FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd [2016] FCA 976

ORDERS

THE COURT ORDERS THAT:

INTRODUCTION    

1.    Subject to the next paragraph, this order has effect until 10 September 2016 at 4.00pm, save that if the applicant has commenced a substantive proceeding against the prospective respondents prior to that date, this order has effect up to the determination of the substantive proceeding.

2.    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.

3.    In this order:

(a)    ‘applicant’, means the Australian Competition and Consumer Commission;

(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)    ‘First Prospective Respondent’ means Get Qualified Australia Pty Ltd;

(e)    ‘Second Prospective Respondent’ means Mr Adam Mazen Wadi; and

(f)    ‘Third Prospective Respondent’ means Ms Lama Al-Natour.

4.    

(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

5.    You must not remove from Australia or in any way dispose of, encumber, or otherwise deal with or diminish the value of any of your assets whether held in Australia or overseas.

6.    For the purposes of this order:

(a)    your assets include:

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

(ii)    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), including the assets of any companies which are wholly owned by you;

(iii)    any funds collected by any person (including any agent) on your behalf; and

(iv)    the following assets in particular:

(A)    the property described as Lot 139 on Survey Plan 224168 with title reference 50832306;

(B)    any money in account 062-000 1503-9609 in the name of Get Qualified Australia at the Commonwealth Bank of Australia.

(b)    the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION

7.    Subject to paragraph 8, you must:

(a)    at or before 4.15pm on Friday 19 August 2016 (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of:

(i)    In the case of each of the Prospective Respondents, all your assets worldwide, 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;

(ii)    In the case of the First Prospective Respondent, all payments you have made in the period 1 January 2014 to 5 August 2016, the amount of the payment and the reason for the payment to:

a.    the Second Prospective Respondent;

b.    the Third Prospective Respondent;

c.    Get Qualified Australia –Adelaide Pty Ltd (ACN 162 736 352);

d.    Get Qualified Australia – Canberra Pty Ltd (ACN 162 736 914);

e.    Get Qualified Australia – Brisbane Pty Ltd (ACN 600 535 868)

f.    Get Qualified Australia – Perth Pty Ltd (ACN 162 735 926)

g.    Get Qualified Australia – Melbourne Pty Ltd (ACN 601 990 185);

h.    Aurion FZE; and

i.    International Consultancy FZC.

(iii)    In the case of the Second Prospective Respondent, all payments you have made in the period 1 January 2014 to 5 August 2016, the amount of the payment and the reason for the payment to:

a.    the First Prospective Respondent;

b.    the Third Prospective Respondent;

c.    Get Qualified Australia – Adelaide Pty Ltd (ACN 162 736 352);

d.    Get Qualified Australia - Canberra Pty Ltd (ACN 162 736 914);

e.    Get Qualified Australia – Brisbane Pty Ltd (ACN 600 535 868)

f.    Get Qualified Australia – Perth Pty Ltd (ACN 162 735 926)

g.    Get Qualified Australia – Melbourne Pty Ltd (ACN 601 990 185)

h.    GQ Holdings Ltd;

i.    Aurion FZE; and

j.    International Consultancy FZE.

(iv)    In the case of the Third Prospective Respondent, all payments you have made in the period 1 January 2014 to 5 August 2016, the amount of the payment and the reason for the payment to:

a.    the First Prospective Respondent;

b.    the Second Prospective Respondent; and

c.    Get Qualified Australia - Canberra Pty Ltd (ACN 162 736 914).

(v)    In the case of each of the Second and Third Prospective Respondents, all funds received by you from the First Prospective Respondent in the period 1 January 2014 to 5 August 2016, the amount of the payment and the reason for the payment;

(vi)    In the case of the Second Prospective Respondent, all funds received by you from “International Consultancy FZC” in the period 1 January 2014 to 5 August 2016, the amount of the payment and the reason for the payment.

(b)    within fourteen (14) working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

8.    

(a)    This paragraph 8 applies to the Second and Third Prospective Respondents, because you are not a corporation, if you wish to object to complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that you:

(i)    have committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    are liable to a civil penalty.

(b)    This paragraph 8 also applies to the First Prospective Respondent, which is a corporation, if all of the persons who are able to comply with paragraph 7 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:

(i)    have committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    are liable to a civil penalty.

(c)    You must:

(i)    disclose so much of the information required to be disclosed to which no objection is taken; and

(ii)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER

9.    This order does not prohibit:

(a)    each of the Second and Third Prospective Respondents from paying up to $10,000 per month on ordinary living expenses;

(b)    the Second Prospective Respondent transferring to the bank accounts of the Third Prospective Respondent payments of up to $2,000 a week for ordinary living expenses;

(c)    the First Prospective Respondent making payments in the ordinary and proper course of its business provided that those payments do not exceed:

(i)    $350,000 on suppliers per fortnight; and

(ii)    $220,000 on payroll and labour hire expenses per fortnight;

(d)    the First Prospective Respondent making any payment due to the Australian Taxation Office;

(e)    expenditure by the Second Prospective Respondent on airfares for his forthcoming pilgrimage to Mecca not exceeding $30,000;

(f)    the Second Prospective Respondent from paying up to $10,000 per month in total to his mother, Zahia Karamouh, his sisters, Nancy Wadi and Suzy Wadi; and

(g)    each of you from paying reasonable legal expenses relating to this application.

10.    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.

COSTS

11.    The costs of this application are reserved.

THIRD PARTIES

12.    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.

13.    Bank withdrawals by you

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. For the avoidance of doubt, payments to Aurion FZE, GQ Holdings Ltd, International Consultancy FZC and International Consultancy FZE are not permitted by this order.

14.    Persons outside Australia

(a)    Except as provided in subparagraph 14(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:

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

(ii)    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

(iii)    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.

15.    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.

16.    Substituted service

The Applicant has leave pursuant to rule 10.24 of the Federal Court Rules 2011 (Cth) to serve this order and all documents in this proceeding on the Third Prospective Respondent by delivering them to her husband, the Second Prospective Respondent, and by sending them to the Facebook page located at the URL: http://www.facebook.com/lama.natour.9.

17.    Liberty to apply

You have liberty to apply on 24 hours’ notice.

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

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

(1)    As soon as practicable, the applicant will issue any notices under s 155 of the Competition and Consumer Act 2010 (Cth) to the First, Second and Third Prospective Respondents.

(2)    On or before 9 September 2016, the applicant will issue substantive proceedings against the First, Second and Third Prospective Respondents.

(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 Prospective Respondents which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the Prospective Respondents’ assets.

(5)    If this order ceases to have effect the applicant will promptly take all reasonable steps to inform in writing anyone who has been notified of this order, or who 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 or the substantive proceeding which the applicant has foreshadowed it will commence against the Prospective Respondents.

(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 Prospective Respondents or the Prospective Respondents’ assets.

SCHEDULE B

AFFIDAVITS RELIED ON

NAME AND ADDRESS OF APPLICANT'S LAWYERS

The applicant’s lawyers are:

Corrs Chambers Westgarth

Level 25, 567 Collins Street

Melbourne, VIC 3000

Attention: Daniel Marquet

Telephone: (03) 9672 3172

Email: daniel.marquet@corrs.com.au

Reference: 9121514

REASONS FOR JUDGMENT

BEACH J:

1    The Australian Competition and Consumer Commission (ACCC) has sought freezing orders against Get Qualified Australia Pty Ltd, Adam Mazen Wadi and Lama Al-Natour (the prospective respondents). On 5 August 2016, I made ex parte freezing orders against the prospective respondents until 10 August 2016. On 10 August 2016, I renewed such orders with their duration expiring today. This morning I renewed such orders until the determination of the substantive proceeding if issued by the ACCC prior to 10 September 2016. I did so over the opposition of the prospective respondents who raised various issues concerning power and discretion, including the question of the appropriateness of not procuring an undertaking as to damages from the ACCC. These are my reasons for making such orders.

2    These reasons address, inter alia, the issue of the Court’s powers under s 137F of the Competition and Consumer Act 2010 (Cth) (the Act) to grant a freezing order against a person who may be liable to pay a pecuniary penalty for contraventions of the Australian Consumer Law to preserve property to meet such a penalty, and the reasons why I did not order the ACCC to give the usual undertaking as to damages.

THE PROSPECTIVE RESPONDENTS

3    Since 24 June 2010, Get Qualified Australia Pty Ltd (GQA) has operated a business involved in assisting and advising customers to obtain nationally recognised qualifications from registered training organisations (RTOs). RTOs are regulated, inter alia, by the National Vocational Education and Training Regulator Act 2011 (Cth) and National Vocational Education and Training Regulator Regulations 2011 (Cth). GQA has operated several RTOs under its own auspices and has had relationships with a broader pool of RTOs.

4    Adam Mazen Wadi is the sole director and sole shareholder of GQA. Lama Al-Natour is Mr Wadi’s wife and formerly Director of Operations at GQA. Ms Al-Natour is the owner of one of the RTOs associated with GQA.

5    A central part of GQA’s business involves assisting customers to obtain nationally recognised qualifications by the process of “Recognition of Prior Learning” (RPL). Under this process, GQA and other service providers assist customers to gain formal certification of their skills on the basis of recognising both their prior formal and informal education and experience in the workplace or from other avenues. GQA assists candidates in advising and assisting them to compile evidence to provide to a qualified skills assessor. Relevant information is then submitted to the appropriate RTO and a formal qualification is sought. In essence, GQA acts as an intermediary between the RTOs and candidates seeking nationally recognised qualifications.

6    Since 1 March 2013, GQA has apparently assisted approximately 7,250 candidates to obtain a formal qualification provided by a RTO. Of those 7,250 candidates, 4056 have obtained qualifications.

EX PARTE APPLICATION FOR FREEZING ORDERS – 5 AUGUST 2016

7    Initially, the ACCC sought freezing orders against the prospective respondents on an ex parte basis. On 5 August 2016, I heard the ACCC’s application for such freezing orders and made the orders requested.

8    In support of its application, the ACCC relied on the affidavits of:

(a)    Elizabeth Louise Holzer affirmed on 3 August 2016;

(b)    Joshua Benjamin Levy sworn on 2 August 2016; and

(c)    Elizabeth Louise Holzer affirmed on 5 August 2016.

9    I was satisfied that I had the power to make freezing orders against the prospective respondents under s 23 of the Federal Court of Australia Act 1976 (Cth), r 7.01 and Division 7.4, Part 7, Chapter 2 of the Federal Court Rules 2011 (Cth) and under s 137F of the Act. I was also satisfied that the grant of the freezing orders was warranted in the circumstances for the following reasons.

10    First, I was satisfied that the ACCC had a good arguable case against the prospective respondents on relevant legal and factual matters (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380) concerning various contraventions of the Australian Consumer Law. The evidence supported the conclusion that there was a good arguable case that GQA had engaged in misleading or deceptive conduct and misrepresentation in contravention of ss 18 and 29 of the Australian Consumer Law, and that the individual prospective respondents had been knowingly involved.

11    There was evidence before me that:

(a)    GQA had made representations on its website, in emails and in phone calls that if customers were not successful in obtaining qualifications through the RPL, they would be entitled to a refund of 100% of the money the customers had paid to GQA. It appeared that GQA did not ever provide a refund of 100% of consumers’ money back, because it deducted a 25% administration processing fee in all cases.

(b)    GQA had made representations to consumers that they were eligible for and could obtain certain qualifications from RTOs affiliated with GQA using the RPL process, when GQA did not have a proper basis for assessing the consumers’ eligibility for these qualifications and no reasonable grounds for making such representations.

(c)    GQA purported to apply “eligibility criteria” for granting refunds which were not made clear to consumers before they signed up, and GQA rejected customers’ claims for refunds on the basis that they were ineligible using these criteria.

(d)    GQA had represented to consumers, who had not achieved a qualification using the RPL process because they were not eligible for such qualification, that they were not entitled to a refund in relation to the RPL accreditation services provided by GQA, in circumstances where GQA did not provide the services with acceptable care and skill and technical knowledge and the services did not give the desired result.

12    Accordingly such matters supported the proposition that there was a good arguable case that GQA had contravened ss 18 and 29 of the Australian Consumer Law and that it may become liable to pay money by way of penalty, compensation, refund or otherwise.

13    Moreover, there was also evidence that suggested that in addition to such conduct, GQA may have failed to explain relevant terms and conditions and risks to consumers, in circumstances where the relevant consumers were vulnerable because of their lack of, and desire to obtain, formal qualifications. GQA may also have used unfair tactics and imposed undue pressure on consumers. There was evidence before me that this conduct had taken place in relation to at least three consumers. But there was also a significant volume of other complaints. The ACCC is still investigating whether GQA has engaged in a system of conduct or pattern of behaviour amounting to unconscionable conduct. I should say that today, counsel for the prospective respondents challenged this evidence. They had some answers to the conduct asserted in respect of three consumers. I do not need to go into detail for present purposes. Their points did not deny that a good arguable case had been established. They also said that the number of complaints were limited. That is true, but I am entitled to draw the inference that the complaints are a manifestation of a broader systemic problem concerning GQA’s practices.

14    Accordingly there was a good arguable case that GQA had engaged in unconscionable conduct in contravention of s 21 of the Australian Consumer Law and that one or more terms of the agreements between GQA and consumers contained unfair contract terms within the meaning of ss 23 and 24 of the Australian Consumer Law.

15    Further, there was evidence before me that Mr Wadi and Ms Al-Natour were knowingly concerned in GQA’s conduct. Today, counsel for the prospective respondents contended that there was no good arguable case against Ms Al-Natour for accessorial liability. I disagree, although the case is weak. She had a prior managerial role during the period of the contravening conduct.

16    Generally, the ACCC proposes in the substantive proceeding yet to be issued to make allegations against the prospective respondents for engaging in misleading or deceptive conduct, misrepresentation, unconscionable conduct and having unfair contract terms in the agreements between GQA and its customers, in contravention of the Australian Consumer Law.

17    The relief proposed to be sought by the ACCC against the prospective respondents in the substantive proceeding includes orders directing them to refund moneys to customers of GQA (under s 239 of the Australian Consumer Law) and to pay pecuniary penalties and costs.

18    The quantum of the possible customer refunds is currently unknown. Considering the large numbers of consumer complaints which have been made including those which concern a refusal by GQA to provide refunds for fees paid up to $6,000, the quantum of refunds payable is likely to be significant if the ACCC succeeds in the substantive proceeding. Today, counsel for the prospective respondents sought to diminish the likely quantum by only considering actual complaints and then only the ones investigated by the ACCC. I consider this to be unrealistic. If the relevant pattern of behaviour is established, at least hundreds of consumers may be entitled to full or partial refunds. The quantum of refunds could potentially and realistically exceed $1 million or more which, in order of magnitude, would equal or exceed GQA’s total tangible assets.

19    As regards pecuniary penalties, under s 224 of the Australian Consumer Law the maximum civil pecuniary penalty for each relevant contravening act or omission is $1.1 million for a body corporate and $220,000 for a natural person. In this case, numerous contraventions were likely to be alleged of ss 21 and 29.

20    Second, I was satisfied that the ACCC had shown that unless the freezing orders were granted, there was a danger or real risk that assets would be dissipated so as to frustrate the Court’s processes, any judgment and the enforcement thereof. The ACCC presented evidence to me which demonstrated the following:

(a)    Business records of GQA had been destroyed by Mr Wadi or other management of GQA. A former GQA employee had said that if customers threatened to make a complaint to the Australian Skills and Quality Authority (ASQA), Mr Wadi and Alexandra Sella (GQA’s Head Assessor) would destroy evidence including by deleting files from GQA’s server. Such assertions have been challenged by the prospective respondents.

(b)    During February 2015 to 21 June 2016, GQA and Mr Wadi had made various transfers of large sums of money overseas to recipients in Jordan and the United Arab Emirates.

(c)    Mr Wadi and Ms Al-Natour were born overseas, and if they were to relocate overseas it would be difficult to enforce any judgment against them.

(d)    There was reason to believe that GQA’s business could be adversely affected by the actions of third parties in the near future. Such actions could affect GQA’s ability to offer services. There was a heightened risk that consumers who had contracted with GQA might not be able to receive services from them and that GQA could transfer money or other assets out of the company.

21    Accordingly, on the ex parte application there was evidence sufficient to satisfy me that, having regard to all the circumstances, there was a danger that a judgment or prospective judgment would be wholly or partly unsatisfied because inter alia the assets of GQA were removed from Australia or disposed of, dealt with or diminished in value.

22    Third, I was satisfied that the ACCC had shown that in all the circumstances it was in the interests of justice for the Court to make freezing orders (Deputy Commissioner of Taxation v Hua Wang Bank Berhad (2010) 273 ALR 194; [2010] FCA 1014 at [13] per Kenny J). I considered that there was a risk that assets would be dissipated which would render nugatory any monetary relief in favour of the ACCC or the enforcement thereof. I considered that the freezing orders that I made also took into account any potential hardship to the prospective respondents. For example, the freezing orders did not prohibit GQA from making payments in the ordinary and proper course of its business provided that those payments did not exceed $20,000 in total. I substantially modified that restriction on the return date.

23    I also considered the likely consequences if the assets were removed and the hardship that such orders might inflict on the prospective respondents. I was satisfied that the making of the orders would not unduly prejudice the rights and interests of any person (see s 137F(1)(c) of the Act). I also considered the rights of third parties who might be affected by the grant of the orders.

24    In this case, in the absence of the freezing orders, the assets could be lost irretrievably, rendering any monetary relief obtained by the ACCC or the enforcement thereof worthless, and rendering any relief which might otherwise be available to consumers nugatory. But the form of the freezing orders minimised the hardship on the prospective respondents, and ensured that third parties would not be adversely affected.

25    On the ex parte application, I did not require an undertaking as to damages to be given. The ACCC submitted that it should not be required to give the usual undertaking as to damages. The ACCC referred to the course taken by Middleton J in Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (Federal Court proceeding VID 252/2015) on 4 August 2015 and by Flick J in Australian Competition and Consumer Commission v Unique International College Pty Ltd (No 4) [2016] FCA 628. Given that the matter was being dealt with ex parte, I considered that I would adopt the course taken by Middleton and Flick JJ, and that if the prospective respondents wished to argue the point on the return date, they could do so. The absence of the undertaking was, however, taken into account on the balance of convenience. I ordered that the matter be made returnable before me on 10 August 2016 and made the freezing orders until that date.

THE FIRST RETURN DATE – 10 AUGUST 2016

26    On the return date, 10 August 2016, I ordered that the freezing orders be renewed, with a duration until 18 August 2016, on which day I would hear submissions from the parties on whether the freezing orders should be further renewed until the resolution of the substantive proceedings when issued; if they were not issued within the relevant time frame the freezing orders would lapse. I gave the ACCC until 9 September 2016 to issue substantive proceedings. I also modified the freezing orders so as to provide for more exceptions that allowed the prospective respondents to make payments in certain circumstances. The modified freezing orders did not prohibit:

(a)    each of Mr Wadi or Ms Al-Natour from making payments up to $2,000 a week on ordinary living expenses;

(b)    Mr Wadi transferring to the bank accounts of Ms Al-Natour payments of up to $2,000 a week for ordinary living expenses;

(c)    GQA making payments in the ordinary and proper course of its business provided that those payments did not exceed:

(i)    $352,500 on suppliers; and

(ii)    $220,000 on payroll and labour hire suppliers;

(d)    GQA making any payment due to the Australian Taxation Office;

(e)    expenditure by Mr Wadi on airfares for his forthcoming pilgrimage to Mecca not exceeding $12,000; and

(f)    each of the prospective respondents from paying reasonable legal expenses.

27    At the hearing on 10 August 2016, the prospective respondents relied upon an affidavit of Mr Wadi affirmed on 9 August 2016. As a consequence of the material in this affidavit, I determined on 10 August 2016:

(a)    to carve out from the 5 August 2016 orders payments required to be made by GQA on 10 August 2016 in respect of employee wages and entitlements ($130,000) and to third party service providers ($70,000); and

(b)    to allow the more general carve outs to the renewed freezing orders as I have detailed in the preceding paragraph.

28    Such carve outs ameliorated GQA’s concerns relating to immediate prejudice flowing from the 5 August 2016 ex parte orders.

29    At the hearing on 10 August 2016, counsel for the prospective respondents raised an issue of whether the Court had the power under s 137F of the Act to grant a freezing order for the purpose of preserving assets held by a person who was liable or may become liable under the Australian Consumer Law to pay a pecuniary penalty to meet such a penalty. Counsel for the prospective respondents also submitted that the ACCC should be required to give the usual undertaking as to damages and that I should not renew the freezing orders in the absence of such an undertaking.

30    I indicated that I would hear the parties further on these issues on the next return date, 18 August 2016.

31    The ACCC also sought an order for substituted service of the freezing orders and the relevant accompanying documents on Ms Al-Natour. The ACCC could not personally serve Ms Al-Natour as she was not present in Australia. I made such orders.

THE SECOND RETURN DATE – 18 AUGUST 2016

32    At the hearing today, further evidence has been relied upon by the parties. The ACCC has relied on a further affidavit of Ms Holzer affirmed on 15 August 2016. The prospective respondents have relied upon further affidavits of Mr Wadi affirmed on 16 and 17 August 2016. The prospective respondents have raised a number of matters in the course of argument today which it is appropriate to address, including:

(a)    The extent and scope of s 137F;

(b)    The significance of the absence of an undertaking as to damages;

(c)    The evidence concerning the risk of dissipation of assets;

(d)    Generally, the balance of convenience.

33    I should say, before discussing each of these matters in turn, that the prospective respondents have in some respects challenged that the ACCC has a good arguable case on one or more of the causes of action that I have summarised earlier. I accept that the Wadi affidavits do set out matters challenging the merits of the ACCC’s claims, but for present purposes I am satisfied that the ACCC has met the relevant threshold against each of the prospective respondents. The threshold is not high (see Curtis v NID Pty Ltd [2010] FCA 1072 at [6] per Edmonds J).

(a) Section 137F

34    Section 137F provides as follows:

Court may make orders for the purpose of preserving money or other property held by a person.

(1) A court may, on the application of the Commonwealth Minister or the Commission, make an order or orders mentioned in subsection (3) if:

(a) proceedings of a kind referred to in subsection (2) have been taken against a person, or proceedings of a kind referred to in paragraph (2)(d) may be taken against a person; and

(b) the court is satisfied that it is necessary or desirable to make the order or orders for the purpose of preserving money or other property held by, or on behalf of, the person if the person is liable, or may become liable, under the Australian Consumer Law:

(i) to pay money by way of a fine, damages, compensation, refund or otherwise; or

(ii) to transfer, sell or refund other property; and

(c) the court is satisfied that the making of such an order or orders will not unduly prejudice the rights and interests of any other person.

Kinds of proceedings taken against the person

(2) For the purposes of paragraph (1)(a), the kinds of proceedings taken against the person are:

(a) proceedings against the person for an offence against a provision of Chapter 4 of the Australian Consumer Law; or

(b) an application under section 232 of the Australian Consumer Law for an injunction against the person in relation to:

(i) a contravention of a provision of Chapter 2, 3 or 4 of the Australian Consumer Law; or

(ii) a term of a consumer contract in relation to which a declaration under section 250 of the Australian Consumer Law has been made; or

(c) an action under subsection 236(1) of the Australian Consumer Law against the person in relation to a contravention of a provision of Part 2-1 or Chapter 3 of the Australian Consumer Law; or

(d) an application for an order under subsection 237(1) or 239(1) of the Australian Consumer Law against a person in relation to:

(i) a contravention of a provision of Chapter 2, 3 or 4 of the Australian

(ii) a term of a consumer contract in relation to which a declaration under section 250 of the Australian Consumer Law has been made.

Kinds of orders that may be made

(3) The court may make the following orders under subsection (1) of this section in a relation to money or other property held by, or on behalf of, a person (the respondent):

(a) an order prohibiting, either absolutely or subject to conditions, a person who is indebted to the respondent, or to an associate of the respondent, from making a payment, in total or partial discharge of the debt:

(i) to the respondent; or

(ii) to another person at the direction or request of the respondent;

(b) an order prohibiting, either absolutely or subject to conditions, a person who is holding money or other property on behalf of the respondent, or on behalf of an associate of the respondent:

(i) from paying all or any of the money to the respondent, or to another person at the direction or request of the respondent; or

(ii) from transferring the other property to the respondent, or to another person at the direction or request of the respondent, or otherwise parting with possession of that property;

(c) an order prohibiting, either absolutely or subject to conditions, the taking or sending by any person of money of the respondent, or of an associate of the respondent, to a place outside the State or Territory in which the money is held;

(d) an order prohibiting, either absolutely or subject to conditions, the taking, sending or transfer by any person of other property of the respondent, or of an associate of the respondent, to a place outside the State or Territory in which that property is located;

(e) if the respondent is a natural person - an order appointing a receiver or trustee of the property, or of part of the property, of the respondent with such powers as are specified in the order.

Operation of order

(4) If the court makes such an order, the order operates:

(a) for the period specified in the order (which must not be longer than 30 days if the application for the order was an ex parte application); or

(b) if proceedings in relation to which the order is made are concluded before the end of that period--until the conclusion of those proceedings.

Other

(5) This section:

(a) has effect subject to the Bankruptcy Act 1966; and

(b) does not affect any other powers of the court.

35    Before proceeding further I should make the following preliminary observations:

(a)    First, whatever may be the construction and operation of s 137F, the freezing orders are separately justifiable as an exercise of power under r 7.01 and Division 7.4 of Part 7, Chapter 2 of the Federal Court Rules and s 23 of the Federal Court of Australia Act 1976 (Cth). Moreover, I have modified the time frame in r 7.01(3) and no issue has been taken to such a modification by the prospective respondents.

(b)    Second, the prospective respondents have asserted that s 137F in some respects impliedly excludes or ousts the powers and their exercise set out in the preceding subparagraph. It is said that if the ACCC seeks freezing orders in respect of contraventions of the Australian Consumer Law, s 137F is the only route that can be used. That contention is not reasonably arguable given the express stipulation preserving other powers as set out in s 137F(5)(b). In any event, even absent s 137F(5)(b), the subject matter of s 137F is to provide ancillary powers. Its subject matter does not suggest any statutory intention to effect such an implied exclusion or ouster.

36    An order under s 137F can be made ex parte (s 137F(4)(a)). Moreover, s 137F is silent about any undertaking as to damages. It does not contain any provision to the effect that the ACCC is not required to give such an undertaking; I will discuss the significance of this later.

37    Section 137F(1) may be triggered if:

(a)    the ACCC has taken proceedings of a kind referred to in subsection (2) (not yet the present case);

(b)    the ACCC may take proceedings of a kind referred to in paragraph (2)(d).

38    Relevantly, the question is whether the ACCC is proposing to take proceedings seeking orders under ss 237(1) or 239(1) of the Australian Consumer Law. That would appear to be the case and I am so satisfied. But if that be so, it seems to me that the exercise of power and the type of orders contemplated under s 137F(1)(b) could only relate to the protection or preservation of assets to enable orders under ss 237(1) or 239(1) to be subsequently enforced. In other words, any order under s 137F(1) that I might presently make could not be targetted in respect of protecting the position for the payment of a pecuniary penalty. That is an extraneous subject matter to s 137F(2)(d).

39    But although I do not need to presently decide the question, let it be assumed that the ACCC had taken proceedings seeking all the remedies in s 137F(2). The various subparagraphs of s 137F(2) do not, it seems to me, encompass proceedings for a pecuniary penalty under s 224 of the Australian Consumer Law for contraventions of a provision in Chapter 2; only the remedies under ss 232, 237(1) and 239(1) are mentioned concerning contraventions of a provision in Chapter 2 (see ss 137F(2)(b) and (d)). Moreover, s 137F(2)(a) is not relevant; it is dealing with offences. Moreover, they are offences under Chapter 4.

40    The ACCC has contended that a pecuniary penalty would fit within the phrase in s 137F(1)(b) as a “fine” (I do not think so), alternatively “or otherwise”. Perhaps it might fit within the latter phrase if decontextualised, but one must read s 137F(1)(b) in the context of s 137F(1)(a). Any order made under s 137F(1)(b) must be ancillary to and protective of the principal relief that might be granted in proceedings of the type identified in s 137F(1) and its enforcement. But that takes you back to s 137F(2) which is not addressing proceedings for a pecuniary penalty under s 224 with respect to contraventions of a provision in Chapter 2.

41    I am satisfied that s 137F cannot be used to freeze and preserve property to meet or enforce a pecuniary penalty order payable under s 224 in relation to a contravention of a provision in Chapter 2.

42    But that conclusion leaves open the possibility that r 7.32 could be used for that purpose. The text of r 7.32(1) does not exclude that possibility. Moreover, as I say, there is nothing in s 137F that indicates any express or implied override of, for example, r 7.32 so that it cannot be used for that purpose. Indeed s 137F(5)(b) indicates the opposite.

(b) Undertaking as to damages

43    I raised with counsel for the ACCC on the ex parte application whether the ACCC should give an undertaking as to damages, but was persuaded not to extract that price. It is appropriate to record my reasons for that position, which position I have maintained.

44    Now section 137F does not refer to such an undertaking not being required from the ACCC. Section 137F(4), which contemplates ex parte and inter partes orders, may be contrasted with provisions such as s 80(6) of the Act and s 234(2) of the Australian Consumer Law which stipulate that the Court must not require the ACCC to give such an undertaking as the price for the grant of the “interim” injunctions to which those provisions refer. Accordingly, in the present case the Court is not precluded from requiring such an undertaking as the price of any ex parte order or inter partes order under s 137F. It is also, of course, not precluded under r 7.32.

45    There is little, if any, authority on the present question. In Australian Competition and Consumer Commission v Unique International College Pty Ltd (No 4) [2016] FCA 628, Flick J relieved the ACCC and the Commonwealth of Australia from the requirement to give an undertaking as to damages in the context of an application for freezing orders under rules 7.32 and 7.35 of the Federal Court Rules. His Honour at [17] cited Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (in liq) (No 3) [2016] FCA 284. In the Clinica litigation, there were earlier decisions reflecting that no undertaking was required. Middleton J made the original ex parte freezing orders on 4 August 2015. The transcript discloses his Honour’s reasons on this point where he said:

There is just one other matter I observe, and that is the question of any undertaking that would normally be given by an applicant in these circumstances. It seems to me that the applicant in this case would not be required to give an undertaking on the basis of the provisions of the ACL. But in any event, this is a matter which involves a statutory authority enforcing legislation to protect the public, and in the exercise of my discretion I would not require an undertaking to be given, even if it wasn’t specifically excluded by the legislation that is being relied upon. So on the basis of those reasons I made the orders that were sought, as I indicated, and are on the file.

46    The matter was next dealt with by Mortimer J on 10 September 2015 where her Honour dealt with an application to vary the freezing orders. At that stage, the respondent in that proceeding did not press for the applicant to give an undertaking as to damages (see Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd [2015] FCA 1006 at [8]). The matter was not raised on a separate occasion the subject of her Honour’s reasons on 23 March 2016 (see Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (in liq) (No 3) [2016] FCA 284).

47    None of these decisions dealt directly with s 137F.

48    Quite appropriately the ACCC drew my attention to the decision of Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 where his Honour required the ACCC to give the usual undertaking as to damages as the price for the grant of a mareva injunction, holding inter alia that a mareva injunction was not an “interim injunction” within the meaning of s 80(6) (at 538).

49    In my view, I am not prevented from requiring an undertaking as to damages from the ACCC, but I will not require it in the exercise of my discretion. This case is not simply private litigation between private parties for their own private purposes.

50    First, the ACCC is a Commonwealth regulator performing and exercising statutory functions and powers in the public interest and for the benefit of the public.

51    Second, although there is no analogue provision in s 137F of the type set out in, for example, s 80(6) of the Act and s 234(2) of the Australian Consumer Law, the rationale underpinning the latter provisions is also present when considering s 137F. At the least, an analogous rationale justifies an exercise of discretion on my part not to insist on an undertaking as to damages.

52    Third, my approach is consistent with the approach of other judges of this Court, save for Lindgren J’s approach in Giraffe where he required an undertaking to be given.

53    I do not consider the approach in Giraffe to be persuasive. Moreover, it is not strictly binding on me in any event.

54    If I needed to say so, I do not consider that the language in s 80(2) of “interim injunction” precludes a mareva injunction. The language used is “interim injunction pending determination of an application under subsection (1)”. It does not say that the form of the interim injunction must be consonant with the final form of the injunction that could be made under subsection (1), save only of a more limited temporal duration. The constraint on the scope of the power in s 80(2) is that the power is to be read and exercisable by reference to the scope and purpose of the Act. It seems difficult to see why a mareva injunction would be outside such a scope and purpose pending the determination of any application under s 80(1). There are other monetary remedies that could be granted under the Act to which the mareva injunction is ancillary, providing that an application under s 80(1) is also made. There is nothing expressed in s 80(2) that states that the interim injunction can only attach to that part of the relief sought under s 80(1). I should note that there is no tension as between that analysis and my analysis of the interaction between s 137F(1) and s 137F(2); the latter regime more closely aligns the orders referred to in s 137F(1) with the s 137F(2) remedies. But in any event, given the breadth of s 80(1), there is nothing in its terms to suggest that it could not also deal with the holding and disposition of property. But I do not need to dwell further on such matters.

55    The other point with which I would respectfully disagree is Lindgren J’s statement at 539 where his Honour said:

In the present case, the Mareva injunctions are in aid of private rights. Indeed, the rights in question are those, not of the Crown, but of private individuals. The ACCC submits that by bringing the proceeding under Pt IVA, it is endeavouring to carry forward the policy of the TP Act. However, the only application which the ACCC could have a “duty” to make in order to ensure that the statute is enforced, is one for an injunction. Indeed, given the fact that any person has standing to seek injunctive relief, it is doubtful whether, consistent with the passage from the speech of Lord Diplock set out above, the ACCC has a “duty” even to apply for that form of relief. Although it would, in a general sense, fulfil the policy of the TP Act if Group Members obtained any compensation to which they may be held to be entitled in respect of any loss or damage caused to them by a contravention of the TP Act, this does not necessarily give rise to a duty incumbent on the ACCC to apply for such compensation on their behalf. There is nothing to suggest that the Group Members are incapable of bringing proceedings themselves, even though it would obviously be more convenient if their claims could be heard and determined together, and, better still, if they could be made and determined in the one proceeding.

56    At one level a Mareva injunction is in aid of a private right. Yet that is not the whole story. Under the Act, the ACCC is given the statutory function and powers to pursue remedies on behalf of private individuals. These are being exercised in the public interest and for a public purpose, albeit that they may also benefit private individuals. No binary choice or division is being made or is necessary as between public and private. The ACCC is exercising a public function. But that public function exists to ensure, inter alia, that victims of the contravening conduct are compensated and that there are available assets for that purpose. Moreover, it is artificial and unrealistic to assume that victims would or could bring their own individual claims. First, they may not have the wherewithal. Second, the cost/benefit analysis would be unlikely to justify separate claims. Third, victims may not have knowledge of the contravening conduct or the evidence sufficient to bring proceedings. Fourth, the prospect that there could be a group proceeding is no answer or panacea. Such proceedings cannot be readily assumed, particularly as they are usually initiated and driven not by victims per se but other actors for their own commercial interests, ie external litigation funders. There is another point I would make concerning Lindgren J’s analysis. His Honour may have taken too narrow a view of the doctrinal basis for the grant of freezing orders in any event (see PT Bayan Resources TBK v BCBC Singapore Pty Ltd (2015) 325 ALR 168; [2015] HCA 36 at [43], [46] and [47] per French CJ, Kiefel, Bell, Gageler and Gordon JJ and at [64] and [65] per Keane and Nettle JJ).

57    There are further points to be made that may not have been applicable to the context Lindgren J was discussing:

(a)    First, s 137F is clearly for a public purpose.

(b)    Second, the power exercisable thereunder may be used to preserve property so that it is available to meet other remedies that are clearly for a public purpose (see the types of proceedings referred to in s 137F(2), particularly s 137F(2)(d)).

58    The prospective respondents have made a number of other points which it is convenient to deal with at this point being:

(a)    First, reliance has sought to be placed upon some observations of Lord Diplock in F. Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 at 363. But the present case does not involve any attempt by the ACCC to enforce or protect its proprietary or contractual rights (jus privatum). Further, when his Lordship discusses the situation of suits brought to enforce jus publicum, nothing in his observations at 364 and 365 dictates that I am bound to extract an undertaking in the context before me. Indeed his reference to “in the light of the particular circumstances of the case” indicates flexibility. Further, I consider it to be a distraction to talk of whether there is a duty (as such) to initiate any law enforcement action. Where there is such a duty, the case for not extracting an undertaking may be even stronger. But where there is no duty as such, it does not follow that I should ordinarily require an undertaking from a public authority exercising a power in the public interest rather than for its own private interest. Finally, I consider proceedings by the ACCC seeking a remedy under inter alia s 239 of the Australian Consumer Law to be a “law enforcement action” within his Lordship’s phrase.

(b)    Second, the prospective respondents made a reference to Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 59 per Mason J where his Honour said:

The injunction will be granted on the usual undertaking as to damages. As the Crown in right of the Commonwealth is not immune from suit or from liability in damages (see ss. 56 and 64 of the Judiciary Act 1903, as amended; Maguire v. Simpson), there is no reason why a distinction should be drawn between the Commonwealth, at least when it seeks an interim injunction to protect a proprietary or private right, and a private citizen (see F. Hoffmann-La Roche Co. A.G. v. Secretary of State for Trade and Industry). The court should in each case require an undertaking as to damages as a condition of granting an interlocutory injunction. (footnotes omitted).

Neither this case nor this passage nor ss 56 and 64 of the Judiciary Act 1903 (Cth) assist the prospective respondents. We are not here dealing with a Commonwealth agency seeking to enforce its own proprietary or private rights. We are in the territory of jus publicum rather than jus privatum. The submission of the prospective respondents that “[t]he effect of s 64 of the Judiciary Act is that the freezing order cannot be made if the usual undertaking is not proffered” frankly pushes the envelope. I reject it. A similar argument was rightly rejected by Logan J in another context (Australian Communications and Media Authority v Mobilegate Ltd (2009) 256 ALR 85; [2009] FCA 539 at [18] to [22]).

(c)    Third, the prospective respondents have submitted that “[t]he express ouster of the requirement for the usual undertaking by s 80(6) of [the Act] and s 234(2) of the [Australian Consumer Law] evinces a legislative intention that the general law would be modified to the extent of these provisions and no further”. Perhaps that is right in form, but I am not sure where the argument goes, for the general law confers on me a discretion which, in the context of a public authority exercising a public power for a public purpose, well justifies that a proper exercise of discretion may involve not requiring the usual undertaking.

(d)    Fourth, I agree with the prospective respondents that the absence in s 137F of an equivalent provision such as s 80(6) should not be treated as an “oversight”. But to accept that submission does not take the prospective respondents forward. Section 137F leaves open my discretion as to whether to require that an undertaking be given.

59    In summary, I will not require an undertaking as to damages. But I do accept that the absence of such an undertaking is an important matter to be taken into account in the balance of convenience and the prejudice to the prospective respondents caused by the freezing orders that will not be ameliorated by any undertaking; see Trade Practices Commission v Santos Ltd (1992) 38 FCR 382 at 388 and 389 per Davies J (albeit in dissent on the question of whether leave to appeal should be granted). Whilst referring to Santos, I would also note in passing Davies J’s observations at 388 that “[w]hen the Crown or an emanation of the Crown acts in pursuance of its function to enforce the law, no such undertaking [as to damages] is ordinarily sought”. In that context, observations of the type set out in National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 at 277 must be read in their own context. They are not directly apposite to the case of a regulator exercising a power for a public purpose and bringing litigation in the public interest.

60    As to prejudice flowing from the orders, I have sought to minimise this by allowing for broad and large monetary exclusions from the freezing orders, so that the prospective respondents’ business and activities are not unduly restricted. If necessary I can make further modifications. I do of course accept that on any view, even with the carve outs, inconvenience and some prejudice will be caused to the prospective respondents as a consequence of these orders, including reputational issues vis-à-vis dealing with third parties. I have taken this into account.

(c) Evidence concerning the risk of dissipation

61    The question is whether there is a danger or real risk of dissipation of assets such that any judgment would in whole or in part go unsatisfied. But it is not necessary to show evidence of a respondent’s positive intention to frustrate a judgment (see Deputy Commissioner of Taxation v Hua Wang Bank Berhad at [10] per Kenny J). One can look at the objective threat or risk and its potential effect. But I accept that solid evidence of a danger or dissipation or disposal of assets ought to be produced.

62    In terms of the risk of dissipation, I would note the following:

(a)    First, it is not apparent what assets are held by GQA or Mr Wadi and Ms Al-Natour. The prospective respondents have not provided documentary evidence as to their financial position. Indeed Mr Wadi’s evidence is that if GQA were placed in liquidation, it would not be able to pay its existing trade creditors in full or at all after payment of liquidation fees. Mr Wadi has stated that the value of GQA as a going concern is approximately $50 million. This is a bare assertion. Its tangible assets are between $1 million to $2 million at most.

(b)    Second, Mr Wadi and Ms Al-Natour were born overseas (in Lebanon and Jordan respectively). Ms Al-Natour is not a citizen of Australia – she is a permanent resident. Ms Al-Natour is currently in Jordan, and Mr Wadi’s evidence is that she is not expected to return for some time. It is apparent from Mr Wadi’s evidence that Ms Al-Natour has family and significant assets (including a vehicle) in Jordan. Mr Wadi intends to travel overseas to Mecca for four weeks from 26 August 2016. If Mr Wadi and Ms Al-Natour relocate overseas it would be difficult to enforce any judgment against them.

(c)    Third, GQA and Mr Wadi have made numerous transfers of significant sums of money to recipients in Jordan and the United Arab Emirates between February 2015 and 21 June 2016. Indeed, Mr Wadi’s evidence is that he and GQA have made significant payments to overseas bank accounts since February 2015, to family members and to a company based in the United Arab Emirates which was established to supply consultancy and other services to GQA. Further, GQA is restructuring to move some of its “back office” operations to other countries and had transferred capital to Dubai for this purpose. Further, it is apparent from the recent and significant transfers to the Philippines that some parts of GQA’s operations may already have been moved off-shore.

(d)    Fourth, GQA’s business is likely to be adversely affected by ASQA’s Notice of Intention to make a decision to impose a sanction on each of Get Qualified Australia - Adelaide Pty Ltd, Get Qualified Australia - Canberra Pty Ltd and Get Qualified Australia - Brisbane Pty Ltd (the GQA RTOs) by cancelling the registration of each of the RTOs. Mr Wadi is the CEO and point of contact for each of these entities. I accept that the Notice is preliminary. But there is a real risk to say the least that ASQA will ultimately take serious action concerning these RTOs, which are very significant to GQA’s overall business model, albeit that their direct financial contribution is small. ASQA’s actions are likely to have a material effect on GQA’s ability to offer services. 2037 of the 7250 GQA customers have received qualifications since 1 March 2013 (28%) from a GQA RTO. Of GQA’s 2388 enrolled clients, 867 (36%) are recorded as having a GQA RTO listed as the “Target RTO”. Mr Wadi’s suggestion that “cessation of the operations of the GQA RTOs will have little financial impact on GQA’s business” is untenable.

(e)    Fifth and accordingly, there is a heightened risk that consumers who have contracted with GQA may not be able to receive services from them. Mr Wadi has given evidence that an inability to provide services to current clients may expose GQA to an action for breach of contract and a liability to refund consumers. Mr Wadi has observed that it is also likely that damage to reputation may adversely affect GQA’s business. But it is very likely that ASQA’s actions in deregistering RTOs associated with GQA will damage GQA’s reputation.

(f)    Sixth, Mr Wadi has given evidence of the following. GQA’s principal asset is goodwill, which is geographically confined. It does not own any substantial plant or equipment and leases its premises. GQA is wholly funded by its cash reserves, which are $1.1 million to $1.3 million cash (equivalent to only 4-5 weeks’ trading expenses, according to Mr Wadi). GQA’s total expenses are about $285,000 per week on the figures provided (although Mr Wadi has asserted $385,000 per week). Without a copy of GQA’s accounts, it is not apparent from the financial information produced whether GQA is solvent, or that GQA would be in a position to meet a significant judgment against it. Finally on this aspect, GQA produced a “Profit & Loss – Summary” and “Cash Flow Statement” for, inter alia, parts of 2016. Frankly I found it opaque and unsatisfactory in form. Moreover, it gave rise to more questions than it answered.

63    In summary, there is evidence sufficient to satisfy me that, having regard to all the circumstances, there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur: (a) Mr Wadi, a prospective judgment debtor, departs from Australia (on 26 August 2016 or at another time) and does not return; and/or (b) Ms Al-Natour, a prospective judgment debtor who is not an Australian citizen and who is currently holidaying in her country of birth, does not return, and/or (c) the assets of GQA, a prospective judgment debtor, are: (i) removed from Australia or from a place inside or outside Australia; or (ii) disposed of, dealt with or diminished in value.

64    For completeness, I should say that the prospective respondents have explained to some extent that some of the overseas payment transactions have a legitimate purpose including:

(a)    to make payments to relatives (by the second prospective respondent);

(b)    to provide capital for potential overseas operations (by GQA).

65    Of course, the fact that such payments may have a legitimate purpose does not necessarily negate any objective risk of removal or dissipation, but it does lessen the risk. Moreover, to preclude such transactions may also create prejudice to the prospective respondents, but I can deal with this through carve outs to any freezing order.

(d) Balance of convenience

66    Let me address a number of the prospective respondents’ points.

67    First, they have referred to the absence of an undertaking as to damages. But as I have said, I have taken this into account. Further, the carve outs that I propose to permit should substantially reduce the effect of any prejudice. But I accept that GQA will suffer reputational damage and I have taken this into account.

68    Second, it is said that the “continuation of the orders will be the destruction of the first prospective respondent’s business and the livelihood of those whom it employs”. I do not think that is the case given the carve outs that I will permit. On this aspect I have also taken into account that GQA runs a substantial business that on one view might be said to provide an important service. Of course, the ACCC has a different perspective.

69    Third, it is said that the ACCC’s prima facie case is weak and that this should be weighed in the balance. I do not consider it to be weak as against the first and second prospective respondents, although further investigation is required. It is weak against the third prospective respondent and I have taken this into account.

70    Fourth and relatedly, to the extent that the freezing orders are made and justified under s 137F to preserve assets sufficient to meet any judgment or order under proceedings of the type dealt with in s 137F(2)(d), I have satisfied myself for the purposes of s 137F(1)(c) that the making of the orders will not unduly prejudice the rights and interests of any other person. Third parties who could expect to receive funds from the prospective respondents for legitimate and reasonable purposes will continue to do so under the carve outs that I will permit.

(e) Other matters

71    Taking into account all of the foregoing circumstances I am satisfied that it is in the interests of justice to renew the freezing orders. I have considered all of the matters and interests identified by Kenny J in Deputy Commissioner of Taxation v Hua Wang Bank Berhad at [13].

72    Further, it is appropriate that I say something further on whether the freezing orders are in place to deal, in part, with the preservation of assets to meet any pecuniary penalty order or enforcement thereof as distinct from the other remedies foreshadowed by the ACCC. As I have said, such a justification cannot be used for any freezing order under s 137F. Nevertheless, strictly, such a justification is open under the Federal Court Rules and s 23 of the Federal Court of Australia Act. The question is whether an exercise of discretion could be so justified. I would make the following points:

(a)    First, the Clinica decisions seem to proceed on the basis or assume that that would be an appropriate exercise of discretion.

(b)    Second, the concept is not novel. Indeed, although s 137F does not apply, it permits a freezing order to facilitate payment of a fine for an offence. By parity of reasoning, in concept a freezing order to facilitate payment of a pecuniary penalty for a contravention is of a similar genus (albeit not expressly encompassed under s 137F, which is a separate point).

(c)    Third, my attention has been drawn to Spender J’s decision in Australian Competition and Consumer Commission v Chaste Corporation (No 1) (2003) 127 FCR 418, but I do not propose to follow it. It does not seem to me to be fully consistent with the doctrinal basis for freezing orders (and its breadth), as expounded in the passages from PT Bayan Resources that I have referred to earlier.

73    The prospective respondents have raised the issue that the ACCC has no right or interest in the enforcement of a pecuniary penalty. Only the Commonwealth of Australia has such an interest. Accordingly it is said that the ACCC has no business in seeking a freezing order for that purpose. That lens is too narrow as the cited passages from PT Bayan Resources explain.

74    I am inclined to the view that it is an appropriate exercise of discretion to make a freezing order in relation to the preservation of assets to meet a potential pecuniary penalty, but in one sense I do not need to finally decide this question because of the form of order that I have made. The order is a general prohibition with carve outs reasonably justified. It is not an order to positively preserve a quantified amount. I am not in a position to make any such quantification. Given the alleged pattern of GQA’s behaviour as it affects its customers and third parties, there may be orders for substantial reimbursement or repayment to such consumers, which presently is not capable of quantification but could well equal or exceed GQA’s tangible assets (contrary to GQA’s submissions). Thus the general form of order with the carve out is justifiable whether or not a freezing order could be used to preserve assets for a later pecuniary penalty or its enforcement.

75    Finally, even if I were to have held that there was no good arguable case for accessorial liability against Ms Al-Natour, I would have treated her as a third party and justified a freezing order in accordance with the principles discussed in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. She clearly has received funds sourced ultimately from GQA and may hold assets acquired with such funds.

CONCLUSION

76    I will make orders in the terms that I have foreshadowed with counsel.

Associate:

Dated: 18 August 2016