FEDERAL COURT OF AUSTRALIA IBM Global Financing Australia Limited v Millennium Hardware (Australia) Pty Ltd [2000] FCA 1107 IBM GLOBAL FINANCING AUSTRALIA LIMITED v MILLENNIUM HARDWARE (AUSTRALIA) PTY LTD & ANOR N 838 OF 1999 HELY J 31 JULY 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 838 OF 1999 BETWEEN: IBM GLOBAL FINANCING AUSTRALIA LIMITED APPLICANT AND: MILLENNIUM HARDWARE (AUSTRALIA) PTY LTD FIRST RESPONDENT MICHAEL JOHN HENDERSON SECOND RESPONDENT JUDGE: HELY J DATE OF ORDER: 31 JULY 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Judgment be entered pursuant to Order 10 rule 7(1)(b) against the first and second respondents in the sum of $838,039.32, with interest continuing to accrue at the rate of $229.59 per day from the date of judgment. 2. The respondents pay the applicant's costs of these proceedings. 3. Upon the applicant, by its counsel, giving the usual undertaking as to damages, that (a) the asset preservation made against the first respondent by Order 2 of the orders made on 25 August and 26 August 1999 be continued for six months from the date of this order; and (b) the asset preservation order made against the second respondent by Order 3 made on 3 September 1999, be continued for a period of six months from the date of this order, on condition that, should the first respondent go into liquidation or the second respondent become bankrupt within that period, the orders are subject to the rights of creditors in their capacity as judgment debtors under an insolvent administration of the affairs of either of the respondents. 4. Liberty to apply be reserved to the first and second respondents in the event of liquidation or bankruptcy, to apply for a modification or discharge of the asset preservation orders. 5. Liberty to apply be reserved to the applicant both generally and in relation to the enforcement of the orders made so far. 6. This order be served on the first and second respondent. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 838 OF 1999 BETWEEN: IBM GLOBAL FINANCING AUSTRALIA LIMITED APPLICANT AND: MILLENNIUM HARDWARE (AUSTRALIA) PTY LTD FIRST RESPONDENT MICHAEL JOHN HENDERSON SECOND RESPONDENT JUDGE: HELY J DATE: 31 JULY 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This matter has been before me on a number of occasions for directions. On 5 October 1999, I directed that any defence by the respondents to the Amended Statement of Claim should be filed and served by 29 October 1999. I am satisfied that that order was served upon the respondents. Notwithstanding that order, neither respondent has filed a defence. 2 I have before me a Notice of Motion filed on 6 October 1999 seeking the entry of judgment pursuant to Order 11, rule 23 of the Federal Court Rules against the respondents in the sum of $738,810.41 plus interest. When the Motion came on for hearing, I gave leave to the applicant to amend the motion so as to invoke the jurisdiction of the Court under Order 10 rule 7(1)(b) and so as to amend the amount claimed in the Motion to $838,039.32 with interest at $229.59 per day from the date of judgment. 3 I am satisfied that prior notice of the application to amend the amount for which judgment was sought was given to each of the respondents. When the matter was called on for hearing, neither respondent appeared. The procedure appropriately adopted in a case such as the present was the subject of consideration by Drummond J in Australian Securities Commission v McLeod (1994) 54 FCR 309. 4 I am satisfied, on the basis of the materials before me, that the court has jurisdiction in this matter. The jurisdiction is not really open to doubt as the claim is fundamentally grounded in the Trade Practices Act 1974 (Cth) ("the Act"), it being alleged that contraventions of ss 52, 53(bb) and 58 have occurred. Liability against the second respondent is sought to be established in reliance on s 75B of the Act. 5 I am also satisfied as to the evidence on which the cause of action is based. When one looks at the totality of that evidence, there is an irresistible inference that the transactions itemised in the schedule to the Amended Statement of Claim are sham transactions in the sense that either the person who is said to have purchased the computer equipment does not exist, or in the sense that if the person does exist, no transaction was entered into with that person. 6 There is also overwhelming evidence that Michael Henderson was directly involved in all of those transactions. He is a director, secretary and shareholder of the first respondent. Each of the leases entered into with persons identified as purchasers were purportedly executed by the second respondent on behalf of IBM and, on the invoices which apparently show delivery of the goods in question, Mr Henderson is listed as the sales representative. I am satisfied on this evidence that Mr Henderson was knowingly concerned in each of the transactions. 7 In those circumstances, I propose to order that: (1) there be judgment pursuant to Order 10, rule 7(1)(b) of the Federal Court Rules for the applicant against both respondents in the sum of $838,039.32 with interest continuing to accrue at the rate of $229.59 per day from the date of judgment; (2) the respondents pay the applicant's costs of these proceedings; (3) upon the applicant, by its counsel, giving the usual undertaking as to damages, that: (a) the asset preservation orders previously made against the first respondent by Order 2 of the orders made on 25 August and 26 August 1999 be continued for six months from the date of this order; and (b) the asset preservation order made against the second respondent by Order 3 made on 3 September 1999, be continued for a period of six months from the date of this order on condition that should the first respondent go into liquidation, or the second respondent become bankrupt within that period, the orders are subject to the rights of creditors in their capacity as judgment debtors under an insolvent administration of the affairs of either of the respondents. 8 I reserve liberty to apply to the first and second respondents in the event of liquidation or bankruptcy, as the case may be, to apply for a modification or discharge of the asset preservation orders. 9 I direct that this order be served on the first respondent and the second respondent and in addition I should reserve general liberty to apply to the applicant in relation to the enforcement of the orders so far made and generally. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely. Associate: Dated: 9 August 2000 Counsel for the Applicant: Mr J Renwick Solicitor for the Applicant: Selby Anderson There was no appearance by the First or Second Respondents Date of Hearing: 31 July 2000 Date of Judgment: 31 July 2000