Australian Securities & Investments Commission v Singapore Liason Pty Ltd

REASONS FOR JUDGMENT 1 On 2 November 1998 the applicant initiated proceedings in this Court against the respondents. The applicant seeks against the first respondent injunctive relief pursuant to ss 1324, 1323 or 1114 of the Corporations Law and injunctive relief pursuant to s 12GD of the Australian Securities and Investment Commission Act 1989 (Cth) ("the ASC Law"). The applicant also seeks against the first respondent orders for mandatory disclosure of information under s 12GE of the ASC Law, and orders preventing the transfer of money and property pursuant to s 12GN of the ASC Law. Additionally, the applicant seeks orders under s 601EE of the Corporations Law to wind up a business "F.I.R.E. - Family Internet Real Estate" as a managed investment scheme operated in contravention of s 601ED(5) of the Corporations Law. 2 As against the second to seventh respondents, the applicant seeks injunctive relief pursuant to ss 1324, 1323, or 1114 of the Corporations Law, injunctive relief pursuant to s 12GD of the ASC Law and other orders pursuant to s 12GE and s 12GN of the ASC Law. 3 On 16 December 1998, undertakings were given to the Court pending trial of the action by all respondents other than the third respondent. Those undertakings included undertakings not to deal with the assets of the business "F.I.R.E. - Family Internet Real Estate" and not to carry on the activities of either "F.I.R.E - Family Internet Real Estate" or "Matrix Marketing Plan". 4 On 20 August 1999 the matter was set down for trial for four weeks commencing 20 March 2000. 5 At the case review conference before a Deputy District Registrar on 8 February 2000, the applicant applied to stay the further hearing of the proceedings in this Court until further order. The application was referred to me to be determined on written submissions. Written submissions in support of the stay were filed by the applicant on 28 February 2000. The contention of the applicant is that it cannot obtain in this Court relief under ss 601EE, 1323 and/or 1324 and 1114 of the Corporations Law. Relief under those sections can only be granted, so it is submitted, by the Supreme Court of Queensland. Such a consequence follows, it is submitted, from the decision of a Full Court of this Court in Edensor Nominees Pty Ltd v Australian Securities & Investments Commission (2000) 18 ACLC 1, handed down on 10 December 1999. 6 The first respondent by written submissions filed 3 March 2000, seeks that the proceedings be stayed pending the outcome of an application for leave and the hearing of any appeal to the High Court in the Edensor Nominees matter and that the trial dates be vacated. 7 The other respondents submit that this Court has jurisdiction to grant the relief sought under the Corporations Law and that there is jurisdiction under the ASC Law in any event. They oppose a stay or the vacation of the trial dates. They submit that they will be prejudiced by further delay and that they have arranged their affairs for a March trial. 8 The Full Court in Edensor Nominees stated the issue before it as follows : "The principal submission can be stated quite simply. It was that the orders made relying on the Corporations Law, particularly the order that Edensor pay to shareholders $28.5 million, depended upon ss 737 and 739. Both of these sections confer upon "the Court" power to make the orders to which the sections refer. Section 58AA defines "Court" so as to include the Federal Court "when exercising the jurisdiction of this jurisdiction" (ie the jurisdiction of the State). However Wakim makes it clear that the State cannot confer jurisdiction upon the Federal Court. Hence it was submitted that the reference to the Federal Court in s 58AA is of no legal force. Accrual of jurisdiction, if that were relied upon, would not alter the definition of "Court". The word "Court" is not defined as any court having jurisdiction to determine whether there was a contravention. It specifically refers to the Federal Court when exercising the State jurisdiction." 9 The Court redefined the issue in the following way : However, in s 58AA the definition of "court" and "Court" refers not merely to "the Federal Court" but to the Federal Court "when exercising the jurisdiction of this jurisdiction." So the real question, in our opinion, is not whether the reference to the Federal Court in s 58AA is invalid as such, but whether, when this Court is seised of a "matter" by force of the accrued jurisdiction conferred upon it by the Parliament of the Commonwealth, this Court then exercises the jurisdiction of the State in which the relevant corporation is incorporated. 10 It concluded : "... Section 58AA of the Corporations Law, when read with the substantive provisions to which it attaches, including ss 737 and 739, purports to confer on this Court the jurisdiction of the State of Victoria. It empowers the Court to make orders under provisions such as ss 737 and 739 only when it is "exercising the jurisdiction" of that State. That is not accrued federal jurisdiction but State jurisdiction." 11 The Full Court held that it was beyond the power of the State Parliament to confer State jurisdiction on the Federal Court: Re Wakim; Ex parte McNally (1999) 163 ALR 270. Accordingly, the Full Court held that this Court was not empowered under ss 58AA, 737 and 739 of the Corporations Law to grant the relief sought by the applicant in the Edensor Nominees proceedings. 12 In the present case the applicant relies upon ss 58AA, 601EE, 1114, 1323 and/or 1324 of the Corporations Law as the source of the powers to grant a substantial part of the remedies sought in these proceedings. The reasoning of the Full Court in Edensor Nominees is equally apposite to the sections relied on in the present proceedings. I am bound by that reasoning with the consequence that I would decline to grant the relief sought under the Corporations Law on the ground that the Court had no jurisdiction to grant such relief. The consequence is that the applicant, although it may make out conduct which contravenes the pleaded provisions of the Corporations Law, would be denied a remedy in this Court in respect of such conduct. 13 A not insignificant amount of the conduct alleged against the respondents occurred prior to 1 July 1998. This is important because Subdivision D - Consumer Protection of Part 2 of the ASC Law upon which the applicant relies to make out contraventions of the ASC Law and the right to relief under ss 12GE and 12GN, did not commence to operate until 1 July 1998. The proceedings, insofar as they relate to prohibited conduct and relief under the ASC Law, are limited to post 1 July 1998 conduct. 14 The pre 1 July 1998 conduct is, in a sense, unconnected with, and anterior to, the conduct which is complained of as constituting prohibited conduct justiciable in this Court, under the ASC Law. This is because it is different conduct in terms of the nature of the conduct complained of, the date on which it occurred and the nature of the contravention alleged against the Corporations Law. It is also concerned with different property. There is a real question whether there is a sufficient connection to bring the conduct within the accrued jurisdiction of this Court in any event: Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261; Fencott v Muller (1983) 152 CLR 570 at 608. 15 The jurisdiction of this Court in respect of proceedings instituted for alleged contraventions of subdivision D of Part 2 of the ASC Law is exclusive of all other State and Territory Courts: s 12GJ(4). However, the Supreme Court has jurisdiction in respect of all conduct whether occurring before or after 1 July 1998 which it is alleged constitute contraventions of the pleaded sections of the Corporations Law and to grant such relief under that Law as the circumstances warrant. For present purposes one of the principal remedies which the applicant seeks is the winding up of the business of the first respondent as a managed investment scheme under s 601EE of the Corporations Law. That may not be able to be achieved in the proceedings in this Court, if those proceedings are limited to conduct occurring after 1 July 1998, or at all having regard to the provisions of the ASC Law relied upon by the applicant. 16 Neither the applicants nor the respondents should be put to the cost and trouble of a trial which will not finally or substantially resolve the issues in dispute between them. Nor does forcing the trial on, on the ASC Law issues relieve the respondents from answering a case mounted under the Corporations Law. 17 In my view the present trial dates should be vacated and the proceedings stayed insofar as they relate to alleged contraventions of the Corporations Law and seek remedies under that law. The stay should be granted for want of jurisdiction in this Court to grant the remedies claimed. The proceedings, so far as they relate to issues arising under the ASC Law which fall within the exclusive jurisdiction of this Court, should be adjourned until 10.15 am on 20 March 2000 for further directions. This will allow the applicant to seek an order under s 11 of the Federal Courts (State Jurisdiction) Act 1999 (Qld) or to institute such other proceedings as it may be advised in the Supreme Court of Queensland to obtain such remedies, if any, as it is entitled to under the Corporations Law. It will also allow the applicant to seek interlocutory orders from that court in lieu of the undertakings given to this Court by the respondents other than the third respondent. If this court has no power to grant injunctive relief under the Corporations Law, then it ought not to accept undertakings to the same end because it has no power to enforce the undertakings: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150. If the applicant does not obtain interlocutory injunctive orders from the Supreme Court to allow for the formal release of the present undertakings, the matter will have to be re-listed in this Court to consider the status and disposition of the present undertakings. 18 If proceedings are to be continued or instigated in the Supreme Court, the trial of the issues arising under the ASC Law in this Court should be postponed until the conclusion of the Supreme Court proceedings. It may be that further litigation in this Court will be of no or little utility. 19 I am not persuaded that the costs associated with the stay or the vacating of the trial dates can or ought to be treated as costs in the proceedings in the continuing proceedings in this Court. Likewise, I am not persuaded that they can be made costs in so much of the proceedings as I have stayed for want of jurisdiction. The position of all parties is protected by reserving the question of costs to be argued on a subsequent occasion when the fate of the continuing proceedings in this Court is known. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.