Asia Pacific Links Limited v Opes Prime Stockbroking Limited

[2008] FCA 998

FEDERAL COURT OF AUSTRALIA

Asia Pacific Links Limited v Opes Prime Stockbroking Limited
[2008] FCA 998

ASIA PACIFIC LINKS LIMITED v OPES PRIME STOCKBROKING LIMITED & ORS

NSD 878 OF 2008

EMMETT J

20 JUNE 2008

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 878 OF 2008

BETWEEN: ASIA PACIFIC LINKS LIMITED
Applicant

AND:

OPES PRIME STOCKBROKING LIMITED
(ACN 086 294 028)
First Respondent

MERRILL LYNCH INTERNATIONAL (AUSTRALIA) LTD (ACN 002 892 846)
Second Respondent

MERRILL LYNCH (SINGAPORE) PTE LTD
(Registration Number 1986 02883D)
Third Respondent

JUDGE:	EMMETT J
DATE OF ORDER:	20 JUNE 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.By 27 June 2008, the Application, Statement of Claim, Notice of Motion and the affidavits of Steven Lewis dated 18 June 2008 and 19 June 2008, be served on the Third Respondent be delivering a copy of such documents to its registered office in Singapore. 

2.The matter be listed for directions on 4 July 2008.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 878 OF 2008

BETWEEN: ASIA PACIFIC LINKS LIMITED
Applicant

AND:

OPES PRIME STOCKBROKING LIMITED
(ACN 086 294 028)
First Respondent

MERRILL LYNCH INTERNATIONAL (AUSTRALIA) LTD (ACN 002 892 846)
Second Respondent

MERRILL LYNCH (SINGAPORE) PTE LTD
(Registration Number 1986 02883D)
Third Respondent

JUDGE:	EMMETT J
DATE:	20 JUNE 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. Asia Pacific Links Limited (the Applicant) has commenced a proceeding against Opes Prime Stockbroking Ltd (Opes Prime), Merrill Lynch International (Australia) Ltd (Merrill Lynch Australia) and Merrill Lynch (Singapore) Pte Ltd (Merrill Lynch Singapore).  The proceeding primarily concerns an agreement entered into between the Applicant and Opes Prime, described as a Global Masters Securities Lending Agreement (the Agreement).  By the Agreement, the Applicant arranged to borrow money from Opes Prime and to provide security of some sort for the borrowing.  The substantive dispute in the proceeding will concern the nature of that security. 

2. The terms of the Agreement indicate that the nature of the security was a transfer of shares by way of a contract of mutuum.  That is to say, full ownership of the shares was to pass to Opes Prime on the basis that its obligation, as lender, would be to transfer to the Applicant, at some future time, the same quantity of equivalent shares.  However, the Applicant says that it was induced to enter into tha Agreement by fraudulent misrepresentations, made on behalf of Opes Prime, to the effect that the nature of the security was really that of a hypotheca or pignus, such that the shares were to remain beneficially owned by the Applicant. 

3. The complication that gives rise to the present application is that shares were transferred by the Applicant, at the direction of Opes Prime, to Merrill Lynch Singapore  The Applicant says that the shares were transferred pursuant to the Agreement on the basis of that fraudulent misrepresentation, such that the Applicant retained beneficial ownership of the relevant shares.  The Applicant contends for that result, either on the basis that the representation was incorporated as a term of the Agreement or gives rise to a construction of the Agreement favourable to the Applicant’s case, or that, by reason of the fraud, there was no parting with beneficial ownership of the relevant shares. 

4. The Applicant points to the fact that it was not until some time after the transfer that Merrill Lynch Singapore asserted any beneficial interest in the shares as owner, as distinct from an interest as mortgagee or chargee.  The Applicant’s case is that Merrill Lynch Australia, advanced money to Opes Prime and made claim to be entitled to the shares in question on the basis that Merrill Lynch Singapore is in effect a depository. 

5. Merrill Lynch Australia has appeared.  Merrill Lynch Singapore has not yet been served and the present application is for leave to serve Merrill Lynch Singapore in Singapore. 

6. The Applicant’s causes of action include an action under the Trade Practices Act 1974 (Cth) for damages caused by misleading and deceptive conduct on the part of Opes Prime. Alternatively, the Applicant may claim under similar causes of action under the Corporations Act 2001 (Cth) or the Australian and Securities and Investments Commission Act 2001 (Cth).  The factual allegations would be identical. 

7. I am satisfied that the proceeding is one in which the Court has jurisdiction, notwithstanding that it is a term of the Agreement that the courts of Victoria have exclusive jurisdiction to hear and decide any suit, action or proceeding, which may arise out of the Agreement.  Whether or not that clause will be relied upon by Opes Prime is not a matter presently before me. 

8. Opes Prime has clearly been properly joined as a respondent and it is clearly appropriate that Merrill Lynch Singapore be joined as a party in the proceeding.  The question is whether or not there is a prima facie case for relief against Merrill Lynch Singapore.  On the basis of the material before me, there may be some difficulties for the Applicant in establishing a cause of action that will result in a determination that the shares held by Merrill Lynch Singapore are beneficially owned by the Applicant.  Nevertheless, I am satisfied that a case for relief has been established to such a degree as would justify giving leave under Order 8 of the Federal Court Rules for the service of the Statement of Claim on Merrill Lynch Singapore in Singapore.  Whether Merrill Lynch Singapore or any other respondent may move for summary dismissal of the proceeding, on the basis that there is no reasonable prospect of success, is not a matter for me to consider in the context of this application. 

9. In the circumstances I propose to accede to the Applicant’s present application.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:        14 July 2008

Counsel for the Applicant:	Mr F M Douglas QC, Mr D Sulan
Solicitor for the Applicant:	Slater & Gordon
No appearance for the First Respondent
Counsel for the Second Respondent:	Mr N C Hutley SC, Mr S Nixon
Solicitor for the Second Respondent:	Blake Dawson
No appearance for the Third Respondent

Date of Hearing:	20 June 2008
Date of Judgment:	20 June 2008