the Faithful Street (Wangaratta) Property Trust, and Philip Newman and Clyde White shall deliver an account for all amounts drawn by them for their remuneration, costs and expenses to the Court every two months, and immediately provide a copy of that account to the plaintiff." 9 In [10] of the interlocutory orders Finkelstein J reserved liberty to the applicants, and to any of the parties, to apply to the Court with respect to the exercise or proposed exercise of any of the trustees' powers referred to in [9] of the orders. However, in [10] of the final orders his Honour ordered that the powers of the applicants as trustees are subject to the control of the Court, but only reserved liberty to apply to the Court to ASIC with respect to the exercise or proposed exercise of those powers. 10 When the applicant's motion came on for hearing on 26 July 2002 the notice of motion was amended by the addition of the following paragraph: "BB. Further and alternatively to A and B an injunction (permanent) restraining Lifetime Nutrition Pty Ltd (ACN 089 388 027) together by itself, its servants, agents or otherwise howsoever from interfering with the possession of the property by the Court appointed Trustees of the Faithful Street (Wangaratta) Property Trust." 11 Part 9.5 of the Act sets out the general powers of the Court in relation to matters arising under the Act. It is not suggested that the interim and final orders made by Finkelstein J do not fall within the ambit of the powers conferred on the Court under Pt 5C.1 and Pt 9.5. Lifetime, however, contends that the relief sought by the applicants in the amended notice of motion relates to an entirely discrete and severable contractual or common law dispute between the applicants as landlord and vendor of the property and Lifetime as tenant and purchaser of the property. As a consequence, Lifetime claims that the Court has no jurisdiction to grant the relief sought in the amended notice of motion in order to resolve that dispute. 12 The applicants contend that the Court has jurisdiction to grant the relief sought in the amended motion, which relates to whether the applicants are entitled to possession of the property as court appointed trustees and liquidators pursuant to the orders made by Finkelstein J under Pts 5C.1 and 9.5 of the Act. 13 The contentions of the parties raise an important question as to the Court's jurisdiction under Pt 5C.1 in relation to disputes between court appointed liquidators of managed investment schemes and third parties who have competing claims in respect of the property vested in the liquidators by orders made pursuant to Pt 5C.1 of the Act. Similar jurisdictional issues could arise in respect of disputes between court appointed liquidators of companies under Pt 5.4B and court appointed receivers appointed pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth), and third parties. 14 Lifetime submitted that the notice of motion should be dismissed on two grounds. The first ground is that the Court has no jurisdiction in respect of "the matter" the subject of the present dispute, which it contends is whether the applicants or Lifetime are entitled to possession of the property. The second ground is that the Court does not have jurisdiction or power to make substantive orders resolving a dispute between the applicants and third parties on the applicants' interlocutory motion in ASIC's proceeding. 15 Under s 39B(1A)(c) of the Judiciary Act 1903 (Cth) jurisdiction is conferred on the Court in a matter arising under any law made by the Parliament. It is now well established that the Federal Court has jurisdiction to determine the whole controversy or matter of which an issue arising under a federal enactment forms part (see Fencott v Muller (1983) 152 CLR 570 ("Fencott v Muller") and Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 ("Stack") at 292-294). A "matter" in this context means the single underlying controversy of which the federal claim or cause of action forms part. Thus, the "matter" is to be characterised by reference to that controversy, rather than by the form of the proceeding or proceedings commenced to resolve the controversy: see Fencott v Muller at 591 and 603 and Re Wakim (1999) 198 CLR 511 at 563-564 and 583-588. 16 However, in order to attract jurisdiction under s 39B(1A)(c) it is necessary that the controversy or matter arise under a federal enactment. If the controversy or matter arises under a federal enactment the fact that the defence to the federal claims or causes of action raises non-federal issues, which the Court would not usually have jurisdiction to determine, does not have the consequence of making the controversy or matter one which does not arise under a federal enactment. In Stack the High Court held that if a matter arises under a federal enactment the Court has jurisdiction to determine the non-federal aspects of the single justiciable controversy of which the issues raised under the federal enactment form an integral or non-severable part: see Stack at 279, 292-294 and 303. 17 In LNC Industries Ltd v B.M.W. (Australia) Ltd (1983) 151 CLR 575 ("LNC Industries") at 581 in the joint judgment of the High Court their Honours stated: "…a matter may arise under a law of the Parliament although the interpretation or validity of the law is not involved: R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett, at p. 154. The conclusion reached by Latham C.J. in that case, and stated in a passage that has often been cited with approval, is 'that a matter may properly be said to arise under a federal law if the right or duty in question in the matter owes its existence to federal law or depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law'. Equally, there is a matter arising under a federal law if the source of a defence which asserts that the defendant is immune from the liability or obligation alleged against him is a law of the Commonwealth: Felton v. Mulligan. When it is said that a matter will arise under a law of the Parliament only if the right or duty in question in the matter owes its existence to a law of the Parliament that does not mean that the question depends on the form of the relief sought and on whether that relief depends on federal law. A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law." 18 In the present case the subject matter of the dispute is not property that exists as a result of federal law: cf LNC Industries at 581-582. However, there are a number of significant federal elements in the present dispute between the applicants and Lifetime in relation to possession of the property that indicate that the source of the claims of the applicants is federal law and that the claims depend upon federal law for their enforcement. The dispute arises in a context where: · ASIC commenced a proceeding in the Court under the Act to wind up the Trust and appoint the applicants as liquidators of the Trust; · the Court made orders under the Act winding up the Trust and appointing the applicants as liquidators to wind up the Trust and to get in its property for that purpose; · the Court conferred on the applicants as court appointed liquidators all of the powers necessary to wind up the Trust. 19 Where a third party calls into question the applicants' rights and the exercise or proposed exercise of their powers as liquidators, as has occurred in the present case, the source of those rights and powers is the Act and the orders of the Court made under the Act. That federal source is not altered by the fact that Lifetime's claims to possession in opposition to the applicants' claims arise under contract and the common law. As was pointed out by Gummow J in Re Truth About Motorways (2000) 200 CLR 591 at 624 the one proceeding may answer the description of several species of "matter". However, in the present case Lifetime's contractual or common law claims to possession of the property are put forward as a defence to the applicants' claims as liquidators of the Trust under a duty arising under the Act and orders of the Court to get in the property of the Trust in order to wind it up. 20 It is also significant, as I later explain, that in so far as the applicants are acting as liquidators winding up the Trust they are doing so as officers of the Court. The applicant's claims to the property are made in that capacity as part of the winding up of the Trust. 21 In the present case the existence of federal law (s 601EE of the Act), and orders of the Federal Court winding up the Trust made under that law, constitute the source of the substantive claims made and rights claimed by the applicants (cf ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 585). A consideration of "what the parties have done, the relationships between or among them and the laws which attach rights and liabilities to their conduct and relationships" (see Fencott v Muller at 608), and the application of the principles stated in LNC Industries, tends to support the conclusion that, in a constitutional sense, there is an underlying controversy which owes its existence to the Act, and Lifetime's contractual or common law claims in respect of the property are part of that controversy and are not severable from it. 22 The parties submissions focussed primarily on the orders made by the Federal Court in the course of the winding up of the Trust, rather than on the originating process which sought the winding up of the Trust under s 601EE of the Act. However, little turns on that distinction in the present case as the relevant "matter" in the constitutional sense can be described as the justiciable dispute between the applicants as liquidators and Lifetime in relation to whether the applicants are entitled to get in the property in the course of winding up the Trust. 23 One particular aspect of that controversy is the applicants' claim to possession of the property as trustees and liquidators. The applicants claim that their appointment as trustees under the interlocutory orders, and their appointment as liquidators under the final orders, were appointments of them as officers of the Court. They contend that Lifetime's actual and threatened interference with their possession as officers of the Court without leave of the Court is a contempt and that constitutes an additional basis for the Court's jurisdiction. 24 In Owen v Homan (1853) 4 H of L Cases 995 ("Owen v Homan") at 1032 the Lord Chancellor observed that where a court appoints a receiver to take possession of property the court is taking possession of the property "by its officer". In Commissioner for Corporate Affairs v Harvey [1980] VR 669 at 695-696 Marks J explained the role of a liquidator appointed by the court in a compulsory winding up as a representative of the court whose decisions are made under the authority of the court. A similar position has been stated to exist in respect of a trustee in bankruptcy appointed by the court: see Ex parte James; re Condon (1874) LR 9 Ch App 609 at 614. 25 In Re Henry Pound, Son, & Hutchins (1889) 42 Ch. D 402 ("Henry Pound") at 420, Cotton L.J. observed that where a court appoints receivers or liquidators as officers of the court and they are in possession of property in that capacity: "…a person having a right to a property which is in the possession of an officer of the Court, cannot, if he could otherwise take possession, take possession without leave of the Court so as to dispossess the officer of the Court who is in possession." 26 Cotton L.J. explained at 420 that interference with the possession of the court appointed officer would be a contempt of court unless prior leave is sought from the court to exercise rights which a third party has in respect of the property. At 422 Fry LJ stated: "Now, where property is in possession of an officer of the Court, and there are legal or equitable rights in that property not vested in the parties to the action or the persons who are before the Court, which legal or equitable rights are not the subject of the administration then going on, then the Court requires that the person who claims to enforce those rights shall apply for leave to enforce them. The right may be a right to take possession, or a right to bring an action, or a right to do various other things; but the Court requires an application to be made to it." 27 In Krextile Holdings Pty Ltd v Widdows; Re Brush Fabrics Pty Ltd [1974] VR 689 at 696. Gillard J stated: "Pursuant to s. 233, the liquidator after the order for winding up, is entitled to custody or control of the company's property, and it would be a contempt of court for anyone to attempt to interfere with his possession of the company's property: see Re Henry Pound, Son & Hutchins (1889), 42 Ch. D. 402, at pp. 420-2; Re Northern Garage, Ltd., [1946] 1 All E.R. 566, at p. 569." 28 Of course, where the Court appointed liquidator or receiver does not dispute the right to possession of a third party, such as a secured creditor, the third party may take possession of the property without seeking leave of the Court: see Re Landmark Corporation Ltd (In Liq) and the Companies Act [1968] 1 NSWLR 705 at 706 and SA Asset Management Corp v Sheahan (1995) 17 ACSR 569 at 576. The present case, however, is one in which Lifetime, although claiming to be entitled to possession of the property, is aware that that claimed entitlement is disputed by the applicants. 29 A court appointed liquidator may for some purposes be an officer of the Court but for other purposes be an agent of the company or a trustee for the creditors as a general body: see Tanning Research Laboratories Inc v O'Brien (1987) 11 ACLR 778 at 789-791 and Re Lemon Tree Passage & Districts RSL v Citizens Club Co-Operative Ltd (1987) 11 ACLR 796 ("Lemon Tree") at 798. When a court appointed liquidator of a managed investment scheme under Pt 5C.1 of the Act is getting in the assets of a trust in order to wind it up in accordance with an order of the Court made under the Act, he or she will usually be acting as an officer of the Court in relation to those activities and the principles set out in Henry Pound will be applicable. But it does not follow that those principles apply to the interference with the applicants' possession of the property as trustees, rather than as liquidators, which occurred prior to their appointment as liquidators. 30 In my view Lifetime is correct in its contention that the Court's interlocutory appointment of the applicants as trustees of the Trust did not result in the applicants becoming officers or representatives of the Court. Rather, the Court was merely exercising its undoubted and well established power to remove a trustee and appoint another in its place. The appointed trustees stood in the shoes of the removed trustee as trustees of the Trust and owed to the Trust's beneficiaries the same fiduciary duties to administer the Trust as were owed by the removed trustee. When the trustees were taking possession of Trust property they were doing so as trustees of the Trust and not for the Court. The fact that the trustees were appointed by the Court and were subject to the Court's supervision and control does not make them officers of the Court. 31 Accordingly, when the applicants acted as trustees of the Trust to claim possession of the property they were not conducting the affairs of the Trust or getting in its property for the Court as its officers or representatives: see Lemon Tree at 798. When the trustees' possession of the property was interfered with, the interference was not with their possession as officers of the Court. 32 Accordingly, the Henry Pound issue, as raised by the applicants as a basis for the rights claimed in their motion is not applicable in the present case as there has not been an interference by Lifetime with the applicants' possession of property as officers of Court. Rather, there was an interference with their possession as trustees of the Trust. Thus, no contempt appears to have been involved in the interference that occurred. 33 The trustees subsequent appointment as liquidators of the Trust stands in a different position. The applicants' claim to possession in their capacity as liquidators includes a claim to restrain Lifetime from continuing in possession of the property and from interfering with the retaking of possession of the property by the applicants as officers of the Court. Lifetime disputes the applicants' claims but, as explained above, that dispute is part of the justiciable controversy between the parties. 34 For the above reasons I do not accept the applicants' contention that Lifetime's interference with their possession as trustees is a contempt of Court that affords a separate basis for the Court's jurisdiction in respect of the relief sought in their Notice of Motion. Rather, the interference is an aspect of the justiciable dispute between the parties. But does that dispute arise under the Act? 35 Plainly, as explained above the dispute has a number of significant federal elements that tend to support the conclusion that it arises under the Act in accordance with the principles stated in LNC Industries. The operation of those principles have been considered in a number of cases that raised a jurisdictional issue analogous to that which has arisen in the present case. 36 Australian Solar Mesh Sales Pty Ltd v Anderson(2000) 175 ALR 566 was concerned with the jurisdiction of the Federal Court in relation to a claim for negligence which allegedly led to the revocation of a patent. At 569-570 and 573-574 Burchett J (with whom Wilcox J and Tamberlin J agreed) held that the dispute was a matter arising under the Patents Act 1952 (Cth) as the issues raised in the claim and the defence involved a patent, which was the creation of a federal law, and the questions raised in the case involved the operation and interpretation of that law. 37 Boys v Australian Securities Commission(1997) 24 ACSR 1 concerned a dispute over whether the Australian Securities Commission ("the ASC") had lawfully exercised, or proposed to lawfully exercise, its powers under the Australian Securities Commission Act 1989 (Cth). Carr J (at 12-14) found that the dispute concerned a matter within the jurisdiction of the Federal Court as it involved a subject matter (ie the ASC's statutory powers) that owed its existence to federal law, and also involved the proper construction of that law, with the consequence that the proceeding involved a matter arising under the Australian Securities Commission Act 1989 (Cth). 38 An analogous jurisdictional question arose under the predecessor to the Act, the Corporations Law, which conferred jurisdiction on the State Supreme Courts "with respect to civil matters arising under the Corporations Law" of a State. In Enterprise Sheet Metal Pty Ltd (In liq) v Queensland Steel and Sheet Pty Ltd (1995) 1 Qd R 511 the Queensland Court of Appeal held that an action by a liquidator to recover a payment alleged to have been a preference under the Corporations Law was a civil matter arising under that law as the right to recover the payment alleged to be a preference owed its existence to the Corporations Law: see 512 per Fitzgerald P and 514-515 per McPherson J and Derrington J. 39 However, in Avamure Pty Ltd (In liq) v Fletcher Jones and Staff Pty Ltd (1996) 22 ACSR 256 ("Avamure") at 258-260 Tadgell JA (with whom Callaway JA agreed) found that a claim for the recovery of a debt by the liquidator of a company in voluntary liquidation did not arise under the Corporations Law merely because the liquidator relied upon the power conferred upon him under that enactment to sue in the name of the company for the recovery of the money as a debt due to the company. Tadgell JA observed at 260 that the claim did not owe its existence to or arise under the Corporations Law. It is to be noted that Avamure concerned a voluntary liquidation and therefore the liquidation was not court ordered and the liquidator was not a court appointed officer. The only relevant statutory element relied upon to claim that the matter arose under the Corporations Law was the power conferred on the liquidator under the Corporations Law to recover the company's debts in its name. 40 The liquidators' claims in the present case are distinguishable from the claim in Avamure as: · they are made by the liquidators as officers of the Court in a Court ordered liquidation under the Act; · the liquidators are not bringing the claims in the name of the trustee; rather, they are bringing the claims in pursuance of an entitlement which arises, and the power which is conferred upon them, under the Act and the orders of the Court made under the Act, to wind up the trust and get in its assets; · an interference with the exercise by the liquidators of their powers in respect of trust property can constitute a contempt of the Federal Court. 41 The entitlement of the liquidator in Avamure to sue for a debt of the company is more analogous to the entitlement of the applicants in the present case to sue for the recovery of possession of the property in their capacity as trustees. Thus, if the matter before the Court were based upon or limited to the applicants role as trustees, rather than as court appointed liquidators, there would be a substantial basis for contending that the matter is not one that arises under the Act. 42 In my view the above matters lead to the conclusion that the claims of the applicants as liquidators owe their existence to the Act and depend upon the Act for their enforcement with the consequence that the justiciable controversy between the applicants and Lifetime is a matter, or part of a matter, arising under the Act. 43 For the above reasons I have concluded that the Court has jurisdiction to determine the dispute between the applicants and Lifetime in relation to the applicants' claims to be entitled to possession of the property and not to have that possession interfered with by Lifetime. 44 There is, however, a problem with the procedure adopted by the applicants for the resolution of that dispute in the present case. The applicants sought to have the Court resolve that dispute by issuing a notice of motion in the proceeding instituted by ASIC. The applicants contend they are entitled to the relief they seek by an application to the Court with respect to the exercise or proposed exercise of any of their powers under [10] of the interlocutory orders and, if necessary, under an implied liberty to apply in respect of the same matters under the final orders, which in [10] state that the exercise by the applicants of their powers is subject to "the control of the Court". In substance, the applicants claim to be entitled to the orders they seek as directions from the Court. 45 The right contended for by the applicants is not relevantly distinguishable from the analogous right of administrators to apply for directions pursuant to s 447D of the Act and also of liquidators to apply for directions under s 479(3) of the Act. However, the preponderance of authority in cases similar to the present case is that on an application for directions under those provisions, or their statutory predecessors, the Court has no power to make orders binding upon or affecting the substantive rights of third parties and the view is also commonly taken that directions should not be given if the proposed act of the liquidator or administrator, which would be "sanctioned" by the directions, would affect such rights: see Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141 at 147-149; In the matter of Ansett Australia Ltd and Mentha [2001] FCA 1439 at [57]-[63] and G.B. Nathan & Co Pty Ltd (In liq) (1991) 24 NSWLR 674 at 679-680 and the cases there referred to. 46 While there may be some dispute as to whether the limitation referred to in the cases is a limitation on jurisdiction or a limitation on power, the course adopted by the applicants in the present case is, in substance, an application by way of directions in the principal proceeding instituted by ASIC which would involve the making of orders that affect the rights of a third party. In my view the applicants' claims should be the subject of a separate originating process, rather than a notice of motion in ASIC's proceeding. 47 For the above reasons I have concluded that the Court has jurisdiction to grant the relief sought by the applicants in the amended notice of motion, but that the applicants have adopted an incorrect procedure for the granting of that relief. It must therefore follow that the amended notice of motion is to be dismissed without prejudice to the applicants' entitlement to commence a proceeding in the Court in relation to the underlying controversy sought to be resolved by the motion. 48 As both parties have been partially successful and partially unsuccessful in the submissions they have put, it is appropriate that the costs of the parties of and incidental to the motion be their costs in the cause in any new proceeding instituted in the Court by the

Australian Securities & Investments Commission v Landy DFK Securities Limited

At a glance

Court

Decision date

Before

Source

Judgment (9 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (11)

Cited By (1)