Humphris, Michael (In his Capacity as Liquidator of Midcharm Pty Ltd)(in liq) & Anor v Jenshol, Max Samuel & Anor (No2) [1997] FCA 1192

FEDERAL COURT OF AUSTRALIA

Corporations Law s 471B Emanuele v Australian Securities Commission (1997) 23 ACSR 664 considered Hospital Products Ltd v Ballabil Holdings Pty Ltd [1984] 2 NSWLR 662 considered MICHAEL HUMPHRIS (IN HIS CAPACITY AS LIQUIDATOR OF MIDCHARM PTY LTD) (IN LIQUIDATION) & MIDCHARM PTY LTD v MAX SAMUEL JENSHOL & JUSTICE TELECOMMUNICATIONS PTY LTD VG 3185 of 1997 GOLDBERG J MELBOURNE 5 NOVEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG 3185 of 1997 ) GENERAL DIVISION )

BETWEEN: MICHAEL HUMPHRIS (IN HIS CAPACITY AS LIQUIDATOR OF MIDCHARM PTY LTD) (IN LIQUIDATION) (ACN 063 784 083)

First Applicant

and

MIDCHARM PTY LTD (IN LIQUIDATION)

(ACN 063 784 083)

Second Applicant

AND: MAX SAMUEL JENSHOL

First Respondent

and

JUSTICE TELECOMMUNICATIONS PTY LTD (ACN 075 748 186)

Second Respondent

JUDGE: GOLDBERG J PLACE: MELBOURNE DATE: 5 NOVEMBER 1997

THE COURT ORDERS THAT: 1. Leave is granted to the applicants nunc pro tunc to continue with this proceeding against the second respondent but such leave is not to extend to enforcing against the second respondent any order for the payment of any sum pursuant to the orders made by this order or consequent upon the inquiry and account ordered by this order without the further leave of the Court. THE COURT DECLARES THAT: 2. The documents, books, records or property of Midcharm Pty Ltd (In Liquidation) ("the company") in the possession of the respondents are the property of the company. 3. The (a) right to receive monies from the retail customers of Emerson Telecommunications LLC ("Emerson") in Australia under agreements dated 14 February 1996 and 6 February 1997 between the company and Emerson and all documents associated with it ("the Emerson business"); (b) right to receive monies from retail customers of Avirnex Communications Australia Pty Ltd ("Avirnex") in Australia under an agreement dated 4 March 1997 between Avirnex and the second respondent ("the Avirnex business") and the benefit of that contract; (c) right to receive payment from customers of the company in relation to its Telstra Corporation Ltd ("Telstra") re‑selling business; (d) cash, cheques or barter points including paid or payable to the respondents from customers in relation to the business of the company of Telstra; (e) current balances in the accounts in the name of Justice Telecommunications and Justice Telecommunications Pty Ltd with the relevant barter agencies to the extent that such balances reflect barter points paid or made available by customers of Telstra, Emerson or Avirnex, were and are the property of the company and to the extent to which they were or are received by the first respondent or the second respondent declare that they are held on constructive trust for the company. THE COURT ORDERS THAT: 4. The property referred to in paragraph 3 vest in the first applicant. 5. The respondents and each of them be restrained until further order whether by themselves, their servants or agents, or otherwise from transferring, dealing with, charging, diminishing, mortgaging, assigning or disposing of any of their assets including without limiting the generality thereof any real property, shares, choses in action or money standing to the credit of any bank account save and except that the first respondent may make use of the sum of $600.00 per week in respect of his ordinary living expenses. 6. The respondents and each of them be restrained until further order whether by themselves, their servants or agents or otherwise from: (a) transferring, dealing with or otherwise disposing of any monies standing to the credit of any barter scheme or arrangement or any bank account of them or either of them or under their control; (b) taking any steps to transfer the business of the customers of the former Emerson or the current Avirnex business, which customers are more particularly described in the lists annexed hereto as Schedules A and B; (c) communicating in any way with any former customer of the Emerson business or the Avirnex business being the persons in the list annexed hereto as Schedule A with respect to any telecommunications business. 7. The first respondent within twenty‑one days file and serve on the applicants' solicitors, Mallesons Stephen Jaques, Rialto, 28th Floor, North Tower, 525 Collins Street, Melbourne, an affidavit sworn or affirmed by him: (a) setting out the name and address of any bank, building society or other financial institution at which there is an account in the name, or under the control, of the first and second respondents, or either of them, together with the number of such account and the balance therein at the date of service of this order upon them or either of them; (b) setting out the name and address of any person or persons indebted to the first and second respondent, or either of them, and the amount of the debt or debts owed by such person or persons; (c) setting out an itemised inventory of any business assets owned by the first and second respondent, or either of them; (d) setting out an itemised inventory of any other property, whether real or personal, owned by the first and second respondent, or either of them or in respect of which the first and second respondents, or either of them have or has an interest; (e) in respect of any of the property referred to in subparagraph (d), stating whether it has been given as security of any debt, and if so, the nature of the security and the debt so secured; (f) listing and describing all barter arrangements or schemes with which he has any involvement; (g) describing all dealings he has had with Avirnex and including a list of all payments made by Avirnex to him or to the second respondent; (h) stating and describing when hard copy Emerson bills were delivered to the respondents from Emerson, when they were re‑billed and what funds in respect of payments of those bills have been received and what has happened to those funds; (i) in respect of the period from 23 May 1997 to the date of the making the affidavit, stating and describing the source of the funds used to pay each deposit in or to the Narit Nominees Pty Ltd Commonwealth Bank account and in respect of what liability of the payer of the funds that deposit relates and as to any debits or withdrawals in relation to such account stating and describing each cheque drawn and naming the payee thereof; (j) in respect of the period from 18 July 1997 to the date of the making the affidavit, stating and describing all payments received by the first and second respondents including the source of the payments and the liability in respect of which each such payment was made. 8. The first respondent deliver up to the applicants' solicitors within seven days: (a) any customer lists in his possession, custody or control relating to the Emerson call back business or the Telstra re‑billing business; (b) any cheques in his possession, custody or control relating to the Emerson call back business or the Telstra re‑billing business. 9. Any property referred to in paragraph 3 of this order held by either of the respondents be delivered to the applicants within seven days of the date of this order. 10. Judgment be entered for the applicants for an account of the profits made by the respondents as a result of their wrongful acts referred to in the reasons for judgment delivered on 15 October 1997 and that there be an inquiry as to such profits and a taking of any accounts. 11. The inquiry as to such profits and the taking of any accounts be held by a Registrar of the Court and that the proceeding be referred to a Register of the Court for the giving of directions concerning the manner of the taking of such account and the making of such inquiry. 12. The cross‑claim of the respondents be dismissed. 13. Liberty is reserved to any party to apply for such further directions and orders arising out of this order as it or he may be advised. 14. The respondents pay the applicants' costs of the proceeding including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.