Australian Securities and Investments Commission v Secure Finance & Investment Services (Australia) Pty Ltd
[2002] WASC 163
•26 JUNE 2002
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION -v- SECURE FINANCE & INVESTMENT SERVICES (AUSTRALIA) PTY LTD & ANOR [2002] WASC 163
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 163 | |
| 26/06/2002 | |||
| Case No: | COR:127/2002 | 20 JUNE 2002 | |
| Coram: | EM HEENAN J | 20/06/02 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Order for examination of second defendant in aid of execution made Interim ex parte orders for delivery up of passport and prohibition against departure from Australia made for short period pending hearing of application on notice to party restrained | ||
| B | |||
| PDF Version |
| Parties: | AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECURE FINANCE & INVESTMENT SERVICES (AUSTRALIA) PTY LTD (ACN 094 169 481) PHILLIP GARRY CRANE |
Catchwords: | Corporations ASIC investigation Order for examination of party in aid of interim receivership Interim orders for delivery up of passport and prohibition against departure from Australia Corporations Act 2002, s 1323(j), s 1323(k) |
Legislation: | Corporations Act 2002, s 1323(j), s 1323(k) Rules of the Supreme Court, O 48 |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
Secure Finance & Investment Services (Australia) Pty Ltd ACN 094 169 481
- Applicant
AND
SECURE FINANCE & INVESTMENT SERVICES (AUSTRALIA) PTY LTD (ACN 094 169 481)
First Respondent
PHILLIP GARRY CRANE
Second Respondent
(Page 2)
Catchwords:
Corporations - ASIC investigation - Order for examination of party in aid of interim receivership - Interim orders for delivery up of passport and prohibition against departure from Australia - Corporations Act 2002, s 1323(j), s 1323(k)
Legislation:
Corporations Act 2002, s 1323(j), s 1323(k)
Rules of the Supreme Court, O 48
Result:
Order for examination of second defendant in aid of execution made
Interim ex parte orders for delivery up of passport and prohibition against departure from Australia made for short period pending hearing of application on notice to party restrained
Category: B
Representation:
Counsel:
Applicant : Mr K G Robson & Mr T A Staples
First Respondent : No appearance
Second Respondent : No appearance
Interim Receiver and Manager : Mr C F McLeod
Solicitors:
Applicant : Australian Securities & Investments
Commission
First Respondent : Clayton Utz
Second Respondent : Clayton Utz
Interim Receiver and Manager : Deacons
(Page 3)
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 4)
1 EM HEENAN J: These are proceedings in which ASIC is seeking declarations that the respondents operated or promoted certain managed investment schemes without those schemes being registered and so acted in contravention of s 601ED(5) of the Corporations Act 2002. Other orders and relief including declarations of alleged misleading or deceptive conduct in contravention of s 995(2); the carrying on of a securities business without being licensed to do so contrary to s 780(1); holding out that the respondents were investment advisers without being licensed, contrary to s 781; the offering of securities without disclosure documents having been lodged with ASIC in contravention of s 727(1), are also being sought. The proceedings are at an early stage and no findings have been made by the Court about whether or not any of the applicant's allegations have been established.
2 However, on 20 May last, I made an order, with the consent of the respondents, appointing an interim receiver and manager of all the assets and undertaking of the first and second respondents situate within Australia for a period of three months. The receiver so appointed, Mr Richard Cacho, was given power to take the receivership assets into his possession, custody or control to preserve them pending further directions from the court. He was also empowered to request information and assistance to identify and locate receivership assets and assume control of them. The full details of the receiver's powers and duties, and the particular funds of which he was to assume control, are set out in the order of 20 May. On 28 May, again by consent, I varied that order in several minor respects at the request of the parties.
3 By an interlocutory application dated 19 June, the applicant has sought ex parte orders requiring the second respondent to deliver up his passport, preventing the second respondent from departing from Australia, and requiring the second respondent and others to be examined on oath concerning their knowledge of information needed by the receiver to pursue his investigations and obtain access to information needed in the course of the receivership. That application came on for hearing before me on 20 June and the applicant was represented by counsel. Counsel also appeared for the receiver, Mr Cacho. But no notice of the application had been given to either respondent. An affidavit of the receiver, Mr Cacho, sworn 19 June 2002 with annexures was filed in support of the claim for interlocutory relief.
4 At this stage of the proceedings, neither of the respondents has had any opportunity to make submissions to the Court or to answer the allegations which have been advanced by the receiver and the applicant
(Page 5)
- when seeking this interlocutory relief. It is important, therefore, to record that although there is evidence before the Court to support the allegations being advanced by the applicant, this has not been tested by either of the respondents, nor answered in any way. Accordingly, no findings should be made. Instead, the role of the Court should be to do no more than is necessary to ensure that the status quo is maintained until the respondents have been given notice of the allegations and have had a sufficient opportunity to answer them. In many instances this situation would result in the application for interlocutory relief being adjourned so that it could be served upon the respondents, together with evidence relied on in support, and a sufficient opportunity is given for the respondents to make an answer. In this case, however, the applicant submits that there is a risk that the processes of the Court may be frustrated unless immediate precautionary steps are taken on an ex parte basis. Although I have been reluctant to make any orders, even interim orders, on an ex parte basis, I am satisfied on the evidence which has been adduced that there is some cause to apprehend that the processes of the Court might be frustrated if no interim relief were given. Accordingly, I will make interim orders relating to the delivery up of the passport of the second respondent and preventing him from leaving Australia for a very short period. But I will direct that this application comes on for hearing afresh, on notice to the respondents, not later than 26 June.
5 The application for an order for examination of the second respondent stands on a somewhat different footing. Applications for such examination orders in aid of execution are usually made ex parte and I am satisfied on the evidence of Mr Cacho that there is cause to make such an examination order in the present circumstances. Accordingly, I will make an order for the examination on oath of the second respondent and direct that it be conducted as soon as practicable. The applicant also sought orders that two other named persons should be similarly examined. However, neither of those persons is a respondent in the principal proceedings, nor an officer of the first respondent. Nothing in my order of 20 May required those two persons to do, or to abstain from doing, anything in connection with the receivership. It seems that these two persons may be in possession of information which may be of assistance to the receiver in the conduct of his receivership. However, that is not sufficient to justify an order for their examination pursuant to O 48 of the Rules of the Supreme Court and, for that reason, I do not consider that any such order for examination of them should be made on this application.
6 Because no notice of the allegations made by ASIC, in support of this application for interlocutory relief, has been given to the second
(Page 6)
- respondent at this stage, I shall only mention, in a general way, the evidence set out in the affidavit of the receiver. Mr Cacho deposes to the steps which he has taken or attempted to date in order to assume possession or control of the receivership assets. He describes a series of meetings, telephone conversations and other communications with Mr Crane in which he has been promised co-operation and the delivery of records which he has sought, but he goes on to say, that despite assurances of continuing co-operation, Mr Crane's responses have been less than complete and that, as his inquiries have continued, it has become evident that Mr Crane has been in possession of more records than he has acknowledged or yet delivered. Investigations of records which have been obtained by the receiver have suggested that there are a number of material inconsistencies between statements made to the receiver by the second respondent and the historical record of events and transactions contained in documents which the receiver has secured.
7 Mr Cacho also deposes to his discovery of an unsigned power of attorney in the Spanish language which appears to confer full rights of sole control upon the second respondent of a bank account located in Panama for the company Secure One International Financial Services Corporation. This is a company to which investors' funds had been sent by the operations of the respondents in Australia. Previously, the second respondent had disclaimed any knowledge of, or control over, investors' funds which had been transmitted from Australia overseas. The receiver's affidavit also contains other information and annexures suggesting that the second respondent may have control or ownership of investors' funds situated abroad.
8 In the affidavit of the receiver, there is evidence to the effect that the receiver has taken possession initially of one, and later of a second, computer in the possession of the second respondent. Preliminary examination of these by a technical expert has revealed that there have been recent attempts to delete a large quantity of information, including email transmissions, from one or both of the computers. The installation of special software has since allowed many of those emails to be retrieved and the receiver's staff is still processing them. Further investigation by the computer expert has revealed that there is information on the second computer which has been encrypted and now cannot be accessed without the relevant password. A request has been made to the second respondent to supply the password needed and an answer has been given which has still not enabled the encrypted data to be opened. The second respondent asserts that he does not know the password and that the encryption system has been installed on his computer by a third person and only that third
(Page 7)
- person knows the password. None of this information was initially volunteered to the receiver by the second respondent.
9 The receiver's affidavit also includes evidence to the effect that the materials obtained from the possession of the respondents include a number of publications dealing with hiding assets overseas beyond the detection of government authorities, and the use of means to conceal individual identities when travelling across international borders. It has also been established that the second respondent has, recently, departed from Australia and returned without disclosing his intention to do so to the receiver. There is also evidence suggesting that, since the order of 20 May, money has been removed from accounts under the control of the respondents in a manner inconsistent with the order of the Court of 20 May as varied.
10 Obviously, no findings should be made on this evidence without an opportunity being given to the respondents to answer it but, I am satisfied that there is sufficient reason to apprehend that the second respondent may depart from Australia and, that if he were to do so and not return, this would significantly handicap the receiver in completing his investigations and may prejudice the investigation presently being conducted by the applicant. In my opinion, this is sufficient to justify short-term interim orders requiring the second respondent to deliver up his passport and to prevent him from leaving the country until he is given an adequate opportunity to respond to this evidence.
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