FEDERAL COURT OF AUSTRALIA

Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 3) [2009] FCA 1154

PRACTICE AND PROCEDURE — Mareva injunction — Ex parte application — Asset preservation order — Prior default judgment against respondent, including order for payment of costs to be taxed – Applicant’s costs not yet taxed - Evidence that respondent to liquidate assets and leave the jurisdiction — Held respondent jointly and severally liable for costs – Held court had jurisdiction to make preservation order even though costs not yet taxed —Asset preservation order made

Federal Court of Australia Act (Cth) s 23

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 cited

Commissioner of State Taxation West Australia v Nechold Pty Limited (1995) 30 ATR 69 Jetwest Limited v Haddican (1992) 2 All ER 545 cited

Thiess Watkins White Construction Limited (in liquidation) v Witan Nominees (1985) Pty Limited (1992) 2 QR 452 followed

Trade Practices Commission v Nicholas Enterprises Pty Limited No. 3 (1979) 42 FLR 213 followed

AUSTRALIAN COMMUNICATIONS AND MEDIA AUTHORITY v MOBILEGATE LTD A COMPANY INCORPORATED IN HONG KONG, WINNING BIG PTY LTD ACN 121 026 793, JOBSPY PTY LTD ACN 112 801 073, SIMON ANTHONY OWEN, TAREK ANDREAS SALCEDO, SCOTT MARK MOLES, GLENN CHRISTOPHER MAUGHAN and SCOTT GREGORY PHILLIPS

QUD 426 of 2008

LOGAN J

29 SEPTEMBER 2009

BRISBANE

THE COURT ORDERS THAT:

Introduction

1.                   

(a)                The Application for this order is made returnable immediately.

(b)                The time for service of the application, supporting affidavits and originating process is abridged and service is to be effected by 30 September 2009 at 8:00pm.

(c)                This order, the application and supporting affidavits may be served on you by forwarding same to the email address:  simon@txtconnect.com

2.                  Subject to the next paragraph, this order has effect up to and including 4:30pm on 1 October 2009 (“the Return Date”).  On the Return Date at 9:30am there will be a further hearing in respect of this order before Justice Logan.

3.                  Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

4.                  In this order:

(a)                ‘applicant’, if there is more than one applicant, includes all the applicants;

(b)                ‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;

(c)                ‘third party’ means a person other than you and the applicant;

(d)                ‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

5.                   

(a)                If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.

(b)                If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

Freezing of Assets

6.                   

(a)                You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (‘Australian assets’) up to the encumbered value of AUD$150,000.00 (the ‘Relevant Amount’).

(b)                If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

(c)                If the unencumbered value of your Australian assets is less than the Relevant Amount, and you have assets outside Australia (‘ex –Australian assets’):

-                      You must not dispose of, deal with or diminish the value of any of your Australian assets and ex-Australian assets up to the unencumbered value of your Australian and ex-Australian assets of the Relevant Amount; and

-                      You may dispose of, deal with or diminish the value of any of your ex-Australian assets, so long as the encumbered value of your Australian assets and ex-Australian assets still exceeds the Relevant Amount.

7.                  For the purposes of this order,

-                     your assets include:

(a)                all your assets, whether or not they are in your name and whether they are solely or co-owned;

(b)               any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions);

(c)                the following asset in particular:

-           the black BMW M3 motor vehicle with the registration plate “TXT”

-                     the value of your assets is the value of the interest you have individually in your assets.

Provision of Information (see Practice Note paragraph 14)

8.                  Subject to paragraph 9, you must:

(a)                at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets world wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;

(b)                within 5 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

9.                   

(a)                This paragraph (9) applies if you are not a corporation and you wish to object that compliance with paragraph 8 may tend to incriminate you or make you liable to a civil penalty;

(b)                This paragraph (9) also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object that compliance may tend to incriminate them respectively or make them respectively liable to a civil penalty;

(c)                You must, at or before the further hearing on the return date (or within such further time as the Court may allow), notify the applicant in writing that you or all the persons referred to in (b) wish to take such objection and identify the extent of the objection;

(d)                If you give such notice, you need comply with paragraph 8 only to the extent, if any, that it is possible to do so without disclosure of the material in respect of which the objection is taken; and

(e)                If you give such notice, the Court may give directions as to the filing and service of affidavits setting out such matters as you or the persons referred to in (b) wish to place before the Court in support of the objection.

Exceptions to this Order

10.              This order does not prohibit you from:

(a)                paying $500.00 a week on your ordinary living expenses;

(b)                paying $2,000.00 or such other greater amount as the Court may fix on your reasonable legal expenses;

(c)                dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

(d)                in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

11.              You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied.  In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

12.               

(a)                This order will cease to have effect if you:

-                      pay the sum of $150,000.00 into Court; or

-                      pay that sum into a joint bank account in the name of your solicitor and the solicitor for the applicant as agreed in writing between them; or

-                      provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.

(b)                Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.

(c)                If this order ceases to have effect pursuant (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

Costs

13.              The costs of this application are reserved to the judge hearing the application on the Return Date.

Persons other than the Applicant and Respondent

14.              Set off by banks

This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.

15.              Bank withdrawals by the respondent

No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

16.              Persons outside Australia

(a)                Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia.

(b)                The terms of this order will affect the following persons outside Australia:

-                      you and your directors, officers, employees and agents (except banks and financial institutions);

-                      any person (including a bank or financial institution) who:

a)                  is subject to the jurisdiction of this Court; and

b)                  has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and

c)                  is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and

-                      any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person’s assets.

17.              Assets located outside Australia

Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party’s application, reasonable written notice of the making of the application is given to the applicant.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     On 14 August 2009, I gave judgment in default in favour of the Australian Communication and Media Authority (the Authority) against, materially, the Fourth Respondent, Mr Simon Anthony Owen.  On 18 September 2009, I made orders in relation to, again materially, Mr Owen, which provided for a form of substituted service as well as for the provision of material directed to the subject of a hearing in respect of penalty to occur in the Court on 23 October 2009.

2                     Application has been made this afternoon ex parte for an order in the nature of a Mareva order in respect of Mr Owen.  That order is sought so as to prevent the frustration of a costs order which I made on the 14 August 2009 in favour of the Authority.  Mr Owen is jointly and severally liable, along with other respondents against whom default judgment was entered that day, for costs.  The amount of the Authority’s costs has yet to be quantified, either by taxation or agreement with, materially, Mr Owen.

3                     I have evidence before me, from an experienced legal practitioner within the Australian Government Solicitor’s office, the solicitor for the Authority, which satisfies me that, even allowing for whatever inefficiencies may attend the charging as between solicitor and client of costs calculated by reference to time costing, there is a likelihood that the taxed costs, as between party and party, of the Authority pursuant to the order which I made on 14 August 2009, will be at least $150,000.  In making that observation I am not to be taken, in any way, to be binding the Court’s taxing officer to tax a bill at, at least, that amount.  Rather, it is merely an observation, prima facie, on the material to hand, of a likelihood of a bill being taxed at, at least, that amount.

4                     That the Federal Court has power to grant an order in the nature of a Mareva order is established by cases such as Cardile v LED Builders Pty Ltd (1999) 198 CLR 380.  The Court being one established by the Parliament pursuant to the Constitution and the Federal Court of Australia Act 1982 (Cth) (Federal Court of Australia Act), the source of power is to be found in s 23 of the Federal Court of Australia Act.  It may be described aptly as part of the Court’s incidental jurisdiction. 

5                     In this instance, the application is one in respect of a costs order.  I am satisfied that the effect of the order as to costs, which I made on 14 August 2009, is indeed one which subjects Mr Owen to a joint and several liability:  see in that regard Thiess Watkins White Construction Limited (in liquidation) v Witan Nominees (1985) Pty Limited (1992) 2 QR 452, and Trade Practices Commission v Nicholas Enterprises Pty Limited No 3 (1979) 42 FLR 213 at 223 and 224.

6                     An order in the nature of a Mareva injunction in support of a costs order, and even a costs order prior to taxation of costs, is not unprecedented:  see Commissioner of State Taxation West Australia v Nechold Pty Limited (1995) 30 ATR 69 at 72(a); see also Jetwest Limited v Haddican (1992) 2 All ER 545 at 548(g).

7                     The evidence read establishes, prima facie, a reasonable basis to suppose that, after 14 August 2009, and at a time when the order made that day had been drawn to his attention, if only at the behest of process servers engaged by the Australian Government Solicitor, Mr Owen has embarked upon a process of liquidating assets and so doing with a view to departing the jurisdiction.  Of particular note, in that regard, again prima facie, is the offering for sale of a BMW motor vehicle, registration number “TXT”, at what, it seems, is a considerable discount from what one might regard as the usual sale price for a vehicle of that make, age and kilometrage ($157,000 compared with an offering for sale of $129,000).  Other items of personal furniture also seem to be being offered for sale via the internet by Mr Owen. 

8                     The amount which is sought by way of freezing of assets is up to $150,000.  The time for return of an order is given the ex parte nature of the application made today, necessarily short.  It will be 1 October 2009 at 9.30am. 

9                     As befits any applicant for ex parte relief, and especially an authority of the Commonwealth, there has been, commendably, full disclosure, both of matters going to jurisdiction, as well as discretion for and against, in the submissions made this afternoon. It seems to me that it is appropriate, against the background I have described, to make an order in terms of the draft presented to me, and altered slightly in the course of submissions, so as to protect the processes of the Federal Court from abuse. 

10                  For these reasons I make an order in terms of the draft which I have amended, signed and placed with the court papers.  I note that the Authority has given the undertakings in Schedule A.  I grant leave, insofar as the same is necessary, for the applicant Authority to have that order passed and entered forthwith.  I reserve, as provided for in the draft, the costs of today’s application.

Associate:

Dated:         8 October 2009

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

1.                  The applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

2.                  As soon as practicable, the applicant will file and serve upon the respondent copies of:

(a)                this order;

(b)                the application for this order for hearing on the return date;

(c)                the following material in so far as it was relied on by the applicant at the hearing when the order was made:

-                     affidavits (or draft affidavits);

-                     exhibits capable of being copied;

-                     any written submission; and

-                     any other document that was provided to the Court.

(d)                a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of exclusively oral submissions that was put, to the Court;

(e)                the originating process, or, if none was filed, any draft originating process produced to the Court.

3.                  As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it.

4.                  The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent’s assets.

5.                  If this order ceases to have effect[1] the applicant will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.

6.                  The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.

7.                  The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.