Kadam v MiiResorts Group 1 Pty Ltd

Federal Court of Australia|2016-11-14|Before: Edelman J

Counsel for the Applicants: Ms CM Kenny QC and Mr SS Monks

Counsel for the First Respondent: The First Respondent did not appear

Counsel for the Second Respondent: The Second Respondent did not appear

Counsel for the Intervener: The Intervener did not appear

BETWEEN: SUNANDA BALKRISHNA KADAM First Applicant

AND: MIIRESORTS GROUP 1 PTY LTD ACN 140 177 395 First Respondent

PEARLS INFRASTRUCTURE PROJECTS LIMITED Second Respondent

SECURITIES AND EXCHANGE BOARD OF INDIA Intervener

JUDGE: EDELMAN J DATE OF ORDER: 14 november 2016

Nirmal Singh Bhangoo, Sukhwinder Kaur and Gurpartap Singh be joined to the proceeding as the fourth, fifth, and sixth respondents respectively.
The applicants have leave to amend their originating application in accordance with the draft that is annexed to the affidavit of Alexander Xavier Moriarty sworn 4 November 2016.
The applicants have leave to amend their statement of claim in accordance with the draft that is annexed to the affidavit of Alexander Xavier Moriarty sworn 4 November 2016.
The applicants file and serve their amended originating application and amended statement of claim upon the first and second respondents within two business days of the date of this order.
The applicants have leave to serve the amended originating application and amended statement of claim (that are to be filed pursuant to this order) upon the third, fourth, fifth, and sixth respondents in the Republic of India, in accordance with the Hague Convention.
The parties' costs of this application be costs in the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EDELMAN J: Introduction [1] The evidence concerning the applicants' allegations [5] The Pearls scheme [5] Mr Bhangoo was the mastermind of the Pearls scheme [10] The investments in Australia [15] The Pearls scheme unravels [19] The claims in this proceeding [25] (1) The application to amend [27] (2) The application for joinder [42] (3) The application for leave to effect service out of the jurisdiction [47] Conclusion [57]

Introduction 1 These reasons concern essentially three applications by the applicants. The underlying matter concerns a claim in which the lead applicant, the President of a Community Action Group (Ms Kadam), represents 45,000 to 46,000 investors who invested and lost approximately $8 million. The applicants allege that they invested in a Ponzi scheme purporting to be a managed investment scheme by the Pearls Group of companies which operated across India for two decades. In total it is said that more than $9 billion was invested in the Ponzi scheme by 58.5 million people. 2 The three applications are as follows. First, the applicants seek leave to amend their originating application and their statement of claim including to raise additional causes of action. Secondly, the applicants seek to join three additional parties, namely the fourth, fifth, and sixth respondents. Thirdly, the applicants seek leave to serve the third, fourth, fifth, and sixth respondents out of the jurisdiction. 3 None of the present respondents oppose these applications. I ordered that the applications be determined on the papers. My decision is made in the absence of the parties who are directly affected by the applications. They have not yet had the opportunity to make submissions or to present evidence in opposition to any of these issues. My preliminary findings of fact are limited to tentative conclusions based only upon the evidence of the applicants in 17 affidavits, some of which are extremely lengthy. The reasons below are therefore expressed in the tentative and preliminary terms common in such applications. 4 Each application is granted.

The evidence concerning the applicants' allegations

The Pearls scheme 5 It is convenient to begin by outlining the evidence before me. None of that evidence is contradicted so any views I express are necessarily tentative and preliminary and based only upon the applicants evidence. However, as I explain in relation to the application for leave to serve out of the jurisdiction, it is necessary for me to assess whether the applicants have a prima facie case. At various points in my recitation of the evidence, therefore, I explain various prima facie inferences that might be drawn. 6 From 1995, the third respondent (PACL Ltd India, trading as "Pearls") operated a scheme where Indian investors were invited to purchase small plots of land in different parts of India (Pearls scheme). PACL advertised, and some investors were told, that PACL was an aggregator of large land banks and could fix the price of units of land offered to investors across India. Investors were promised interest at rates between 12.5% to 14.5% per annum. Investors received certificates representing that they had been registered for plots of land, for which they would make lump sum and instalment payments. 7 One such investor was Ms Nanda Jagtap. Ms Jagtap invested in PACL after a telephone call from a PACL Branch Manager who told her that she could invest via PACL in different parts of India. She was promised a 14.5% return, and was told that her investment was safe and that she would not lose any money. Ms Jagtap is a teacher who earns the equivalent of $100 a month. She invested the equivalent of $1000 by six instalment payments. Similar evidence has been given from eight other investors. Some invested their life savings. Some were asked by PACL representatives to introduce other investors. Sometimes the investors were promised commissions for introductions. One farmer introduced 3,000 other investors, none of whom obtained the return of any of their funds. 8 The applicants say that the scheme was always unsustainable because the land which was purchased and the projects which were undertaken were never capable of generating returns to fund the promised interest and commissions. The scheme was therefore a Ponzi scheme, funding those returns through new investments. 9 The applicants claim that the mastermind of the scheme was a man named Mr Bhangoo. He was the Chairman of the Pearls Group of companies (explained below).

Mr Bhangoo was the mastermind of the Pearls scheme 10 The applicants claim that Mr Bhangoo's acts should be attributed to PACL, PIPL, Miiresorts (previously Pearls Australasia Mirage 1 Pty Ltd), and Miigroup (previously Pearls Australasia Pty Ltd) because he was their directing mind and will. As I have explained, PACL operated the Pearls scheme. PIPL, Miiresorts, and Miigroup are alleged to have been the recipients of funds paid by investors to PACL. I have annexed to these reasons a chart showing the relationships of these companies which were loosely described as the Pearls Group. 11 It is unnecessary for the purposes of this application to determine whether it is necessary for the applicants to prove that Mr Bhangoo was the directing mind and will of the corporations in order to attribute knowledge: compare Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500; Director of Public Prosecutions Reference No 1 of 1996 [1998] 3 VR 352; (1997) 96 A Crim R 513; Director General, Department of Education and Training v MT [2006] NSWCA 270; (2006) 67 NSWLR 237, 244 [23] (Spigelman CJ; with whom Ipp JA and Hunt AJA agreed); see also Competition and Consumer Act 2010 (Cth) s 84. It suffices to say that there is a prima facie case, and a serious question to be tried, that Mr Bhangoo was the directing mind and will of each of PACL, PIPL, Miiresorts, and Miigroup. Three reasons which support this prima facie case are as follows. 12 First, there is evidence that Mr Bhangoo and his family have indirect interests in each of PACL, PIPL, Miiresorts, and Miigroup. That evidence is summarised in the chart which is Annexure 1 to these reasons. In addition, Mr Prescott's evidence is that PIPL's shareholders paid for their shares with money that was transferred to them from PACL. 13 Secondly, Mr Bhangoo was a director of PACL from 1996 until 1998. Mr Bhangoo and members of his immediate family comprised a majority of the board of directors of both Miiresorts and Miigroup until the allegations of PACL's fraud became public knowledge. Mr Bhangoo resigned on 5 August 2014, after a tribunal hearing of the Securities and Exchange Board of India (the SEBI) and shortly before its decision was published. Mr Bhangoo's son and son-in-law (the latter of whom the applicants are applying to join as the sixth respondent) were on the board of directors of PIPL. 14 Thirdly, Mr Bhangoo arguably held himself out as representing the Pearls Group in various ways. The applicants rely on evidence that he described himself to Premier Campbell Newman as, or was understood by the Premier to be, the Chairman of the Pearls Group.

The investments in Australia 15 On 25 November 2009, Miiresorts signed a contract to purchase the Sheraton Mirage resort on the Gold Coast (Sheraton Mirage) for approximately $62.8 million. The contract completed on 20 May 2010. There are a number of matters which support the inference that Miiresorts used money from the Pearls scheme for the purchase: (1) Miiresorts (which was then called Pearls Australasia Mirage 1 Pty Ltd) is owned 50% by PIPL directly, and 49% by PIPL indirectly; (2) Miiresorts was only incorporated one month before signing the contract; (3) Miiresorts paid cash, with no mortgage registered at settlement; (4) two of the Australian directors of Miiresorts (Mr Paul Brinsmead and Mr Peter Madrers) had entered into arrangements under Pt X of the Bankruptcy Act 1966 (Cth) in April 2009 and were not capable of providing any funding; (5) the Australian directors of Miiresorts had become involved with the Pearls Group in around May 2009, after being introduced to Mr Bhangoo and having reached an agreement to assist Mr Bhangoo and the Pearls Group to invest in Australian property; (6) a press release issued by India's Central Bureau of Investigation stated on 8 January 2016, following the arrest of Mr Bhangoo, that approximately $132.99 million had been diverted to Australian companies; (7) the SEBI has given evidence that: (a) PACL transferred 6,571,800,000 rupees (approximately $138,365,000) to PIPL by way of 11 direct transfers and a series of indirect transfers; and (b) PIPL transferred 6,316,552,248 rupees (approximately $138,208,243.50) to Miigroup's Australian bank account 4,591,912,500 rupees), Miiresorts' Australian bank account (1,473,875,000 rupees), and Hickey Lawyers' Trust Account (250,764,748 rupees to settle the purchase of a luxury house at Sanctuary Cove); (8) a meeting with Premier Anna Bligh, Mr Bhangoo and other Pearls directors, and the Australian directors Mr Brinsmead, Mr Higgins and Mr Madrers, had proceeded on the basis that the Sheraton Mirage had been purchased by the Pearls Group; and (9) Miigroup told the ABC shortly before 6 July 2016 that it "had already agreed to fully co-operate with authorities in India" and expressed concerns that this proceeding could "lower the return to Indian investors" due to the applicants' legal costs. 16 I take into account that Miiresorts' solicitors and PIPL's solicitors have denied that they received any funds from PACL. Nevertheless, I am satisfied that there is at least a prima facie case that funds from the Pearls scheme were used for the purchase of the Sheraton Mirage. 17 On 18 January 2007, Mr Bhangoo paid $2.38 million to purchase a luxury house at 323 Mont Albert Road, Mont Albert in Melbourne (the Mont Albert Road property). The Mont Albert Road property was purchased in the name of Mr Bhangoo and his wife. It was subsequently transferred allegedly as a gift to Mr Bhangoo's daughter, Ms Sukhwinder Kaur, and son-in-law, Mr Gurpartap Singh. There is a prima facie case that an inference can be drawn that the Mont Albert Road property was purchased using funds from the Pearls scheme. 18 On 2 August 2011, PIPL paid $4.95 million in cash to purchase a luxury house at Sanctuary Cove (the Sanctuary Cove property) at which Mr Bhangoo's other daughter, Ms Barinder Kaur, and son-in-law, Mr Harsatinder Singh Hayer, resided. They told ASIC that it was their home address. Again, there is a prima facie case that an inference can be drawn that the Sanctuary Cove property was purchased using funds from the Pearls scheme.

The Pearls scheme unravels 19 Since 1995, very shortly before the Pearls scheme started, the Indian parliament amended the Securities and Exchange Board of India Act 1992 to prohibit the operation of unregistered collective investment schemes. Registration with the SEBI was required. 20 Since 1997, PACL has been under investigation by the SEBI for operating unregistered collective investment schemes. On 22 August 2014, following a hearing, a decision was given by Whole Time Member Prashant Saran. The applicants summarise the conclusions from Whole Time Member Saran's decision as follows. (1) The real estate business purportedly carried on was a façade and a sham to camouflage the unregistered collective investment scheme (page 70). (2) The land transactions were a sham, and not a genuine sale of land (page 81). (3) The contract did not specify the location of the land, and gave PACL the right to change the plot location, a right "never seen in a pure real estate transaction" (page 57). (4) Although the registration letters stated an expected value of the land, it was impossible for PACL to have fixed the expected value of the land with the precision that it purported to do (page 67). (5) Out of a sample of 500 customers, PACL could not show a single example where the investment had resulted in land being transferred to the investor (page 73). (6) According to PACL's records, most of the investors (46,313,342) had not even been theoretically allocated land (page 88). (7) According to PACL's records, it owed investors 294.2 billion rupees but owned land that was worth a total of only 117 billion rupees (page 88) (although PACL had collected 491 billion rupees). (8) Very high rates of commission were offered, amounting to 19.83% of all monies invested (page 76). (9) The lack of proper records and data keeping by PACL was a clear indication that the activities of PACL were in the nature of a Ponzi scheme (page 81). (10) The scheme operated by PACL was nothing but a money mobilizing scheme (page 70). 21 Whole Time Member Saran ordered (at 91 [38(b)]) that: PACL Limited, its promoters and directors… shall wind up all the existing Collective Investment Schemes of PACL Limited and refund the monies collected by the said company under its schemes with returns which are due to its investors as per the terms of offer within a period of three months from the date of this Order. (Emphasis in original.) 22 On 12 August 2015, the Securities Appellate Tribunal at Mumbai dismissed PACL's appeal against the judgment of the SEBI. 23 On 2 February 2016, the Supreme Court of India made orders in relation to an interim arrangement, but apparently having final effect, directing that PACL shall not collect any further amount from any of the investors, and that the SEBI constitute a committee for disposing of the land purchased by PACL to repay sale proceeds to the investors. The Chairman of the committee was to be the Honourable Mr Justice RM Lodha, the former Chief Justice of India. 24 Mr Bhangoo was arrested on 8 January 2016. On 7 April 2016, he was charged with offences including forgery and criminal conspiracy in relation to the scheme.

The claims in this proceeding 25 The essence of the proceeding involves allegations that more than $130 million of the funds invested by Indian investors in the Pearls scheme was used for the purchase and improvement of the Sheraton Mirage resort, the purchase of the Sanctuary Cove property, and the purchase of the Mont Albert Road property. 26 The statement of claim as filed pleads the following causes of action: (1) the first and second limbs of Barnes v Addy (1874) LR 9 Ch App 244; (2) unlawful means conspiracy; and (3) deceit (which the applicants describe throughout their submissions as "fraud" although it is unclear whether the applicants intend by their submissions to introduce the new, and difficult, issue of whether the common law recognises a generalised tort of fraud rather than the tort of deceit which has been recognised for centuries).

(1) The application to amend 27 Since the applicants seek to amend their originating application, they require leave: Federal Court Rules 2011 (Cth) r 8.21(1)(g)(i). 28 The applicants seek to amend their statement of claim to plead additional facts, provide further particulars, change the structure of their pleading, and simplify the way in which their claims are pleaded. Since this is the first amendment by the applicants, these matters could have been amended without leave under r 16.51. 29 However, the applicants also seek to add new claims for relief. The applicants accept that since their amendments add new claims for relief, or new foundations in law for existing claims for relief, they need to show that the new claims arise out of the same facts or substantially the same facts as those already pleaded to support their existing claims for relief. 30 The new claims are: (1) claims for declarations that the Mont Albert Road property is subject to a constructive trust or equitable charge or lien for the amount owed to the applicants, and for an injunction restraining the sale of the Mont Albert Road property; (2) a claim under s 1323(1)(h)(ii) of the Corporations Act 2001 (Cth) for the appointment of a receiver and manager, with the power to sell, over the Sanctuary Cove property and the Mont Albert Road property in addition to the already pleaded appointment over the Sheraton Mirage; (3) claims for unconscionable conduct (or accessorial liability for it) in breach of one or more of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)), the Australian Securities and Investments Commission Act 2001 (Cth), the Corporations Act 2001 (Cth), the Fair Trading Act 1989 (Qld), the Fair Trading Act 1999 (Vic), and the Trade Practices Act 1974 (Cth); (4) claims for misleading or deceptive conduct (or accessory liability for it) in breach of the various six Acts above; (5) orders for restitution; (6) orders for the taking of accounts of profits; and (7) orders for the payment of interest and the applicants' costs. 31 The applicants seek to amend their pleading to include the following additional causes of action: (1) claims based on unjust enrichment pleaded as involving a receipt which is "contrary to conscience" and "unjust" (without further particulars and without any express reference to tracing of funds although perhaps implicitly by reference to the use of the "investor's funds"). This claim is curiously described as being "either in Equity or at common law for money had and received" by way of orders including an account of profits (which is not a restitutionary remedy); and (2) claims for unconscionable conduct and misleading or deceptive conduct, as well as accessory liability, variously in contravention of the various six Acts above (at [29(3)]). 32 The applicants submit that the same evidence is relied upon in relation to these additional causes of action. They say that they can succeed on these causes of action without needing to prove fraud, or that the respondents had any other particular state of mind. They submit that the restitutionary claims merely require proof that the investors' funds were used to purchase property in Australia without the investors' consent, and that the unconscionable conduct and misleading or deceptive conduct claims involve an objective assessment of the respondents' conduct, and do not require findings of fraud or negligence. 33 I am content to accept these submissions for the purpose of this application. Certainly the proposed amendments appear to present simpler and clearer contentions. In this unopposed application I do not propose to examine the minutiae of each cause of action. If an application is made to strike out the pleading, or for summary judgment in relation to any cause of action, then that examination can take place then. It is enough to say at this stage that at a high level of assessment, there is a prima facie case in relation to each of these pleas. My discussion of the facts above illustrates, at a high level, the prima face case for drawing inferences that funds which are traceably related to the investments made by investors, including the investors who are represented in this proceeding, were knowingly and fraudulently used without authority for the purchase of the three pleaded Australian properties. It may be that the applicants will seek to prove these matters by inference rather than by direct evidence of funds transfer: see Relfo Ltd (In Liquidation) v Varsani [2014] EWCA Civ 360 [56] (Arden LJ; Gloster and Floyd LJJ agreeing on this point). 34 However, there remain issues with the amendments. I have already made observations at a case management hearing that the applicants seem set on an approach to pleading which pleads every imaginable causes of action. Curiously, my remarks seem to have encouraged the applicants to plead even more variants of causes of action arising from the facts. Although some of the new claims are simpler, and involve proof of fewer matters than the existing claims, no claim has been abandoned and the applicants' proposed amended pleading has taken the technique of geometric pleading to stratospheric levels. For instance, the same unconscionability claim against the fourth, fifth, and sixth respondents is pleaded as being a contravention of prohibitions against unconscionable conduct in: (i) the Australian Consumer Law; (ii) the Australian Securities and Investments Commission Act; (iii) the Fair Trading Act 1989 (Qld); (iv) the Fair Trading Act 1999 (Vic); and (v) the Trade Practices Act. In other words, nearly the identical claim is pleaded five different ways against three different respondents (and in the same five ways against the existing three respondents). The same approach is taken to the plea of misleading or deceptive conduct. And this geometric style of pleading is adopted in circumstances in which the applicants say that their claim for restitution (albeit one which is pleaded in a way which is probably unique), merely requires that the investors' funds were used (by which the applicants must mean "traceably used") to purchase property in Australia without their consent. 35 I have given serious consideration to refusing leave to allow the amendments due to their potential defects, and the serious inconvenience and disruption that they may cause to the orderly progress of this proceeding. In broad terms, the applicants' approach seems to be akin to that taken by a nervous first year law student answering an exam question, unsure about which points are important in the answer: identify every imaginable cause of action, and every possible permutation of causes of action arising from the facts in relation to particular defendants. This approach might do little more than to delay the proceeding and increase legal expenses. In Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486, 503 [27], French CJ, Gummow, Hayne and Kiefel JJ quoted from Keane CJ in the Full Court of the Federal Court who said that "[t]he presentation of a range of alternative arguments is not apt to aid comprehension or coherence of analysis and exposition; indeed, this approach may distract attention from the central issues". 36 Ultimately, however, I consider that the amendments should be allowed for five reasons. 37 First, the meaning and nature of the underlying causes of action which are pleaded are easily able to be determined, even if the manner of some of the pleading may be, to say the least, unfortunate. 38 Secondly, the applicants have not yet had the opportunity to respond in detail to these concerns in relation to the amended pleading. These remarks could not come as a surprise to the applicants because they have been made in similar terms at previous case management hearings. However, there may be reasons why the applicants have considered it necessary to plead almost every imaginable causes of action. For instance, although it is extremely difficult to fathom why five different permutations of substantially the same plea of unconscionability needs to be made, it is not impossible that each one of those pleas is subject to a different legal obstacle. 39 Thirdly, if this matter does not settle at mediation then it is almost certain that the pleadings will be amended again. For instance, if the respondents raise the same defences to the five different claims of (apparently) identical causes of action for unconscionability and misleading or deceptive conduct, then the applicants might, bearing in mind their duties to the Court and the overriding concerns of litigation, reduce the multitude of these many repetitive claims. These issues can be dealt with at a case management hearing. 40 Fourthly, if the applicants persist in this geometric style of pleading, and require the respondents to respond in detail to each and every multiplied version of similar causes of action, "planting a forest of forensic contingencies and waiting until final address or perhaps even an appeal hearing to map a path through it" (Forrest at [27] (French CJ, Gummow, Hayne and Kiefel JJ)), then these matters might be addressed by costs orders. 41 Fifthly, as the applicants say, the amendments are being made at an early stage in the proceeding, none of the present respondents oppose the amendments, and the parties are currently making arrangements to hold a mediation, which will be held in the awareness that the applicants have an array of causes of action which will result in multiplied legal expenses (although not necessarily costs that the applicants will recover).

(2) The application for joinder 42 The joinder application is made under r 9.05 of the Federal Court Rules. The applicants seek to join Mr Bhangoo as the fourth respondent. They seek to join Ms Kaur (Mr Bhangoo's daughter) as the fifth respondent. And they seek to join Mr Singh (Mr Bhangoo's son-in-law) as the sixth respondent. 43 Rule 9.05(1)(b)(iii) provides that a party may apply to the Court for an order that a person be joined as a party to the proceeding if the person "should be joined as a party to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings". In Comcare v John Holland Rail [2009] FCA 660; (2009) 185 IR 191, 196-197 [13], Jessup J said: I also agree that it will not be sufficient for an applicant seeking joinder merely to show that he or she has claims against the proposed respondent which could not be dismissed as unarguable in the [General Steel Industries Inc. v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125] sense. However, with respect to Branson J, neither do I accept that O 6, r 8 is concerned only with existing proceedings which are "improperly constituted by reason of the failure to join a person as a party". I consider that such a view takes too narrow an approach to the concept of ensuring that all matters in dispute in the proceeding are effectually and completely determined and adjudicated upon. It is sufficient for present purposes to say that I consider that the expression "all matters in dispute in the proceeding" extends at least to matters which are placed in dispute by an existing party and which, if determined in a particular way, would result in a finding that another person, rather than the existing party, should be called to account for the transgression presently alleged by the applicant. See also Brisbane Slipways Operations Pty Ltd v Pantaloni [2010] FCA 654; (2010) 270 ALR 13, 48 [151] (Greenwood J). 44 I am satisfied that the dispute arising from the proposed allegations against Mr Bhangoo (the proposed fourth respondent), his daughter (the proposed fifth respondent), and his son-in-law (the proposed sixth respondent) are related to the dispute with the other respondents. I have discussed above the facts in relation to Mr Bhangoo. He is intimately connected with the dispute with the current respondents and the dispute with Mr Bhangoo is plainly "related". The proposed fifth and sixth respondents, Mr Bhangoo's daughter and son-in-law, were the recipients, for arguably no consideration, of title to the Mont Albert Road property. Since it is alleged that this property was also purchased with monies misappropriated from investors in the Pearls scheme, this dispute is also a related dispute. Further, each of the proposed respondents was a director of Miigroup. 45 Case management issues also support joinder. The joinder application has been brought at an early stage of the proceeding, before any defences have been filed. Joinder will enable all the disputes to be mediated together. And the applicant submits that the three parties sought to be joined would be likely to be called as witnesses in any event. 46 The fourth, fifth and sixth respondents should be joined to the originating application and statement of claim, and the applicants should have the leave necessary for the associated amendments to their originating application and statement of claim under rr 8.21(1)(g)(i) and 16.53 of the Federal Court Rules.

(3) The application for leave to effect service out of the jurisdiction 47 The applicants also seek leave under r 10.43(2) of the Federal Court Rules to serve the third to sixth respondents out of the jurisdiction. Each of these respondents resides or is located in India. The applicants seek to serve the amended originating application and amended statement of claim pursuant to the Hague Convention. 48 Rule 10.43(3) of the Federal Court Rules provides that an application for leave to serve out of the jurisdiction must be accompanied by a supporting affidavit which states the name of the country where service is to take place, the proposed method of service, and the basis upon which that method of service is permitted. The affidavit of Mr Moriarty explained that it is the Republic of India, service is by the Hague Convention method, and that this method of service is permitted by India's accession to the Hague Convention on 23 November 2006 (about which details are provided). The reference to the Hague Convention is to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at The Hague on 15 November 1965. 49 Rule 10.43(4) requires the applicants under r 10.43(2) to satisfy the Court of three matters: (1) that the Court has jurisdiction; (2) that the proceeding is of a kind mentioned in r 10.42; and (3) that the applicants have a prime facie case for all or any of the relief claimed. 50 As to jurisdiction, this Court plainly has jurisdiction, including accrued jurisdiction, in relation to the claims, many of which arise under Commonwealth statutes. 51 As to the proceeding being of a kind mentioned in r 10.42, that rule creates the traditional English "pigeon hole" approach which requires that one or more of the matters in the table in the rule be established. Numerous pigeon holes are satisfied. The proceeding, in which the subject matter of numerous claims is the three pleaded properties, falls within the meaning of item 21 as a proceeding "in which the subject matter, to the extent that it concerns the person to be served, is property in Australia". The applicants also rely on the following: (1) Items 4 or 12: Proceeding based on a tort committed in Australia in Item 4 (the torts of conspiracy and deceit), and a proceeding based on a contravention of an Act that is committed in Australia (Item 12); (2) Item 5 and 13: Proceeding based on, or seeking the recovery of, damage suffered wholly or partly in Australia caused by a tortious act or omission (wherever occurring). On the assumption that the funds were "lost" as the applicants claim when invested in Australia then this damage would be suffered in Australia (the same reasoning is applied to Item 13); and (3) Item 15: Proceeding seeking any relief or remedy under an Act, including the Judiciary Act 1903 (Cth). Relief and remedies are sought under numerous Commonwealth Acts. 52 The proceeding consists of, or includes, matters that fall into a number of pigeon holes. The requirements of r 10.43(4)(b) are met. 53 Finally, as to r 10.43(4)(c), the test for a prima facie case is well established. It is satisfied if, on the material before the Court, inferences are open which, if translated into findings of fact, would support the relief claimed: Perdaman Chemicals and Fertilisers Pty Ltd v ICICI Bank Ltd [2013] FCA 175 [58] (McKerracher J); Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102, 110 (French J); Ho v Akai Pty Ltd (in liquidation) [2006] FCAFC 159; (2006) 24 ACLC 1,526, 1,529 [10] (the Court). 54 The approach to whether there is a prima facie case "should not call for a substantial inquiry": Ho v Akai, 1,529 [10] (the Court); WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472, 476 (Beaumont J); Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539, 549 (the Court). 55 I am satisfied, for the purposes of this unopposed, ex parte application and in the context in which it is made, that there are prima facie cases against each of the proposed respondents, in relation to each claim. It is not necessary to descend into each of the elements of each cause of action pleaded by the applicants. It suffices to say that the evidence demonstrates there is a serious issue to be tried in relation to each of the proposed respondents. The overlapping essential elements of many of the repetitive causes of action include: (i) the receipt of funds by PACL on trust for the investors (curiously the trust said to arise from the receipt of the investors' funds to be held for their benefit and used for investment in land to be held for them is pleaded as different forms of constructive trust, and as a resulting trust); (ii) a relationship of trust and confidence between PACL and vulnerable investors; (iii) a fraudulent or dishonest scheme by PACL; (iv) a sufficient degree of knowledge of that scheme by the respondents; (v) the use of funds from that scheme to purchase the three pleaded properties in Australia; and (vi) a sufficient degree of knowledge by the owners of those properties of the providence of the funds. 56 For the reasons I have explained, I am satisfied for the purposes of this application that the evidence establishes a prima facie case, or serious issue to be tried, in relation to each of the pleaded claims against all respondents, including the three joined respondents to be served in India. The evidence establishes a prima facie case of each of these elements.

Conclusion 57 The proposed orders should be made (i) allowing the proposed amendments, (ii) joining the three additional parties as fourth, fifth, and sixth respondents, and (iii) granting leave for the applicants to serve the third, fourth, fifth, and sixth respondents in India. 58 Finally, the applicants' costs of this application should be costs in the proceeding. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.

Pt X Competition and Consumer Act 2010(Cth)s 84

Trade Practices Act 1974(Cth)

Fair Trading Act 1999(Vic)

Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)), the Australian Securities and Investments Commission Act 2001(Cth)

(Cth), the Corporations Act 2001(Cth)

(Cth), the Fair Trading Act 1989(Qld)

(Qld), the Fair Trading Act 1999(Vic)

Corporations Act 2001(Cth)s 1323(1)(h)(ii)

Federal Court Rules 2011(Cth)rr 8.21(1)(g)(i), 9.05, 9.05(1)(b)(iii), 10.42, 10.43(2), 10.43(3), 10.43(4), 10.43(4)(b), 10.43(4)(c), 16.51, 16.53, r 8.21(1)(g)(i).

At a glance

Court

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Before

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Judgment (23 paragraphs)

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Legislation Cited (14)

Cases Cited (15)