FEDERAL COURT OF AUSTRALIA Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd [1999] FCA 1527 AUSTRALIAN COMPETITION & CONSUMER COMMISSION v GIRAFFE WORLD AUSTRALIA PTY LTD & ORS NG 421 OF 1998 AKIHIKO MISUMA & ANOR v AUSTRALIAN COMPETITION & CONSUMER COMMISSION N 1209 of 1999 AKIHIKO MISUMA & ANOR v AUSTRALIAN COMPETITION & CONSUMER COMMISSION N 1225 of 1999 JUDGE: SACKVILLE J PLACE: SYDNEY DATE: 4 NOVEMBER 1999 IN THE FEDERAL COURT OF AUSTRALIA NG 421 of 1998 NEW SOUTH WALES DISTRICT REGISTRY N 1209 of 1999 N 1225 of 1999 NG 421 of 1998: BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Applicant AND: GIRAFFE WORLD AUSTRALIA PTY LTD First Respondent AKIHIKO MISUMA Second Respondent ROBIN HAN Third Respondent MARK SCOTTE Fourth Respondent LUCILLE ORR Sixth Respondent N 1209 of 1999: BETWEEN: AKIHIKO MISUMA First Applicant YUKARI MISUMA Second Applicant AND: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Respondent N 1225 of 1999: BETWEEN: AKIHIKO MISUMA First Applicant YUKARI MISUMA Second Applicant AND: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Respondent JUDGE: SACKVILLE J DATE: 4 NOVEMBER 1999 PLACE: SYDNEY THE COURT ORDERS THAT: 1. The time for filing and serving a notice of appeal and/or an application for leave to appeal from the judgment of Lindgren J given on 26 August 1999 be extended until 4 pm on 10 November 1999. 2. The time for filing and serving an application for leave to appeal from the judgment of Moore J given on 23 September 1999 be extended until 4 pm on 10 November 1999. 3. The time for Mr Misuma to comply with Order 1 made by Moore J on 23 September 1999 be extended until 4 pm on 10 November 1999. 4. The leave granted to the ACCC in Order 1 made by Moore J on 23 September 1999 be stayed until further order. 5. The costs of the present motions be reserved for the consideration of the Full Court. 6. Liberty to apply on 48 hours notice be granted. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NG 421 of 1998 NEW SOUTH WALES DISTRICT REGISTRY N 1209 of 1999 N 1225 of 1999 NG 421 of 1998: BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Applicant AND: GIRAFFE WORLD AUSTRALIA PTY LTD First Respondent AKIHIKO MISUMA Second Respondent ROBIN HAN Third Respondent MARK SCOTTE Fourth Respondent LUCILLE ORR Sixth Respondent N 1209 of 1999: BETWEEN: AKIHIKO MISUMA First Applicant YUKARI MISUMA Second Applicant AND: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Respondent N 1225 of 1999: BETWEEN: AKIHIKO MISUMA First Applicant YUKARI MISUMA Second Applicant AND: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Respondent JUDGE: SACKVILLE J DATE: 4 NOVEMBER 1999 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 26 August 1999, Lindgren J delivered judgment in proceedings brought by the applicant ("ACCC") against the first respondent ("Giraffe World"), the second respondent ("Mr Misuma") and three other respondents. The hearing lasted for eighteen days, and Lindgren J's judgment is 81 pages in length. It appears that Giraffe World and Mr Misuma were represented in the proceedings, but that their representative did not participate in the hearing at the stage at which submissions were made. Mr Misuma did not give evidence in the proceedings. 2 On 2 September 1999, Lindgren J made orders giving effect to his judgment. His Honour made declarations, inter alia, that Mr Misuma had been knowingly concerned in and party to contraventions by Giraffe World of ss 57 and 61 of the Trade Practices Act 1974 (Cth) ("TP Act"). Sections 57 and 61 prohibit, respectively, so-called referral selling and pyramid selling. His Honour ordered Mr Misuma to pay twenty per cent of the ACCC's costs. He also granted leave to the ACCC to move by notice of motion for orders for compensation, pursuant to s 87(1A) and (1B) of the TP Act. 3 Lindgren J also made orders varying certain asset preservation orders that had been made as early as May 1998 against Mr Misuma and his wife (Ms Misuma). Ms Misuma has never been a party to the principal proceedings. I was informed that Mr and Ms Misuma resisted the making of the asset preservation orders, but that none of the legal representatives had a copy of any reasons for judgment given by Lindgren J when making the original asset preservation orders. It is unclear whether this was because his Honour's reasons were not transcribed or because no reasons have been delivered. 4 The asset preservation orders made on 2 September 1999 are as follows: "12. Order 11 made on 24 July 1998 be varied to read as follows: (a) Until and including 16 September 1999 the second and third respondents whether by themselves, their servants or agents or otherwise howsoever be restrained from removing from the jurisdiction, disposing of, mortgaging, assigning, charging or otherwise dealing with assets in which the said respondents or any of them have an interest either legal or equitable and whether the interest is held directly or indirectly through an agent nominee or servant as at the date of making this order whether within or outside the jurisdiction of the Court, except as provided in these orders, and in the case of the second respondent Akihiko Misuma this order includes, but is not limited to, his interest in the property in Lot 5 Deposited Plan 263421 at Elanora Heights, being the property in Land Titles Computer Folio reference 5/263421. (b) Notwithstanding Order 12(a), each of the second and third respondents inclusive shall be entitled to draw down and expend from a bank account or other source the identity of which shall be first notified by him or her to the applicant's solicitors,: (i) a sum not exceeding $250 per week for ordinary living expenses; (ii) a sum not exceeding $100 per week for ordinary business expenses; (iii) a sum not exceeding $500 per week for reasonable legal expenses; and (iv) such further sum or sums, of any, as the applicant's solicitors may from time to time agree in writing. Provided, however, that nothing in sub-paragraphs (i), (ii), (iii), (iv) of this paragraph shall impose any obligation on any third party to inquire into the purpose or purposes for which any sum or sums drawn by the second and third respondents thereunder are in fact required or used. (c) In addition to Order 12(a), Yukari Misuma whether by herself, her servants or agents or howsoever otherwise be restrained from removing from the jurisdiction, disposing of, mortgaging, assigning, charging or otherwise dealing with assets in which Yukari Misuma has an interest either legal or equitable and whether the interest is held directly or indirectly through an agent, nominee or servant as at the date of making this order, within or outside the jurisdiction of the Court, except in respect of any amount exceeding $300,000, provided that nothing in this order shall impose any obligation on any third party to enquire into the purpose or purposes for which any sum or sums drawn by the said Yukari Misuma are in fact required to be used, this order includes but is not limited to her interest in the property in Lot 5 Deposited Plan 263421 at Elanora Heights, being the property in Land Titles Office Computer Folio reference 5/263421. 5 On 23 September 1999, the ACCC sought further orders against Mr and Ms Misuma. The ACCC sought these orders in the context of what was said to be anticipated proceedings under s 87(1A) and (1B) of the TP Act. Moore J made an order in the following form: "1. Upon the Applicant by its Counsel giving the usual undertaking as to damages [Mr Misuma and Ms Misuma] within fourteen days of the giving to them or any of them of notice of this Order deliver or cause to be delivered to the Applicant…, a full affidavit sworn by them setting out:- (a) 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 [Mr Misuma] or Yukari Misuma…, together with the number of such account and the balance therein at the date of service of notice of the Order upon them or either of them; (b) the name and address of any person or persons indebted to [Mr Misuma or] Yukari Misuma…at the date of service of notice of this Order upon them or any of them, and the amount of the debt or debts owed by such person or persons; (c) an itemised inventory of any business assets owned by [Mr Misuma or] Yukari Misuma…; (d) an itemised inventory of any other property, whether real or personal, owned by [Mr Misuma or] Yukari Misuma…, or in respect of which [Mr Misuma or] Yukari Misuma…has an interest; (e) in respect of any of the property referred to above, whether it has been given as security for any debt, and, if so, the nature of the security and the debt so secured. The Court grants leave to the Applicant to give any bank, building society or other financial institution with which [Mr Misuma or] Yukari Misuma… conducts any account or accounts notice of this Order." 6 On 7 October 1999, Branson J varied the asset preservation orders made by Lindgren J so as to increase the sum that could be expended on legal fees. 7 Ms Misuma has now complied with the requirements of pars (a) to (e) of Order 1 made by Moore J. Mr Misuma has not complied. The date for compliance with Order 1, so far as Mr Misuma is concerned, was extended by an order made by Gyles J on 26 October 1999 up to and including 3 November 1999. The balance of Order 1 (that is, the lease granted in the last sub-paragraph) has been stayed up to and including 3 November 1999. 8 Neither Mr nor Ms Misuma filed within the time prescribed by the Federal Court Rules ("FCR") a notice of appeal or an application for leave to appeal against the judgment of Lindgren J. Nor did they file within time an application for leave to appeal against the interlocutory orders made by Moore J on 23 September 1999. 9 Mr and Ms Misuma now bring three motions which have been heard together. (i) They seek an extension of time in which to file and serve a notice of appeal from the judgment of Lindgren J. The application appears to assume that any appeal from the judgment, if brought within time, is available as of right. This may be the case in relation to the declaratory orders made in respect of Mr Misuma, although it is possible that these are interlocutory in character having regard to the grant of leave to the ACCC to seek orders for compensation under s 87(1A) and (1B) of the TP Act. In any event, the amended asset preservation orders appear to be interlocutory in character. Since these are the only orders which affect Ms Misuma, she requires leave to appeal against the asset preservation order affecting her. (ii) Mr and Ms Misuma apply for an extension of time within which to file and serve a notice of motion for leave to appeal against the interlocutory judgment of Moore J given on 23 September 1999. (iii) Mr and Ms Misuma seek a stay of the following orders until further order: (a) Orders 12(a) and (b) made by Lindgren J on 2 September 1999 insofar as they affect Mr and Ms Misuma; (b) Order 12(c) made by Lindgren J on 2 September 1999 insofar as it affects Ms Misuma; (c) Order 1 made by Moore J on 23 September 1999. In the alternative, Mr Misuma seeks an extension of time for compliance with Order 1 made by Moore J on 23 September 1999. 10 To the extent that the application seeks an extension of time to file an application for leave to appeal from the judgment of Lindgren J, a Judge of the Court has power to extend the time beyond the seven days provided for in the FCR, O 52 r 10(2)(b). To the extent that Mr Misuma seeks an extension of time within which to file and serve a notice of appeal beyond the period of 21 days specified in O 52 r 15(1), a Judge of the Court may grant an extension "for special reasons": O 52 r 15(2). The principles governing the grant of an extension of time are well known and are set out in Jess v Scott (1986) 12 FCR 187. 11 Evidence has been given providing an explanation for the delay by Mr and Ms Misuma in filing a notice of appeal or an application for leave to appeal from the judgment of Lindgren J. While there are some gaps in the evidence, particularly so far as Mr Misuma is concerned (who again has given no evidence in this application), I think the relatively short delay is largely explained. Having regard to the absence of any prejudice to the ACCC, if the delay were the only consideration I would grant the necessary extension of time to file a notice of appeal or an application for leave to appeal. 12 Mr White on behalf of the ACCC submitted, however, that extension of time should not be granted because an appeal, or an application for leave to appeal, from the judgment of Lindgren J would be futile. He pointed out that the declarations made in respect of Mr Misuma essentially rested on findings of fact and the asset preservation orders constituted an exercise by a trial judge of discretionary powers. 13 In my opinion, the challenge to the asset preservation orders cannot be characterised as necessarily hopeless. The applicants are labouring under the disadvantage that Lindgren J's reasons for making the original asset preservation orders are not available. There may be some force in Mr White's observation that it is unlikely that any error of principle in Lindgren J's reasoning will be shown. On the other hand, the orders are certainly very broad, and the possibility that the reasoning supporting orders in such form will ultimately reveal an error of principle cannot be entirely ruled out. I have not overlooked the fact that Order 12 is expressed to last only until 16 September 1999. However, that order was subsequently extended by Moore J until 12 November 1999 and thus remains in force. 14 Mr Temby, on behalf of the applicants, foreshadowed that Mr Misuma wishes to make an application to adduce further evidence on the appeal. The purpose of this evidence is to challenge a critical finding of fact made by Lindgren J. This finding was that Mr Misuma had signed many of the application forms for membership of a "Giraffe Club". This finding provided an important evidentiary basis for his Honour's conclusion that Mr Misuma had knowingly participated in Giraffe World's breach of ss 57 and 61 of the TP Act. Evidence was adduced before me which, if accepted, would be capable of supporting the conclusion Mr Misuma did not sign the relevant document. 15 The Court is entitled to receive further evidence on an appeal: Federal Court of Australia Act 1976 (Cth), s 27. In Hong v Minister for Immigration and Multicultural Affairs (1998) 82 FCR 468 (FC), it was said that, in general, two conditions must be satisfied (at 470): "(a) if the evidence had been available at the trial it is reasonably clear that an opposite result would have produced, and (b) reasonable diligence was exercised to procure the evidence which the defeated party failed to adduce at the trial." 16 One difficulty confronting the applicants is that, although the evidence might be capable of satisfying condition (a), no evidence has been adduced to support the proposition that reasonable diligence was exercised to procure the evidence at trial. 17 With some hesitation, I have concluded that Mr Misuma should be given the opportunity to attempt to persuade a Full Court that he should be permitted to adduce further evidence on the appeal. It is possible that he may be able to adduce evidence satisfying condition (b). I take into account that until very recently the funds available to Mr Misuma for the purpose of obtaining legal advice were severely limited by the terms of the asset preservation orders. That may have impeded the applicants' ability to address all evidentiary issues. In the circumstances, I think this is an appropriate case to exercise my discretion in favour of Mr Misuma. If it turns out that he is unable to satisfy condition (b) for the reception of further evidence a Full Court will doubtless have little difficulty in rejecting the proffered evidence. 18 While I think Mr Misuma should have the opportunity of challenging the asset preservation orders, I do not think that the operation of pars 12(a) and (b) of the orders made by Lindgren J should be stayed pending the hearing of any appeal or application for leave to appeal. In substance these orders have been in place for nearly eighteen months. Until very recently no attempt had been made to stay the operation of those orders or to set them aside. Moreover, to stay the orders pending any appeal would be to create the risk of removal of assets from the jurisdiction which presumably prompted Lindgren J to make the orders in the first place. I note that I have not been asked to extend these orders beyond 12 November 1999. 19 I do think, however, that a stay should be granted of order 1 made by Moore J on 23 September 1999, to the extent that it grants leave to the ACCC to give any bank, building society or other financial institution with which Mr Misuma or Ms Misuma conducts any account notice of the order. There is evidence that this order, if implemented, could or might cause substantial and perhaps irremediable prejudice to Mr Misuma and Ms Misuma. There is nothing to indicate that the sanctions available for breach of the asset preservation orders are not of themselves sufficient to ensure compliance with those orders. Pending the hearing of an application for leave to appeal that part of order 1 should be stayed. 20 The result is as follows: 1. I extend the time for filing and serving a notice of appeal and/or an application for leave to appeal from the judgment of Lindgren J given on 26 August 1999 until 4 pm on 10 November 1999. 2. I extend the time for filing and serving an application for leave to appeal from the judgment of Moore J given on 23 September 1999 until 4 pm on 10 November 1999. 3. I extend the time for Mr Misuma to comply with Order 1 made by Moore J on 23 September 1999 until 4 pm on 10 November 1999. 4. I stay the leave granted to the ACCC in Order 1 made by Moore J on 23 September 1999 until further order. 5. I reserve the costs of the present motions for the consideration of the Full Court. 6. I grant liberty to apply on 48 hours notice. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. Associate: Dated: 4 November 1999 Counsel for Mr and Ms Misuma: Mr I Temby QC Solicitor for Mr and Mrs Misuma: Blessington Judd Counsel for the ACCC: Mr S T White Solicitor for the ACCC: Australian Government Solicitor Date of Hearing: 3 November 1999 Date of Judgment: 4 November 1999