FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v
CFS Private Wealth Pty Ltd [2018] FCA 1070
Table of Corrections 23 November 2018 The Orders have been amended to include Orders 3, 4 and 5, definitions and notice under rule 41.06 of the Federal Court Rules 2011 (Cth). ORDERS
QUD 255 of 2018 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Applicant
AND: CFS PRIVATE WEALTH PTY LTD ACN 141 584 885
First Respondent
BDM ASIA PACIFIC PTY LTD ACN 127 643 529 (DEREGISTERED)
Second Respondent
COMBINED FINANCIAL SOLUTIONS PTY LTD ACN 003 152 378 (and another named in the Schedule)
Third Respondent
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- AGLC
- CFS Private Wealth Pty Ltd [2018] FCA 1070
- Case
- [2018] FCA 1070
- Decision Date
CaseChat Overview and Summary
The court was tasked with determining whether it had the authority to grant preservation and restraining orders under the Corporations Act without the appointment of a receiver. ASIC argued that such orders were necessary to prevent the dissipation of assets that could be required to compensate victims or to support regulatory actions. The respondents contested the application, raising issues regarding the scope of the court’s powers and the proportionality of the orders sought.
In ruling on the application, the court found that it had the necessary jurisdiction to grant the preservation and restraining orders. The court determined that the preservation of assets was crucial given the significant nature of the allegations and the potential harm to affected parties. The court also noted that the orders were carefully tailored to balance the need to protect assets with the rights of the respondents to conduct certain necessary business activities. Consequently, the application was allowed, and orders were made to restrain the respondents from removing or disposing of their assets, incurring new liabilities, and engaging in certain business activities.
The final orders included restraining the respondents from removing assets from Australia, selling or disposing of their property, incurring new liabilities, and conducting specific business activities, while allowing certain limited financial activities to continue. ASIC's costs for the interlocutory application were also ordered to be paid by ASIC. The court provided liberty to ASIC to apply for further orders with one business day’s notice.
Orders
Orders of the court
1. Subject to the terms of paragraph 2 below, an order pursuant to sections 1323(1) and 1323(3) of the Corporations Act 2001 (Cth) that until further order, each of the respondents, by themselves and their servants, agents and employees be restrained from:
(a) removing, or causing or permitting to be removed from Australia all or any of the Property of any of the respondents;
(b) selling, charging, mortgaging or otherwise dealing with, disposing of and/or diminishing the value of all or any of the Property of any of the respondents;
(c) causing or permitting to be sold, charged, mortgaged or otherwise dealt with, disposed of, or diminished in value, all or any of the Property of any of the respondents;
(d) without limiting the terms of sub-paragraphs (a) to (c) above, incurring new liabilities including, without limitation, liabilities incurred either directly or indirectly, through the use of a credit card, a credit facility, a drawdown facility or a re-draw facility; and
(e) without limiting the terms of sub-paragraphs (a) to (d) above, withdrawing, transferring or otherwise disposing of or dealing with, any monies available in any account with any bank, building society or other financial institution (in Australia and elsewhere), in which the respondents have any legal or equitable interest.
2. An order that the orders sought in the preceding paragraph shall not prevent:
(a) the fourth respondent from paying or otherwise incurring a liability for ordinary living and operating expenses up to $1,000 per week or such greater sum as may be set by the Court;
(b) each of the respondents from paying or otherwise incurring a liability for costs reasonably incurred in these proceedings and any criminal proceedings arising from the applicant's investigation into the affairs of each of the respondents; and
(c) any bank, building society or financial institution from exercising any right of setoff which it may have in respect of a facility afforded by it to each or any of the respondents prior to the date of this order.
3. Pursuant to sections 1101B(1), 1101B(5) and 1324 of the Corporations Act, until further order, each of the First, Third and Fourth Respondents, by themselves and their servants, agents and employees be restrained from:
(a) further promoting or carrying on the Business;
(b) doing any act in furtherance of or in connection with the Business;
(c) receiving, soliciting, transferring or disposing of Investor Funds received in connection with the Business; and
(d) promoting or carrying on any financial services business in Australia.
4. The applicant's cost of this interlocutory application be the applicant's costs in the proceeding.
5. Liberty to apply on one business day’s notice in writing.
For the purposes of this Order:
“Business” means all activities and arrangements whereby the respondents, whether by themselves or any of them, or by their servants, agents or employees, elicited or obtained Investor Funds.
“Corporations Act” means Corporations Act 2001 (Cth).
“Dealing” includes:
(a) Removing, causing, procuring, assisting or permitting any Property in the possession or under the control of the respondents to be removed from Australia or from the jurisdiction of this Court, and/or
(b) Selling, charging, mortgaging, encumbering, securing, diminishing, disposing of, parting with possession, making any declaration of trust in relation to, exercising any power to vary or modify any trust deed or any interest under any trust in relation to the respondents' Property.
“Investor Funds” means monies provided to the respondents, whether directly or to the respondents’ authorised agents, servants and/or representatives for the ostensible purpose of investing and/or otherwise dealing with such funds for the purpose of providing a return to investors on the funds invested.
“Property” means all real or personal property, assets or interests in property of any kind, within or outside Australia including, by virtue of subsection 1323(2A) of the Corporations Act, any property held otherwise than as sole beneficial owner.
NOTICE UNDER RULE 41.06 OF THE FEDERAL COURT RULES 2011
TAKE NOTICE that you will be liable to imprisonment, sequestration of property or punishment for contempt if:
(a) the order requires you to do an act or thing and you neglect or refuse to do the act or thing within the timeframe specified in the order; or
(b) the order requires you not to do an act or thing and you disobey the order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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