FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (In Liquidation) (No 3) [2016] FCA 284

ORDERS

THE COURT ORDERS THAT:

1.    The Applicant’s interlocutory application be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application by Swishette Pty Ltd and Letore Pty Ltd as filed on 26 February 2016 be dismissed.

2.    The oral application for joinder made on behalf of Swishette Pty Ltd and Letore Pty Ltd on 22 March 2016 be granted insofar as it relates to Swishette Pty Ltd, but is otherwise dismissed.

3.    Swishette Pty Ltd be joined as a party to this proceeding, with effect from 23 March 2016.

4.    The ACCC pay the costs of the application by Swishette Pty Ltd and Letore Pty Ltd, to be taxed in default of agreement.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MORTIMER J:

1    I published reasons for judgment in this proceeding on 9 February 2016 in favour of the applicant: see Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62. I shall refer to that as ‘the principal judgment’ in these reasons. These reasons should be read in conjunction with the principal judgment. Due to the complex nature of the orders sought by the applicant, I distributed to the parties a form of orders I proposed to make and gave the parties an opportunity to make submissions about the proposed orders, any such submissions to be filed by 23 February 2016. A summary of the orders proposed, both as to those about which there was a contest between the parties and those there was not, are set out at [151]-[152] of the principal judgment.

2    The ACCC made submissions in accordance with the directions I gave. The respondents made no submissions.

3    Instead, by an interlocutory application dated 23 February 2016 but filed on 26 February 2016, two companies (Swishette Pty Ltd and Letore Pty Ltd), in respect of each of which the second respondent is a director, applied for a series of orders, both interlocutory and permanent. The applications are wholly concerned with funds currently held in the trust account of the ACCC’s solicitors pursuant to freezing orders initially made by Middleton J on 4 August 2015 and continued by me on several occasions. In the principal judgment, I determined that those funds should be made available to compensate and reimburse the clients of the first respondent (Clinica) who lost money in the respondents’ scheme, which I found contravened several provisions of the Australian Consumer Law (ACL). Those funds came from the sale of a property in Brighton of which Swishette was the registered proprietor, in its capacity as trustee, and in which Mr Laski lived for a considerable period of time until it was sold. I shall refer to them as the “Brighton funds”. The reasons why I reached that conclusion can be found at [256]-[300] of the principal judgment.

4    The effect of the orders sought by Swishette and Letore would be first and most significantly, to render the Brighton funds unavailable to satisfy the non-party redress orders the Court has made under s 239 of the ACL. It would mean, in substance, that there were no funds available to compensate the clients of Clinica who have been misled and deceived by the respondents’ conduct. Instead, the Brighton funds would be available for Swishette as trustee to distribute, with Mr Laski being the individual (as the sole director of Swishette) who will in effect decide to which of the beneficiaries the Brighton funds are distributed, or (on an alternative view of the facts) having already decided what the distribution should be. The second effect of the orders sought by Swishette and Letore would be to reduce immediately the now approximately $670,000 by $51,400 (on present estimates in the evidence) so the funds could be applied to pay for the legal costs incurred by those two companies on the interlocutory application. The third effect would be to remove the effect of the freezing orders, at a stage earlier than that proposed by the Court, in relation to a real estate property of which Letore is the registered proprietor.

5    All orders sought by Swishette and Letore are opposed by the ACCC.

6    At the conclusion of his oral argument, senior counsel for Swishette and Letore made an oral application to amend the companies’ interlocutory application. The amendment sought was to include, in the alternative, an order that Swishette and Letore be joined as parties. This represented a change from the companies’ position to this point, which had been that the ACCC was legally obliged to apply for Swishette and Letore to be joined.

7    The ACCC also made an interlocutory application on 26 February 2016. That application was to delete from the freezing orders what I will describe, somewhat colloquially, as the “carve outs” from the freezing orders. In their terms, some of them related to assets held in the name of Letore, and expenses incurred by Swishette. A number of them were obviously and avowedly for the personal benefit of Mr Laski.

8    The freezing orders had been amended, by consent of the parties, and in some cases for the apparent benefit of Letore and Swishette as non-parties, from time to time. By orders made on 9 March 2016 the Court made a consolidated set of orders, reflecting the current position and removing the need for those affected by the orders to continue to consult the original orders together with all of the separate amendments.

9    The proposed final orders would otherwise have maintained the freezing orders – and the carve outs from them for the benefit of Mr Laski, Letore and Swishette – for some period of time until compliance with other parts of the final orders had occurred.

10    The ACCC’s application was opposed by Mr Laski.

11    The parties, and Swishette and Letore, agreed and submitted a proposed timetable to deal with both interlocutory applications. According to that timetable, the Court was invited to deal with the ACCC’s application to delete the carve outs from the freezing orders, and what were described as the “procedural issues” concerning the interlocutory application by Swishette and Letore. Those “procedural issues” relate to whether the interlocutory application by Swishette and Letore should continue to a final hearing, or should be dismissed on one or more of the bases put forward by the ACCC.

12    Thus, those two matters – the deletion of the carve outs from the freezing orders and whether Swishette and Letore’s interlocutory application should proceed to a full hearing – are the matters for determination by the Court today. The oral hearing however only related to the interlocutory application by Swishette and Letore. There were no appearances on behalf of the respondents although I noted that Mr Laski was present in Court.

13    For the reasons I set out below, there will be no variation to the freezing orders and save for the late oral application for joinder by Swishette, the interlocutory application by Swishette and Letore will be dismissed.

14    I will give my reasons relating to the ACCC’s application first, as those reasons inform in part the decision I have made on the interlocutory application by Swishette and Letore.

The ACCC’s application

15    The current “carve outs” from the freezing orders are:

11A.    Subject to further order, this order does not prohibit the respondents to the Freezing Order from making the following payments out of the funds which are held on trust in the Thomson Geer Trust Account pursuant to paragraph 8 of the orders made by the Honourable Justice Middleton on 4 August 2015:

(a)    The sum of $55,000 for legal and accounting fees incurred to date and for the ongoing legal fees of Mr Radovan Montague Laski and Clinica Internationale Pty Ltd up to and including the trial in this proceeding;

(b)    The sum of $2,000 to be paid weekly to Mr Radovan Montague Laski for ordinary living expenses;

(c)    The sum of $680 be paid on a quarterly basis to Medibank Private for health insurance of Mr Radovan Montague Laski;

(d)    An amount be paid monthly to the ANZ Bank to cover any shortfall between the rent received for the property at 2 Vallence Court, Wallan and the minimum monthly mortgage payments for the property, (such amount to be determined upon receipt of satisfactory evidence of such shortfall following the reduction in the mortgage pursuant to paragraph 11B below);

(e)    The water rates, council rates and land tax, for 2 and 2A Vallence Court, Wallan, to be paid upon receipt of invoices;

(f)    The sum of $1,157.17 be paid monthly to Macquarie Leasing Pty Ltd for car lease payments;

(g)    The sum of $8,650.70 to be paid to Master Relocations for relocation expenses;

(h)    The sum of $955.50 to be paid for conveyancing expenses for the sale and settlement of 5 Maroona Road, Brighton;

(i)    The legal fees incurred to date by Swishette Pty Ltd in relation to the Supreme Court of Victoria Proceeding No. SCI 2015 4467, in the sum of $5,789.90;

(j)    Any legal fees incurred by Swishette Pty Ltd in relation to the Supreme Court of Victoria Proceeding No. SCI 2015 4467, to be paid upon receipt of invoices issued by its legal representative and submitted to the applicant, to a maximum of $10,000.

11B.    Subject to further order, this order does not prohibit Letore Pty Ltd from selling the vacant land situated at 2A Vallence Court, Wallan, for the sum of $75,000, provided that:

(a)    the full proceeds of sale (after deduction of selling costs) is paid into ANZ Bank mortgage account 013 304 3655 56802 to reduce Letore Pty Ltd’s liability under the mortgage; and

(b)    neither Mr Laski nor Letore Pty Ltd, at any later stage while the Freezing Order remains in place, redraw any sum under the mortgage.

16    It is important to note, and it is a matter to which I return, that of the eight recurring payments in paragraph 11A of the carve out provisions, two are expressly for the benefit of Swishette, two are for the benefit of Letore, and the remainder are for the personal benefit of Mr Laski. One of these (the car lease payment) was in respect of a legal obligation incurred by Letore, as I understand the evidence (and despite a submission of the ACCC to the contrary). Letore was the lessee of the car, but it was squarely put to the Court that the carve out should be made because the car was Mr Laski’s form of transport. The car lease is yet another example of how Mr Laski’s personal financial needs and expenditure are entirely mixed with those of the corporate vehicles of which he is a director.

17    Only paragraph (a) of 11A benefits both respondents in the proceeding. No other carve outs were apparently required for Clinica. I note also that the two carve outs in paragraph 11B which were made by amended consent orders on 9 March 2016 are entirely for the benefit of Letore. How it, as a beneficiary of the trust, is entitled to use the Brighton funds held by Swishette on trust for a number of beneficiaries, including Ms Laski and Ms Hatch, was never satisfactorily explained by Mr Laski.

18    Of the 10 payments set out in paragraph 11A, I assume the sums referred to in (g) and (h) have been paid, those amounts being one-off payments related to the sale of the Brighton property. The relocation expenses (item (g)) were for the personal benefit of Mr Laski, who had been living in the Brighton property. The conveyancing expenses (item (h)) were for the direct benefit of Swishette as the registered proprietor of the Brighton property, but also for the indirect benefit of Mr Laski who is the sole director of Letore, which is the sole shareholder of Swishette. Mr Laski is also the sole director of Swishette, and given all those connections it is apparent as a practical matter that it was he who might otherwise have had to find funds elsewhere to pay the conveyancing expenses for the sale of the Brighton property.

19    I note first that the evidence adduced by the ACCC (being the investment account transaction report for the applicant’s solicitors trust account) demonstrates that since 15 September 2015 each and every payment released has been made payable to Franzese & Associates Trust Account, whether the funds were released to pay liabilities of Mr Laski, Swishette or Letore. It is difficult to see how that could occur without Mr Franzese having some instructions to act on behalf of Swishette and Letore since September 2015.

20    As to the sum in paragraph (a), the evidence is that $46,815 out of the $55,000 has been released to Franzese and Associates in payment of the respondents’ legal fees incurred in the conduct of this proceeding.

21    As to the sum in paragraph (b), there have been 22 payments to Mr Laski since the orders were made, totalling $52,000. That is, Mr Laski has had the benefit of this carve out for almost six months, in respect of his personal living expenses. On the evidence, there has been only one quarterly payment for Mr Laski’s health insurance pursuant to paragraph (c).

22    As to the sum in paragraph (d), there have been five payments of $517.60 monthly totalling $2,588 for Letore’s benefit in respect of the mortgage it holds over the property registered in its name at 2 Vallence Court, Wallan.

23    As to the sum in paragraph (e) a total of $1,304.34 has been released for Letore’s benefit, to pay water rates and council rates for the 2 Vallence Court property as well as the vacant land it owns at 2A Vallence Court, Wallan. I note that on 9 March 2016, the freezing orders were varied on application and by consent to allow Letore to sell the vacant land so long as the proceeds were applied to reduce the mortgage it holds over, I assume, both Vallence Court properties. However, no evidence has been adduced that any steps whatsoever have been taken to sell this vacant land so as to reduce the mortgage repayments, and so reduce any claims on the Brighton funds (noting what I have said at [17] above concerning the question of how this can lawfully occur in any event).

24    As to the sum in paragraph (f), five payments of $1,157.17 totalling $5,785.85 have been made to Macquarie Leasing Pty for the car that Mr Laski drives.

25    As to the sums in paragraph (i) and (j), an amount of $8,539.90, said to be legal fees incurred by Swishette Pty Ltd in relation to the Supreme Court of Victoria Proceeding No. S CI 2015 4467 has on the evidence been paid to Franzese & Associates.

26    If one looks at the transaction ledger, every few days a payment is released to Franzese and Associates and the Brighton funds are correspondingly depleted. The depletion has been considerable. On the latest evidence before the Court, the affidavit of Mr Graham Phillips filed on behalf of the applicant, a total of $127,318.59 has been taken from the Brighton funds.

27    The ACCC submits that, if they continue, freezing orders are now in aid of execution of the judgment given on 9 February 2016, within the terms of r 7.35 of the Federal Court Rules. The ACCC submits that the risk of dissipation of assets continues, relying on a finding in the principal judgment to the effect that in the absence of a restraint, as soon as he was able, Mr Laski would dissipate the funds and attempt to put them out of the reach of creditors of Clinica, and of himself: see [2016] FCA 62 at [295], [299]-[300].

28    The purpose of the continuation of the freezing order after judgment and final orders, the ACCC submits, will be to preserve the funds for (and pending) the execution of the redress orders. As I found in the principal judgment, this is the purpose to which priority must be given over the penalty orders that will be made, in accordance with s 227 of the ACL. The ACCC submits that to continue the carve outs (which benefit Mr Laski), between the delivery of judgment and when the orders are implemented would be inconsistent with the preservation of such funds for the satisfaction of the claims of the aggrieved consumers, who are the beneficiaries of the non-party redress orders.

29    Finally, the ACCC submits that, on the recent evidence at trial, the circumstances of Mr Laski have changed so that the Court should no longer be satisfied the $2,000 weekly payment to him is just and reasonable in the circumstances. Whereas on 9 September 2015 Mr Laski deposed in an affidavit that he needed a weekly amount of $2,000 as general living expenses to cover rent, general household expenses and payment of utilities, at trial he gave evidence that, as at 21 October 2015, he was living with a partner in South Melbourne and was not paying rent at this property. I accept that is an accurate reflection of the evidence, and no evidence has been adduced by Mr Laski to suggest any change to the position about which he gave evidence on oath on 21 October 2015.

30    I accept the ACCC’s submissions, to a point. It is clear from my findings in the principal judgment that it is my opinion the Brighton funds are an asset which Mr Laski controls, and will use for his own benefit unless otherwise restrained. They are, indisputably, the only real funds available on the evidence to satisfy the redress orders which I have found should be made under s 239 of the ACL. Their dissipation is capable of entirely frustrating the redress orders the Court has found should be made. That proposition of course must be read with the findings I have made in the principal judgment about the way Mr Laski mixes and uses funds from his various corporate vehicles for his own purposes as it suits him, and the findings I make below on the interlocutory application of Swishette and Letore.

31    In that sense, I accept the submissions that without a freezing order, Mr Laski will use his control of Swishette (and Letore, and, as I have found in the principal judgment, his influence over, or his relationships with, Ms Hatch and Ms Laski) to apply the Brighton funds for his own purposes, at the expense of the clients he and Clinica misled and deceived. I take into account on this application what occurred during the trial of this proceeding, when Mr Laski sought to divest himself of his directorships and shareholdings in various companies (including Letore). I infer he took this course of action, after the first day and a of trial, having been present in court, to render less effective any orders he apprehended the Court might make against him, and in an attempt to put aspects of his business dealings further out of the reach of any Court orders. I refer here to the oral reasons I gave on 23 October 2015 for making the orders sought by the ACCC and which were, in the end, not opposed by Mr Laski despite his conduct the previous day.

32    However, the conclusions I have reached to dismiss the interlocutory application of Swishette and Letore mean that there will be no opportunity for dissipation. The ACCC has proposed that the written direction to facilitate the use of the Brighton funds to fulfil the redress orders under s 239 of the ACL be given by Mr Laski within 24 hours of the final orders being made. I consider that is appropriate, so that the rest of the orders can be implemented.

33    The proposed final orders also contemplate that the freezing orders will be discharged after 5pm on the day after Mr Laski give that written direction. In other words, after final orders are made on the principal judgment, the freezing orders will only remain in place for a period of 48 hours. The ACCC did not submit this timing was inappropriate. Once the written direction is given, the Brighton funds, which are held in the trust account of the applicant’s solicitors, will not be vulnerable to any dissipation by Mr Laski.

34    It is apparent that even with the use of the Brighton funds there will be a shortfall of many hundreds of thousands of dollars and former Clinica clients will not receive all of their money back. It is clear from the remainder of the orders that none of the Brighton funds will actually be disbursed to any former Clinica clients for quite some time after that – several months at least – because of the need for the ACCC to make contact with as many former clients as possible, those clients going through a verification process about their claims, and then a calculation being done by the ACCC about the proportion of each claim which can be repaid.

35    That gap in time means that there is unlikely to be any prejudice to Mr Laski, or Swishette, in exercising rights of appeal from final orders in this proceeding. It will be some time before the ACCC will be in a position to disburse any of the Brighton funds to former clients of Clinica.

36    Accordingly, given the view I have reached on the interlocutory application by Swishette and Letore, I find there is no need to alter the operation of the freezing orders in their current form.

37    Had I decided, contrary to the view I have formed, to allow Swishette’s and Letore’s application to proceed to a full hearing after the giving of notices pursuant to s 78B of the Judiciary Act 1903 (Cth), then I would have been disposed to allow the ACCC’s application and to amend the freezing orders in the following manner. First, I would not have continued any authorisation to release funds under paragraph 11A(a) for the legal expenses of Clinica and Mr Laski as this proceeding is now finalised. There being no evidence placed before me on behalf of Mr Laski, or Swishette, about the status of Ms Fahey’s Supreme Court proceeding No SCI 2015 4467, I would not have continued the carve out in paragraph 11A(j) for legal fees for Swishette in respect of this proceeding. Further, I would have varied the freezing order so that the real property owned by Letore at 2 Vallence Court, Wallan could be dealt with and if necessary used as security for loans or sold. How Mr Laski, as the sole director of Letore, then chose to direct the use of any sums advanced or proceeds of sale, and whether he chose to use them lawfully, would be a matter for him. Removing those restrictions on Letore would then obviate the need to retain paragraphs 11A(d) and (e) as carve outs from the freezing orders. I would not have continued the carve out for Mr Laski’s personal expenses relating to his car, his living expenses or his health insurance under paragraphs 11A(b), (c) and (f). As to his car, after more than six months and given my findings in the principal judgment about the way in which Mr Laski conducts his affairs, I would not have been satisfied it was necessary or appropriate for the Brighton funds to be applied to make lease payments. It seems Mr Laski is well capable of finding other funds to pay this lease if he so chooses. Letore in any event will not have its real property subject to the freezing orders and it should be able to make arrangements to pay the lease to which it is the contracting party. Further, I would not have seen it as appropriate to release any sum for Mr Laski’s personal expenses, given he has no rental expenses and his other expenses are on the evidence shared with a partner. On the evidence, he has had no separate rental expenses since at least October 2015 and yet has received $2,000 per week through the carve out. There was evidence during the trial that he had other personal sources of income from his work as a private investigator ($50,000-$80,000 a year), and he deposed to having friends who bought him things. He also controls other companies not affected by the freezing orders: see for example my findings about Equitale Pty Ltd at [248] of the principal judgment. For similar reasons, I would not have maintained the quarterly Medibank Private payment for Mr Laski’s health insurance.

38    I turn now to explain why I have decided to dismiss the interlocutory application by Swishette and Letore at this stage and without proceeding to a full hearing.

Swishette and Letore’s interlocutory application

39    Aside from the oral application that Swishette and Letore be joined as parties the proceeding, the other orders sought by the companies are as follows:

Interlocutory orders sought

1.    The reasonable legal costs to be incurred by Swishette and Letore in an amount to be fixed by the Court be paid out of the funds held and owned by Swishette and frozen by order of Mortimer J originally made on 4 August 2015 (subsequently extended or varied on 12 August 2015, 10 September 2015 and at the hearing of the matter in October 2015) (the freezing Orders).

2.    Directions be made listing this application for final hearing on a date to be determined and for related matters, including for the giving of notices under s 78B of the Judiciary Act 1903 (Cth).

Final orders sought

3.    The application of the applicant for Orders 1 0-12 of the Proposed Orders, or for Orders having a similar affect or operation, be refused.

4.    The freezing Orders and any Orders made in this proceeding in relation to the properties at 2 and 2A Vallence Court, Wallan, Victoria, be discharged.

5.     The applicant pay costs of Swishette and Letore of and incidental to the making of this application.

6.    Such further or other Orders as to the Court may seem fit.

40    Senior counsel for Swishette and Letore handed up a proposed minute of orders the companies sought the Court make on the interlocutory aspect of their application. Three matters were set out in paragraph 1 of the orders, as matters about which the Court needed to be satisfied to make the orders sought. Senior counsel accepted the Court needed to be satisfied of those matters. Initially this seemed to be on the basis that Swishette and Letore were not made parties, but ultimately it appeared to be submitted in the alternative that the Court needed to be satisfied of these matters even if Swishette and Letore were made parties. Those matters were:

a.    the application raised reasonably arguable issues as to the power of the Court to make the proposed final orders;

b.    it was necessary or appropriate to deal with the issues raised by the application prior to the making of final orders; and

c.    the third parties are not estopped from bringing the application.

41    The principal basis for dismissing the companies’ application (save for the joinder issue, which I address below) is that I am not satisfied of the matter in 1(b). In summary, in my opinion it is neither necessary or appropriate to deal with the issues raised by the companies’ application because:

(1)    The companies have had an opportunity to be heard in this proceeding, and the effects of both interlocutory freezing orders and proposed final orders (including freezing orders) on their asserted interests (including proprietary interests) were put before the Court by way of evidence and argument then considered appropriate.

(2)    Those matters, both by way of evidence and submission, were not simply advanced on Mr Laski’s behalf (nor in evidence by Mr Laski himself) from the perspective of whether he should be ordered to give the direction now contained in paragraph 10 of the proposed orders. They were advanced on behalf of Mr Laski as the controlling mind of Swishette and Letore, and on behalf of Swishette and Letore, from the perspective of the likely effect on the proprietary interests of Swishette as trustee and Letore (and Ms Tanya Hatch and Ms Tania Laski) as beneficiaries of the Second Rodney Laski Family Trust.

(3)    Even if I am wrong to see what occurred at trial as in all real and practical senses an opportunity afforded to the companies to be heard, and therefore not a source of any unfairness or denial of procedural fairness to them, I am satisfied that the companies, through Mr Laski as the only person on the evidence capable of making a decision on their behalf, chose not to take a more active role in the trial, or in the making and variation of the freezing orders. The companies chose to stand by and have Mr Laski himself defend and look after their interests, through the submissions made and evidence adduced. Given my findings about the way Mr Laski ran his companies, that is hardly surprising. The separateness and independence which is now contended to exist between Swishette and Letore and their interests on the one hand, and Mr Laski’s personal interests on the other hand, was not at all evident at trial, nor in the evidence before the Court. That is most obvious by reference to two facts: first that Mr Laski as a party sought actively to ensure the freezing orders contained carve outs which protected and advanced the interests of Swishette and Letore both directly and indirectly; and second that the trial was mostly occupied with competing contentions about whether the Court should make an order of the kind in paragraph 9 of the ACCC’s proposed orders (now paragraph 10 of the Court’s proposed orders), which is the very issue Swishette and Letore now seek to re-agitate, albeit with power arguments about s 239 that are different to the power arguments about s 239 advanced at trial. Nevertheless, at trial the power arguments about s 239 put to the Court in respect of the then proposed paragraph 9 of the ACCC’s form of orders were put for the avowed purpose of excluding the Brighton funds (that is, the funds in which Swishette is said to hold a proprietary interest) from the reach of the Court’s orders. That is the same purpose as the current application by Swishette and Letore.

(4)    As the oral argument progressed, it became apparent from the submissions made by senior counsel on behalf of the companies that what the companies sought to do was no small or confined exercise. Eventually, senior counsel accepted that they sought to re-open the Court’s judgment. He submitted that the findings I made about Mr Laski’s conduct in using the funds of the companies he controlled as he saw fit were likely affected by error because of a misapprehension of the true facts. The companies challenged the Court’s power to make orders under s 239 not only on the basis of s 51(xxxi) of the Constitution, nor only because they had not been joined as parties, but also – it became apparent – because they submitted there should have been different fact finding about the nature of the discretionary trust of which Swishette was trustee. In effect, all the matters which were not admitted by the respondents and on which there was a contest were to be thrown open again. Senior counsel was reluctant to put a fixed position about the amount of evidence which the companies might seek to adduce at any such re-opened trial. Matters of Swishette’s accounting practice were, at times, sought to be explained from the bar table. Much of the evidence in one of Mr Franzese’s affidavits was hearsay from the accountant retained by Swishette, and it was unclear whether only this evidence would be put into admissible form, or whether it would also be supplemented by further accounting or other evidence.

(5)    In my opinion, made at the stage it is and in the circumstances to which I have referred, save for the late oral joinder application by Swishette, the application is an abuse of the process of the Court. That being the case, the Court has no duty under s 78B of the Judiciary Act to refrain from making final orders in this proceeding.

42    On the joinder application, Swishette has drawn the attention of the Court, for the first time, to the High Court’s decision in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1 at [131] and [137]. In summary, I accept the submission that the principles stated by the High Court in those paragraphs are applicable. In my opinion they compel the joinder of Swishette, but not Letore, for reasons I set out below.

Opportunity to be heard

43    The first point I note, and to which I will return several times, is that even if one puts the whole process of the freezing orders and the companies’ involvement in that process to one side, Mr Laski as the sole director of both companies, and Mr Franzese as the solicitor who filed material dealing with the position of the companies and who acted for Swishette in the sale of the Brighton property, were on notice from 12 October 2015 that the ACCC proposed final orders of the kind the Court has proposed to make as a result of the conclusions reached in the principal judgment. The evidence before the Court reveals that on 12 October 2015 the ACCC served on Franzese & Associates a copy of its Outline of Submissions which covered both liability and relief sought. The redress orders were set out at [50] and [51] of those submissions. Two days later on 14 October 2015, and ahead of the pre-trial conference convened by the Court, the ACCC provided the Court and Franzese & Associates with a form of the relief it sought. These proposed orders included paragraph 9, which became the focus of submissions on behalf of the respondents at trial, even though neither of the respondents had a direct interest in the funds to which paragraph 9 was directed. Indeed, Clinica claimed no interest at all, but nevertheless made active submissions about paragraph 9.

44    I accept, as submissions for Swishette and Letore point out, that neither company has been joined as a party to this proceeding. The ACCC has never made such an application. Nor, however, have the companies themselves. Until the late oral application at the end of senior counsel’s submissions, they still did not seek such an order, notwithstanding that the substance of the relief they sought was to re-open the trial, apparently while remaining as third parties. If either of the companies believed their rights were in danger of being adversely affected by orders in this proceeding (a belief which, at the very least, must have crystallised if it ever was to do so on the making of the freezing orders against each of them in August 2015) then it is reasonable to have expected each of them to apply to be joined as parties to this proceeding. That is what occurred in John Alexander, on which Swishette and Letore rely. In this proceeding, no such joinder application occurred. It did not occur, I find, because of the state of affairs to which I have referred extensively in the principal judgment. That is: each of these companies is a corporate vehicle through which Mr Laski conducted his business operations as he saw fit, including moving money around between them as he saw fit, without regard to the interests of the individual company (or, with Swishette, its role as a trustee) On the evidence before me, Mr Laski made no distinction between the different roles and functions of his companies, their assets and their liabilities, and did not instruct his solicitor, Mr Franzese, to indicate to the Court there was any such distinction. An example is the submissions made on behalf of Clinica and Mr Laski in opposition to the continuation of the freezing orders. In these submissions, Mr Franzese makes a point, when dealing with the orders against Swishette and Letore (at [17]-[24]), of noting that Clinica’s line of credit in the sum of approximately $660,000 (that is, I infer, the principal basis on which it was able to operate and offer the Clinica scheme to clients) was secured by a mortgage over the Brighton property, to which Swishette consented. It is not credible to contend that it was in the interests of the beneficiaries of the trust for Swishette to put the Brighton property at risk for a business venture of a company it asserts should be regarded as entirely separate from its own interests, and which on the evidence before the Court had no assets of its own. Indeed, this transaction meant, as Mr Laski deposed in his affidavit at trial sworn 18 October 2015 (at paragraph 21) that $665,051.99 of the funds Swishette held in trust for the beneficiaries of the trust were not available to any of those beneficiaries but instead had to be repaid to the Commonwealth Bank. As the ACCC contended at trial, this is but one example of Mr Laski using the funds available to various of the companies he controls so as to pursue the business ventures he wished to at a particular point in time. That, I find, is why there was never any application from Swishette and Letore to be joined as parties – because Mr Laski, as the controlling mind of all these companies, was giving instructions in the proceeding and in control of the defence of it, including as this proceeding affected his other companies. He had an eye to their interests as much as he did to Clinica’s – if not more, because there were real assets held by Swishette and Letore. That is why there was opposition to the ACCC’s proposed order 9 during the substantive proceedings, about which I shall say more below. Clinica and Mr Laski otherwise had no interest in opposing these orders.

45    To the extent that Swishette and Letore also seek to make something of the fact that they have not been “separately represented” during this proceeding, I reject that submission for the same reasons. Their interests were represented by Mr Laski as their sole director and through his instructions to Mr Franzese, reflecting Mr Laski’s concern, evident from the time the ACCC foreshadowed the making of freezing orders, to keep the funds from the sale of the Brighton property out of the reach of the orders the ACCC was seeking in this proceeding.

46    The ACCC has also relied on the following matters. First, evidence given on 18 August 2015 on affidavit by Mr Laski (filed by Franzese & Associates, and I note witnessed by Mr Franzese of that firm) where he deposed to being the sole director of Letore and authorised to make the affidavit on its behalf. His evidence set out Letore’s financial position, and then in the same affidavit Mr Laski also set out Swishette’s financial position. Second, on the same day Mr Laski swore a further affidavit in opposition to the continuation of the freezing orders, in which he deposed that the freezing orders were preventing Swishette “as trustee of the Second Rodney Laski Family [Trust] purchasing another property or dealing with its assets in a legitimate manner”. That is in substance the point now sought to be agitated in respect of the proposed final orders. Third, Mr Laski went on to make two further affidavits with similar content regarding Swishette and Letore on 26 August 2015 and 8 September 2015. He also swore an affidavit on 18 October 2015 in which he deposed at paragraph 2 that he was authorised to give the evidence he did on behalf of Letore, Swishette and Equitale, and to give that evidence in opposition to the continuation of the freezing orders and paragraph 9 of the ACCC’s proposed orders.

47    Fourth, on 19 August 2015, Mr Franzese made an affidavit deposing that he is “the legal practitioner responsible for the sale and settlement of [the Brighton property] for Swishette Pty Ltd as trustee for the Second Rodney Laski Family Trust”. The only reasonable inference to be drawn from that sworn evidence by a legal practitioner is that he had instructions first, to act for Swishette in that transaction, and second, instructions from Swishette to place that evidence before the Court. On both counts, of course, his instructions must have come in reality from Mr Laski.

48    Fifth, the next day, on 20 August 2015, submissions were filed in opposition to the continuation of the freezing order. These are the submissions to which I have already referred above. I accept the ACCC’s contention that these submissions were made on behalf of the two respondent parties to the proceeding and the two companies subject to the freezing orders: namely Swishette and Letore. As can be seen from the reasons I have already set out, that is hardly surprising since both companies sought to have substantial carve outs from the freezing orders made for their ostensible benefit. That is, Mr Franzese was apparently instructed by 20 August 2015 to make express submissions about orders this Court should make, favourable to Swishette and Letore, in which, if Mr Laski’s position and the companies’ position is now to be accepted, neither Clinica nor Mr Laski had any interest. Indeed, Mr Franzese’s submissions went as far as seeking, successfully as it turned out, carve outs to benefit Swishette in proceedings in the Supreme Court of Victoria, in which he was the solicitor on the record for Swishette.

49    None of this evidence referred at all to the distribution in the first half of 2015 that is now said to be the centrepiece of the claim by Letore (not a claim made on behalf of the other two beneficiaries, Ms Hatch and Ms Laski) to be entitled to present full argument after reasons for judgment on the making of orders first proposed by the ACCC on 16 October 2015. Nor did Ms Laski refer to it in her affidavit made on 18 August 2015.

50    I do not accept that Mr Franzese has not acted on behalf of Swishette and Letore already in this proceeding. I also reject the submission that the companies have not been ‘represented’ in this proceeding. In a real and practical sense they, and their interests, were represented. That they are now differently represented, and different arguments are sought to be made on their behalf, does not alter what occurred at trial. The protection of the companies’ proprietary interests was advanced as part and parcel of the respondents’ defence both to the continuation of the freezing orders and to the nature and scope of the final orders in the proceeding itself. It is to that latter issue I now turn.

51    As I have noted, the ACCC filed and served the orders it invited the Court to make as final orders in this proceeding on 12 October 2015, well ahead of the trial in the matter, which occurred on 21 and 22 October 2015. Those trial dates had been set since June 2015. I noted in the principal judgment at [2] that the proceeding was actively defended until 12 October 2015 when an agreed statement of facts was filed containing admissions as to liability. The contest between the parties after that date concerned the characterisation of the respondents’ conduct for the purposes of the relief sought (such as penalties and injunctions) , and the nature and breadth of a small number of the specific orders sought by the ACCC. Key, and central, to the active contest between the parties was the fate of the Brighton funds, which had been frozen subject to the carve outs since 4 August 2015.

52    Further, as I noted at [7] of the principal judgment, the respondents sought variations to the freezing order, but never sought the discharge of the freezing orders. Swishette and Letore were served with the Court’s freezing orders on the day they were made: namely, 4 August 2015. Discharge of the orders against Swishette’s trust property, the Brighton funds, was never sought. If, as is now contended, there would, under no circumstances, be power to make orders under the ACL against property held by Swishette as trustee, the timely and appropriate course of action would have been for Swishette to raise this matter at the time Mr Laski and Clinica were seeking to have the Court alter the freezing orders. Instead, being on notice of them since 4 August 2015, Swishette and Letore acquiesced in the continuation of those orders against them until trial, and sought only to have sums carved out of the freezing orders so as to benefit each of them in relation to their other financial commitments. These were, I find, informed and deliberate decisions taken by Mr Laski as director of each of the companies.

53     In response to the ACCC’s proposed final orders, on 20 October 2015 and a day before trial, the respondents filed their outline of submissions. I have noted the matters of agreement and disagreement between the parties at [151]-[152] of the principal judgment. In my opinion it is a fair characterisation of these written submissions to say that the two principal matters they contested were the making of orders of the kind proposed by the ACCC in paragraph 9 of its proposed orders, and the continuation of the freezing orders. There were subsidiary issues such as the breadth of the injunctions sought but these were much less prominent submissions. This position continued during oral argument at the trial, as presented by counsel briefed by Franzese & Associates. There is, in my opinion, no material difference for the purposes of the disposition of this application between the ACCC’s then proposed paragraph 9, and what became paragraph 10 of the orders proposed by the Court to the parties on 9 February 2016.

54    Indeed, the submission made on behalf of the respondents at trial was that the Court had no power to make the orders sought by the ACCC in paragraph 9 of its proposed orders. As I have noted, paragraph 9 would have required Mr Laski as a respondent to do something, but it was not something that would affect his personal financial assets, nor could it affect Clinica’s assets. The strength and nature of the challenge mounted on behalf of Mr Laski to the orders in paragraph 9 reveals, in my opinion, the facts as the Court found them to be: namely, that it is Mr Laski who was personally interested in the funds held by any and all of the companies through which he operated his affairs, and he treated all those companies as holding assets and funds for his use. That is why he was so concerned to have his counsel focus on the orders which may affect the only substantial pool of funds to which he would otherwise have access. That is why, in my opinion, it was clear that Swishette and Letore were ‘represented’ at the trial, through the submissions Mr Laski instructed counsel to put to the Court. It is also clear, and I find, that insofar as Mr Laski as the director of Swishette and Letore was capable of applying an independent mind to their interests, he was, as their controlling mind, also content with the way submissions were put to protect their interests at trial. In that sense Swishette and Letore acquiesced in the submissions made to support their interests (without descending into a definition of those interests, but see the principal judgment at [296]), and were afforded such procedural fairness as was required. The companies ought not to be permitted, in the circumstances, to seek to re-agitate different arguments to those put at trial, which I find were put on their behalf as well as on behalf of Mr Laski (Clinica having no interests affected by orders such as those in paragraph 9).

55    Insofar as this application is made by Letore, it is said to hinge on a distribution to three beneficiaries of the trust by a resolution recorded as made on 11 June 2015. The three identified beneficiaries are Tania Laski (as to 15 %), Tanya Hatch (as to 15%) and Letore (as to 70%). It is the interest of these three beneficiaries which is relied on in the following way by Swishette and Letore in their written submissions:

For example, Swishette has made distributions to Tanya Laski and Tanya Hatch.3 The beneficiaries are presently entitled to the distributions and will need to pay tax on those receipts.

56    The footnote to these submissions refers to an exhibit to an affidavit by Mr Franzese filed in support of the application. That document is a resolution of the minutes of a directors’ meeting held by Swishette on 11 June 2015. The sole person present, and making the resolution, is Mr Laski, since he is the sole director of Swishette. The resolution relates to a distribution to Ms Laski, Ms Hatch and Letore of “the net income of the trust for the accounting period 1st July 2014 to 30th June 2015”.

57    In the principal judgment, I record at [85] that the settlement date for the Brighton property was 8 September 2015. This was the evidence given by Mr Franzese at paragraph 3 of his affidavit of 19 August 2015. That paragraph states:

Pursuant to the terms of the contract of real estate, settlement is due on 8 September 2015. The Purchaser had requested that settlement be effected prior to 11 August 2015, however settlement is now agreed by the parties to be 8 September 2015.

58    The affidavit also states at paragraph 2 that the contract was dated 4 May 2015.

59    Thus, on any view the settlement funds were not paid until 8 September 2015. There is no evidence whether a deposit was paid, and if so when and in what amount. On the evidence before the Court whether the ‘net income of Swishette for the period 1 July 2014 to 30 June 2015’ included the Brighton funds may well depend, as senior counsel submitted, on the accounting method employed by Swishette’s accountants. There is no evidence as to that matter. To the extent that the hearsay evidence of Mr Franzese in his affidavit sworn 11 March 2016 suggests (at paragraph 9) to the contrary, I do not accept that evidence. Insofar as Mr Franzese’s evidence deals with what are described as “rental receipts of $62,000” there is no evidence that sum of money, or any other sum of money referable to rental receipts exists in any bank account held by or on behalf of Swishette. Therefore there is no evidence that such a sum is affected by the freezing orders insofar as they apply to Swishette.

60    Both parties relied on the decision of Edelman J in Parker v BHP Billiton Iron Ore Pty Ltd [2015] WASC 95. The point his Honour there makes about joinder (at [81]-[83]) by reference to three earlier authorities is relevant to answer the submissions of Swishette and Letore concerning their lack of status as parties at trial. In those paragraphs, Edelman J states:

Strictly, the Manager and Joint Venturers have not yet denied that BNTAC has rights under s 11(2). But, in any event, neither of the two submissions relied upon by Mr Parker is a sufficient basis to resist joinder. The primary consideration for whether a non-party to the PDA Agreement should be joined, as the non-party was in Pegang Mining Co Ltd and News Ltd, is one of natural justice. It is not whether another party will be adversely affected. Indeed, orders can be made joining a party to proceedings even where that person is indifferent to the outcome.

In Pegang Mining Co Ltd [v Choong Sam [1969] 2 MLJ 52 at 54], Lord Diplock said of the rule concerning joinder of an additional party:

[O]ne of the principal objects of the rule is to enable the Court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given the opportunity to be heard.

As McHugh J said in The State of Victoria v Sutton [[1998] HCA 56; 195 CLR 291 at [77]]:

[t]he rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order.

[Footnotes omitted.]

61    F trials, Edle83]]hs, Edleman J stats:ties to date.Parker [2015] WASC 95. In myopinionf Letore, Swishette and Equitale, and ot or the reasons I have outlined above, I consider that the companies were first, “given an opportunity to contest” the making of proposed paragraph 9 of the ACCC’s form of orders, and took that opportunity, through Mr Laski’s and Mr Franzese’s evidence and through the submissions made by counsel at trial, which were made for the purpose of protecting the proprietary interests of Swishette , and the beneficiaries, in the Brighton funds. Second, I consider there was, to use the words of Lord Diplock in Pegang, no “injustice done” to either Swishette or Letore because, by the then decision making of Mr Laski ( as opposed to the course he might now wish to take, being advised by different legal practitioners) the companies were content to stand by and have evidence and submissions adduced through the respondents in order to seek to protect the companies’ asserted proprietary interests.

Whether the process in s 78B must be followed before final orders are made

62    By s 78B of the Judiciary Act, the Court is precluded from proceeding in a cause that involves a matter arising under the Constitution, or involving its interpretation, unless the Court is satisfied that notice of the cause has been given to the Attorneys-General of the Commonwealth and of the States so that they may decide whether to intervene.

63    The ACCC submits the Court should not consider, at all, the merits of the constitutional contentions which Swishette and Letore seek to raise concerning the proper construction of s 239 and its limits in not authorising orders of the kind proposed by paragraph 10. I do not accept that course is appropriate: a constitutional argument (based on s 51(xxxi) of the Constitution) concerning the kind of orders authorised by s 239 of the ACL having been drawn to the Court’s attention, the Court must give some consideration to that argument, and to the course the Court should follow, taking into account the terms of s 78B.

64    In Australian Competition & Consumer Commission v C G Berbatis Holdings Pty Ltd [1999] FCA 1151, French J (as his Honour then was) held at [14]:

Section 78B does not impose on the Court a duty not to proceed pending the issue of a notice no matter how trivial, unarguable or concluded the constitutional point may be. If the asserted constitutional point is frivolous or vexatious or raised as an abuse of process, it will not attach to the matter in which it is raised the character of a matter arising under the Constitution or involving its interpretation - Nikolic v MGIC Limited [1999] FCA 849 cf Australian Securities and Investments Commission v White (unrep, Fed Court, 16/7/98, Drummond J).

65    That statement was approved and applied by the Full Court in Waters v Commonwealth [2015] FCAFC 46; 108 ACSR 445 at [25] [25] per Flick J (North and Katzmann JJ agreeing), as it has been in a number of other cases: KS v Veitch [2012] NSWCCA 186; 300 ALR 181; Vella v Waybecca Pty Ltd (No 2) [2015] VSC 678 at [45]-[57]; Sleep v Repatriation Commission [2011] FCA 1153; Dye v Commonwealth Securities Ltd (No 2) [2010] FCA 817; Gakhar v Sheppard [2001] FCA 1501; and see, to similar effect, Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 3) (2010) 184 FCR 516; Re Finlayson (1997) 72 ALJR 73. While those cases focus principally on whether the constitutional points raised in them were without merit, in its terms French J’s statement of principle extends to other species of abuse of process as well.

66    I accept it would not be correct to describe the constitutional argument raised by Swishette and Letore as “frivolous” or “unarguable”, based as it is on the proposition that the construction of s 239 of the ACL is affected by the terms of s 51 (xxxi) so as to make orders such as those in proposed paragraph 10 outside the power of the Court. Senior counsel submitted the argument was “novel”, and indeed it is. In a related but different context, a similar argument was made in Attorney-General (NT) v Emmerson [2014] HCA 13; 253 CLR 393. The argument was unsuccessful but the Court did not consider it frivolous or vexatious, and, as I have noted, the context was different, relating to mandatory forfeiture orders consequent upon an application by the DPP.

67    However, I am satisfied for the reasons I have given above that the stage of the proceeding at which the argument is now raised, and the circumstances in which it has come to be raised (including all the matters to which I have referred earlier in these reasons) means the companies’ interlocutory application (aside from the late oral application for joinder) constitutes an abuse of the process of the Court. That is because Swishette and Letore, and their proprietary interests, have in substance been ‘represented’ in this proceeding all along, and the companies have acquiesced in the manner in which this proceeding has been conducted, to the point of allowing interlocutory orders to be sought, and arguments made in opposition to paragraph 9 of the ACCC’s proposed orders, which were only or principally for their respective benefits, as I have described above. Having conducted themselves in this way, and the trial having been conducted as it was, with Mr Laski giving instructions and making decision on behalf of himself and all his corporations about which evidence was given, while being on notice for a considerable period of time prior to trial about the nature of the orders sought by the ACCC, it would be an abuse of process to now allow the companies to re-open the trial, adduce further evidence and make new arguments so as to delay hinder and frustrate the making of final orders by the Court. Those orders include injunctions, penalties, and a disqualification order against Mr Laski, as well as redress orders, none of which were substantially challenged by the respondents.

68    In those circumstances, I do not consider the terms of s 78B preclude the Court from making final orders in this proceeding, in accordance with the reasons for judgment it has published.

Estoppel

69    I accept the principal submission made on behalf of Swishette and Letore that the ACCC’s argument about estoppel is premature, since no final orders had been pronounced when the companies’ interlocutory application was made. It is clear from the reasons of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602-4 that the principles which their Honours there articulated were to be applied in circumstances where orders had been made by a court in a previous proceeding, whether those principles related to res judicata, issue estoppel, or what, after the case, came to be known as Anshun estoppel. In my opinion it is clear that where their Honours use the term “judgment”, they refer to the orders the Court makes and not to the reasons it gives. For example, at 604: “It is for this reason that we regard the judgment that the Authority seeks to obtain as one which would conflict with the existing judgment, though the new judgment would be based on a different cause of action, a contractual indemnity”. In my opinion, Brennan J used the term “judgment” in the same way: see for example at 612.

70    Of course, in usual circumstances, the orders of a Court are pronounced at the time reasons for judgment are delivered, and it may be the case that the Court’s “judgment” is seen as comprising both the reasons and the orders made. However, without the orders there is no exercise of judicial power to quell the controversy between the parties, and it is that exercise of power upon which the principles of res judicata, issue estoppel and Anshun estoppel operate.

71    However, there was an additional way in which counsel for the ACCC put this argument. That was to characterise the conduct of Swishette and Letore as not giving rise to an estoppel, but rather to an abuse of process. In Re HIH Insurance Limited (in liquidation) [2014] NSWSC 774 at [37]-[38], having rejected the existence of privity in the usual sense between the entities concerned, Brereton J stated:

However, there are cases in which, despite the absence of privity in the strict sense, a person has been held precluded – whether by estoppel or abuse of process – from litigating a claim which could and should have been litigated in earlier proceedings, albeit that the person in question was not a party to those proceedings.

In Wytcherley v Andrews (1871) LR 2 P & D 327, Lord Penzance referred (at 328) to the practice of the Probate court, “founded on justice and common sense”, that if a person with an interest in a suit, knowing of the proceedings, was content to stand by and see his battle fought by somebody else in the same interest, he should be bound by the result, and not be allowed to re-open the case:

There is a practice in this court, by which any person having an interest may make himself a party to the suit by intervening; and it was because of the existence of that practice that the judges of the Prerogative Court held, that if a person, knowing what was passing, was content to stand by and see his battle fought by somebody else in the same interest, he should be bound by the result, and not be allowed to re-open the case. That principle is founded on justice and common sense, and is acted upon in courts of equity, where, if the persons interested are too numerous to be all made parties to the suit, one or two of the class are allowed to represent them; and if it appears to the court that everything has been done bona fide in the interests of the parties seeking to disturb the arrangement, it will not allow the matter to be re-opened.

[Emphasis added.]

72    It seems to me that the extract from Wytcherley v Andrews (1871) LR 2 P & D 327 may be another way of describing the circumstances at trial to which I have referred at [41(3)] and [67] above.

Summary on the characterisation of the application as an abuse of process

73    In various parts of these reasons I have characterised the companies’ application as an abuse of process, save for the late oral application for joinder. I have done so because of the manner in which the trial, and preparation for trial, proceeded, and the approach taken by the respondents (and the companies) to the freezing orders and to paragraph 9 of the ACCC’s proposed orders. I also take into account that this application was not made until after the time for submissions on the Court’s proposed orders had expired. The arguments, especially the constitutional argument, were not raised by the respondents, although they could have been since the main argument put by them (and, I have found, on behalf of Swishette and Letore) at trial was also a power argument about s 239. Of course, if they had raised the constitutional argument for the first time in submissions in response to an order after judgment had been delivered, they would be going outside the leave granted (which concerned only submissions about the orders reflecting my reasons for judgment) and they would have been met with any number of persuasive arguments about why they should not be permitted to raise new matters at such a stage. Instead of taking that obviously hopeless course, the companies have made application in their own names. The respondents have still made no submissions about the Court’s proposed orders, or about the companies’ application. It is that kind of artificiality in the conduct of Mr Laski, and the entities he controls, which has been evident throughout this matter.

74    Through the conduct which occurred after the first day of trial (to which I have referred at [31] above), Mr Laski has shown himself well capable of doing whatever he considers might be required to alter the effects of Court processes on his personal and corporate interests, and his access to funds. I am satisfied that any further delay in the making of final orders may afford him further opportunities to engage in such conduct. The Court having determined almost six weeks ago the controversy between the parties, orders should be made forthwith in accordance with those reasons, and no such further opportunities allowed. In particular, Mr Laski’s disqualification and the injunction against him, both of which are protective in nature, should take effect in accordance with my reasons for judgment.

75    Further, and as I have also noted at various points in these reasons, it soon became apparent from submissions made by senior counsel that, in reality, if leave were granted to the companies to re-open the trial, there were no obvious restrictions or confinements on the arguments that would be raised. Although senior counsel sought, from time to time, to describe the application as confined, in answering questions from the Court, it became clear that the companies did seek to quarrel with some of the Court’s fact finding (without precise identification of which parts); they were likely to seek to adduce further evidence (again without precise identification); they did seek to put whatever new arguments about the Court’s powers, discretions and fact finding would serve their ultimate aim of placing the Brighton funds out of reach of the Court’s orders. A very clear example was the unilateral expansion, in reply, of the consequence of the companies’ constitutional argument. Despite an agreed position having been put in correspondence to the Court by the companies, the respondents and the ACCC about the way the Court should deal with the companies’ interlocutory application, in reply senior counsel sought to put a new, and more absolute position about the Court’s obligations under s 78B, and sought to characterise (wrongly in my opinion) the ACCC’s position as having conceded that s 78B notices should be issued. This is but one example of why I have no confidence that, were the application to be granted, there would be anything short of a full re-trial, on the terms the companies and Mr Laski decided best suited their interests (having the benefit of seeing how the Court reasoned on the evidence as it previously existed).

76    It is antithetical to the administration of justice, in a long running matter such as this, where serious contraventions of the ACL have been admitted and found proven by the Court, largely on the basis of agreed or uncontested facts and on the basis of particular arguments put forward as a matter of forensic choice, to allow a re-opening of the controversy by third parties. It is also antithetical to the objects and purposes of case management as set out in s 37M of the Federal Court of Australia Act 1976 (Cth). For the companies to have held back until this point is, in my opinion, an abuse of process.

The power in s 239 of the ACL

77    The matter or controversy between the parties in this proceeding is the admitted contraventions by each of Clinica and Mr Laski of a series of provisions of the ACL and what relief should be granted by the Court by reason of those admissions, and the remainder of the evidence adduced at trial. Part (but only part) of that matter includes what is the appropriate relief to be granted in exercise of the Court’s powers in s 239 of the ACL. That provision is, as I have said in the principal judgment at [293], a remedial power. By paragraph 10 of the orders proposed by the Court (and paragraph 9 of the orders originally proposed by the ACCC), an order would be made against Mr Laski, on the basis of findings by the Court as to his control and use of funds located in accounts held by companies which he controls, including the Brighton funds. Those findings are at [189]-[210], [274], [290] and [294]-[297] of the principal judgment.

78    I note also that in the principal judgment at [199] I made other findings abut the way Mr Laski used the equity in the Brighton property to his personal advantage, despite it being owed by Swishette as trustee. I note further that in the principal judgment at [209] I made findings about the way in which funds from the contravening conduct of Clinica found its way into the bank accounts of Swishette and Letore. These findings were based on uncontradicted and unchallenged evidence adduced by the ACCC. At [210] in the principal judgment I made findings about the way Mr Laski used a credit card in Letore’s name to make payment, amongst other things, to the Melbourne Magistrates’ Court to enable Clinica to issue proceedings against Mr Uppal, one of the Clinica clients I found was misled and deceived by the conduct of Clinica and Mr Laski.

79    The orders as proposed in paragraph 10 require Mr Laski to engage in conduct (the giving of a written direction) which will ensure that funds the Court has found are under his control, and to which he has had access in the past in various ways without regard to the legal structures in place, will be made available to remedy the very significant damage his actions, on his own part and through his directorship of Clinica and as mastermind of the Clinica scheme, have caused to innocent third parties. At [291]-[298] of the principal judgment I explained why I was persuaded the Court had power to make an order in the nature of paragraph 10, and those are the opinions to which the Court’s orders should give effect. If they are wrong, they can be corrected on appeal. Given the joinder order I have made, that will be an opportunity available to Swishette, and as trustee, it will be a in a position to advance submissions designed to protect the interests of the beneficiaries to whom it owes its obligations, putting to one side whether to date it has observed those obligations.

Joinder

80    As I have noted, towards the conclusion of his principal submissions and in answer to questions from the Court as to why no such application was being made, senior counsel for the companies made an oral application for joinder on behalf of each of them. That application was opposed by the ACCC, but only on the same basis as it opposed the companies’ interlocutory application and not for additional reasons.

81    Whatever might have been the position in earlier or other authorities to which the ACCC took the Court, in my opinion the High Court has made the law on joinder clear in John Alexander [2010] HCA 19; 241 CLR 1, in circumstances which have parallels with the present proceeding. That case also concerned an assertion by a non-party that its proprietary interests were affected by orders made by a court. In that case, the non-party (Walker Corporation) had not sought to be joined at trial, and no party sought its joinder. Orders were made at trial declaring the existence of a constructive trust and providing for a transfer of the land in issue in the proceeding to the appellant so as to make the interests transferred indefeasible on registration, which would have the effect of rendering Walker Corporation’s unregistered mortgage unenforceable. This consequence led the plurality to find, unambiguously, at [131] and [137]:

Walker Corporation submitted that where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined. That submission is correct. The Court of Appeal’s orders directly affected Walker Corporation. The majority of the Court of Appeal (Macfarlan JA, Giles JA concurring) erred when it held to the contrary.

…

Walker Corporation submitted that if a court makes an order affecting a person who should have been joined as a necessary party, while the order will not be a nullity, that person is entitled to have the order set aside, and is not limited merely to seeking the favourable exercise of a discretion, whether or not the person in question becomes a party. As a general proposition this submission is correct. The setting aside of the order “lays the ghost of the simulacrum of a trial, and leaves the field open for a real trial”.

[Footnotes omitted.]

82    Applying those principles to the present circumstances, it is apparent that whatever the nature of Swishette’s interest in the Brighton funds, it is a proprietary one. Either it holds the Brighton funds as trustee for future distribution to beneficiaries under the terms of the discretionary trust; or, as the companies contended, a distribution of the Brighton funds has been made to three identified beneficiaries (Letore, Ms Hatch and Ms Laski) and those beneficiaries have “a vested and indefeasible interest” in those funds, enforceable against Swishette.

83    On the basis of the approach set out in John Alexander, Swishette’s proprietary interests are affected by the orders the Court proposes to make and it should be joined as party. For the reasons I have set out elsewhere, in my opinion that joinder does not and should not occasion a re-opening of the substantive arguments about whether the making of orders of the kind proposed in paragraphs 10-12 of the proposed orders are lawful and appropriate. Swishette has, in reality and in substance, had an opportunity to make arguments, alternatively stood by while arguments of certain kinds (and not others) were made for the sole purpose of protecting its proprietary interests and thus acquiesced in the arguments made on its behalf. That it has, after delivery of reasons for judgment, sought new legal advice and been advised of other arguments that might be made is not sufficient to warrant a complete re-opening of the contested matters in this proceeding, at this stage.

84    The situation is different in respect of Letore. First, Letore has no greater or different right to be joined than Ms Hatch and Ms Laski. All three beneficiaries must, logically, be in the same position. At [297] in the principal judgment I made findings to the effect that those beneficiaries had nothing more than a mere expectancy. Senior counsel submitted that finding may be in error because the Court was not informed of the true position on the evidence, or (perhaps) the evidence was insufficient. Certainly a key piece of evidence which was not presented at trial and which the companies now seek to rely upon is a resolution of Swishette made on 30 June 2015 and signed by Mr Laski as chairperson. There was a sense in the ACCC’s submissions that the provenance of this document might be called into question in any re-opening, and given the course the trial took it is not difficult to see why that might be a matter which the ACCC would wish to consider. However, the Court has made the findings it has on the evidence which was before it. The adducing on this application of the resolution does not satisfy me on the balance of probabilities that the three identified beneficiaries have what was described in the companies’ submission as a “vested and indefeasible interest”. The question, for example, of what the phrase “net income of the trust” means in this resolution and in the trust deed, and whether the Brighton funds were accounted for in the 2014/2015 financial year so as to create such an interest in the three beneficiaries, is not a matter on which I am persuaded sufficiently to determine that Letore, and Ms Laski and Ms Hatch, meet the threshold set in John Alexander for joinder as necessary parties.

Conclusion

85    Finally, the course I have taken seems to me to pursue the overarching objective in s 37M of the Federal Court Act. Further steps in this proceeding which in substance seek entirely to reopen matters that were explored at trial should not be permitted to delay the finalisation of this proceeding. That would not be conducive to the overarching objective in the circumstances of this case as I have outlined them above.

86    The principal judgment in this matter was given in early February 2016. Clients of Clinica whom I have found to have been misled and deceived have not been able to access refunds for more than two years already. Some of them are still subject to proceedings in other courts brought, without foundation, by Clinica against them. I published my reasons for judgment resolving the matters between the parties on the evidence before the Court over six weeks ago. Final orders should now be made. The respondents, and Swishette, can take up any or all matters arising from my reasons for judgment and the orders made on appeal if they so desire.

87    In my opinion, the orders I propose to make are appropriate and are in the interests of justice, when all the circumstances that have arisen in this proceeding are taken into account.

88    On the question of costs, Swishette and Letore have been largely unsuccessful in their application. So has the ACCC in its application in respect of the freezing orders, although that is because of the conclusion I have reached on the companies’ application. However, Swishette was correct to draw the Court’s attention to the High Court’s decision in John Alexander and I have decided it is applicable. This is a matter which I consider the ACCC should have brought to the Court’s attention, even if it maintained the position it did in submissions about the effect of the decision. The Court should have been alerted to this issue. Accordingly I consider it appropriate to order that the ACCC pay the costs of the interlocutory application by Swishette and Letore. On Mr Franzese’s evidence, the cost for senior counsel, junior counsel, and instructors for a full hearing of Swishette’s and Letore’s application would be $51,400. Accordingly, the costs incurred on the matter to date should be considerably less than that.

Associate:

Dated:    23 March 2016