Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd

[2002] NSWSC 741

Reported Decision: 42 ACSR 605
(2002) 20 ACLC 1637

New South Wales

Supreme Court

CITATION:	ASIC v Mauer-Swisse Securities Ltd and Anor [2002] NSWSC 741
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 3823/02
HEARING DATE(S):	9 August, 2002
JUDGMENT DATE:	9 August 2002
PARTIES :	Australian Securities and Investments Commission - Plaintiff Mauer-Swisse Securities Limited - First Defendant Alan Goldman - Second Defendant
JUDGMENT OF:	Palmer J

COUNSEL :	D.R. Stack - Plaintiff B.R. McClintock, P.J. Brereton - First Defendant B.R. McClintock, P.J. Brereton - Second Defendant
SOLICITORS:	Jan Redfern, Regional General Counsel, ASIC - Plaintiff Blake Dawson Waldron - First Defendant Blake Dawson Waldron - Second Defendant
CATCHWORDS:	CORPORATIONS - INJUNCTIONS - INTERIM INJUNCTIONS - Application by ASIC under s.1324(4) Corporations Act for interim injunctions - principles applicable - whether Court has regard only to whether serious question to be tried and where balance of convenience lies - inconsistency in authorities - ASIC v Sweeney [2001] NSWSC 114, ASIC v Parkes (2001) 38 ACSR 355, ASIC v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 followed - ASIC v Cooke (1996) 22 ACSR 580, Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362, Westgold Resources NL v Precious Metals Australia Ltd (2002) 41 ACSR 672 not followed.
LEGISLATION CITED:	Australian Securities and Investments Commission Act (2001) (Cth) - s.1(2), s.33 Companies Act (1981) (Cth) - s.574(5), (6) Companies (Acquisition of Shares) (Queensland) Code - s.45(1), s.49(2A), (2B) Corporations Act, 2001 (Cth) - s.911A, s.1324(1), (3), (4), (6), (7), (8) Supreme Court Act 1970 (NSW)
CASES CITED:	- Adsteam Building Industries Pty Ltd v Queensland Cement & Lime Co Ltd [1984] 2 Qd R 1 - Algar v Middlesex County Council [1945] 2 All ER 243 - ASIC v Cooke (1996) 22 ACSR 580 - ASIC v Mauer-Swisse Securities Ltd [2002] NSWSC 684 - ASIC v Parkes (2001) 38 ACSR 355 - ASIC v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 - ASIC v Sweeney [2001] NSWSC 114 - Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 - Corporate Affairs Commission (NSW) v Lombard Nash International Pty Ltd (1986) 11 ACLR 566 - Evans Deakin Industries Limited, Re [1981] Qd.R. 321 - Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362 - NCSC v Monsoon Nominees Pty Ltd (1990) 3 ACSR 361 - Westgold Resources NL v Precious Metals Australia Ltd (2002) 41 ACSR 672 - World Series Cricket Ltd v Parish (1977) 16 A.L.R. 181
DECISION:	Interim injunctions continued.

Ex tempore – 9 August, 2002

Introduction

1    When this matter was before me on 7 August, I continued orders which had been made earlier in the proceedings: ASIC v Mauer-Swisse Securities Ltd [2002] NSWSC 684. The principal orders prohibited the Second Defendant, Mr Goldman, from leaving Australia without the consent of the Court, required him to deliver up his passport, and prohibited both Mr Goldman and the First Defendant (“Mauer-Swisse”) from taking money out of Australia in specified circumstances. 2 When the matter came back before me today, I was informed that documents had been delivered to the Plaintiff (“ASIC”) by Mauer-Swisse and that the examination of Mr Goldman was able to proceed. The matter was stood down until 3.00 pm today. 3 Mr Stack, who appears for ASIC, now informs me that the examination of Mr Goldman has been completed. ASIC has no objection to the dissolution of the orders detaining Mr Goldman in Australia. The reality of the situation is, however, that he will probably be here for some time because, upon conclusion of his examination, he was arrested and he is now in custody. A bail application may or may not be successful. I do not wish anything I say now to have any effect on the consideration of any bail application that Mr Goldman might make. 4 The orders in paragraphs 1 and 2 of the Short Minutes of Order dated 7 August will expire in fifteen minutes and will not be extended. The passport of Mr Goldman may be handed back to him, or his legal representative, and he is able to leave Australia without the consent of the Court, if his bail conditions so permit. 5 The Defendants do not oppose the continuation of the orders in paragraphs 3, 4 and 5 of the Short Minutes. Those orders will, therefore, continue until further order of the Court. 6 As I remarked on the last occasion, the proceedings at this stage are interlocutory in that ASIC has obtained interim orders under s.1324(4) of the Corporations Act, 2001 (Cth) (“CA”). ASIC says that it intends to prosecute the proceedings for final relief under s.1324(1) CA to a conclusion, even though there may be little of substance still to be determined as events have transpired. I will therefore stand the matter over into the Corporations List on a date to be fixed at the conclusion of these reasons after discussion with Counsel.

Interim injunctions sought to be extended

7 What has been debated before me today has been whether or not the interim injunctions in paragraphs 6 and 7 of the Short Minutes ought to be continued. Those injunctions presently restrain Mauer-Swisse and Mr Goldman from carrying on a business of financial services in Australia, contrary to s.911 A CA. The injunctions were sought pursuant to s.1324(4) CA, which is in the following terms:
“ (4) Where in the opinion of the Court it is desirable to do so, the Court may grant an interim injunction pending determination of an application under subsection (1).”
8 Mr McClintock SC, who appears with Mr Brereton for the Defendants, says that there is no purpose in continuing those injunctions. Mr Goldman and Mauer-Swisse have been effectively prevented, he says, from any activity which might involve future contraventions of s.911 A CA because, for a start, Mr Goldman is now in custody facing criminal charges and, secondly, in the circumstances which have transpired since Mr Goldman's detention in Australia, it would be extremely foolhardy for either him or Mauer-Swisse to attempt to continue any activities in Australia which could constitute a breach of s.911 A CA. 9 Mr Stack, who appears for ASIC, says that the interim injunctions should be continued because there is still a degree of risk that illegal activities in contravention of s.911 A CA will be carried out by the Defendants. He says that the Court should exercise the power to grant interim injunctions conferred under s.1324(4) CA because it is the intention of the legislature that people contemplating breaches of the Corporations Act should be deterred by the possibility of contempt proceedings in addition to the possibility of prosecution under the Corporations Act . 10 In the present case it is clear that, as matters presently stand, the Court does have power under s.1324(4) and (6) CA to make the orders sought by ASIC. Mr McClintock concedes that there is at least a prima facie case that the Defendants have engaged in conduct contravening s.911 A , so that there is a prima facie case for a permanent injunction under s.1324(1). Even if there were not such evidence, s.1324(6) enables the Court to grant an injunction, whether or not it appears that the relevant person has previously engaged in contravening conduct. 11 In my ex tempore judgment I referred briefly to two authorities, ASIC v Parkes (2001) 38 ACSR 355 and ASIC v PegasusLeveraged Options Group Pty Ltd (2002) 41 ACSR 561. I noted that in both of those cases the Court had remarked upon equity’s aversion to granting an injunction to restrain the possible commission of a criminal offence and to granting an injunction if there was little, if any, risk of future wrongful conduct. However, both cases drew attention to the legislative intent emerging from s.1324 CA and from the Australian Securities and Investments Commission Act (2001) (Cth) (“ ASIC Act ”) that the Court should grant an injunction in circumstances in which equity would ordinarily have refused it out of hand. I came to the conclusion that, ultimately, the question for the Court’s determination in an application for an injunction under s.1324(4) CA was whether the injunction would have some utility or serve some purpose within the contemplation of the Corporations Act . Sometimes, I said, the utility will be to protect the community against a real risk of wrongdoing by a person who, the Court finds, has a demonstrated propensity to engage in conduct in contravention of the Corporations Act . Sometimes the utility will be to mark the Court’s and the community’s disapproval of certain types of conduct. However, I concluded, the circumstances which may move the Court to grant an interim injunction in the exercise of its power under s.1324(4) CA cannot be circumscribed. What follows is an amplification of my reasons for coming to those conclusions.

Inconsistency as to applicable principles

12 There is some inconsistency in the authorities as to the principles upon which the Court should act in an application for an interim injunction under s.1324(4) CA. As I have noted, there are decisions of this Court to the effect that in an application for a permanent injunction under s.1324(1) CA the Court is entitled to take into account discretionary considerations which are quite foreign to the traditional principles upon which a court of equity acts in granting injunctions. On the other hand, there are authorities to the effect that in an application for an interim injunction under s.1324(4) the Court should approach the matter as if it were simply exercising its ordinary equitable jurisdiction: the Court considers only whether there is a serious question to be tried and where the balance of convenience lies. 13 It seems rather curious that a Court which is said to have a wide jurisdiction when granting final injunctive relief under s.1324(1) CA should be confined to a somewhat narrower jurisdiction when exercising the power to grant an interim injunction under s.1324(4). The anomaly has arisen, in my opinion, because it has not always been kept firmly in mind that the jurisdiction which the Court is exercising both under s.1324(1) and under s.1324(4) is a special statutory jurisdiction rather than the Court’s traditional equity jurisdiction. How this anomaly has developed emerges from a consideration of the cases. 14 In ASIC v Sweeney [2001] NSWSC 114, ASIC commenced proceedings against the defendant seeking, inter alia, permanent injunctions under s.1324(1) of the Corporations Law (now the Corporations Act ) restraining the defendant from committing further acts in contravention of the Corporations Law . In an interlocutory application concerning an order for substituted service the defendant submitted that there was little likelihood of the Court granting the permanent injunctions sought because they were founded upon past conduct, not threatened future conduct. 15    Austin J said at paragraphs 34 to 36:

“34. The present proceedings have been brought by the public regulator to enforce the corporations and securities legislation. According to s 1(2) of the Australian Securities and Investments Commission Act 1989 (Cth), in performing its functions and exercising its powers, the plaintiff must strive to achieve various objectives, including:

· to promote the confident and informed participation of investors and consumers in the financial system;

· to administer the laws that confer functions and powers on it effectively and with a minimum of procedural requirements; and

· to take whatever action it can take, and is necessary, in order to enforce and give effect to the laws that confer functions and powers on it.

35. These provisions imply that it is appropriate for the Commission to take civil proceedings for declaratory and injunctive relief in respect of past events, even if there is no risk of repetition, where the outcome may establish that the conduct complained of was wrongful (and thereby mark the Court's and the community's disapproval of it) and may deter other wrongdoers. It is appropriate for the Court to take these matters into account in the exercise of its discretion to grant or refuse such relief.

36. Thus, the Court has jurisdiction to grant relief of the kinds sought by the plaintiff in these proceedings. The granting of that relief will depend on the exercise of the Court's discretion. It cannot be said that the plaintiff is doomed to fail because of the nature of the relief that it seeks. On the contrary, it is likely that there will be persuasive discretionary considerations in favour of granting such relief, which will be taken into account at the final hearing. Therefore the defendant's first ground discloses no reasonable basis for challenging the order for substituted service.”
16    In ASIC v Parkes (supra), ASIC sought declarations that the defendant had contravened the Corporations Law and it sought permanent injunctions under s.1324(1) accordingly. Austin J referred to his observations in ASIC v Sweeney , set out above, and said at paragraph 9:
“9. If a contravention of s 229(1) is established, various civil consequences follow. The criminal consequences of contravention are not relevant to this case. Perhaps the most important civil consequence is that the Court may, in the exercise of its inherent jurisdiction and statutory powers under the Supreme Court Act 1970 (NSW) , make declaratory and injunctive orders. I have recently reviewed the case law with respect to the making of declarations of Corporations Law contraventions: Australian Securities & Investments Commission v Sweeney [2001] NSWSC 114, paras 30-36. The same general considerations apply with respect to granting an injunction. Equity's traditional reluctance to enjoin the commission or repetition of a crime yields to the public interest in establishing and dealing with contraventions of a law of economic and social importance. The Court's general power to grant an injunction is underscored by s 1324, which makes it clear that an injunction may be granted, in the exercise of the Court's discretion, even if there is no threat of repetition of the contravention.”

Although his Honour did not expressly say so, it is clear from his Honour’s reasoning in Sweeney , and more particularly in Parkes , that his Honour considered that the Court’s power to grant an injunction under s.1324 CA was additional to, and not merely ancillary to, its inherent equitable jurisdiction or its power to grant injunctions under the Supreme Court Act . As the source of the injunction power in s.1324 was statutory, so the discretionary factors influencing the exercise of that power were to be found mainly, if not entirely, within the framework of the statute and its associated legislation. With that conclusion and his Honour’s reasons in arriving at it, I respectfully agree.

17    In ASIC v Pegasus Leveraged Options Group Pty Ltd (supra), ASIC sought final relief including permanent injunctions under s.1324(1) restraining possible future breaches of the Corporations Act . Davies AJ quoted the passage from the judgment of Austin J in ASIC v Sweeney set out above, and continued at p.583:
“109. However, although the Court has a wide discretion and is relieved by ss 1324(6) and (7) from the shackles which would otherwise be imposed by the well understood principles of equity, nevertheless, the Court should not grant an injunction simply because it has been requested to do so. An injunction should not be granted unless the order is directed to and appropriate to achieve an end such as enforcing and giving effect to the statute.”
18 It is apparent from this passage that Davies AJ implicitly accepted the proposition that the power to grant an injunction conferred by s.1324(1) was derived, not from the Court’s equitable jurisdiction, but from the statute and that at least one of the considerations relevant to the exercise of that power was whether the granting of a permanent injunction was appropriate as a means of giving effect to the policy considerations and objectives of the Corporations Act and the ASIC Act to which Austin J had referred in Sweeney . 19 I do not think that there could be any doubt that the Court is not exercising its traditional equitable jurisdiction in granting an injunction under s.1324(1) CA. That is made abundantly clear by the provisions of s.1324(6) and (7), which are in the following terms:

“ (6) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and

(b) whether or not the person has previously engaged in conduct of that kind; and

(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.

(7) The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:

(a) whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; and

(b) whether or not the person has previously refused or failed to do that act or thing; and

(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.”

The circumstances referred to in these subsections, if found in the negative, would have led to the refusal of an injunction by a court of equity almost as a matter of course.

20 It is important to observe that the provisions of s.1324(6) and (7) are not confined to applications for permanent injunctions under s.1324(1); they apply as well to interim injunctions sought under ss.(4). This is so, in my opinion, because ss.(6) and (7) are not expressed to be applicable only to the grant of a permanent injunction under ss.(1). The subsections refer to “the power of the Court to grant an injunction” – a power to be found in ss.(4) as well as in ss.(1), (2) and (3). An interim injunction is “just as much an injunction as a permanent injunction, with this qualification, that it is to last only for a certain time” : Algar v Middlesex County Council [1945] 2 All ER 243, at 250 per Humphreys J. I see nothing in s.1324 which requires the words “the power … to grant an injunction” where occurring in ss.(6) and (7) to be read down to refer only to a permanent injunction. 21 One might have thought that an application for an interim injunction under s.1324(4), at least if made by ASIC, would have been treated as requiring the Court to have regard to substantially the same wide considerations as, according to Sweeney , Parkes and Pegasus , should be taken into account in an application for a final injunction under s.1324(1), subject of course to the qualification that the injunction is interim and may be sought at a very early stage in the proceedings. That the same policy considerations are relevant to applications by ASIC for interim injunctions as are relevant to applications for permanent injunctions would seem obvious from the fact that s.1324(8) provides that the Court “must not” require an undertaking as to damages from ASIC or any other person as a condition of granting an interim injunction on the application of ASIC. This is so because ASIC is presumed to be acting in the public interest and in accordance with the policy considerations to which Austin J has referred. Yet there seems to have developed a line of authority which treats applications under s.1324(4), whether by ASIC or private parties, in exactly the same way as applications for an interlocutory injunction in the equity court’s traditional jurisdiction. 22 In Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362, the plaintiff sought various interlocutory orders, including an order under s.1324(4). Warren J said at para.51:

“It is well established that an application under s.1324 is to be determined in accordance with the usual principles applicable to an interlocutory injunction: see Adsteam Building Industries Pty Ltd v Queensland Cement & Lime Co Ltd (1984) 2 Qd R 1, at 5-6; NCSC v Monsoon Nominees Pty Ltd (1990) 3 ACSR 361, 363; ASIC v Cooke (1996) 22 ACSR 580, 580-1.”
23 His Honour’s observation was made in the context of litigation between private parties rather than between ASIC and an alleged wrongdoer. Nevertheless, the observation, on its face, seems intended to be of general application, founded as it is on the authority of two cases in which ASIC was a party. If the observation is correct, it seems that in an application for an interim injunction under s.1324(4) the Court is concerned only with the issues applicable when the Court is exercising its traditional equitable jurisdiction: excluded from consideration are the wider issues referred to by Austin J in Sweeney and in Parkes , and by Davies AJ in Pegasus . 24    To like effect is the observation of White AUJ in Westgold Resources NL v Precious Metals Australia Ltd (2002) 41 ACSR 672. As in Liquorland , the litigation was between private parties so that his Honour’s remarks may have to be understood as confined to that context. However, the application before the Court was for an interim injunction under s.1324(4) restraining the respondent from issuing shares pursuant to a prospectus alleged to have been promulgated in contravention of the Corporations Act . 25    At p.673, White AUJ described as well settled the principles applicable to the grant of an interlocutory injunction. He then referred to the principles applicable to the exercise of the equity court’s traditional injunction jurisdiction, namely, whether there was a serious issue to be tried, where the balance of convenience lay, and whether damages would be an adequate remedy. He made no reference to Sweeney or Parkes and gave no consideration of the effect of s.1324(6) and (7) CA. 26 It is necessary to pay some attention to the three cases upon which Warren J relied in Liquorland as supporting the proposition that “the usual principles” applicable to an interlocutory injunction in the court’s traditional equitable jurisdiction apply to an injunction sought under s.1324(4) CA. 27 In Adsteam Building Industries Pty Ltd v Queensland Cement & Lime Co Ltd [1984] 2 Qd R 1, the plaintiff commenced proceedings for orders under s.45(1) of the Companies (Acquisition of Shares) (Queensland) Code (“the Code”). The final relief claimed was an order restraining the defendant from exercising voting rights attaching to shares which were alleged to have been acquired in contravention of s.11 of the Code. The plaintiff then sought interlocutory orders to that effect under s.49(2 A ) of the Code. 28    At p.5, McPherson J said:

“A question that arises on this application is the extent to which general equitable principles governing the grant or refusal of injunctions apply to the exercise of the discretion to make or withhold orders under s45(1). In support of his submission that they do apply, Mr Dowsett QC referred me to the decision of the Federal Court in World Series Cricket Ltd v Parish (1977) 16 A.L.R. 181, where the Full Bench of that Court applied those principles to an application under s.80 of the Trade Practices Act 1974. However, s.80 of that Act expressly refers to injunctions and so may be thought by implication to import equitable notions associated with that form of relief. The word used in s.45 is not “injunction” but “order”, and in Re Evans Deakin Industries Limited [1981] Qd.R. 321 at 325, Dunn J held that the equitable requirement of “clean hands” had no application because the applicant was not claiming equitable relief but seeking the exercise of a power given to the court by statute. My own conclusion is that, although some characteristically equitable doctrines may perhaps not extend to applications under s45(1), the general approach of the courts to such an application is likely to be similar to that in the case of an injunction. That is so simply because both involve the imposition of restrictions on the activities of others, and the considerations affecting the court’s discretion are therefore likely to be much the same in both types of case . Some statutory confirmation of this is to be found in s49(2 B ), which evidently contemplates that a successful applicant for statutory relief will, as in the case of an injunction, ordinarily be required to give an undertaking in damages .

It is reasonable to expect that similar considerations will govern the granting of what s49(2 B ) describes as an interim order, that is, one expressed to have effect pending the determination of the application. Section 49(1) expressly precludes the court from making an order that it is satisfied would unfairly prejudice any person. Otherwise there is little explicit guidance to be gathered from the section.” [Emphasis added]
29    A little further on, at p.6, his Honour said: “An interlocutory injunction will ordinarily be granted if two enquiries are satisfied.” He then referred to the balance of convenience and whether there was a serious question to be tried. 30    A number of points need to be made. First, his Honour clearly recognised that the Court was exercising a statutory jurisdiction, rather than its ordinary equitable jurisdiction, when granting both final and interlocutory relief under s.45(1) and s.49(2 A ) of the Code. Second, his Honour was prepared to say only that the general approach to exercise of the statutory jurisdiction was “likely to be similar” to the approach to injunctions in the ordinary equitable jurisdiction. Third, the relevant provisions of s.45 and s.49(2 A ) and (2 B ) are substantially different from those of s.1324 in that there is no equivalent of s.1324(6) and (7) and, by s.1324(8), an applicant for an interim order is now exempted from the requirement to give an undertaking as to damages. Fourth, there were not then in effect, of course, the policy considerations enumerated in s.1(2) of the ASIC Act , to which Austin J drew attention in Sweeney . 31    Corporations legislation has moved on considerably from s.49 of the Code. Section 574 of the Companies Act (1981) (Cth), which was the predecessor of s.1324 CA, went much further than s.45 and s.49(2 A ) of the Code in that it added ss.(5) and (6), which were the precursors of s.1324(6) and (7). Section 1324(6) and (7) went further than s.574(5) and (6) in that those subsections removed the qualifications of which the Court had to be satisfied before granting injunctions. In my opinion, all that can now be derived from Adsteam is that, as the law stood when that case was decided, the Court regarded the principles guiding the exercise of the statutory jurisdiction to grant an interlocutory injunction in aid of relief for a contravention of the corporations legislation as analogous to, but not the same as, the principles upon which the Court exercises its traditional injunction jurisdiction. Since Adsteam , however, the power to grant statutory injunctions in respect of contraventions of the corporations legislation has been expanded considerably and the analogy between the statutory injunction and the injunction in the Court’s traditional equitable jurisdiction has become more and more remote. In my opinion, Adsteam can no longer be relied upon as authority for the principles which should guide the Court in an application for an interim injunction under s.1324(4) CA. 32 The second case to which Warren J referred, NCSC v Monsoon Nominees Pty Ltd (1990) 3 ACSR 361, was another case of an application for an interim injunction under s.49(2 A ) of the Code. This time, of course, the applicant was the Commission, rather than a private party. At p.363, Ipp J said:
“The nature and effect of an order under s 49(2 A ) are similar to an interlocutory order for an injunction. Similar considerations to those which apply to the grant of an interlocutory injunction apply to the grant of an order under s 49(2 A ): cf Adsteam Building Industries Pty Ltd v Queensland Cement & Lime Co Ltd [1984] 2 Qd R 1 at 5-6.”
33    It will be seen that Ipp J went no further than McPherson J in expounding the principles upon which the Court exercises its statutory jurisdiction to grant interlocutory injunctions: the principles are not the same but similar. In my opinion, by reason of subsequent statutory amendment, Monsoon Nominees , like Adsteam , is no longer a guide to the principles applicable to proceedings under s.1324(4) CA. 34 An urgent application for an interim injunction under s.1324(4) came before R.D. Nicholson J in ASIC v Cooke (1996) 22 ACSR 580. At the commencement of an ex tempore judgment, his Honour said at p.580-581:

“ Interim injunctive relief

The approach taken to the granting of interim orders under the Corporations Law follows that taken in respect of an interlocutory injunction: see Adsteam Building Industries Pty Ltd v Queensland Cement and Lime Co Ltd [1984] 2 Qd R 1 at 526; NCSC v Monsoon Nominees Pty Ltd (1990) 3 ACSR 361 at 363. As is normal on such applications, the applicant must establish there is a serious question to be tried and the balance of convenience favours the making of the order: see Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153; 67 ALR 553.”

His Honour then went on to consider those two questions.

35 With great respect to Nicholson J, for the reasons which I have given I am unable to agree with his view of the principles guiding the exercise of the Court’s discretion in an application under s.1324(4) CA, and that Adsteam and Monsoon Nominees are authorities which support that view. 36    At the risk of some repetition, I summarise the principles which I draw from the presently applicable authorities:


– the jurisdiction which the Court exercises under s.1324 CA is a statutory jurisdiction, not the Court’s traditional equity jurisdiction;

– Parliament has made it increasingly clear by successive statutory enactments that the Court, in exercising its statutory jurisdiction under s.1324, is not to be confined by the considerations which would be applicable if it were exercising its traditional equity jurisdiction;

– amongst the considerations which the Court must take into account in an application for an injunction under s.1324 CA are the wider issues referred to by Austin J in Sweeney and Parkes , and by Davies AJ in Pegasus ; they may be gathered under the broad question whether the injunction would have some utility or would serve some purpose within the contemplation of the Corporations Act ;

– these considerations are to be taken into account regardless of whether the application is for a permanent injunction under s.1324(1) or for an interim injunction under s.1324(4);

– where an application under s.1324(4) is made by ASIC rather than a private litigant the Court is more likely to give greater weight to the broad question whether the injunction would serve a purpose within the contemplation of the Corporations Act ;

– where there is an appreciable – that is, not fanciful – risk of particular future contraventions of the Corporations Act by a defendant, it would serve a purpose within the contemplation of the Corporations Act that the Court grant not only a permanent injunction but, in an appropriate case, an interim injunction restraining such conduct. Section 1324 evinces an intention that the possibly severe consequences and the relative promptness of proceedings for contempt of Court be added to criminal prosecutions as a deterrent to contraventions of the Corporations Act ;

– although the questions whether there is a serious question to be tried and where the balance of convenience lies will not circumscribe the Court’s consideration in an application for an interim injunction under s.1324(4), the interests of justice will always require that those questions be examined carefully when restrictions are sought to be imposed before the case has been properly examined by the Court, even where the protection of the public is said to be involved: see per Young J (as his Honour then was), in Corporate Affairs Commission (NSW) v Lombard Nash International Pty Ltd (1986) 11 ACLR 566, at 570-571;

– the balance of convenience will be viewed differently according to whether the applicant under s.1324(4) is ASIC or a private litigant. Where ASIC is acting to protect the public interest, the absence of an undertaking as to damages, exempted by s.1324(8), will usually be of little consequence. However, where the proceedings are brought to advance a plaintiff’s private interests, then if such an undertaking is not proffered even though it is likewise exempted by ss.(8), the Court may take that circumstance into account as a matter of practicality, common sense and fairness in determining where the interests of justice lie and whether “it is desirable” to grant the injunction: see per Young J in Lombard Nash at 571.


Conclusions

37    In the present case I have come to the conclusion that there is utility in extending the interim injunctions as sought by ASIC, and that it is desirable to do so, for the following reasons. 38    I have been somewhat troubled by the fact that the capacity for Mr Goldman to engage in future contraventions of the Act seems to be, at least at the moment, severely limited; as I have said, he is in custody. However, it is quite possible that he may be released on bail very shortly. I think that the circumstances urged by Mr McClintock as to the risk of repetition of possible wrongful conduct are powerful. On the other hand, however, as Mr Stack says, there is evidence suggesting, on a prima facie basis – and if I may say so, quite strongly – that in the past Mauer-Swisse and Mr Goldman have engaged in conduct in breach of s.911 A when they must reasonably have known that they were breaching the Act. I have set out the circumstances in the judgment which I delivered on 2 August: ASIC v Mauer-Swisse Securities Ltd [2002] NSWSC 684. 39 In considering whether there is any likelihood of Mr Goldman committing breaches of s.911 A in the future so that interim injunctions should go, I have been troubled by the fact that when Mr Goldman gave his evidence he did not seek to justify the conduct in which he had engaged; he did not seek to give an explanation, which would have exonerated him or might have shown that he believed that he was not committing any wrongful act. He did not attempt to say that he was in honest ignorance of the relevant provisions of the Corporations Act which he was said to have breached. 40 Further, as I have noted in my earlier judgment, I have been somewhat troubled by the fact that I did not find satisfactory the evidence which Mr Goldman gave as to why it would be impossible or impracticable for Mauer-Swisse to comply with ASIC’s Notice under s.33 of the ASIC Act to deliver up books and records for the purposes of his examination. 41    I have been troubled by Mr Goldman’s evidence that, despite his being shown as sole director of Mauer-Swisse, he was not really in control of the company at all and accepted instructions from Mr Mauerberger. 42    Those circumstances, taken together with the prima facie case of repeated breaches of the Corporations Act on previous occasions, lead me to the conclusion that this is a case in which there is an appreciable risk of further identifiable contraventions by the Defendants of s.911 A CA, so that it is appropriate for the Court to grant injunctions on an interim basis in accordance with s.1324(4) and (6). 43 It may be that when the matter is heard on a final basis it will be shown that the actions of Mr Goldman and Mauer-Swisse do not constitute a breach of any provisions of the Act. Mr McClintock has foreshadowed some possible defences in that respect. However, I think that it is proper at the present time to extend the orders in paragraphs 6 and 7 of the proposed Short Minutes. 44 I make orders in accordance with the Short Minutes of Order dated today, initialled by me and placed with the papers. I stand the matter over to the Corporations List on Monday 26 August 2002.
– oOo –

Last Modified: 08/23/2002