Australian Securities & Investments Commission v Ocean Salvage Ltd [1999] FCA 340

FEDERAL COURT OF AUSTRALIA

Australian Securities & Investments Commission v Ocean Salvage Ltd

[1999] FCA 340

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v OCEAN SALVAGE LTD S 3005 OF 1999 MANSFIELD J ADELAIDE 23 MARCH 1999

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 3005 OF 1999

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Applicant

AND: OCEAN SALVAGE LTD

Respondent

JUDGE: MANSFIELD J

DATE: 23 MARCH 1999

PLACE: ADELAIDE

REASONS FOR DECISION

HIS HONOUR:

1 On 9 March 1999 I made an ex parte order in this matter restraining the respondents from dealing with funds in their possession, in particular as specified in pars 3 and 4 of that order concerning two accounts in the name of J J McNamara and Associates Pty Ltd at the National Australia Bank. The application for interlocutory orders to that effect was intended to be heard on 18 March 1999, but due to the need for parties to have adequate time to prepare, and given the complexity of the matter, the application for interlocutory relief is now listed for hearing on 29 March 1999.

2 The second and third respondents have applied for orders varying the interim orders governing the two accounts to which I have referred, to permit the payment of sales commissions or wages, for office expenses, for legal costs, and superannuation levies said to be due. There are also amounts claimed to be owing to the Deputy Commissioner of Taxation for tax instalment deductions. The amount sought to be released, on the material before me, would be in excess of $100,000 and the amount in the two accounts presently totals in the order of $165,000. The application therefore seeks that the majority of the moneys held, and presently the subject of the interim orders, should be authorised to be expended prior to the hearing of the application for an interlocutory injunction, now to be heard some six days from now. 3 I refuse that application. I give liberty to the second and third respondents to renew the application at the completion of the hearing for interlocutory relief, if then I am minded to make any interlocutory orders. I do not know whether I will do so. I will briefly mention my reasons for refusing the variation order at the present time. 4 On the material before me, the group tax instalment notice indicates that the amount payable is due on 7 April 1999. It is anticipated that the application for interlocutory relief will be heard and determined before that time, and if interlocutory relief is granted, then the application to authorise payment of that amount may then be renewed. There is no evidence as to when the payments in respect of the superannuation levy are due to be paid. There is no evidence as to the amount of any legal costs presently outstanding or as to the amount likely to be incurred within the next several days until the interlocutory hearing. The evidence indicates that the second and third respondents have presently borrowed funds to procure legal representation, but I do not know the terms of that arrangement or when those funds will be repayable. 5 I accept that in respect of the claim for "wages", as it was described in submissions, certain liabilities for wages or commissions have been incurred since the granting of the interim injunction which will not be able to be paid until the interlocutory application is heard unless the order is varied. However, I am not presently able to determine whether those liabilities constitutes liabilities by way of wages or liabilities to pay for commission sales, and in any event, on the material before me, a substantial proportion of the liability for wages or commissions is a liability which was incurred or arose in the period of time prior to the grant of the interim injunction. It is not explained presently, in a way which I regard as entirely satisfactory, why those amounts were not paid at an earlier time. There may be further evidence which will explain that. 6 The interlocutory hearing is only six days away. 7 I am not therefore satisfied that the matter has a sufficient degree of urgency or hardship to vary the interim orders before the hearing of the interlocutory application. In that regard, I add the following comments. The evidence indicates that the second and third respondents operate four bank accounts - two accounts related to the accounting practice of the third respondent, and two accounts relating to the share sale activities which are the subject of this application. There is no evidence as to the amount of funds available in the two accounts which are not the subject of an interim injunction, nor evidence or other material to indicate whether the second and third respondents have resources otherwise available to them to meet the liabilities which are apparently acknowledged as liabilities of the second or the third respondent or both of them. There may be reasons why those two accounts, or other resources available to the second or third respondents, cannot facilitate the meeting of those liabilities, but at present I do not know what the position is. 8 Certain submissions were put going to what I regard as the merits of the interlocutory application - that is, going to issues as to whether there is in fact a serious question to be tried, issues as to whether damages will be an adequate remedy for any investor ultimately entitled to relief against any of the respondents and to the fact that there is presently no evidence of any investor seeking to pursue a claim for damages. The apparent delay (and in using that description I am not seeking to express any view one way or the other but to recognise the contention that there was asserted a delay) in the procuring of the interim injunction, having regard to the period of time over which the investigation has continued and the communications with the second and third respondents going back to at least January 1999 if not earlier, may well be relevant to whether or not an interlocutory injunction should be granted and, if so, on what terms. At present I am simply unable to form a view with any degree of confidence on them so as to give those considerations weight in such a way as to lead to the granting of the application as presently made. 9 I therefore propose to decline the application as presently made. As I have indicated, I will give the second and third respondents the opportunity, if I otherwise to decide to make interlocutory orders at the hearing of the interlocutory applications, to renew the application in the light of all the material then before the Court.