Australian Securities Commission v Jamcap Nominees Pty Ltd

[1995] FCA 59

IN THE FEDERAL COURT OF AUSTRALIA )No QG 3003 of 1995
QUEENSLAND DISTRICT REGISTRY     )
GENERAL DIVISION                 )

IN THE MATTER OF RED RIVER LIMITED
ACN 003 087 689

BETWEEN:  AUSTRALIAN SECURITIES COMMISSION

Applicant

AND:     JAMCAP NOMINEES PTY. LTD.

ACN 003 131 011

First Respondent

AND:SWAN RIVER NOMINEE CORPORATION PTY. LTD.

ACN 008 685 738

Second Respondent

AND:ABN-AMRO BANK NV

Third Respondent

AND:RED RIVER LIMITED

ACN 003 087 689

Fourth Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:         Drummond J
DATE OF ORDER:              17 February, 1995
WHERE MADE:                 Brisbane

THE COURT ORDERS THAT:

1. The applicant shall herein have leave to serve the originating process outside the Commonwealth.

1. The applicant's application for interlocutory relief is adjourned to the District Registrar.

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

IN THE FEDERAL COURT OF AUSTRALIA )    No. QG 3003 of 1995
QUEENSLAND DISTRICT REGISTRY     )
GENERAL DIVISION                 )

IN THE MATTER OF RED RIVER LIMITED
ACN 003 087 689

BETWEEN:  AUSTRALIAN SECURITIES COMMISSION

Applicant

AND:     JAMCAP NOMINEES PTY. LTD.

ACN 003 131 011

First Respondent

AND:SWAN RIVER NOMINEE CORPORATION PTY. LTD.

ACN 008 685 738

Second Respondent

AND:ABN-AMRO BANK NV

Third Respondent

AND:RED RIVER LIMITED

ACN 003 087 689

Fourth Respondent

Coram:    Drummond J
Date:     17 February, 1995
Place:    Brisbane

REASONS FOR JUDGMENT

I have before me an application to restrain two Australian resident companies, Jamcap Nominees Pty. Ltd. ("Jamcap") and Swan River Nominee Corporation Pty. Ltd. ("Swan"), who are the registered holders of a large number of shares in Red River Limited ("Red River"), from dealing with those shares until further order.  The application is brought ex parte.

The evidence before me indicates that Jamcap and Swan hold a large part of their total holdings of Red River shares for ABN-Amro Bank NV ("ABN-Amro"), a Singapore resident company.  The evidence indicates that ABN-Amro in turn holds these shares on behalf of persons it has declined to identify, in its responses to notices delivered to it by the Australian Securities Commission ("ASC") under Part 6.8 the Corporations Law.  An ASC investigation has been under way into dealings with Red River shares on the Australian Stock Exchange ("Stock Exchange") for some time.  Initially the investigation was begun at the request of the Stock Exchange, following the temporary suspension in May 1994 of dealings in Red River shares.

The ASC investigator, Mr. Ryan, refers to the reference of the matter from the Stock Exchange to the ASC in May 1994 and to the commencement in July 1994 of the investigation into certain suspected contraventions of Part 6.7 and Part 7.11 the Corporations Law in relation to trading in Red River shares in the period 21 to 24 June, 1994.  The evidence indicates that the ASC investigation has since that time been expanded on a number of occasions, most recently by a decision on 5 September, 1994 to include investigation of possible breaches of Part 6.2 the Corporations Law in relation to trading in Red River shares and a number of other companies in the period 10 December, 1993 to 19 August, 1994.  ABN-Amro's activities throughout all the various phases of the investigation continue to be of interest to the ASC. 

The present action is founded on what are said to be recent failures by ABN-Amro to comply with notices issued to it by the ASC under s. 722 the Corporations Law:  one failure is alleged to have taken place on 8 February, 1995 in relation to the parcel of shares held on behalf of it by Jamcap; and the other failure is said to have taken place on 9 February, 1995 in relation to the parcel of shares held by Swan for it.

My overriding concern is with whether it is proper on the material before me to issue an ex parte restraint on dealings by Jamcap, Swan and ABN-Amro with these Red River shares.

Mr. Ryan, at paragraph 50 of his affidavit, says:

"The ASC fears that if notice of this application is given to the respondents prior to the hearing of the application the shares will be dealt with in such a manner as to create rights in third parties so as to defeat this application without the ASC being able to ascertain whether such third parties are associates of any of the respondents.  Further, any such transfer as may occur to independent third parties may limit the scope of any final order the Court may otherwise think just in the event that the ASC is successful on the final hearing."

I can see nothing in the material before me to justify these fears and thus the need for ex parte injunctive orders other than those considerations which flow from the inherently saleable and transferable nature of interests in the shares in question.   There is nothing in the history of the matter that supports what Mr. Ryan now says here.  Notices were first given to Jamcap, which are likely to have alerted ABN-Amro to the ASC's interest in ABN-Amro's holdings of interests in Red River shares, as long ago as 25 August, 1994.  Jamcap's response to the ASC notice of 25 August, 1994, a response made on the same date, was to the effect that it then held 1.6 million of Red River shares on behalf of ABN-Amro.  In its response on 6 February, 1995 to a more recent ASC notice, Jamcap indicated that it then held 2.267 million Red River shares for ABN-Amro.  Notwithstanding ABN-Amro's likely awareness of the ASC interest in its activities in relation to Red River shares since August last, it has substantially increased the number of shares which it holds, apparently on behalf of persons whose identities it will not disclose.  The same concerns the ASC had with respect to ABN-Amro's activities back in August 1994 continue to be of concern to it, although the ASC is now interested in a wider range of ABN-Amro's activities in respect of Red River shares.  No explanation is given for the delay on the part of the ASC until now in seeking to obtain interlocutory orders against ABN-Amro.  If ABN-Amro has been acting improperly in respect of Red River shares held for it by Jamcap and Swan (something which I of course merely assume for the purpose of dealing with this application), it has known since August last that the ASC is investigating its role; if Mr. Ryan's fears are justified, it is improbable that ABN-Amro has not long ago adopted procedures which will ensure that the problems Mr. Ryan speaks about already exist.  I am not satisfied that the
ex parte orders sought will achieve anything in these circumstances.

There seems to me to be no justifiable basis for ex parte relief.

I am also asked to grant leave to serve the proceedings out of the jurisdiction on ABN-Amro in Singapore.  I am satisfied, for the purposes of O. 8, r. 2(2) the Federal Court Rules, that the proceeding is one in which the Court has jurisdiction under the Corporations Law and that the proceeding is a proceeding to which O. 8, r. 1 applies:  the proceeding is founded on a breach of the Corporations Law alleged to have been committed within the Commonwealth within r. 1(b) and that, given the evidence that Jamcap and Swan are Australian resident companies and are the registered holders of the Red River shares in which ABN-Amro is interested, the proceeding is one properly brought against persons to be served in the Commonwealth, i.e., Jamcap and Swan, and in circumstances in which ABN-Amro is properly joined as a party to the proceeding within rule 1(g).  I am also satisfied that the matter is a proceeding to which r. 1 applies because it is a proceeding within r. 1(j), having regard to the injunctive relief sought, and a proceeding within r. 1(l), insofar as it is a proceeding which concerns the construction, effect or enforcement of the Corporations Law.  I am also satisfied that the applicant has a prima facie case for the relief which it seeks against ABN-Amro within the meaning of that expression in r. 2(2), founded as it is on ABN-Amro's refusal to comply with the s. 722 notices.

I will therefore give leave to serve the originating process outside the Commonwealth under O. 8 the Federal Court Rules.

I certify that this and the preceding
five pages are a true copy of the
reasons for judgment herein of the
Honourable Justice Drummond.

Associate:

Date:        17 February, 1995