Australian Securities Commission v Sheraton Finance Ltd

[1992] FCA 1064

1064           ? L *

JUDGMENT NO. .e....*m*....oa.oJ o.,':.m.sa

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 3155 of 1991

1

GENERAL DIVISION 1

BETWEEN :  AUSTRALIAN SECURITIES
COMMISSION

Applicant

AND :  SHERATON FINANCE LIMITED

Respondent .

18 MARCH 1992

REASONS FOR JUDGMENT

LOCKHART J.

This matter commenced on 8 November last year upon the filing of an application by the applicant, the Australian Securities Commission, joining as a respondent a company, Sheraton Finance Limited. The application by the commission sought various forms of relief, but as I pointed out in my reasons for judgment on 22 November last, they were all directed to restraining the respondent from carrying on an investment advice business and entering into agreements which were said to involve the respondent in the carrying on of the business of dealing in securities or holding itself out as doing so without a dealers license, an alleged contravention of section 780 of the Corporations Law.

the respondent from carrying on, at least in large measure, the	activities which the Commission sought to restrain by injunction.
The matter came back into the list on 19 December 1991 when other undertakings were given to the Court by the respondent through its counsel and certain orders of the Court were made. Again, I need not refer to the content of those undertakings and orders except to say that order 4 reserved the question of costs. This question has not been resolved by the agreement of the parties and has come before the Court today for determination.
It is necessary to state that the present form of the undertakings to the Court are to continue until further order and it has not been sought to terminate the operation of those injunctions, so they still continue. They have the same effect, for all practical purposes, as permanent undertakings or permanent injunctions.
What has been argued today on the question of costs by counsel for the respondent is twofold. First, it has been submitted that the applicant has sued the wrong party. It sued
have sued a company incorporated in Vila, Executive Syndicate Sheraton Finance Limited whereas it is submitted that it should
Limited. That company appears to have been incorporated at Vila on 5 July 1991 under the name of Sub Sea Research and Recovery Limited and its name was changed on 18 November 1991 to the Executive Syndicate Limited.
The second argument of the respondent is that there never was a threat of the kind alleged by the Commission which could have sustained the granting of injunctive relief, even interlocutory injunctive relief.
Turning to the first point which I think is the primary point, counsel for both parties have taken me to the affidavits which have been filed in this matter in support of the principal proceeding for interlocutory relief and I am satisfied, having examined the requisite material, that there is throughout the material continual reference to Sheraton Finance Limited. Counsel for the respondent states that such references exist in the context of that company being, as he put it, the handler of the monies of the syndicate and that the real members of the syndicate were the respondent and two individuals who are referred to in the evidence. That number has apparently since grown beyond three but little seems to turn on that for this purpose.
As I read the material which has been placed before the Court it seems to me that documents on the letterhead of Sheraton Finance Limited do far more than merely nominate it as a
convenient financial repository of funds of the syndicate. The evidence indicates that Sheraton Finance Limited is directly involved in the alleged contravention which is the subject of the proceeding and it is far more than a handler of moneys. Indeed, the first reference to the Executive Syndicate Limited appears to have been when an affidavit was filed on behalf of the respondent by a Mr Rex Elkington sworn on 19 November last and filed in Court on 22 November last when the name of the company, the Executive Syndicate Limited was mentioned by him.
I should say that although its name was mentioned it does not, in my opinion, detract from the view that a reasonable inference from all the evidence was that the contravening party, if there be a contravention of the relevant provision of the Corporations Law namely section 780 of the Corporations Law was the respondent.
Other contraventions are alleged by the respondent of the generic form which I described earlier and therefore other sections of the Corporations Law are relevant but I need not deal with them. There is also evidence from members of the syndicate themselves, who subscribed money to the venture in a form that adopts as an apt description of the arrangement between the syndicate members that which is referred to in schedule A to the applications which involves the respondent, Sheraton Finance
Limited, as party to the relevant transactions which have given rise to the alleged contravention of the Corporations Law.
Accordingly I do not accept that the wrong party was joined by the applicant.
As to the second ground relied upon on behalf of the respondent that there really was no evidence of a threat of the relevant kind sufficient to justify the ground of injunctive relief, I am satisfied that on the material before the Court there was sufficient evidence to support the grant of interlocutory injunctive relief to restrain the respondent from engaging in the alleged contraventions of the Corporations Law, namely, the carrying on of a business of dealing in securities or holding itself out as doing so without a dealer's licence and from carrying on an investment advice business and entering into agreements involving the respondent in the carrying on of the businesses of the kind I have mentioned.
Of course, it is true and rightly pointed out by counsel for the respondent that the undertakings have been proffered at all material times without admissions; and I therefore do not seek to raise the question of the fact that undertakings were proffered as in some way bearing upon the liability on the question of costs.
In my view the appropriate order for costs of the proceeding is that the respondent pay the costs of the applicant of the
proceeding, including all reserved costs.
I should add that submissions were made by counsel for the respondent that paragraph 8 of the application, being the initiating document in the proceeding asked for an injunction in terms which I need not repeat. Counsel argued that the evidence did not support and could not have supported the grant of an injunction in those terms.
In my opinion when parties file applications it is common knowledge that they do so by seeking all measure of relief which they legitimately require. The fact that a paragraph is included which may go beyond that to which they are entitled, has relevance to the question of whether an injunctive relief ought to be granted in those terms. But in the circumstances of this case even if the applicant could not establish a case for interlocutory injunctive relief of the kind to which paragraph 8 is directed, it would not, in my view, affect the question of costs, except perhaps to give rise to an argument that some portion of the costs of the proceeding should not be borne by the respondent, or perhaps even should be borne by the applicant, but I do not regard the intervention of paragraph 8 in the proceedings on the evidence as affecting the orders for costs that ought to be made.

I reviewed the history of the matter up to 22 November last in my reasons for judgment, and I need not repeat what I set out there, except to say that on that occasion certain undertakings were proffered by the respondent by its counsel (in each case without admissions and until further order) in effect prohibited

Accordingly, the order for costs will be as I have

indicated.

I certify that this and the

preceding five (5) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate G .

Dated: 18 March 1999 X"

Counsel for the Applicant	M. Oakes
Solicitors for the Applicant :	Australian Securities Commission
Counsel for the Respondent	W. Marler
Solicitors for the Respondent :	Davis Hyde Page

Date of Hearing	.	18 March 1992
Date of Judgment	.	18 March 1992