Westpac Banking Corporation v Forum Finance Pty Limited

BETWEEN: WESTPAC BANKING CORPORATION ABN 33 007 457 141 First Applicant

WESTPAC NEW ZEALAND LIMITED (COMPANY REGISTRATION NUMBER COMPANY NUMBER 1763882) Second Applicant

AND: FORUM FINANCE PTY LIMITED First Respondent

VINCENZO FRANK TESORIERO (and others named in the Schedule) Third Respondent

order made by: LEE J DATE OF ORDER: 20 OCTOBER 2021

THE COURT ORDERS THAT:

1. Upon the hearing of an application by the first applicant pursuant to rule 42.14(1) of the Federal Court Rules 2011 (Cth) and being satisfied that BASILE PAPADIMITRIOU (also known as Bill Papas), a person charged with contempt, is likely to withdraw from the jurisdiction of the Court, a warrant for the arrest and detention of BASILE PAPADIMITRIOU issue (until he is brought before the Court to answer the charge) in the form set out in the Annexure to this order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Annexure Form 90 Rules 34.14(2); 41.05(1); 42.01 & 42.14(3) Warrant for arrest NSD616 of 2021 Federal Court of Australia District Registry: New South Wales Division: General WESTPAC BANKING CORPORATION ABN 33 007 457 141 and another named in the Schedule Applicants FORUM FINANCE PTY LIMITED ACN 153 301 172 and others named in the Schedule Respondents To the Sheriff
2. Arrest BASILE PAPADIMITRIOU (also known as Bill Papas DOB 31/08/1972) and bring him before the Federal Court of Australia to answer the charge set out below.
3. Detain BASILE PAPADIMITRIOU in custody unless he pays $50,000 into the Federal Court of Australia giving security for his appearance in person before the Court to answer the charge and to submit to the judgment of the Court. BASILE PAPADIMITRIOU is charged with contempt of court in that it is alleged that:
4. On 28 June 2021, the Federal Court of Australia made a freezing order pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and rule 7.32 of the Federal Court Rules 2011 (Cth) (Freezing Orders) preventing BASILE PAPADIMITRIOU from removing from Australia or disposing, dealing with or diminishing the value of any of his assets in Australia (Australian assets) up to the unencumbered value of $254,500,000.
5. On 2 July 2021, orders were made by the Federal Court of Australia varying and extending the Freezing Orders (Amended Freezing Orders) to prevent BASILE PAPADIMITRIOU from removing from Australia or disposing, dealing with or diminishing the value of any of his Australian assets up to the unencumbered value of $262,907,838.23.
6. BASILE PAPADIMITRIOU has disobeyed order 5 of the Amended Freezing Orders because on or around 1 July 2021 he gave instructions to Macrovue Pty Limited (Macrovue) to pay (or caused instructions to be given to Macrovue on his behalf using his user name and access credentials) which caused the payment by Macrovue of $150,000 held in cash by Macrovue on behalf of Palante Pty Limited ACN 135 344 151 (Palante), whose assets he had power over, to a third party, Mr Eric Constantinidis, and thereby disposed of, dealt with or diminished the value of the Australian Assets by $150,000 in circumstances where, as at 1 July 2021, BASILE PAPADIMITRIOU had assets in Australia with an unencumbered value of less than the 'Relevant Amount' stated in the Amended Freezing Orders, being $262,907,838.23.
7. BASILE PAPADIMITRIOU has disobeyed order 5 of the Amended Freezing Orders because on or around 6 July 2021 he gave instructions to Macrovue to pay (or caused instructions to be given to Macrovue on his behalf using his user name and access credentials) which caused the payment by Macrovue of $570,000 held in cash by Macrovue on behalf of Palante, whose assets he had power over, to a third party, Mr Eric Constantinidis, and he thereby disposed of, dealt with or diminished the value of his Australian Assets by $570,000 in circumstances where, as at 1 July 2021, BASILE PAPADIMITRIOU had assets in Australia with an unencumbered value of less than the 'Relevant Amount' stated in the Amended Freezing Order, being $262,907,838.23. Date: 21 October 2021 Signed by Judge

(Delivered ex tempore, revised from the transcript)

LEE J: 1 Before the Court are two adjectival applications by Westpac in respect of an interlocutory application seeking to punish Basile Papadimitriou (also known as Mr Papas) for contempt of Court (contempt application). 2 They both relate to the mechanism by which Mr Papas is to be brought before the Court in order to answer a charge, a draft statement of which was filed with the Court on 6 October 2021. It is alleged that Mr Papas disobeyed a freezing order by giving instructions to a company, Macrovue Pty Limited, to pay two amounts of $150,000 and $570,000 held by the company to Mr Eric Constantinidis. The details are set out in more detail in the statement of charge, which I will sign. 3 The material before the Court on the current application indicates that the relevant freezing orders, including the relevant endorsement on those orders, were served on Mr Papas (the freezing orders having been amended from their original, ex parte form which had already been served). 4 The first application before me today is for substituted service of the contempt application, statement of charge and the affidavits upon which Westpac relies. 5 Rule 42.13 of the Federal Court Rules 2011 (Cth) (FCR) provides: 42.13 Service The person charged must be served personally with: (a) the application (whether originating or interlocutory); and (b) the statement of charge; and (c) the affidavits on which the party making the charge intends to rely. 6 I am satisfied that it is wholly impractical to serve the relevant documentation on Mr Papas. Mr Papas is presently in Greece and has been in that country since June 2021. Although he initially indicated, through his solicitor and counsel, an intention to return to Australia "to attend to [the] serious allegations against him personally", he has failed to do so. This is notwithstanding his then counsel, at one stage, tendered before me copies of travel arrangements that were said to have been made for his imminent return. 7 The explanations provided by Mr Papas for his failure to return to the jurisdiction have been varied. Initially, it was said that he could not return to Australia because of medical reasons, but lately, that has transformed somewhat into an assertion that he does not have money to buy a ticket from Greece, and that he would be caught up with current COVID restrictions as to entry into Australia. 8 I will turn to the evidence concerning Mr Papas absenting himself, and continuing to absent himself from Australia later, but for present purposes, I am satisfied that there is no prospect of Mr Papas returning in the near future in order to allow for service to be effectuated by orthodox means. The question that then arises is twofold: whether, notwithstanding the terms of FCR 42.13, substituted service (a) can; and (b) should, be ordered? 9 As to (a), I am satisfied that it can be ordered. 10 It is evident that FCR 42.13 is the successor of Order 40, rule 8 of the former Rules and, apart from some inconsequential changes, they are essentially the same. The issue of whether the Court has power to dispense with the requirements of personal service notwithstanding the terms of Order 40, rule 8 was dealt with authoritatively by the Full Court in Lazar v Taito (Aust) Pty Ltd (1985) 5 FCR 395 (Fox, McGregor and Neaves JJ). 11 In that case, two alternative arguments were advanced: first, that there was no power to dispense with the requirement for personal service; and secondly, in the alternative, if there was a discretion to dispense with personal service in contempt proceedings, such a discretion should only be exercised where it could be shown that the accused person is evading service. 12 At the time of that case, the relevant Rules provided (like the current FCR 1.34), that there could be dispensation with compliance with the Rules either before or after the occasion for compliance arises, being a position that existed formerly in equity: see Ferrand v The Mayor, Aldermen and Burgesses of Bradford (1856) 8 De G M & G 93; 44 ER 324 (at 325). 13 Under the old Rules, however, there was no exact equivalent of the current FCR 1.32, which allows the Court to make an order it considers appropriate in the interests of justice. In any event, in Lazar, it was held that the Court's discretionary power to dispense with personal service could be exercised, even though to do so would override the requirement in the Rules for personal service, particularly where there is no apparent injustice (at 403-404 per McGregor J), although it was suggested that there would be limited circumstances in contempt proceedings in which the discretion should be exercised (at 414 per Neaves J). 14 Having dealt with power, I am also satisfied on the evidence that the proposed mode of substituted service is likely to bring the service of the documents to the attention of Mr Papas. It is proposed that service be effected on Mr Papas by sending the documents: (a) to the current address for service (as noted in the Form 10 notice of address); (b) by hard copy to the former solicitors for Mr Panetta (who filed that address for service), Panetta Lawyers; (c) by email to that firm; (d) by email to Ms Louise Agostino (whom the evidence discloses is the so-called "domestic partner" of Mr Papas) at her email address and requesting that Ms Agostino inform Mr Papas that the documents can be downloaded; and further (e) by the sending of a short message service (SMS) to a phone number used by Mr Papas in Greece, which was provided to the Court by his former solicitor and was the number in respect of which Mr Papas communicated with his erstwhile solicitor. 15 Given the impracticality of service of the documents on Mr Papas in any other way, I am satisfied that this is one of the limited circumstances where such an order should be made. In short, there is no practical alternative and I am comfortably satisfied the documents will come to his attention. 16 The second application is for a warrant to issue for the arrest of Mr Papas. 17 By s 31 of the Federal Court of Australia 1976 (Cth) (Act), this Court has the same power "to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court". Contempt is addressed in Pt 42 of the FCR. 18 FCR 42.14 provides as follows: 42.14 Arrest (1) If an application for punishment of a contempt has been filed, or a proceeding has been started for punishment of a contempt, a party making the charge may apply to the Court for: (a) an order that the person charged give security for the person's appearance to answer the charge; or (b) a warrant for the person's arrest and detention in custody until the person is brought before the Court. (2) The party making the charge under subrule (1) must satisfy the Court that the person charged is likely to abscond or otherwise withdraw from the jurisdiction of the Court. (3) If the person charged does not comply with an order to give security, the Court may issue a warrant, in accordance with Form 90, for the arrest of the person and for the person's detention in custody until the person is brought before the Court to answer the charge. 19 In this case, I am satisfied that Westpac is a party who has made an application for punishment of contempt and accordingly, is in a position to make application for an order for the issue of a warrant for arrest and detention of Mr Papas until he is brought before the Court. 20 As the terms of the Rule make clear, before the Court will make an order for the issue of a warrant, it must be satisfied by the party making the charge that the person charged is likely to abscond or otherwise withdraw from the jurisdiction of the Court. The question that then arises is whether the Rule is satisfied where, like the position of Mr Papas, a person has already left (or using the language of the Rule, withdrawn or absconded) from the jurisdiction of the Court. This question was considered by the Full Court (Besanko, Wigney, and Bromwich JJ) in Mensink v Parbery [2018] FCAFC 101; (2018) 264 FCR 265. 21 In that case, Bromwich J (at 311-312 [189], with whom Besanko J agreed (at 267-268 [1]), held that it could be said that a person was "likely to withdraw from the jurisdiction" even when he had already done so, and the fact that a person had expressed an intention to return some months later did not change the position, especially as no clear or firm date was indicated. Further, Wigney J found (at 281-283 [92]-[98]), after referring to authorities as to the meaning of "abscond", that the rule should be "construed beneficially so as to permit the issue of a warrant in circumstances where the person has already left the jurisdiction and has evinced an intention not to return in the near future." 22 As noted above, there is no basis, let alone a reasonable basis, for thinking that Mr Papas is likely to return from Greece to Australia on any firm date. Indeed, every indication is that he steadfastly intends to remain in Greece. This is consistent with his conduct in relation to this proceeding, which has been less than satisfactory. He has repeatedly disobeyed Court orders for the filing of material and apparently provided (at best) Delphic information to his solicitors. It might be an exercise in masterly understatement to suggest that the conduct of the proceeding on his behalf has not been consistent with the overarching purpose. 23 As to the various reasons thus far provided for his delay, there is no reason for me to consider that his health difficulties prevent his return to Australia if he intended to do so. Moreover, there has been no suggestion based on evidence to date that if he wished to return to Australia now, he would be unable to do so because of some inability to obtain entry into the country (albeit, he would no doubt need to enter into quarantine arrangements). 24 The only other matter raised as a basis of Mr Papas not returning, that is, a lack of funds, is somewhat difficult to reconcile with his conduct while in Greece and at the time when it was said that he was making arrangements to return to Australia. Mr Papas, upon his entry into Greece in mid-June, did not behave like a man short of funds. 25 The evidence discloses that after arriving in Greece refreshed by his travel in business class on Qatar Airways, he went to what appears to be a somewhat luxurious accommodation in Athens - and thence to an apparently fancy beach resort. As I said during the course of argument, it does not appear he was "living on his uppers" or was vexed by lack of access to sources of funds. 26 Whether or not his American Express Centurion card still remains active, on the material before me, I am satisfied that if he wished to return to Australia, it is more likely than not he would have had access to sufficient funds in order to allow him to do so. 27 Further, despite being obliged to do so upon his solicitor filing a notice of ceasing to act, Mr Papas has not filed any updated notice of address for service, and no steps have been taken by Mr Papas to ensure that those acting for Westpac can contact him. It is quite clear on the evidence that he is not seeking to engage actively with the proceeding, and I am satisfied he has withdrawn from the jurisdiction and evinced an intention not to return to Australia in the foreseeable future. 28 It is not necessary for me to form a view about whether or not the issue of the warrant will, in fact, secure the attendance of Mr Papas before the Court in the short to medium term. There has been some suggestion today made on behalf of Westpac that a warrant, if issued, would be sufficient to ground an application to the Hellenic Republic authorities for the extradition of Mr Papas, although I express no view whatsoever as to the correctness of this submission or upon the likelihood of relevant treaty arrangements being able to be invoked in relation to warrant issued to secure attendance on a contempt of Court charge. 29 Additionally, I should note that there is no requirement for me to engage with the merits of the contempt charge for the purposes of the application. 30 The warrant should issue, although some arrangement ought to be made for the provision of security which, if provided, would secure his attendance and, if paid into Court, would result in his release from detention pending the hearing. The warrant will so provide and Westpac, if it wishes, can be heard as to this issue as to security, which was not addressed orally. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.

SCHEDULE OF PARTIES No. NSD 616/2021 Federal Court of Australia District Registry: New South Wales Division: General Respondents Fourth Respondent: Forum Group Financial Services Pty Ltd (provisional liquidators appointed) ACN 623 033 705 Fifth Respondent: Forum Group Pty Ltd (Receivers Appointed) (in liquidation) ACN 153 336 997 Sixth Respondent: Forum Enviro Pty Ltd (provisional liquidators appointed) ACN 168 709 840 Seventh Respondent: Forum Enviro (Aust) Pty Ltd (provisional liquidators appointed) ACN 607 484 364 Eighth Respondent: 64-66 Berkeley St Hawthorn Pty Ltd ACN 643 838 662 Ninth Respondent: 14 James Street Pty Ltd (in liquidation) ACN 638 449 206 Tenth Respondent: 26 Edmonstone Road Pty Ltd (in liquidation) ACN 622 944 129 Eleventh Respondent: 5 Bulkara Street Pty Ltd (in liquidation) ACN 630 982 160 Twelfth Respondent: 6 Bulkara Street Pty Ltd (in liquidation) ACN 639 734 473 Thirteenth Respondent: 23 Margaret Street Pty Ltd ACN 623 715 373 Fourteenth Respondent: 1160 Glen Huntly Road Pty Ltd ACN 639 447 984 Fifteenth Respondent: 14 Kirwin Road Morwell Pty Ltd ACN 641 402 093 Sixteenth Respondent: Canner Investments Pty Ltd ACN 624 176 049 Seventeenth Respondent: 123 High Street Taradale Pty Ltd ACN 639 872 512 Eighteenth Respondent: 160 Murray Valley Hwy Lake Boga Pty Ltd ACN 641 392 921 Nineteenth Respondent: 31 Ellerman Street Dimboola Pty Ltd ACN 641 392 887 Twentieth Respondent: 4 Cowslip Street Violet Town Pty Ltd ACN 639 872 352 Twenty-First Respondent: 55 Nolan Street Maryborough Pty Ltd ACN 641 392 912 Twenty-Second Respondent: 89 Betka Road Mallacoota Pty Ltd ACN 641 393 179 Twenty-Third Respondent: 9 Gregory Street Ouyen Pty Ltd ACN 641 392 707 Twenty-Fourth Respondent: 9 Main Street Derrinallum Pty Ltd ACN 639 872 736 Twenty-Fifth Respondent: 286 Carlisle Street Pty Limited ACN 610 042 343 Twenty-Sixth Respondent: 275 High Street Golden Square Pty Ltd ACN 639 870 545 Twenty-Seventh Respondent: Mazcon Investments Hellas IKE Twenty-Eighth Respondent: Palante Pty Ltd ACN 135 344 151 Twenty-Ninth Respondent: Anastasios Giamouridis Thirtieth Respondent The Forum Group of Companies Pty Ltd (in liquidation) ACN 151 964 626 Thirty-First Respondent Iugis Pty Ltd (in liquidation) ACN 632 882 243 Thirty-Second Respondent Iugis (UK) Limited Thirty-Third Respondent Iugis Holdings Limited Thirty-Fourth Respondent Iugis Global Financial Services Limited Thirty-Fifth Respondent Iugis Finance Limited Thirty-Sixth Respondent Spartan Consulting Group Pty Ltd (in liquidation) ACN 168 989 544 Thirty-Seventh Respondent Intrashield Pty Ltd (in liquidation) ACN 133 426 534 Thirty-Eighth Respondent Tesoriero Investment Group Pty Ltd ACN 161 088 115 Thirty-Ninth Respondent Mangusta (Vic) Pty Ltd ACN 631 520 682 Fortieth Respondent 193 Carlisle Street Enterprises Pty Ltd ACN 612 615 237 Forty-First Respondent 8-12 Natalia Ave Oakleigh Pty Ltd ACN 643 838 626 Forty-Second Respondent Iugis Hellas IKE Forty-Third Respondent Iugis Energy SA