Solomon & Ors v Corporate Affairs Commission

[1993] HCATrans 219

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S230 of 1992

B e t w e e n -

EDDIE SOLOMON

First Applicant

JUDITH ANN SOLOMON

Second Applicant

TRANSPHERE PTY LIMITED

Third Applicant

EDDIE SOLOMON PTY LIMITED

Fourth Applicant

TRANSPHERE LIMITED

Incorporated in the Cayman

Islands

Fifth Applicant

TRANSPHERE LIMITED

Incorporated in the Turks &

Caicos Islands

Sixth Applicant

EDDIE SOLOMON BANK & TRUST

CORPORATION

Solomon	1	9/8/93
and

Seventh Applicant

EDDIE SOLOMON BANKING
CORPORATION (WEST INDIES)

LIMITED

Eighth Applicant

EDDIE SOLOMON HOLDINGS INC

Ninth Applicant

NORTHLAND FINANCE LIMITED

Tenth Applicant

CORPORATE AFFAIRS COMMISSION

First Respondent

ALEXANDER ROBERT MACKAY

MACINTOSH

Second Respondent

Application for special leave

to appeal

MASON CJ McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 9 AUGUST 1993, AT 12.14 PM

Copyright in the High Court of Australia

MR E. SOLOMON:  I seek leave to appear for myself. My wife

is here as well. I speak on her behalf.

MASON CJ:  Yes. What do you say in support of your

application to present your application on your own

behalf?

MR SOLOMON:  On my own behalf, Your Honour, the basis of my

application is what I said in my affidavit,

affirmed on 24 December 1992.

MASON CJ: Yes.

MR SOLOMON:  What I say, Your Honour, the trial court and

the appeal court were in error in applying the

principles that needed to be applied under

section 573 of the Companies Code in appointing a

receiver. As well, Your Honour, the trial court

was in error in hearing separate matters on

Solomon 2 9/8/93

separate occasions in the whole proceedings and no

order was made under section -

MASON CJ:  You are seeking to appear on behalf of yourself,

your wife and the other applicants?

MR SOLOMON: If I am allowed, Your Honour, first I seek to

appear on my own behalf and my wife who is here,

and if I am allowed to appear on behalf of the

corporate applicant then I will. If I am not

allowed I will be seeking to just speak on her behalf, because I was not allowed to appear on

behalf of the corporate defendants.

MASON CJ:  No, understandably so. On what grounds should we

grant you leave to present your case and your

wife's case?

MR SOLOMON:  Your Honour, you mean leave for me to appear on

my own case?

MASON CJ: Yes. The rule requires an application for

special leave to be presented by counsel or

solicitor.

MR SOLOMON:  I was not aware of that, Your Honour.

MASON CJ: Well, it does.

MR SOLOMON:	I was not aware of it and if this is the case, then instead of making a decision now, I would like
to be able to get representation.  I did not get
representation due to the fact that my assets and
my income are still under the control of a receiver
and they have been under the control of the
receiver for some nine years. Instead of draining the funds from the receiver to get a lawyer to
represent me I opted to represent myself because I would like the money that the receiver has to be
made and used for the creditors.
MASON CJ: Yes, but you have made it clear during the course

of the investigation that the assets in the hands

of the receivers are not your assets only, they

have been intermingled with the assets that have

been contributed by creditors.

MR SOLOMON: That is right, Your Honour.

MASON CJ:  In those circumstances there is no way in which a

court can direct the receiver to make the assets

under their control available to you.

MR SOLOMON:  The Court did direct the receiver to make some

funds available in the Court of Appeal and some

$40,000, and I believe it is a large sum and it is

better that these funds be made available to the

Solomon 9/8/93

creditors first and then if there is something left

then it be made available to the applicant.

MASON CJ:  What else do you want to say in support of your

application, whatever it be for an adjournment or

for leave to present the case yourself?

MR SOLOMON:  Your Honour, if I am now allowed to present

myself I do not wish the Court to make a decision

now and I would be asking for an adjournment to

have a lawyer represent me. But in my case and my

wife's case I say that the trial court, the supreme

court, was in error in making a decision in

appointing a receiver and also that the trial court
was in error in not making an order for the
separate trial of issues as Judge Young, who was

the trial judge - - -

MASON CJ:  Why do you say that the court was in error in

appointing a receiver?

MR SOLOMON: Because the principles that needed to be applied

under section 573 of the Companies Code were not

met.

MASON CJ: But there was an investigation being carried out,

was there not, into the companies?

MR SOLOMON: There was an investigation, Your Honour - - -

MASON CJ:	By the Commission?
MR SOLOMON:	By the Commission, and what I say to support

that is that the investigation that was carried out

was simply a matter of routine investigation and

not an investigation that needed the appointment of

a receiver. In support of this argument I

mention the ·case of Commission for Corporate Affairs (Vic) v Guardian Investments Pty Ltd.

MASON CJ: But what is there to establish that this was not

an investigation under the Code?

MR SOLOMON:	There was nothing to suggest that it was, Your Honour. This was one of the points - the
other point was that prosecution was being
conducted under the Companies Code and there was no prosecution conducted under the Code. There was a prosecution conducted under the common law and this prosecution was the subject of an appeal in this
Court and it was successful.  The third issue was
that there should be a civil proceeding instituted
under the Companies Code to warrant the appointment
of the receiver and no civil proceedings were
instituted against the Code.  The only proceeding
that was instituted was a proceeding to appoint the

Solomon 4 9/8/93

receiver and that is hardly a proceedings

instituted under the Code.

McHUGH J: But were there not proceedings in 1984 and 1987

taken against you?

MR SOLOMON:	Yes, Your Honour, there were proceedings for the appointment of a receiver but there was no
civil proceeding prior to that.  The only
proceedings that the Corporate Affairs Commission
instituted in, I think, 1984 and 1987 were
proceedings to appoint a receiver.  The other
argument, also,  Your Honour - - -

MASON CJ: But those proceedings were preceded by an

investigation, were they not?

MR SOLOMON:  I am not aware of that, Your Honour.

McHUGH J: But not only were they proceedings for the

appointment of a receiver but they were proceedings

for declarations, were they not?

MR SOLOMON: That is right. Proceedings for declarations

that certain funds did not conform with the

Companies Code.

McHUGH J: Yes.

MASON CJ: But more importantly, they were proceedings for

prohibitory orders, were they not?

MR SOLOMON:  They were, Your Honour, yes.

MASON CJ: Proceedings for prohibitory orders are a civil

proceeding under the Code.

MR SOLOMON:  Yes, Your Honour. But these proceedings were

started at the same time, they are not separate

proceedings.	The summons was for declaratory
orders and also the appointment of a receiver.	The
declaratory orders, if they were successful, then	one would presume the receiver would be appointed
and His Honour Judge Young refused to give the declaratory orders. So the main substance of the summons was not successful and hence the receiver should not be appointed. All the orders that were
made, Your Honour, were made for the appointment of
an interim receiver and one would presume that the
receivership orders will lapse during the final
hearing unless, of course, an order was made to extend the appointment of the receiver and no such orders were made.

Judge Young did say that the appointment of

the receivers were final orders, while the Court of

Appeal had the opinion that the orders were

Solomon 9/8/93

interlocutory or interim orders. It was too late

to challenge the appointment of the receiver. That

is why I am here, Your Honours, to challenge the

appointment of the receiver and to say that the

Court of Appeal was in error in saying it is too

late to challenge the appointment of the receiver.

The Corporate Affairs Commission did not give the

usual undertaking as to damages when the orders
were made. They are not required to do so if the
orders are interlocutory, but I presume that they
would be required to give the undertaking if the

orders were final.

MASON CJ:  When were the proceedings for prohibitory orders

under 574 instituted?

MR SOLOMON:	In 1987, Your Honour.
MASON CJ:	1987.
MR SOLOMON:	And I think there was one set of proceedings

that the orders did not say whether they were
interim or final and I think they are the

proceedings of 1987 but I could be wrong,

Your Honour, I have the orders here. His Honour

Judge Young, in his judgment of December 1988, I

think he did mention that - either in 1988 or

1987 - he did mention that the proceedings were not

civil proceedings. I say that it is a matter of

importance, it is a matter of general importance

and of public importance. There are some 500

creditors affected by these orders and they were

not given a chance to present their case, if they

had any.

MASON CJ:  Who did not give them a chance to present their

case?

MR SOLOMON:  The Corporate Affairs Commission. They were

given a chance, but they were not interested.	I am
sorry, the Corporate Affairs Commission did tell
them if they wished - - -

MASON CJ: But they did not present anything to the

Commission?

MR SOLOMON:  They did not, they did not. Judge Young did

order the Corporate Affairs Commission to write to

all the creditors and invite them to take action,

but nobody did. That is what I mean by the civil
proceeding, Your Honour, is a creditor who is

dissatisfied or a creditor who cannot get his money

so he takes a civil proceeding against me and then

that will be the basis of appointing a receiver.
But to merely appoint a receiver for the Corporate

Affairs Commission to enhance the prosecution

against me is not the right thing to do. I have

Solomon 6 9/8/93

been now under the control of the receiver for the

last nine years and this is a matter of importance,

Your Honour, and I wish this Court to do something

about it. I have been to the supreme court, I have

been to the Court of Appeal and nothing happened.

MASON CJ:  It is not a matter of wishing this Court to do

something about it, you have got to establish a

case for relief in this Court, and two things that
confront you immediately are whether or not we

ought to grant you leave to present the case on

behalf of yourself and your wife. We cannot do it

so far as the companies are concerned, and if we

refuse that, this application you are making for an

adjournment.

MR SOLOMON: Well, I will be seeking then an application for

an adjournment, Your Honour, if you do not allow me

to represent myself or my wife because I believe it

is a matter of importance and if I cannot represent

myself then I will have to get a lawyer to

represent me. I am not saying I am fully

conversant with the law because I am not, I am

just - - -

MASON CJ:  No, but we have understood what you have said, we

have also read the materials in the application

book and we, I think, understand the nature of the

case that you are endeavouring to present.

MR SOLOMON:  Yes, Your Honour.

MASON CJ: Very well. Now I will ask Ms McColl what she has

to say in response to:  (a) your application for

leave to present the case on your own behalf, and

as I understand it, in the event that that is

refused, this application for an adjournment to

enable you to obtain legal representation.

MR SOLOMON:	Thank you.
MASON CJ: Yes, Ms McColl?
MS R.S. McCOLL:	Thank you, Your Honour. If the Court

pleases. (instructed by P.J. Stepek, Australian

Securities Commission and P.A. Somerset & Co)

In relation to the first point my submission

would be that it is a matter, essentially, for the

Court. We would not wish to put any submissions in

opposition to Mr Solomon's application for leave to

represent those parties. In relation to the

application for an adjournment, may I just have a

short moment to seek some instructions on that?

MASON CJ: Yes.

Solomon 7 9/8/93

MS McCOLL:  I should have also added to that, that in so far

as I appear for the second respondent, the second respondent intends, merely, to submit such orders as the Court may make.

MASON CJ: Yes.

MS McCOLL: In relation to the first respondent, I would

submit that the application for special leave is essentially hopeless and I would wish to present

submissions on that basis such that an adjournment

should not be ordered by this Court as it would

only cause additional costs and delay,

Your Honours.

MASON CJ: Yes. Can I ask you some questions about this?

On what basis do you put the appointment of a

receiver under section 573?

MS McCOLL:  Your Honour, there were a number of orders, or a

number of matters, which were before the courts

which made the original orders appointing the

receivers, but essentially they related to

investigations which were being conducted by the

first respondent pursuant to the provisions of the

Companies New South Wales Code at the time into the

offering of prescribed interests and those

investigations were commenced as various activities

of the applicants were identified over the years.

MASON CJ: Yes.

MS McCOLL:  That was the primary basis, Your Honour. As the

proceedings developed before the court an

additional basis was identified before the court,

and in particular in the judgment of the Court of

Appeal as being the commencement of proceedings for

the injunctions. But I should say in order to
fully inform the Court, it is not precisely clear

to me at what stage those applications for

injunctions were added to the proceedings. It may

be that they were only added subsequent to the

original appointment of the receiver in 1984.

MASON CJ:  Yes. So essentially your claim is that the

appointment of the receivers was justified on the

basis of an investigation that was proceeding under

the code by the Commission.

MS McCOLL:	Yes, Your Honour. There were affidavits which were before Mr Justice Young which were not
reproduced before the Court of Appeal but a series of agreed facts was presented to the Court of
Appeal which identified the relevant fact and the
source of the fact, but those affidavits were not
in the appeal books.

Solomon 8 9/8/93

MASON CJ: Yes, thank you, Ms McColl. Mr Solomon, is there

anything that Ms McColl has said that you want to

respond to?

MR SOLOMON:  I would like to say that the prohibitory

orders were finally made after the appointment of

the receiver, not before the appointing of the

receiver. They were made in April 1989 and the

orders for the appointment of the receivers were

made in 1984 in the first set of proceedings and also in 1985 in the first set of proceedings and

then in 1987 in the second set of proceedings.	So
the timing, Your Honour is crucial, of course.
His Honour appointed a receiver and then made

prohibitive orders. I mean, one would presume you

make the prohibitory orders first and then appoint

the receiver.

Just one point I would like to raise,

Your Honour, is that the first respondent, the

Corporate Affairs Commission, did not file an

appearance with this Court. It was filed by the

Australian Securities Commission on behalf of the

Corporate Affairs Commission and the two bodies are

separate bodies, Your Honour, and I presume that Ms

McColl is instructed by a solicitor from the

Australian Securities Commission. The Corporate

Affairs Commission, Your Honour, does exist and

there is a reference of the Corporate Affairs

Commission in the Corporation's New South Wales Act

of 1990. It was a solicitor from the Securities

Commission who told me about it when I went to

deliver some documents to them and the reference to

the Corporate Affairs Commission means the Managing Director of the Department of Business and Consumer

Affairs and I believe he is not represented here and he has not made an appearance here.

I raised this issue in the Court of Appeal and

the President of the Court of Appeal suggested to

the Securities Commission if they wish to be

represented to file a notice of motion to be	substituted as a party. In this case we have the
Securities Commission appearing and pretending to
be the Corporate Affairs Commission, simply because
the Corporate Affairs Commission does not want to appear, or does not want to take any steps in these
proceedings. I did serve the documents on the
Managing Director himself, Mr Holloway, I did serve
him with the special leave to appeal application
and I did serve him with the application book. I
just wish to mention this before the case can
proceed any further. Maybe I am wrong but I just
would like this matter to be rectified to see who
is really appearing, the Corporate Affairs
Commission or the Securities Commission.

Solomon 9 9/8/93

MASON CJ: One question I want to ask you, Mr Solomon. That

is, special leave is generally not granted unless

the applicant can show that there is some important

question of general principle involved. What is

the question of general principle that you are

seeking to agitate here?

MR SOLOMON:  What I seek to agitate here, Your Honour, is

there is a receiver appointed over my own assets

and income for the last nine years and that is a

matter of general importance -

MASON CJ: It may be to you, but not of public importance.

MR SOLOMON: Well, it is, Your Honour, because they can do

the same to anybody. It is important to me and it

is also important to anybody else - nobody has the

right to stop somebody from earning a living, for

instance, and that is what the Corporate Affairs

Commission and that is what these orders are doing.

Practically, we cannot earn a living, we cannot

have a job, we cannot have a lease, I cannot go out

and borrow money for housing, it has damaged my

reputation and it is a matter of human rights -

nobody really can stop someone else from earning a

living. The court order did not give me an

indication on how I was supposed to make a living, for instance. It is a matter of great importance, and also there is five hundred or so creditors

affected by the orders and they have been patiently

waiting to hear the outcome of these proceedings.

I think, Your Honour, that if not for my sake then

for the sake of those four or five hundred

creditors, that some orders should be made to

protect them.

MASON CJ: That is a matter for them, Mr Solomon.

MR SOLOMON:  So, Your Honour, if I am not presenting my case

properly, I would like to be represented by a

lawyer.

MASON CJ: Very well. The Court will take a short

adjournment in order to decide the course it will

take in this matter.

AT 12.41 PM SHORT ADJOURNMENT

Solomon 10 9/8/93

UPON RESUMING AT 12.43 PM:

MASON CJ: In this application the applicant, Mr Solomon,

applies, in the first instance, for leave to

present the special leave application in person on

behalf of himself and his wife. We have listened

patiently to the reasons advanced by Mr Solomon for

the making of an order in those terms but we have

concluded that no ground at all has been made out

for the grant of leave in that respect.

Mr Solomon has also indicated that in the event that the Court refuses that application, as

it has done, he seeks an adjournment in order to

engage a legal representative to put the

application on behalf of himself and his wife.	We
have given consideration to that application and,

in particular, to the materials in the application

book, but we have come to the conclusion that those

materials do not disclose any possibility of error

on the part of the Court of Appeal.

In those circumstances, it would be futile to grant an adjournmemnt of this application and that

application is refused.

Now, Mr Solomon, do you wish to say anything

else? ·

MR SOLOMON:  No, Your Honour.

MASON CJ: Very well. In those circumstances, the

application for special leave to appeal is

dismissed.

MS McCOLL:  I would seek an order for costs, if the Court

pleases.

MASON CJ:  Yes. Do you want to say anything about costs,

Mr Solomon?

MR SOLOMON:	No.
MASON CJ:	The application is refused with costs.

AT 12.43 PM THE MATTER WAS ADJOURNED SINE DIE

Solomon 11 9/8/93