Australian Securities & Investments Commission v Marshall Bell Hawkins Ltd

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

REASONS FOR JUDGMENT 1 The Australian Securities and Investments Commission ("ASIC") has commenced a proceeding against Marshall Bell Hawkins Limited ("MBH"), Strategic Project Marketing Limited ("SPM"), Private Equity Asset Management Pty Ltd ("PEAM"), Spinofrere Pty Ltd ("Spinofrere") and Tony Marshall Bell ("Bell") claiming, inter alia, that a receiver and manager be appointed of all of the property of MBH, SPM, PEAM and Spinofrere pursuant to s 1323(1) of the Corporations Act 2001 ("the Corporations Act") 2 MBH, SPM, PEAM and Spinofrere are companies under the control of Bell, who was at all relevant times a director of each of those companies. Bell used SPM, which held a dealers licence under s 784 of the Corporations Law, and MBH to advise potential investors in relation to investments in securities and loans. MBH was also used by Bell as the trustee of the MBH VC Trust. PEAM appears to have carried on business in its own right and as the trustee of the Findlay Investment Trust. PEAM and Spinofrere engaged in investment activities on behalf of investors who were persuaded by Bell to invest monies in entities established by him or in investments which he advised them to make. 3 It appears that Bell persuaded a number of investors to establish self-managed superannuation funds or to transfer existing superannuation funds to self-managed superannuation funds and to invest the funds on his advice. Investments were also made by investors personally in accordance with Bell's recommendations. While there is some dispute as to whether the investments recommended by Bell were appropriate investments for superannuation funds, or for individuals who do not appear to have had a great deal of commercial experience, it does appear that the investments made were extremely high risk investments which, on present indications, are likely to result in substantial losses being incurred by many of the investors. 4 Although the proceeding is only at an early interlocutory stage and any findings of fact can only be made on a prima facie case basis, the evidence gives rise to a number of matters of concern. It appears that the investors have been persuaded to act on Bell's advice in making investments in the expectation of high returns on their money. It is likely that the investors were unaware that high returns are commensurate with high risk and that, as a consequence, they were subjecting their superannuation funds and their savings to risks that appear to be inappropriate for those investors. As I shall later explain, a number of factors have contributed to that situation. Nonetheless, the present case should offer at least two salutary and simple lessons to persons who have not had a great deal of commercial or investment experience. The first is that expected returns are commensurate with risk; the higher the return the greater the risk. Thus, there is a need for investors to be aware of and to carefully consider the risks involved in such investments. The second is that before deciding to invest funds in unorthodox investments on the advice of investment advisers, the investors should ascertain whether the advisers are receiving any commissions or benefits for procuring the investment to be made. 5 ASIC is seeking urgent interim orders on the basis that the continued involvement of MBH, SPM, PEAM and Spinofrere in the investments recommended by Bell is likely to put the investors' realisation of the investments at great risk and that it is necessary for a receiver and manager of the property of those companies to be appointed in order to protect the interests of the investors. ASIC has applied to the Court under s 1323(3) of the Corporations Act for interim Mareva orders and for an interim order that Gregory John Keith of Grant Thornton, Chartered Accountants, be appointed as receiver and manager of all of the property of MBH, SPM, PEAM and Spinofrere. The defendants have agreed to submit to the Mareva orders, but oppose the appointment of a receiver and manager. 6 Section 1323 of the Corporations Act, relevantly, provides: "(1) Where: (a) an investigation is being carried out under the ASIC Act or this Act in relation to an act or omission by a person, being an act or omission that constitutes or may constitute a contravention of this Act; … and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of a person (in this section called an aggrieved person) to whom the person referred to in paragraph (a) … (in this section called the relevant person), is liable, or may be or become liable, to pay money, whether in respect of a debt, by way of damages or compensation or otherwise, or to account for financial products or other property, the Court may, on application by ASIC or by an aggrieved person, make one or more of the following orders: … (h) an order appointing: … (ii) if the relevant person is a body corporate - a receiver or receiver and manager, having such powers as the Court orders, of the property or of part of the property of that person; … (3) Where an application is made to the Court for an order under subsection (1), the Court may, if in the opinion of the Court 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." 7 Since 9 September 2002 ASIC has been carrying out an investigation under s 13(1) of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") in relation to suspected contraventions of s 184(2) and s 610ED(5) of the Corporations Act, s 727 of the old Corporations Act and s 851 of the old Corporations Act in relation to the financial services provided by SPM and MBH and recommendations made by Bell to clients to invest in securities in Spinofrere, PEAM, Global Business Solutions Ltd ("Global"), Cottee Health Limited ("Cottee"), the Findlay Investment Trust and the MBH VC Trust. It is common ground that the pre-condition in s 1323(1)(a) has been satisfied. 8 Finkelstein J granted interim Mareva injunctions, which severely restrict the defendants ability to make investments or to deal with their assets, pending the hearing of ASIC's application for an interim order appointing a receiver and manager. Because of the complexity of the transactions that have been entered into, the hearing of ASIC's application for an interim order has proceeded over a number of days with voluminous affidavit material and numerous exhibits being relied upon by the parties. 9 ASIC's allegations are summarised in its statement of claim. It alleges that the defendants are liable, or may become liable, to pay money in respect of debts, and by way of damages or compensation, to investors as a result of the defendants recommending or making investments in breach of the contractual obligations and of the duties they owed to investors. The investments in respect of which the liability is said to arise include the investors' acquisition of convertible notes in Global and Cottee, their investment in units in the Findlay Investment Trust, their advancing of funds to Spinofrere and to PEAM by way of loans and the advancing of funds to PEAM for investment in units in the Findlay Investment Trust. 10 ASIC alleges that the investments made by the defendants are worthless or, at best, will result in substantial losses and that the loans made are either irrecoverable or will only be partly recoverable. The losses investors are said to have suffered, or will suffer, are alleged to have been caused by breaches of the defendants contractual obligations and legal duties. The contravening conduct and the claims made as a consequence of that conduct include claims for loss and damage suffered by reason of: · breach of a duty of care owed in respect of the investments; · breach of a duty to disclose the commissions and other benefits the defendants would receive from the investments; · advice given and representations made in respect of the investments that was misleading and deceptive, inter alia, in contravention of s 995(2) of the old Corporations Act, s 1041H(1) of the Corporations Act and s 12DA(1) of the ASIC Act; · contraventions of s 1005(1) of the old Corporations Act, ss 1041I and 1325 of the Corporations Act and s 12GF of the ASIC Act; · the making of security recommendations without having a reasonable basis for so doing in contravention of s 851 of the old Corporations Act; · the failure to disclose commissions and other benefits received as a result of the investments in contravention of s 849 of the old Corporations Act; and · conducting the Findlay Investments Trust as a managed investment scheme without being registered under s 601EB of the Corporations Act. 11 The basis upon which ASIC claims that it is necessary to appoint a receiver and manager to protect the interests of investors is summarised in paras 36-43 of the Statement of Claim as follows: "36. The liabilities of MBH exceed its realisable assets. 37. As at 30 June 2002, SPM had net assets of $271,658. 38. As at 30 June 2002, PEAM - (a) had a net asset deficiency of $1.841m; and (b) had made a trading loss of $1.694m for the financial year just ended. 39. As at 30 June 2002, Spinofrere - (a) had a deficiency of $2.166m of liabilities over realisable assets; and (b) had made a loss of $661,581 for the financial year just ended. 40. No audited accounts have been prepared for any of the MBH, SPM, PEAM or Spinofrere for the financial year ended 30 June 2002. 41. None of MBH, SPM, PEAM or Spinofrere had any or any adequate record of - (a) the identity of the investors; (b) the advice; (c) the investments made respectively by the investors; or (d) the loans made respectively by the investors. 42. Spinofrere has made substantial loans to PEAM and FIT respectively, being loans - (a) which are unsecured; (b) in respect of which no or no adequate documentation exists. 43. By reason of the matters set out in paragraphs 10-13 and 36-42, it is necessary or desirable for the purpose of protecting the interests of the investors that a receiver be appointed to all of the property of each of - (a) MBH; (b) SPM; (c) PEAM; and (d) Spinofrere." 12 Paragraphs 10-13 of the Statement of Claim allege, inter alia, that the investments made in convertible notes in Global and Cottee, in units in the MBH VC Trust and in the Findlay Investment Trust and by advancing funds by way of loan to Spinofrere and PEAM are worthless or worth substantially less than the amounts originally invested. ASIC alleges that the loans by investors to Spinofrere and PEAM were for the purpose of purchasing convertible notes, but in breach of that condition the funds were lent by Bell to other companies in the group and were otherwise used by him for unauthorised purposes. 13 At the outset it is appropriate to state a number of principles, which were summarised by Finn J in Australian Securities Commission v AS Nominees Ltd (1995) 18 ACSR 459 ("AS Nominees") at 511-512, that have been accepted in respect of the operation of s 1323 and its predecessors in the Corporations Law and the Companies Codes. The purpose of the remedies provided in s 1323 is to protect the interests of persons who might have claims against the relevant corporations, irrespective of whether those claims are based on a breach of a law relating to corporations or arise under the general law. That purpose is usually achieved by securing the assets of the relevant corporation against which the claims may lie for the purpose of providing security for those claims or for securing assets for which that corporation may be liable to account in respect of such claims. In considering whether it is necessary or desirable to appoint a receiver and manager the Court should recognise the "drastic nature" of such an appointment, which should only be made in exceptional or special circumstances, after careful scrutiny and after less drastic remedies, including a Mareva injunction, have been considered. The circumstances where a receiver and manager may be appointed include where potential or actual claimants are being protected from incompetence, where there have been persistent breaches of trust caused by "an undeveloped sense of trusteeship" or from fraud. Thus, proof of actual or apprehended fraud is not a pre-condition to the appointment of a receiver and manager under s 1323. 14 Of particular relevance in the present case is the observation by Finn J in AS Nominees at 512 that an appointment of a receiver and manager may be appropriate where there have been serious and persistent breaches of trust and conflicts of interest resulting in the trust funds being subject both to depredation and dissipation. His Honour's justification for the appointment in such circumstances was that for as long as the trust funds remain under the control of the relevant corporation or its controllers there can be no assurance that the breaches will not continue. While the defendants are not holding investors' funds on trust it is arguable that, having regard to their interest in the investments they, or some of them, may owe fiduciary duties or analogous duties to investors in respect of their investments: see Daly v The Sydney Stock Exchanges Ltd (1986) 160 CLR 371 at 377, Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (1994) 49 FCR 334 at 358 and Australian Breeders Co-operative Society Limited v Jones (1998) 150 ALR 488 at 506, 517 and 518. 15 The appointment of a receiver and manager may also be appropriate where a Mareva injunction is inappropriate because the nature of the property to be collected or secured is such that on-going management or decision-making is required. In Australian Securities and Investments Commission v Burke [2000] NSWSC 694 ("ASIC v Burke") Austin J appointed a receiver and manager by an interim order. His Honour observed at [6] and [8]: "6. Although the appointment of a receiver as an interlocutory step is often associated with allegations of fraudulent misappropriation of property, it appears to me that the fundamental issue is not the character of the alleged wrongdoing of the defendants, but the overriding concern to protect assets for the benefit of those entitled to them. Where, as here, the applicant is the public regulator, there would be a need to separate the investigatory functions of the regulator, which continue after the receiver is appointed, from the functions of the receiver who typically has powers of investigation for the purpose of getting in and preserving assets, rather than for the purpose of establishing some breach of the law. … 8. …the extraordinary step of appointing a receiver may be justified, even though Mareva orders are in place, in a case where there is real doubt about the existence and location of assets such as investments, and about the number and identity of claimants and the nature of their claims, and additionally the defendants are engaged in business activities which entail that any Mareva Orders must allow assets to be turned over in the course of business. Where these circumstances exist in combination, and especially where there are allegations of serious fraud involved, the Court may conclude, as I do in this case, that the Mareva Orders are not enough to ensure that the assets are preserved and protected, and indeed identified and brought in for the benefit of investors." 16 The observation of Austin J that the receiver's appointment is not to be for investigatory purposes is consistent with the observations made by Cooper J in Re Aust-Home Ltd and Others, Australian Securities Commission v Aust-Home Investments Ltd (1993) 112 ALR 683 at 689: "…The receivers and managers were not appointed to investigate the affairs of the companies, to settle accounts between the companies, creditors, contributors and others and to wind up those affairs and the companies themselves. The purpose was to prevent the companies dealing with property to defeat any legitimate claims of aggrieved persons." 17 In Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605 ("Mauer-Swisse") at 613-614 Palmer J made a number of observations concerning the statutory power to grant an injunction under s 1324 of the Corporations Act, which is analogous to the statutory power to grant an injunction under s 1323. In particular, his Honour stated that the traditional equitable approach, requiring consideration of whether there is a serious question to be tried and where the balance of convenience lies, does not circumscribe the Court's consideration of an interim injunction in exercise of the statutory power under s 1324, although his Honour stated (at 614): "…the interests of justice will always require that those questions be examined carefully. …" 18 Although there may be some debate about his Honour's observations, it is unnecessary for present purposes to consider their correctness as I am satisfied that the interests of justice in the present case require that an interim order for the appointment of the receiver and manager only be made in the event that ASIC has established that there is a serious question to be tried as to whether it is entitled to such an order by way of final relief and that the balance of convenience is in favour of the making of the order it seeks. 19 Finally, it is relevant to note that, in determining whether there is a serious question to be tried, s 1323 does not require that that issue be considered in the context of whether a prima facie case has been made out in respect of the liability of the relevant corporation to persons who may be aggrieved as a result of its conduct. As was pointed out by Waddell CJ in Equity in Corporate Affairs Commission (NSW) v Walker (1987) 11 ACLR 884 at 888: "This is made clear by the power given to grant relief where the relevant person 'may be or become liable' …" 20 However, as was noted by Finn J in AS Nominees (at 511) the extent to which the evidence tends to establish actual or potential liability on the part of the relevant corporation is a circumstance that can be of significance in determining whether a receiver and manager should be appointed as, in the usual course, the Court may be less likely to make an appointment if the liability is merely speculative. 21 I turn now to consider the nature and strength of the claims of investors against the defendants in the present case. In doing so it is necessary to make findings on a prima facie case basis. The findings will be relevant, not only to the issue of whether there is a strong, or merely a speculative case for liability, but also to whether the defendants have engaged in serious and persistent breaches of duty to investors, whether they are now in a situation of conflict and whether it is not safe to leave the investments under their control. 22 The claims of the investors arise out of their investment, on the recommendation of Bell, of funds in excess of $9 million. The major investments were in convertible notes of Cottee and Global. There appears to have been some doubt as to the financial viability of those companies and the prudence of acquiring convertible notes in them. As I shortly explain Cottee and Global were prepared to pay commissions and marketing fees of up to 18% of the funds invested as well as interest rates significantly above market rates. Those matters alone suggest the investments were in the very high risk category. 23 As at 30 June 2002, which is not long after the investments appear to have been made, the balance sheets of both companies had net asset deficiencies, each had been trading at a loss and the auditors report in the financial statements stated that there is significant uncertainty as to whether each of the companies can continue as a going concern. There is a real doubt as to whether the convertible notes now have any significant value. 24 The questionable investments in the convertible notes of Global and Cottee, which appear to be unusual investments for superannuation funds, have not been satisfactorily explained by Bell. A likely explanation is the large "commission" and "marketing fees" Bell's companies were entitled to receive in respect of the convertible notes acquired by Bell's clients. Commissions of 9% of the amount invested were payable in all cases and marketing fees of a further 9% for Global notes and a further 5 for Cottee notes were also to be paid in respect of many, if not all, of the amounts invested. The Commissions were payable to Spinofrere and the marketing fees were payable to MBH. 25 There does not appear to have been proper or adequate disclosure of the commissions and marketing fees to investors. When that matter arose as an issue in the course of the hearing Bell produced a copy of a financial plan which was given to investors. On a careful reading the plan reveals the 9% commissions but not the extent of the marketing fees. However, as was pointed out by ASIC, the documents presented by Bell appeared to post-date, by a considerable period, the making of the investments in question. Although Bell continues to assert optimism in respect of the convertible notes, the objective evidence is to the effect that they are unlikely to have any substantial value and, at best, have a value considerably less than their face value. 26 Further problems have arisen concerning the recording of the investments made in convertible notes in Global and Cottee. According to Bell his clients have purchased $2,867,000 in convertible notes in Global but Global's annual report only acknowledges the issuing of notes in the sum of $1,666,000. While Bell has purported to give an explanation for the discrepancy, and has suggested it is in the process of being rectified, the evidence does not offer any satisfactory explanation as to how this problem has arisen nor does it offer any assurance that the investments made will be acknowledged by Global. A similar problem appears to exist in respect of the Cottee convertible notes. Cottee's records disclose the issue of notes having a value of $310,000 less than Bell claims to have invested. 27 On a prima facie case basis, the investors appear to have substantial claims against the defendants arising out of the investors' investments in Global and Cottee convertible notes. 28 The other major investment of Bell's clients was in loans to Spinofrere and PEAM. The loans, which were made at rates of interest above the prevailing rates, were for the purpose of purchasing "convertible notes", which were to be held as security for the principal and interest. 29 Putting to one side for the moment the high risk nature of the loans, it appears that in breach of the terms of the loan agreements Bell misapplied large amounts of the loan monies by making loans to other companies in his group, rather than by acquiring convertible notes. Spinofrere made total loans of $2.032 million to MBH, $1.389 million to PEAM in its own right and $2.627 million to PEAM as Trustee of the Findlay Investment Trust. From time to time loans were repaid to investors although the source of the funds used for the repayments is unclear. At the present time, it appears that approximately $1.9 million is owed by Spinofrere to investors in respect of loans made by them to it and in excess of $385,000 is owed by PEAM to investors in respect of loans made by them to PEAM. 30 The amounts of clients' funds lent by Spinofrere to Bell's companies include an amount lent by Spinofrere to PEAM as trustee of the Findlay Investment Trust of $2.627 million, of which $1.559 million has been "written off" by Spinofrere as a bad debt, leaving a balance presently outstanding in the accounts of Spinofrere of $557,908.83. No explanation has been given as to why the amount was written off as a bad debt. Spinofrere has also an outstanding loan of $930,689.35 to PEAM in its own right. The evidence suggests that there is a serious risk that the loans to PEAM are also unlikely to be fully realisable. 31 ASIC claims Spinofrere has a current net asset deficiency of $2.166 million. Insofar as Spinofrere invested amounts lent to it in investments in Cottee it currently holds Cottee convertible notes with a face value of $710,000 and Cottee shares alleged to have a "value" of $475,000. As explained above, the shares and convertible notes are unlikely to have a significant value. Spinofrere's profit and loss statement shows it made a loss of $661,582 for the financial year ending 30 June 2002. As explained above, Spinofrere's ability to repay loans currently outstanding of $1.9 million depends upon the respective loans of $557,908.83 and of $930,689.35 to PEAM as trustee of the Findlay Investment Trust and to PEAM in its own right being repaid. PEAM's balance sheet for 30 June 2002 shows it has a net asset deficiency of $1.841 million and made a loss for that financial year of $1.694 million. 32 Investors also lent $510,000 to PEAM. Bell claims that that amount has been reduced to $385,000. The PEAM loans raise the same kinds of issues as are raised in respect of investors loans to Spinofrere. 33 On a prima facie case basis, the investors also appear to have substantial claims against the defendants for the losses they are likely to suffer in respect of the loans they have made. 34 There was a further misuse by Bell of investors' funds. When Global defaulted on interest payable in respect of its convertible notes, Spinofrere drew on investors' loans in the sum of $24,992.81 to pay the interest due to note-holders. Whatever may have been Bell's reasons for so doing, his payments concealed the default and breached provisions of the loan agreements by using investors' funds for unauthorised purposes. While the amount involved may not be substantial, Bell's conduct in respect of the loans and the interest raises a real issue as to whether he has been using investors' funds to repay other investors and leaves me with little confidence about the safety of investors' funds under his control. 35 A further area of concern relates to the manner in which investments have been made and recorded. Bell claims that a significant and valuable investment made by PEAM as trustee of the Findlay Investment Trust is the 535 shares it owns in Registrars Asia. However, those shares are not recorded as being registered in the name of PEAM but, rather, are registered in the name of MBH. There also appears to have been some dispute as to whether those shares have been sold by MBH. While Bell has offered explanations for the above matters it is a matter of concern that shares held by PEAM as trustee for investors, who financed the purchase by subscribing for units in the Findlay Investment Trust, are not registered in the name of the trustee but, rather, are registered in the name of MBH. 36 The above transactions are complex and inter-related. Bell's senior counsel does not dispute his client has a conflict between his interest and his duty in the current situation but suggests that his client has resolved that conflict by putting forward a commercial plan to ensure all investors are repaid the funds they have invested. Bell's plan proposes to repay the investors' loans by, inter alia, realising the value of the convertible notes held in Cottee and Global. It is in Bell's interest to reduce the potential claims of those investors by delaying, for as long as possible, the date on which he must meet their claims in the hope that something will happen that enables the convertible notes to realise their full value, the interest payable on the notes to be paid and the loans made by investors to be repaid. 37 The plan put forward for that outcome is claimed by ASIC to be unrealistic and illusory. I need not form any concluded view about ASIC's claim, which appears to have considerable force, because I am satisfied that Bell's interest in endeavouring to save his companies from collapse and to protect them against any substantial claims by investors is in conflict with his duty to act in the interests of those investors to enable them to protect, collect and secure their investments. The viability of Bell's package will be a matter the receiver and manager might consider as part of his function of determining how the property of the defendants is to be collected and secured for the purpose of meeting claims of investors if those claims are ultimately established. Thus, if a receiver and manager is appointed to the relevant companies the existing conflict is likely to be removed and Bell can put any plans he wishes to the receiver and manager, who can consider the plans on their merits. 38 There also appears to be some doubt about the assets of Spinofrere and PEAM and about the realisable value of those assets. The nature of the assets (convertible notes and loans) are such that they may need to be collected and realised, rather than frozen: cf ASIC v Burke at [8]. 39 The prima facie breaches by the defendants of contractual, legal and statutory duties they owed to investors (including Bell's misapplication of investors' funds), Bell's apparent failure to reveal properly or adequately the commissions and fees he or his companies were to receive, his position of conflict and the general manner in which Bell has exposed investors' funds to high risks have led me to conclude that it is not safe to leave the funds, to which investors may have to resort to meet their claims, under Bell's control. 40 For the above reasons the present case is one in which ASIC has established a strong prima facie case for the Court to take the exceptional step of appointing a receiver and manager of the property of Spinofrere and PEAM, being the companies out of whose assets the main claims of the investors may have to be met. In that regard it is of significance that PEAM and Spinofrere are the vehicles used by Bell for investing the funds of clients with the consequence that their assets appear, for the most part, to have been derived from those funds. 41 Senior counsel for PEAM and Spinofrere was not able to point to any significant harm that would result from the appointment of a receiver and manager of the property of Spinofrere and PEAM. Thus, there can be little doubt that the balance of convenience is strongly in favour of the appointment of a receiver and manager of Spinofrere and PEAM, notwithstanding that an undertaking by ASIC as to damages has not been required: cf Mauer-Swisse at 614 [36] last dot point. 42 A different situation applies in respect of MBH and SPM, which Bell uses to conduct his investment advisory business. Subject to one exception the companies do not appear to hold substantial assets and Bell's clients' funds do not appear, to any significant extent, to have been invested directly in those companies. Unlike the situation with Spinofrere and PEAM, Mareva injunctions ought to be sufficient to protect the investors' interests in relation to the assets of MBH and SPM. The same situation applies to Bell's personal assets. The one exception relates to the MBH VC Trust administered by MBH. As little attention was directed to its position it is preferable to defer addressing its position until a specific problem arises in relation to the assets of that trust. 43 Finally, because the orders I consider to be appropriate will not restrain Bell from continuing to conduct his investment advisory business, it is desirable that orders be made requiring Bell, MBH and SPM to inform investors in writing of any commissions and other benefits that they may be entitled to receive as result of any investments clients may make on their advice. 44 For the above reasons I have concluded that it is desirable that interim orders be made appointing a receiver and manager of all the property of PEAM (whether held in its own right or as trustee of the Findlay Investment Trust) and of Spinofrere, but not of the property of Bell, MBH and SPM against whom Mareva orders will sufficiently protect the interests of claimants.

45 It is appropriate to reserve all questions of costs, including the question of which of the parties is to bear the costs of the receiver and manager. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.

Counsel for the Plaintiff: Mr C Maxwell QC with Mr P Cawthorn

Solicitor for the Plaintiff: Australian Securities and Investments Commission

Counsel for the Defendant: Mr G Bigmore QC with Mr P Zappia

Solicitor for the Defendant: Herbert Geer & Rundle

Date of Hearing: 31 October and 7, 8, 27 and 28 November 2002