FEDERAL COURT OF AUSTRALIA
Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. Judgment be entered in favour of the Applicants pursuant to Rule 5.23 of the Federal Court Rules 2011 (Cth) against the first, second and third respondents.
UPON ADMISSIONS WHICH THE FIRST, SECOND AND THIRD RESPONDENTS ARE TAKEN TO HAVE MADE CONSEQUENT UPON THEIR NON-COMPLIANCE WITH ORDERS OF THE COURT, IT IS DECLARED THAT:
2. The first respondent, Reach Aussie Pty Ltd (ACN 605 460 400) (Reach Aussie), and the second respondent, Trade Pages Pty Ltd (ACN 612 962 606) (Trade Pages), engaged in conduct that was misleading and deceptive, or likely to mislead or deceive, within the meaning of s 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) by contacting customers of the Applicants and purporting to represent or to be associated with the Applicants and by seeking to obtain funds from the Applicants’ customers on that basis.
3. Vinod Roger aided, abetted, counselled or procured, or was knowingly concerned in or party to, the misleading and deceptive conduct of Reach Aussie and Trade Pages Pty Ltd by causing or permitting those companies to engage in such conduct.
THE COURT FURTHER ORDERS THAT:
4. Pursuant to s 232 of the Australian Consumer Law, each respondent, by itself or by its servants, employees or agents, be restrained from:
(a) claiming to represent, or in any way be associated with, either or both of hipages Group Pty Ltd ACN 112 872 009 and hipages.com.au Pty Ltd ACN 109 996 134;
(b) using in conjunction with the sale or promotion of their services or those of others the names “hipages”, “Home Improvement Pages” or any other name substantially identical with or deceptively similar thereto; and
(c) advertising, promoting, selling, offering to sell, supplying or offering to supply their services or those of others under or by reference to the names “hipages”, “Home Improvement Pages” or any other name substantially identical with or deceptively similar thereto.
5. Each of Reach Aussie and Trade Pages be wound up pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth).
6. Anthony Elkerton, official liquidator, be appointed to Reach Aussie and Trade Pages.
7. The respondents are to pay the applicants’ costs of these proceedings as agreed or assessed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
(REVISED FROM TRANSCRIPT)
PERRY J:
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4.6.2 Evidence relied upon with respect to the exercise of discretion to grant relief on the interlocutory application | [55] |
4.6.3 General considerations informing the approach to the exercise of discretion | [64] |
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1 By an interlocutory application filed 17 December 2016, the applicants, hipages Group Pty Ltd and hipages.com.au Pty Ltd (collectively, Hipages), seek default judgment pursuant to r 5.23 of the Federal Court Rules 2011 (Cth) (FCR) against the respondents, Reach Aussie Pty Ltd (Reach Aussie), Trade Pages Pty Ltd (Trade Pages) and Mr Vinod Roger (the first, second and third respondents respectively). Default judgment is sought on the ground that none of the respondents has filed a defence in the proceedings in accordance with the Rules or the directions made by this Court. Further the applicants seek declaratory and injunctive orders against the three respondents, and an order that Reach Aussie and Trade Pages be wound up under s 461(1)(k) of the Corporations Act 2001 (Cth) (Corporations Act).
2 For the reasons that follow, I consider in the exercise of discretion that judgment should be given in default under r 5.23. I also consider that it is appropriate to grant the relief sought by the applicants.
2.1 Overview of the proceedings
3 Hipages Group is the sole shareholder of the second applicant and the registered owner of the trademarks “HIPAGES”, “HIPAGES.COM.AU” and “HOME IMPROVEMENT PAGES”. The second applicant, Hipages.com.au, operates an online directory of tradespeople and building and renovation service providers.
4 On 15 June 2016, Hipages commenced proceedings against two respondents, Australian Web Management Pty Ltd (Australian Web Management) (the then first respondent) and Reach Aussie alleging that Australian Web Management and Reach Aussie were engaged in misleading and deceptive conduct contrary to the Australian Consumer Law (ACL) contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA). An interlocutory injunction against Australian Web Management and Reach Aussie was granted by Rares J on 16 June 2016, and was subsequently extended on 20 June 2016 until further order.
5 On 18 August 2016, orders were made in separate proceedings (NSD1224 of 2016) pursuant to FCR rr 7.22(1) and 7.22(2)(c) for Hipages to ascertain the description of certain prospective respondents.
6 Subsequently, an amended statement of claim (ASOC) was filed on 27 October 2016 seeking relief against two additional respondents, Trade Pages and Mr Vinod Roger. Leave to discontinue the proceedings against Australian Web Management was granted on 30 November 2016 with no order as to costs, upon that company being deregistered by the Australian Securities and Investments Commission (ASIC) on 27 November 2016.
7 Hipages allege that Reach Aussie and Trade Pages have engaged in a pattern of misleading and deceptive conduct whereby they have asserted that they are associated with Hipages and are offering services by or on behalf of Hipages in order to solicit monies from consumers. The applicants’ case against Mr Roger is that he is the natural person who, at all material times, controlled the activities and affairs of Reach Aussie and Trade Pages and, prior to its deregistration, Australian Web Management, and that he aided or abetted in the alleged misleading or deceptive conduct.
8 I note with respect to Australian Web Management that the ASOC was not further amended following disjoinder of that party. However, counsel for Hipages confirmed that, despite the ASOC still containing allegations against Australian Web Management, those allegations cannot be relevant to a consideration of this application as that entity is no longer a party. Counsel for the applicant submitted that this was subject to a qualification, namely, that to the extent that the Court might require greater comfort on the question of whether relief should be granted in the exercise of discretion, the pattern of conduct alleged against Mr Roger can take into account material relating to Australian Web Management, as well as Aussie Web Tech which has also been deregistered
2.2 Participation in the proceedings by the respondents
9 Trade Pages filed an appearance in the proceedings on 27 October 2016. However, on 22 November 2016 its solicitors filed a notice of ceasing to act. Trade Pages has taken no active role in the proceedings since that date.
10 Neither Reach Aussie nor Mr Roger have filed any appearance or notice of acting in the proceedings. On 13 January 2017, Mr Roger sent an email to the Court requesting an adjournment of the hearing of the application for default judgment. As submitted by Hipages, it is apparent from Mr Roger’s communication with the Court that he is both aware of the proceedings and the pending application for default judgment. The Court informed Mr Roger of the need to enter an appearance following receipt of that email.
11 On 2 February 2017, Mr Roger sent a further email in response to a communication from the Court relating to the re-scheduling of the hearing. In that email, Mr Roger requested an adjournment of at least two weeks for personal reasons. However, the Court indicated that in the absence of any appearance by Mr Roger being filed and any evidence in support of the request for the adjournment, the application would remain listed for 6 February 2017. As at the date of this judgment, Mr Roger has not filed a notice of appearance or notice of address for service.
12 Hipages sought to rely upon a number of affidavits in support of its application for default judgment.
13 First, the applicants relied upon the following evidence with respect to proof of service and default for the purposes of FCR rule 5.23:
(1) the affidavit of Alistair Gregory McKeough sworn 15 December 2016 (filed 16 December 2016) (McKeough 15 December 2016)
(2) the affidavit of Andrew Smorchevsky sworn 16 June 2016 (filed 16 June 2016) (Smorchevsky 16 June 2016);
(3) the affidavit of Steven Turnbull, process server, sworn 17 June 2016 (filed 20 June 2016);
(4) the affidavit of Andrew Smorchevsky sworn 20 January 2017 and the exhibit thereto (filed 20 January 2017) (pages 1-74 inclusive of the exhibit being relied upon on the issue of service and default together with pages 184 to 187); and
(5) the affidavit filed on 2 February 2017 of Andrew Smorchevsky sworn and filed on 2 February 2017.
14 These affidavits were taken as read and the exhibit received as Exhibit A1.
15 Secondly, the applicants sought to rely upon the following evidence with respect to the appropriateness of the grant of the relief sought:
(1) the affidavit of Alistair Gregory McKeough sworn 25 October 2016 (filed 26 October 2016) (McKeough 25 October 2016) and its exhibit (received as exhibit A2);
(2) the affidavit of Alistair Gregory McKeough sworn 30 November 2016 (filed 20 January 2017) (McKeough 30 November 2016);
(3) the affidavit of Andrew Smorchevsky sworn 20 January 2017 (filed on the same day) together with pages 75 to 187 inclusive of exhibit A1;
(4) the affidavit of Donna Victoria Hole affirmed 14 June 2016 (filed 15 June 2016) (Hole 1) and its exhibit (contained within exhibit A3);
(5) the affidavit of Donna Victoria Hole affirmed 16 June 2016 (filed 16 June 2016) (Hole 2); and
(6) the affidavit of Donna Victoria Hole affirmed 25 October 2016 (filed 26 October 2016) (Hole 3) together with its exhibits (contained within exhibit A3).
16 As mentioned, the applicants relied upon this second category of evidence as relevant to establishing that it is appropriate for the Court, in the exercise of discretion, to award the relief sought in the ASOC. I permitted the affidavits and parts of the exhibits referred to at [15] above to be read limited to that use under s 136 of the Evidence Act 1995 (Cth), in accordance with the principles explained at [20]-[25] below.
17 Rule 5.23(2) relevantly provides that:
If a respondent is in default, an applicant may apply to the Court for:
…
(c) if the proceeding was started by an originating application supported by a statement of claim, or if the Court has ordered that the proceeding continue on pleadings—an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled; or
(d) an order giving judgment against the respondent for damages to be assessed, or any other order; or
(e) an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order.
Note 1: The Court may make any order that the Court considers appropriate in the interests of justice—see rule 1.32.
Note 2: An order or judgment under this Division may be set aside or varied.
18 Rule 5.22 sets out the circumstances in which a party is in default namely:
A party is in default if the party fails to:
(a) do an act required to be done, or to do an act in the time required, by these Rules; or
(b) comply with an order of the Court; or
(c) attend a hearing in the proceeding; or
(d) prosecute or defend the proceeding with due diligence.
19 The power to grant relief under r 5.23(2) is discretionary: Speedo Holding BV v Evans (No 2) [2011] FCA 1227 at [20].
20 The requirement in r 5.23 that the Court be satisfied that the applicant is entitled to the relief claimed does not require proof by way of evidence. Rather, it is necessary to demonstrate that there is a claim for the relief sought on the face of the statement of claim: Australian Competition and Consumer Commission v dataline.net.au Pty Ltd (In Liq) [2007] FCAFC 146; (2007) 161 FCR 513 (Dataline (FCAFC)) at [42] (the Court); Searson v Salmon [2014] FCA 748 (Searson) at [6]; Titan Support Systems Inc v Nguyen [2014] FCA 884 (Titan) at [4]. Accordingly, the Court must be satisfied that the claim falls within its jurisdiction and each element of the relevant civil wrong must be properly and discreetly pleaded: Titan at [4]. As I explained in Titan:
5. The reason why in general it is not appropriate to lead evidence on a default judgment is that the allegations contained in the statement of claim are taken to be admitted. Therefore considerations of fairness require that the admission of evidence to supplement the statement of claim be, in general, refused: ACCC v Dataline (2006) 236 ALR 665 at 678 [48] Kiefel J.
21 It follows that it would not be appropriate to allow reliance upon evidence that would alter the pleaded case or add to it where the matters which are the subject of evidence ought properly to have been pleaded: Dataline (FCAFC) at [42]; Australian Competition and Consumer Commission v dataline.net.au Pty Ltd [2006] FCA 1427; (2006) 236 ALR 665 (Dataline (FCA)) at [50]-[51] (Kiefel J); Titan at [6].
22 Nonetheless, as I explained in Titan:
6. ….Evidence should be led, as here, of service of the originating application and statement of claim, and the amended originating application and amended statement of claim. Evidence was also led to prove service of the notice that the matter had been set down for hearing.
23 Furthermore, the Court may permit an applicant to lead evidence concerning the appropriateness of the relief sought provided as I have said that it does not depart from or supplement the pleaded case: Searson at [7]; Dataline (FCAFC) at [42]; Dataline (FCA) at [49]-[51]. As I also explained in Titan at [6]:
There is… some support in the authorities for the view that evidence might be permitted concerning matters which would not ordinarily be the subject of pleading concerning the appropriateness of granting the relief sought where the grant of that relief is discretionary: Dataline at [49].
24 In effect, as Kiefel J held in Dataline (FCA) at [94], while bearing in mind that the evidence has not been challenged, such evidence may nonetheless allay any concerns on the part of the court as to whether to grant relief.
25 Finally, due to the seriousness of the consequences of a judgment in default, the rules providing for judgment in default must be strictly construed and the discretion exercised cautiously.
4.2 Jurisdiction to entertain the claims
26 I am satisfied that the Court has jurisdiction with respect to the claims. The claims arise under the ACL. Jurisdiction is conferred on this Court in any civil matter arising under the ACL by s 86(1) of the CCA: see also by analogy Titan at [19]-[20].
4.3 Are the respondents in default?
4.3.1 Defaults by Reach Aussie
27 On 15 June 2016, Rares J granted leave to the applicants to file the originating application and statement of claim in court. His Honour also made orders at the same time abridging the time for service on Reach Aussie to 5:30 PM on 15 June 2016 and providing for service to be effected by email and facsimile. The originating application and statement of claim, together with the applicant’s affidavit evidence, were served on Reach Aussie on 15 June 2016 in accordance with those orders. Reach Aussie was also served with the originating application and statement of claim by a process server at its registered address on 17 June 2016 in accordance with s109X of the Corporations Act, together with all of the affidavit evidence on which the applicants sought to rely at that stage of the proceedings.
28 On 20 June 2016, Rares J made orders among other things that Reach Aussie file its defences on or before 15 July 2016. No defence was filed in accordance with those orders or thereafter.
29 Following the filing of the amended originating application and ASOC, orders were made on 28 October 2016 requiring each respondent to serve its defence on or before 25 November 2016. On 30 November 2016, the time for each respondent to file and serve its defence was extended to 14 December 2016. Again, Reach Aussie failed to comply with the Court order and no defence has been filed.
30 I accept, as the applicants submit, that Reach Aussie is therefore in default for the purposes of FCR rr 5.22 and 5.23 because it has failed to comply with Court orders and has failed to defend the proceedings with due diligence.
4.3.2 Defaults by Trade Pages and Vinod Roger
31 On 30 November 2016, the amended originating application and ASOC joining Trade Pages and Mr Roger were served upon them in accordance with the means of service directed by the Court. The orders sent by post were returned to sender.
32 By orders made on 30 November 2016, Trade Pages and Mr Roger were ordered to file their respective defences to the ASOC on or before 14 December 2016. Neither has done so and accordingly, they are in default for the purposes of rr 5.22 and 5.23 as the applicants submit.
33 Furthermore, as the applicants submit, it is apparent that Trade Pages and Mr Roger are in fact aware of the proceedings given the filing and later withdrawal of an appearance by solicitors for Trade Pages and the email correspondence from Mr Roger to the Court to which I have already referred (see above at [9]-[11]). I also note that Mr Roger was specifically advised by the Court of the need to enter an appearance following receipt of his email on 13 January 2016 but has not done so.
4.4 Conclusion on defaults by the respondents
34 I am satisfied that each of the three respondents are in default for the purposes of FCR rr 5.22 and 5.23 by reason of their failure to file defences in accordance with Court orders and to defend the proceedings with due diligence. Accordingly, the discretion to award judgment in default under r 5.23(2)(c) is enlivened.
4.5 Is the pleaded claim sufficient?
4.5.1 The allegations against Reach Aussie
35 As against Reach Aussie, Hipages plead that on a number of occasions in the period from about March 2016 to date, Reach Aussie contacted customers of Hipages.com.au and represented that they were servants, agents, employees or representatives of Hipages Group or Hipages.com.au and attempted to solicit that customer to provide their credit card details or otherwise make a payment to Reach Aussie (ASOC at [10]) (the Reach Aussie representations). The applicants plead that those representations were made in trade and commerce (ASOC at [11]). They further plead at ASOC [12] that the Reach Aussie representations were misleading or deceptive or likely to mislead or deceive in that they caused or were likely to cause people to think or assume that:
(1) Reach Aussie was associated with either Hipages Group or Hipages.com.au;
(2) either Hipages Group or Hipages.com.au have requested that Reach Aussie make contact with them or other persons on behalf of Hipages Group or Hipages.com.au;
(3) Reach Aussie was offering services by or on behalf of Hipages Group or Hipages.com.au; and/or alternatively
(4) information supplied by the customer to Reach Aussie was being provided to Hipages Group or Hipages.com.au; and
(5) payments made by way of credit card or otherwise using the payment details provided by Reach Aussie were being made to Hipages Group or Hipages.com.au.
36 However, the applicants plead at ASOC [13] that, contrary to the representations:
(1) Reach Aussie is not and has never been associated with either Hipages Group or Hipages.com.au;
(2) neither Hipages Group nor Hipages.com.au has at any time requested that Reach Aussie make contact with its customers or any other person on its behalf;
(3) Reach Aussie has never had authority or permission to offer services by or on behalf of Hipages Group or Hipages.com.au;
(4) information collected by Reach Aussie from customers was not provided to Hipages Group or Hipages.com.au; and
(5) payments made by way of credit card or otherwise using the payment details provided by Reach Aussie were not made to Hipages Group or Hipages.com.au.
37 In other words, the pleadings allege that Reach Aussie engaged in a course of conduct of representing to the applicant’s customers that it was acting for the applicants or had some relationship with them when in fact neither proposition was true. I accept, as the applicants submit, that such conduct if proved amounts to misleading and deceptive conduct in contravention of s 18 of the ACL and can found a claim for the relief sought in the ASOC.
4.5.2 The allegations against Trade Pages
38 Similar allegations are pleaded against Trade Pages. The applicants plead at ASOC [16] that in the period since about June 2016 to date, Trade Pages has contacted one or more customers of Hipages Group or Hipages.com.au and represented that:
(1) its servants, agents or employees were representatives of Hipages Group or Hipages.com.au, or had contacted the customer on behalf of Hipages Group or Hipages.com.au;
(2) the customer of Hipages Group or Hipages.com.au was an existing customer of Trade Pages by reason of the fact that the customer was an existing customer of Hipages Group or Hipages.com.au;
(collectively the Trade Pages representations) and
(3) attempted to solicit customers to provide their credit card details or to otherwise make a payment to Trade Pages.
39 The applicants also plead that the Trade Pages representations were made in trade and commerce (ASOC [17]). The applicants plead at ASOC [18] that the Trade Pages representations were misleading or deceptive or likely to mislead or deceive in that they caused or were likely to cause persons to think or assume that:
(1) Trade Pages was or was associated with Hipages Group or Hipages.com.au;
(2) either Hipages Group or Hipages.com.au have requested that Trade Pages make contact with them or other persons on behalf of Hipages Group or Hipages.com.au;
(3) Trade Pages was offering services via or on behalf of Hipages Group or Hipages.com.au;
(4) information supplied by the customer to Trade Pages was being provided to Hipages Group or Hipages.com.au; and/or alternatively
(5) payments made by way of credit card or otherwise using the payment details provided by Trade Pages were being made to Hipages Group or Hipages.com.au.
40 However, the applicants plead at ASOC [19] that, contrary to the representations:
(1) Trade Pages is not and has never been Hipages Group or Hipages.com.au or associated with Hipages Group or Hipages.com.au;
(2) neither Hipages Group nor Hipages.com.au has at any time requested that Trade Pages make contact with their customers or any other persons;
(3) Trade Pages has never had authority or permission to offer services by or on behalf of Hipages Group or Hipages.com.au;
(4) information supplied by the customer to Trade Pages was not provided to Hipages Group or Hipages.com.au; and
(5) payments made by way of credit card or otherwise using the payment details provided by Trade Pages were not made to Hipages Group or Hipages.com.au.
41 Again the tenor of the pleadings is that Trade Pages does not have and has never had any involvement with, or authority to act on behalf of, the applicants. I accept that the pleadings are sufficient to found a claim based on a contravention of s 18 of the ACL.
4.5.3 The allegations against Mr Roger
42 The applicants plead that Mr Roger at all material times controlled the activities and affairs of both Reach Aussie and Trade Pages. Specifically, at ASOC [22] the applicants plead that:
22. Vinod Roger:
(i) is, and at all material times was, the sole director and sole shareholder of [Australian Web Management];
(ii) has, at all material times, controlled the activities and affairs of [Australian Web Management];
Particulars
Vinod Roger’s control of [Australian Web Management] is to be inferred from the following circumstances:
(a) Vinod Roger caused [Australian Web Management] to be incorporated;
(b) Vinod Roger was the sole director and sole shareholder of [Australian Web Management] at all material times;
(c) Vinod Roger caused the details of [Australian Web Management] registered with the ASIC to be amended from time to time;
(d) Vinod Roger caused third parties to be engaged by or on behalf of [Australian Web Management]; and
(e) Vinod Roger caused the third parties that were engaged by or on behalf of [Australian Web Management] to be paid for the services that they have performed for that company.
(iii) has, at all material times since 15 April 2015, controlled the activities and affairs of [Reach Aussie]; and
Particulars
Vinod Roger’s control of [Reach Aussie] is to be inferred from the following circumstances:
(a) Vinod Roger caused [Reach Aussie] to be incorporated;
(b) Vinod Roger caused the details of [Reach Aussie] registered with ASIC to be amended from time to time;
(c) Vinod Roger caused third parties to be engaged on by or on behalf of [Reach Aussie]; and
(d) Vinod Roger caused the third parties that were engaged by or on behalf of [Reach Aussie] to be paid for the services that they have performed for that company.
(iv) has, at all material times, controlled the activities and affairs of the [Trade Pages].
Particulars
Vinod Roger’s control of [Trade Pages] is to be inferred from the following circumstances:
(a) Vinod Roger caused [Trade Pages’] webpage domain name to be registered; and
(b) The similarity and coincidence of the conduct being engaged in by [Trade Pages] with the conduct earlier engaged in by [Australian Web Management and Reach Aussie].
43 The applicants plead that in those circumstances Mr Roger controlled the activities and affairs of Reach Aussie and Trade Pages (ASOC [23]). Further, the applicants plead that:
24. …at all material times, Vinod Roger knew that [Reach Aussie and Trade Pages] were engaging in the conduct pleaded in paragraphs [10 to 20] above, and caused or, alternatively, permitted such conduct to continue.
Particulars
Vinod Roger’s knowledge of, and involvement in [Australian Web Management, Reach Aussie and Trade Pages’] conduct is to be inferred from at least the following circumstances:
(a) all three companies engaged in a similar pattern of misleading or deceptive conduct during the period in which they were controlled by Vinod Roger;
(b) another company previously controlled by Vinod Roger, of Aussie Web Tech Pty Ltd ACN 145 769 204 (Aussie Web Tech), previously engaged in conduct that was similar to the misleading or deceptive conduct engaged in by [Australian Web Management, Reach Aussie and Trade Pages];
(c) the monies obtained by [Australian Web Management] were, in some cases at least, deposited into an account controlled by Vinod Roger;
(d) Vinod Roger took steps to disguise his control of [Reach Aussie and Trade Pages], including by using mail forwarding services, registered agents and other third parties to create the appearance that he had no involvement in those companies; and
(e) on or about 14 July 2016, Vinod Roger caused the domain name tradeimprovementpages.com.au to be registered, which website has been used to facilitate the conduct of [Trade Pages] alleged in paragraphs 16 to 19 above.
44 I accept that these pleadings are sufficient to state grounds for injunctive relief against Mr Roger under s 232 of the ACL, as the applicants submit.
4.5.4 The winding up orders sought
45 Finally, the applicants apply for orders that Reach Aussie and Trade Pages be wound up under s 461(1)(k) of the Corporations Act on the ground that it is just and equitable to do so.
46 I accept first that, by reason of the claim made in these proceedings for damages, the applicants are contingent creditors of Reach Aussie and Trade Pages and therefore the requirements for standing under s 462(2)(b) of the Corporations Act to apply for an order to wind up those companies on a ground under s 461 are met. This is because the claim for damages is based upon an alleged breach of pre-existing obligations imposed on Reach Aussie and Trade Pages to comply with the ACL: Australian Competition and Consumer Commission v Phoenix Institute of Australia Ltd [2016] FCA 1246 at [72]-[74] (Perry J). In other words, the source of the obligation to pay the damages is the statutory duty imposed on Reach Aussie and Trade Pages to comply with the ACL (ibid). The possibility that a monetary payment will be required in the future constitutes the relevant contingency (ibid: see also Commissioner of Taxation v Simionato Holdings Pty Ltd [1997] FCA 25; (1997) 15 ACLC 477 at 482; cf The Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (1996) 14 ACLC 925 at 932-933 (Santow J).
47 Secondly, it is well established that the Court may order that a company be wound up on the ground that it is just and equitable where the company in question is simply being used as a vehicle to carry on unlawful conduct: Re London and County Coal Company (1866) 3 LR Eq 355. Subcategories of the just and equitable ground include where there has been serious fraud, misconduct or oppression in the conduct of the company’s affairs, or where a company has operated an illegally managed investment scheme: see the discussion by Barrett J in Macquarie Bank Ltd v TM Investments Pty Ltd [2005] NSWSC 608; (2005) 223 ALR 148 at [11]-[13]. It may also be just and equitable to wind up a company in circumstances where “the management are operating fraudulently, misleadingly or in breach of the law”: Australian Securities & Investments Commission v Centro Financial Synergy Group [2007] FCA 2084 at [5] (Gilmore J). Similarly, Lander J said in Australian Securities & Investments Commission v International Unity Insurance Pty Ltd [2004] FCA 1059 at [139]:
An order may be made if a company has not carried on its business candidly and in a straightforward manner with the public: Australian Securities & Investments Commission v Austimber Pty Ltd [1999] FCA 566; (1999) 17 ACL C 893. Such an order would also be appropriate where the corporation has acted fraudulently or entered into sham transactions.
48 In Australian Securities & Investments Commission v Stone Assets Management Pty Ltd [2012] FCA 630, Besanko J, after holding that the power of the plaintiff to seek this form of relief on public interest grounds is well established, held that a winding up order should be made having regard to a number of factors:
47 In the present case, I have found that the defendant has engaged in repeated contraventions of the Act, and as such, there is a real risk to actual and potential investors that such breaches will continue. This is particularly so in a case where the defendant has no director present in Australia, against whom any required action could be taken. Further, and perhaps most relevantly, the defendant failed to comply with the interim injunction I made on 8 December 2011, requiring the company to cease publication of its website (www.aftfx.com.au). In addition, the affidavit of Lily Yang, sworn 27 January 2012, and the translation therein contained, shows that the defendant continued to publish a Chinese language version of the website (www.aftfx.com) which persisted in making reference to the possession of an AFSL licence. Such conduct, in clear disregard of the orders of this court, also favours the order sought by the plaintiff. Finally, the overall misconduct and mismanagement of the defendant justifies a finding that there is cause for a lack of confidence in the future conduct and management of the defendant, should it be allowed to continue trading. The defendant does not have a director who ordinarily resides in Australia and appears never to have had such a person (s 201A(1)). It appears to have been prepared to make false or misleading statements contrary to subs 1308(2) in relation to the address of Ms Liang (ss 205B and 205D) and the defendant’s principal place of business in its application for registration as an Australian company. For all these reasons I will make the winding up order sought by the plaintiff under s 461(1)(k) of the Act.
49 The pleadings on the basis of which the winding up orders are sought are at ASOC [26]-[29]. Specifically, at ASOC [26] the applicants plead that:
26. Further, and in the alternative, since June 2014 at the latest, Vinod Roger has engaged in a pattern of conduct having the following features:
(i) Vinod Roger first causes an Australian company to be incorporated by using a third party in Australia to register the company with ASIC;
(ii) on some occasions, Vinod Roger has caused ASIC to be provided with the names of other persons who are nominally appointed directors and shareholders of the companies, but who either do not exist or who permit Vinod Roger to control the companies;
(iii) Vinod Roger uses intermediary companies, registered agents and mail forwarding services to mask his true address and contact details;
(iv) the companies established and operated by Vinod Roger appear to have no legitimate business operations and do not appear to maintain staff or provide the services advertised;
(v) Vinod Roger has established new companies where action has been taken to wind up one or more of his companies, and the new companies have thereafter continued the pattern of conduct engaged in by the companies being wound up; and
(vi) the primary purpose or function of the companies so-created appears to be to conduct unlawful activities by engaging in misleading or deceptive conduct of the type pleaded in paragraphs 4 to 20 above.
50 The applicants also plead that both Reach Aussie and Trade Pages are companies established in accordance with the pattern of conduct alleged at ASOC [26], and that in those circumstances, their affairs are being conducted without regard to justice and propriety, and for the purpose of engaging in unlawful and improper conduct (ASOC at [27]-[28]). On this basis, the applicants plead that it is just and equitable that Reach Aussie and Trade Pages be wound up (ASOC at [29]). That claim on its face pleads improper conduct which could properly be the basis for an order as to winding up under s 461(1)(k) of the Corporations Act in line with the principles set out at [47]-[48] above.
51 It follows for the reasons set out above that I am satisfied that the applicants have met the second requirement for a default judgment under r 5.23(2), being a properly pleaded entitlement to relief.
4.6 Should relief be granted in the exercise of discretion
52 The final question is whether relief should be granted in the exercise of discretion and, if so, the nature of the relief to be granted.
53 By the amended originating application, the applicants seek the following relief:
1. An order pursuant to s 232 of the Australian Consumer Law that each Respondent, by itself or by its servants, employees or agents, be restrained from:
a. claiming to represent, or in any way be associated with, either or both of hipages Group Pty Ltd ACN 112 872 009 and hipages.com.au Pty Ltd ACN 109 996 134;
b. using in conjunction with the sale or promotion of their services or those of others the name "hipages", "Home Improvement Pages" or any other name substantially identical with or deceptively similar thereto; and
c. advertising, promoting, selling, offering to sell, supplying or offering to supply their services or those of others under or by reference to the name "hipages", "Home Improvement Pages" or any other name substantively identical with or deceptively similar thereto.
[the claimed injunctive relief]
1A. A declaration that:
a. Reach Aussie Pty Ltd (ACN 605 460 400) (Reach Aussie) and Trade Pages Pty Ltd ACN 612 962 606 (Trade Pages) engaged in conduct that was misleading and deceptive. or likely to mislead or deceive. within the meaning of s 18 of the Australian Consumer Law by contacting customers of the Applicants and purporting to represent or be associated with the Applicants and by seeking to obtain funds from the Applicants' customers on that basis; and
b. Vinod Roger aided. abetted, counselled or procured, or was knowingly concerned in or party to. the misleading and deceptive conduct of Reach Aussie and Trade Pages by causing or permitting those companies to engage in such conduct;
[the claimed declaratory relief]
1B. Damages or compensation under s 238 of the Australian Consumer Law.
1C. An order under s 461(1)(k) that each of Reach Aussie and Trade Pages be wound up.
1D. An order that a liquidator be appointed to Reach Aussie and Trade Pages.
[the claimed winding up relief]
54 The interlocutory application seeks a default judgment and orders to the same effect, save that no order for damages is sought.
4.6.2 Evidence relied upon with respect to the exercise of discretion to grant relief on the interlocutory application
55 It is important again to stress that the grant of relief itself is based not upon the evidence relied upon by the applicants but rather the deemed admissions to the pleadings in the ASOC. However, the evidence, while unchallenged, is relevant in line with the principles earlier outlined for the limited purpose of determining whether it is appropriate for the Court, in the exercise of discretion, to grant the relief sought. For this reason and given that there is no contradictor, it is not appropriate for me to make findings per se on the matters which are the subject of the applicants’ pleaded case. I am satisfied, however, that the evidence to which I have had regard (as set out below) is in line with the applicants’ pleaded case and does not seek impermissibility to expand or alter the pleaded case.
56 Turning then to the evidence, first evidence as to the scale and history of complaints by customers was given by Ms Hole. She has held the position of Head of Trade Service at Hipages Group since February 2015 and in that role, oversees the Customer Service, Retention and Compliance Team. She has been employed by Hipages Group since 2009 in various roles and from 2014 has held the positions of Customer Support Manager and Head of Customer Service.
57 Hipages has kept a database of the complaints, extracts of which are in evidence. Ms Hole gave evidence that hipages.com.au has received complaints from Hipages customers since September 2010 that they have received calls from third parties purporting to be, or to represent, Hipages soliciting them to provide their credit card details. She also gave evidence that the caller frequently sent a follow-up email indicating that they were from Australian Web Management, Aussie Web Tech or Reach Aussie. The majority of these complaints have apparently been received by Hipages from around October 2015 demonstrating an escalation in the alleged conduct. Ms Hole estimated that Hipages had received a total of 600 complaints from affected clients in the period from January 2016 to 14 June 2016 alone. In her affidavit affirmed 25 October 2016, Ms Hole gave evidence that the applicants have received complaints of similar conduct by Trade Pages or www.tradeimprovementpages.com.au, as well as continuing complaints of the kind the subject of earlier evidence given by her.
58 Secondly, the applicants rely upon ASIC records to reveal a connection between Aussie Web Tech and Australian Web Management, namely, that Mr Roger was the sole director of Australian Web Management at all material times and that he was a director of Aussie Web Tech at all material times and the sole director from 15 March 2012 until that company was deregistered.
59 Thirdly, the ASIC records suggest that Mr Roger has at all material times resided at an address for an entity known as National Postal Services (National Postal) (the National Postal address) with respect to all companies aside from Trade Pages of which Mr Roger is not a director. The evidence however also suggests that he is an Indian citizen and has at all material times been resident in India. Reliance was placed in this regard upon documents prepared by Reckon Docs for establishing Aussie Web Tech in August 2010 which identified Mr Roger’s residential address as located in Bangalore, India. Reliance was also placed upon an email dated 30 July 2013 from Mr Roger requesting that a parcel be sent to Bangalore in India.
60 Fourthly, the applicants rely upon evidence to demonstrate the existence of a relationship between Aussie Web Tech, Australian Web Management, Reach Aussie and Trade Pages in that each of those companies appears to have been established and controlled by Mr Roger through third party service providers in Australia (in line with the pleading at ASOC [26]).
(1) In this regard, the evidence suggests that Mr Roger was able to conduct the affairs of Aussie Web Tech and Australian Web Management through third party Australian companies who have served as the registered offices of Aussie Web Tech and Australian Web Management and acted as their registered agents. Specifically the applicants rely upon evidence suggesting the following:
(a) Mr Roger caused Aussie Web Tech to be created by ordering it on 13 August 2010 from a company known as Reckoned Docs. Mr Roger then used a firm of accountants, as the registered address of Aussie Web Tech until that firm refused to continue to do business with Aussie Web Tech due to the number of calls and visits from “irate customers”. Thereafter Aussie Web Tech’s address was changed to that of a company known as Shelcom Corporate Services (Shelcom) and later National Postal.
(b) The original registered address of Australian Web Management was also Shelcom’s address and was later changed to National Postal’s address.
(c) The personal address given by Mr Roger to ASIC was also changed in the case of Aussie Web Tech and Australian Web Management to the address of National Postal.
(2) Mr Roger followed a similar pattern of conduct with respect to Reach Aussie. Even though he was never formally registered as a director, the evidence suggests that he established that company using the services of a company known as ecompanies.com.au. Furthermore, the registered address for Reach Aussie was again the address for National Postal, as was the address given for the sole director of Reach Aussie.
(3) The registered address for Trade Pages is the address for National Postal. Furthermore, Mr Roger’s email address is given as the contact email for the registration of Trade Pages’ domain names (tradeimprovementpages.com.au and tradepages.net.au). This is also the case with respect to the registration of the domain names for Australian Web Management Pty Ltd and Reach Aussie. Furthermore, there was evidence that Mr Roger had emailed Shelcom from a Trade Pages email address requesting that it process what Shelcom described as “corporate secretarial changes”.
61 Fifthly, based upon this evidence the applicants submit that Mr Roger’s practice over several years has been to conduct the affairs of these companies from abroad by utilising Australian intermediaries to mask the fact that he is a foreign resident and, in the case of Reach Aussie and Trade Pages, to conceal his involvement with those companies (see ASOC at [24(d)]). The applicants further submit that it is open to the Court to infer from the fact of that concealment that Mr Roger is conscious that those entities are involved in wrongful or unlawful conduct (see the pleading in ASOC at [24]). Based upon those inferences, the applicants contend that:
47. Once these matters are appreciated, the gravity of the conduct at issue in these proceedings is apparent. The Hipages database reveals that the complaints linked to these companies date from as early as 28 March 2011. The conduct has continued since that time through a number of corporate vehicles, but has remained substantially the same. Even though Aussie Web Tech and Australian Web Management has since been deregistered, the conduct has continued through the incorporation of Reach Aussie and Trade Pages. Indeed, one sees a pattern of ‘Phoenixing’ whereby essentially the same activities are being carried on continuously despite the demise of certain of the corporate vehicles engaged in the conduct.
62 Given the nature of these allegations against the respondents, the evidence on which the applicants seek to rely is necessarily circumstantial. In those circumstances, I consider that it is necessary as a matter of fairness to set out the evidence in more detail than might usually be the case in a default judgment where the Court is not engaging in a fact finding exercise. This also explains the greater degree of detail with which I have referred to the evidence earlier in these reasons. Bearing in mind these considerations, counsel for the applicants made the following submissions with respect to the evidence and the relevant legal framework in support of their submissions as to the gravity of the conduct at issue.
(1) S201A of the Corporations Act provides that “[a] proprietary company must have at least 1 director. That director must ordinarily reside in Australia.” It will be recalled that Aussie Web Tech Pty Ltd had two directors in the period 13 August 2010 to 15 March 2012, one of whom was stated to reside in Dandenong in the State of Victoria, Australia, the other being Mr Roger. However, from 15 March 2012 until deregistration of the company, the only director was Mr Roger. It will also be recalled that Mr Roger was the sole director of Australian Web Management.
(2) Reference has already been made to the evidence in the ASIC records that Mr Roger has given an Australian address as his address for Aussie Web Tech and Australian Web Management. That information, it can be inferred, was lodged with ASIC by the companies in question in purported compliance with their obligations under the Corporations Act to give the personal details of directors, relevantly, her or his “usual residential address”: see ss 205B and 205D(1) of the Corporations Act.
(3) While Mr Roger gives an Australian address for Aussie Web Tech and Australian Web Management, that address appears to be essentially a mailbox, being the address for National Postal.
(4) The evidence suggests that Mr Roger is in fact resident in India and not in Australia. Specifically:
(a) A “Chat transcript” dated 11 October 2016 between www.ecompanies.com.au and “vinod” in relation to correcting details with ASIC as to the registration of Reach Aussie, identifies “Vinod’s” email address as Mr Roger’s ‘Gmail’ address and places his location as “Mumbai, India”.
(b) In an email from Mr Roger’s Gmail address dated 20 August 2014, Mr Roger requests that parcels be sent to an address in Bangalore.
(c) On the company order form for Reach Aussie with Reckon Doc, Mr Roger gave as his address, an address in Bangalore, India. That address in turn corresponds with the address apparently given by him on his Indian passport.
(d) The statement from Westpac Bank for an account in the name of Reach Aussie Pty Ltd for the period 13 May 2016 to 12 August 2016 (the Reach Aussie Westpac statement) identifies repeated online and mobile withdrawals to “INTL Roger info”: see Exhibit A1 at p. 178. The reference “INTL” suggests an international transfer and therefore suggests that the withdrawals are to a location outside Australia. Furthermore, it appears from the evidence that Vinod Roger is one of two directors of a company known as Roger Infotech Private Limited. Evidence was led that that company represents on its website that it is an “Indian Non-government company”, gives its address as Bangalore, India, and contains a banner expressly referring to Hipages, reading “Get that electrical job done. Hipages Get Quotes Now”.
(5) It appears from the evidence led as to the content of the website for Roger Infotech Private Limited that the other director of that business is Grace Sujatha. It appears from a Westpac Bank statement for an account in the name of Trade Pages Pty Ltd for the period 21 June 2016 to 13 September 2016 (the Trade Pages Westpac statement) that repeated international mobile and online withdrawals were made to a person of a very similar name, “Grace Suja” or that the recipient’s name was cut short by the right-hand border of the column in the statement in which her name appears. The statement indicates that withdraws are made immediately after deposits are made into the account.
(6) A similar pattern of deposits followed by immediate withdrawals appears from the ANZ Business Advantage Bank Statement for Australian Web Management (the ANZ Australian Web Management Statement) before its deregistration for the period 18 April -17 June 2016. The deposits in turn appear to have come from various companies. While some of those are unidentified, some appear to be trades people, who, it will be recalled, constitute Hipages’ client base. In each case the evidence suggests that money deposited is immediately transferred to Reach Aussie with the result that at the end of the period covered by the statement, almost all money deposited has been withdrawn. The withdrawals recorded in the ANZ Australian Web Management Statement are in turn reflected in the Westpac Reach Aussie bank statement, with the periods covered by the two statements overlapping each other to some degree. By the end of the period covered by the Westpac Reach Aussie bank statement, there is a negative balance with the total debits slightly exceeding the number of deposits. Again, amounts deposited were withdrawn almost immediately from this account and sent offshore to “INT Roger info”.
63 The evidence to which I have referred, including as to Mr Roger’s involvement in the Website registration for Reach Aussie, suggests that Mr Roger has endeavoured to actively conceal his involvement in the activities of Trade Pages and Reach Aussie and that a practice is being engaged in whereby money is moved between these companies in quick succession after it is deposited and immediately transferred offshore to an account for or connected to Mr Roger, notwithstanding that the ASIC records do not reveal Mr Roger’s involvement in Trade Pages and Reach Aussie.
4.6.3 General considerations informing the approach to the exercise of discretion
64 I accept that this evidence suggests that, in line with the applicant’s pleaded case, the respondents and Mr Roger have engaged in wrongful conduct of an apparently deliberate, systematic and sustained nature through various corporate vehicles over a number of years and have done so by engaging in so-called “phoenix” activities. I accept as a general proposition the submission by the applicants that the fact that the evidence supports this pattern of conduct warrants wide ranging relief as sought by them to ensure (to the extent possible) that the conduct at issue is not continued or repeated by Reach Aussie, Trade Pages or any new or other entities in the future to the detriment of the applicants and consumers.
65 The evidence led by the applicants, though unchallenged, also suggests that an award of damages is unlikely to be of any utility as it appears from the evidence that: Mr Roger has engaged, as I have said, in apparent “phoenixing” conduct and that Reach Aussie and Trade Pages are vehicles through which that conduct is being pursued; that Mr Roger is not resident in Australia; that Reach Aussie and Trade Pages do not have significant assets in Australia having regard to the evidence as to the bank accounts and dollar value of those companies; and their registered offices in Australia are effectively mailboxes. Added to this, Mr Roger’s place of residence in Bangalore in India is apparently not known and, even if a judgment is enforceable against him in India, considerable costs and delays would likely be involved in any endeavour to enforce the judgment against him in India.
4.6.4 The claimed declaratory relief
66 I agree with the applicants that the Court’s power to grant declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) extends to cases where a default judgment is sought. In this regard, Kiefel J in Dataline (FCA) held at [58] that neither s 21 of the FCA Act nor (then) Order 35A of the Federal Court Rules imposes constraints upon the relief that may be granted on a default judgment. In this regard, her Honour continued:
[58] … Refusals to make declarations in cases of default are based upon a practice, not a rule of law. The practice is one of long-standing and might be seen as derived from views about litigation which predate more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall. Views expressed in older cases may not take account of the increase in the use made of declaratory orders in developing areas of law which may involve matters of public interest.…
[59] It may no longer be correct to have a practice which operates as a prohibition in every case of default and preferable to consider the circumstances pertaining to the particular case and the purpose amd effect of the declaration.… Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made: “upon admissions which [the respondent in question] is taken to have made, can upon non-compliance with orders of the court”.
67 The approach adopted by her Honour by the inclusion of the preface to the declarations was endorsed by the Full Court on appeal as “entirely appropriate” in Dataline (FCAFC) at [92]. Her Honour’s observations have since been cited with approval on many occasions: see e.g. Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 3) [2015] FCA 583 (Adata) at [22]-[23] (Reeves J); Director of Consumer Affairs v Nightingale Electrics Pty Ltd [2016] FCA 279 at [2] (Pagone J) (albeit in the context of making declarations by consent on agreed facts).
68 In Adata, Reeves J identifies a number of broader discretionary factors as relevant when declaratory relief is sought:
24. They include the court being satisfied that the orders in question are directed to determining “a legal controversy and not answering abstract or hypothetical questions”, that “the party seeking the declaration has a real interest in seeking that relief”, and that “there are sufficient consequences flowing from the making of the declaration” to justify it being made: see Australian Competition and Consumer Commission v Grove & Edgar Pty Ltd (2008) ATPR 42-269, [2008] FCA 1956 at [19]. See also Forster at 437–438; Tobacco Institute at 99–100; Yeo at [17]; and Australian Competition and Consumer Commission v Powerballwin.com.au Pty Ltd [2010] FCA 378 at [41] per Tracey J.
69 The evidence allays any concerns that I may have had as to the first two considerations identified by Reeves J. As to the third consideration, the applicants submit (at paragraph [56] of their submissions) that in the present case, the interests of justice favour the making of the declarations for two reasons:
a) First, although the litigation is between private parties, it involves a significant public interest in that the conduct at issue appears to involve a sustained pattern of misleading conduct directed towards a large number of the applicants’ customers over many years. The applicants are unlikely to have been the only persons harmed by the conduct because it was chiefly directed at misleading the applicant’s customers. Thus, a question of public interest is involved that is similar to that which exists where a regulator seeks declaratory relief in that declarations will serve to reveal and emphasise the seriousness of the respondents’ misconduct; and
b) Second, the making of the declarations sought will likely assist the applicants to prevent such conduct occurring in the future (whether by the respondents or new corporate entities) because it will be a means by which the applicants can alert third parties to the respondents’ past misconduct and thereby help prevent or more efficiently remedy any future misconduct of a similar nature. In particular, the making of declarations will provide a basis for the applicants to notify Shelcom, National Postal and the other intermediaries who have unknowingly facilitated the respondents wrongful conduct. It will also permit the applicants to more easily draw any similar future misconduct to the attention of ASIC and the Australian Competition and Consumer Commission.
70 I accept that the evidence suggests that there is a strong public interest in the making of the declarations sought, having regard to the nature, seriousness and extent of the allegedly unlawful conduct engaged in by the respondents. I also accept that there is utility in the making of the declarations from the perspective of the applicants in that the evidence suggests that the respondents are engaging in the conduct alleged against them, that it is causing serious harm to the applicants, and that the making of the declarations will facilitate the taking of steps such as those identified by the applicants to guard against future similar misconduct.
4.6.5 The claimed injunctive relief
71 Bearing in mind that an award of damages is unlikely to be of utility, the question arises as to whether the Court ought to grant the claimed injunctive relief. Power to grant injunctive relief is conferred by s 232 of the ACL. The principles governing the grant of injunctive relief are explained by Goldberg J in Australian Competition and Consumer Commission v Dermalogica Pty Ltd [2005] FCA 152; (2005) 215 ALR 482 in the context of s 80 of the Trade Practices Act 1974 (Cth) which was the precursor provision to s 232 of the ACL. Specifically, his Honour held that:
110. In determining whether to grant an injunction proscribing future conduct, the court should consider whether all the circumstances of the case – including the scale of the prior contravening conduct, any evidence as to the contravener’s future intentions and the likelihood of damage to other persons as a result of further proscribed conduct – call for the contravener being subject to the more onerous burdens, such as contempt of court, in relation to their future conduct. This consideration is required even though the power of the Court to grant an injunction under s 80 is not limited by the requirement of a threat of future contravening conduct.
72 The Full Court (Ryan, Finn and Allsop JJ) cited this passage with approval in Foster v Australian Competition and Consumer Commission [2006] FCAFC 21; (2006) 149 FCR 135 at [35] in holding that “[i]f the Court considers that a complete prohibition, whether permanently or for a specified period, on a respondent’s engaging in a particular field of commercial activity or industry is required to protect the public from conduct of the kind which constituted the contravention, s 80 is wide enough to support such a prohibition as a matter of power.”
73 The applicants submit that the claimed injunctive relief should be granted given the following factors:
a) First, the conduct of the issue was long-standing, serious and of a large-scale, having been carried out over many years through numerous corporate vehicles;
b) Second, the respondents have not indicated any intention to cease engaging in the conduct. To the contrary the conduct has continued even after this Court issued an interlocutory injunction restraining Australian Web Management and Reach Aussie from engaging in such conduct on 16 June 2016; and
c) Thirdly, there is a likelihood that any continuation or recurrence of the conduct in the future will injure the applicants and their customers.
74 I agree and accordingly consider that it is appropriate for injunctions to be made against each of the respondents in the terms sought by the applicants on the interlocutory application. First, I accept that the evidence on which the applicants seek to rely is appropriate to an application for default judgment under r 5.23 as I earlier indicated. Secondly, I accept that that evidence, while unchallenged, appears to support the inferences which the applicants seek to draw. In particular, the evidence suggests that there is utility in the injunctions sought and that there is a real risk that the respondents will continue to engage in the pattern of wrongful conduct against them, as pleaded. In this regard, I note that it can reasonably be inferred that all three respondents were aware of the interim injunction and of the final relief sought having regard to the service of the documents as detailed above, Mr Roger’s correspondence with the Court, and Trade Pages’ brief participation in these proceedings. Thirdly, the evidence also suggests that the apparently wrongful conduct has escalated, that there is a real risk of continuing harm to Hipages and to their customers, and that the respondents have been engaging in apparent “phoenixing” activities. Finally, the scope of the injunction sought does not go beyond the unlawful conduct pleaded against the now three respondents in the ASOC.
4.6.6 The winding up orders sought
75 I also accept the applicants’ submissions that it is appropriate in the circumstances of this case for an order to be made winding up Reach Aussie and Trade Pages for the following reasons.
76 First, for the reasons earlier given I accept that the applicants have standing under s 462(2)(b) of the Corporations Act by reason of their contingent claim to damages under the ACL, as well as their contingent claim to legal costs in these proceedings: see above at [46].
77 Secondly, s 462(4) of the Corporations Act provides that:
(4) The Court must not hear an application by a person being, or persons including, a contingent or prospective creditor of a company for an order to wind up the company unless and until:
(a) such security for costs has been given as the Court thinks reasonable; and
(b) a prima facie case for winding up the company has been established to the Court’s satisfaction.
78 Subsections (a) and (b) of s 462(4), together with requirement as to standing in s 462(2), are pre-conditions to the making of an order winding up the companies. Thus s 462(5) provides that “[e]xcept as permitted by this section, a person is not entitled to apply for an order to wind up a company.”
79 As to s 462(4)(a), the applicants correctly submit that no security for costs would be appropriate in the present case given that the respondents have not actively defended the proceedings in any way or indeed participated in them.
80 I also accept that the precondition in s 462(4)(b) of a prima facie case is established. In this regard, I accept the applicants’ submission that, having regard to the evidence which I have earlier described, the scale of the misleading and deceptive conduct apparently carried on by Reach Aussie and Trade Pages suggests that the business of those companies is not being carried on candidly and in a straightforward manner with the public but rather to mislead the public in breach of the ACL. Furthermore, I am fortified in that conclusion by the efforts which the evidence suggests have been taken by Mr Roger to conceal his involvement with Reach Aussie and Trade Pages, which in turn suggests that the companies are a mere device to perpetrate misleading and deceptive conduct, as the applicants submit.
81 Finally, the applicants properly drew my attention to their failure to lodge the notice of their intention to apply to wind up the companies within the time frame required by s 470(1)(a) of the Corporations Act. That section requires that an applicant other than ASIC for the winding up of a company must “lodge, not later than 10.30 am on the next business day after the filing of the application, notice of the filing of the application and of the date on which the application was filed”. That means that notice should have been filed when the ASOC was filed, whereas notices in the form prescribed by Form 519 were filed with ASIC only on 25 January 2017. However, s 467A of the Corporations Act provides that:
An application under Part 5.4 or 5.4A must not be dismissed merely because of one or more of the following:
(a) in any case—a defect or irregularity in connection with the application;
(b) in the case of an application for a company to be wound up in insolvency—a defect in a statutory demand;
unless the Court is satisfied that substantial injustice has been caused that cannot otherwise be remedied (for example, by an adjournment or an order for costs).
82 In this case, I am satisfied that no substantial injustice has been caused. First, as the applicants submit, the notice has been filed and is now reflected in the ASIC records. Secondly, on 25 January 2017 the applicants lodged four notifications of court action relating to winding up on prescribed form 519 in respect of the respondents with ASIC. Thirdly, on 13 January 2017, a notice of application for winding up order in respect of Reach Aussie and Trade Pages was published electronically on the website “insolvencynotices.asic.gov.au”, with updated versions of that notice being published on the website on 16 January 2017 and on 2 February 2017. It follows that ASIC has been notified of the relevant applications for almost a month. In addition Mr Roger is aware of the relief being sought, as is apparent from the email exchanges with the Court earlier referred to. Reach Aussie and Trade Pages have been served with the amended originating application and ASOC, together with the affidavits filed in the matter, correspondence with the Court and court orders, in accordance with s 109X of the Corporations Act at their registered addresses. It follows that all of the respondents have been notified but have apparently chosen not to participate in any way.
83 Furthermore, I note that under s 601AH(2) of the Corporations Act, the Court can make an order that ASIC reinstate the registration of a company if an application for reinstatement is made to the Court by a person aggrieved by the deregistration and the Court is satisfied that it is just to do so.
84 In the circumstances therefore I do not consider that any substantial injustice would be occasioned by the making of the orders winding up Reach Aussie or Trade Pages and that it is appropriate for those orders to be made.
85 For the reasons set out above, I consider that judgment should be given in default under FCR r 5.23 and that it is appropriate to grant the injunctive and declaratory relief sought by the applicants together with orders to wind up Reach Aussie and Trade Pages. The applicants are entitled in the circumstances to their costs.
I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perry. |
Associate:
