Australian Securities Commission v Booth, Mark

[1997] FCA 1012

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 3701 of 1996
GENERAL DIVISION                 )   

Between:AUSTRALIAN SECURITIES COMMISSION

Applicant

And:MARK BOOTH

Respondent

REASONS FOR JUDGMENT

EINFELD J SYDNEY 18 JULY 1997

This case commenced as an application under section 1323 of the Corporations Law for various orders including both restraining and mandatory injunctions concerning certain share dealings in September-November 1996. As a consequence of the commencement of the action, a sum of $1,977,000 was recovered and paid into this Court pending a distribution to persons with legitimate claims on those monies. Subsequently, a Judge of the Court ordered that these moneys be invested such that the figure has grown to a little over $2,000,000 with interest.

Some six organisations and one individual have come forward to make claims on that sum.  In addition, the Australian Securities Commission (ASC) which had moved in the interests of the various aggrieved parties to secure the funds, is seeking costs of just under $67,000.  All of the claimants except two have accepted the distribution of the funds proposed by the Commission, the two opponents being Merrill Lynch Options (Australia) Pty Limited and Merrill Lynch (Australia) Futures Limited.  Their challenge is not to the percentage division of the funds, but to the proposal that out of the accumulated funds, the Commission’s costs should be a disbursement.

These companies do not challenge the jurisdiction of the Court to make an order for costs or the Court’s legal power to do so.  It is also not contested that the amount of costs claimed by the Commission is reasonable for the work it has done.  What the Merrill Lynch companies claim, is that on equitable grounds the Commission’s costs should be recovered, not from those who suffered from the share transactions, but from the person responsible for the dealings in the first place who is the only remaining respondent to the current proceedings.

The Commission argues that without its prompt action in this matter, the aggrieved person and organisations which lost moneys on the transactions concerned would not have recovered the moneys that they are about to recover without launching proceedings themselves.  In that event, they would no doubt have had to pay their own legal costs or take their chances of recovering them against the current remaining respondent.  It is also argued by the Commission that it should be allowed as a matter of equity to be funded now because, spread over the $2,000,000, its $67,000 would be contributed in relatively small sums by the various participants in the funds available.  This is said to be a reasonable contribution by the beneficiaries of the distribution in all the circumstances of the case.

The evidence establishes that a male has been charged with a number of offences in relation to these share transactions and that his trial is expected to take place in 1999.  The Commission, which is also responsible for initiating that prosecution, alleges that the man to be tried is in truth the same person as the present respondent although the names are different, and that the name of the respondent in this case is an alias or an assumed name.  Although in theory the ASC could launch separate civil proceedings against this person, the practical realities are that if that the Commission can only recover its costs from him, it would have to await the completion of the criminal proceedings and then, of course, take its chances that he was in a position to meet the costs.

I agree that the Commission’s submissions provide a reasonable basis for the Court to make the order it seeks and I accept its arguments in this regard.  Accordingly, the orders I make are that the New South Wales District Registrar of the Federal Court recover the sums presently invested and pay them to the Commission with interest accrued to the date of withdrawal.  I note that, within eight business days of the receipt of these sums, the Commission undertakes to distribute the funds in accordance with a document headed "Schedule A" to some short minutes of order which I have initialled and dated with today's date.  I order that the proceedings be otherwise dismissed.