FEDERAL COURT OF AUSTRALIA Clout (Trustee) v Anscor Pty Ltd [2001] FCA 709 DAVID LEWIS CLOUT (AS TRUSTEE IN BANKRUPTCY OF THE ESTATE OF GEOFFREY ROBERT DEXTER) v ANSCOR PTY LTD,MACKAY & ALLEN PTY LTD, HINATORIE PTY LTD (PROVISIONAL LIQUIDATOR APPOINTED), THE FUND ADMINISTRATORS PTY LTD, REINSAG NOMINEES PTY LTD, SPECTRUM FUND ADMINISTRATION PTY LTD, AUSTRALIAN SECURED MORTGAGES PTY LTD, PROJECT FINANCE (QLD) PTY LTD, ANNE SHIRLEY CORBETT, CROFTBY DOWNS PTY LTD, THORNVILLE PTY LTD IN ITS OWN CAPACITY AND IN ITS CAPACITY AS TRUSTEE OF THE ANSCOR EXECUTIVE INCENTIVE TRUST AND THE THORNVILLE EXECUTIVE INCENTIVE TRUST, ANSCOR INVESTMENTS PTY LTD AND PACIFIC INTERNATIONAL ASSET MANAGEMENT LIMITED QG 7308 OF 1998 DRUMMOND J 7 JUNE 2001 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 7308 OF 1998 BETWEEN: DAVID LEWIS CLOUT (AS TRUSTEE IN BANKRUPTCY OF THE ESTATE OF GEOFFREY ROBERT DEXTER) APPLICANT AND: ANSCOR PTY LTD FIRST RESPONDENT MACKAY & ALLEN PTY LTD SECOND RESPONDENT HINATORIE PTY LTD (PROVISIONAL LIQUIDATOR APPOINTED) THIRD RESPONDENT THE FUND ADMINISTRATORS PTY LTD FOURTH RESPONDENT REINSAG NOMINEES PTY LTD FIFTH RESPONDENT SPECTRUM FUND ADMINISTRATION PTY LTD SIXTH RESPONDENT AUSTRALIAN SECURED MORTGAGES PTY LTD SEVENTH RESPONDENT PROJECT FINANCE (QLD) PTY LTD EIGHTH RESPONDENT ANNE SHIRLEY CORBETT NINTH RESPONDENT CROFTBY DOWNS PTY LTD TENTH RESPONDENT THORNVILLE PTY LTD IN ITS OWN CAPACITY AND IN ITS CAPACITY AS TRUSTEE OF THE ANSCOR EXECUTIVE INCENTIVE TRUST AND THE THORNVILLE EXECUTIVE INCENTIVE TRUST ELEVENTH RESPONDENT ANSCOR INVESTMENTS PTY LTD TWELFTH RESPONDENT PACIFIC INTERNATIONAL ASSET MANAGEMENT LIMITED THIRTEENTH RESPONDENT JUDGE: DRUMMOND J DATE OF ORDER: 7 JUNE 2001 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The request by Mrs Corbett for a relaxation of the Mareva injunction and for an adjournment of the proceedings against her be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 7308 OF 1998 BETWEEN: DAVID LEWIS CLOUT (AS TRUSTEE IN BANKRUPTCY OF THE ESTATE OF GEOFFREY ROBERT DEXTER) APPLICANT AND: ANSCOR PTY LTD FIRST RESPONDENT MACKAY & ALLEN PTY LTD SECOND RESPONDENT HINATORIE PTY LTD (PROVISIONAL LIQUIDATOR APPOINTED) THIRD RESPONDENT THE FUND ADMINISTRATORS PTY LTD FOURTH RESPONDENT REINSAG NOMINEES PTY LTD FIFTH RESPONDENT SPECTRUM FUND ADMINISTRATION PTY LTD SIXTH RESPONDENT AUSTRALIAN SECURED MORTGAGES PTY LTD SEVENTH RESPONDENT PROJECT FINANCE (QLD) PTY LTD EIGHTH RESPONDENT ANNE SHIRLEY CORBETT NINTH RESPONDENT CROFTBY DOWNS PTY LTD TENTH RESPONDENT THORNVILLE PTY LTD IN ITS OWN CAPACITY AND IN ITS CAPACITY AS TRUSTEE OF THE ANSCOR EXECUTIVE INCENTIVE TRUST AND THE THORNVILLE EXECUTIVE INCENTIVE TRUST ELEVENTH RESPONDENT ANSCOR INVESTMENTS PTY LTD TWELFTH RESPONDENT PACIFIC INTERNATIONAL ASSET MANAGEMENT LIMITED THIRTEENTH RESPONDENT JUDGE: DRUMMOND J DATE: 7 JUNE 2001 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Mrs Corbett, the ninth respondent, applies again for relaxation of the Mareva injunctions I have granted to the applicant trustee in bankruptcy of Dexter for the purpose of having access to her frozen property to meet her future legal expenses in this action. She also applies on medical grounds for an adjournment of the trial of the action against her that has been running, with interruptions, since 23 May 2001. On 23 May, I refused Mrs Corbett's application that her husband, Mr Corbett, be permitted to act as her advocate at the trial. I also then refused leave to the first and the tenth to thirteenth respondents to be represented by Mr Corbett. I incorporate my reasons of 23 May 2001 for adopting that draconic course. However, I gave Mr Corbett limited leave, confined to representing the first and the tenth to twelfth respondents, in order to raise and litigate a new ground of defence to the trustee's claims that I then gave leave to all those respondents and to Mrs Corbett to raise by amendment. Though I had previously refused Mr Corbett leave to act as Mrs Corbett's advocate in the further conduct of the trial, I gave leave to him on 25 May 2001 to act as Mrs Corbett's "McKenzie friend" at the trial. 2 I have now rejected a number of applications by the first and the ninth to twelfth respondents for relaxation of the Mareva injunctions that I granted in May 2000 and extended in February last, which freeze certain assets of those respondents. A major reason for refusing to relax the injunctions is the failure of these respondents to put evidence before me to show that, despite the very large amount of moneys to which they have all had access from commissions paid by Dexter to the first respondent, they are nevertheless in the position that the only assets they can look to, to meet their legal expenses of defending this action, are the frozen assets. 3 Though the first respondent was in receipt of large amounts of commissions from Dexter prior to March 1996, the trustee's case focuses on the two years, March 1996 to March 1998. In this period, the first respondent received over $26 million from Dexter. I have dealt with the issue of the failure of the Anscor respondents including Mrs Corbett to show that they need access to the frozen assets in my judgments of 26/27 February and 4 May 2001. 4 This issue was also central to my decision of 23 May last to refuse Mr Corbett general leave to represent any of the Anscor respondents, including Mrs Corbett. I again referred to the failure of Mrs Corbett to lead any evidence at all suggesting how she might now be bare of assets save for the frozen properties, despite the large amounts of money she personally received both directly and indirectly through her control of the other Anscor respondents when I refused her applications to relax the injunctions that were made during the trial on 28 May and 30 May 2001. On 30 May, I said this: "All they [ie, the Anscor respondents including Mrs Corbett] have done is point to the fact that disbursements of those amounts are recorded in Anscor's books, but there's not been the slightest attempt to come to grips with the need to demonstrate that all those many millions of dollars that passed to Mrs Corbett and to Mr Corbett personally have been frittered away, and that neither is worth pursuing by Anscor or any of the other respondents for recovery of the loans, a small part of which would be all that would be necessary to enable the respondents, including Mrs Corbett, to be legally represented." 5 For a long while now, Mr Corbett and all the Anscor respondents including Mrs Corbett can have been in no doubt as to the issues that they need to deal with if they are to obtain access to any of the frozen assets. In the wholly unlikely situation of Mr and Mrs Corbett not clearly understanding from what I have repeatedly identified as the issue they need to deal with to get access now to the frozen assets, I note that they have assistance, on some informal voluntary basis, of a retired barrister. The sort of advice that he has been giving them may be reflected in exhibit A11, Mrs Corbett's submission of 30 May last. 6 I have given reasons in my judgments of 26/27 February, 4 May and 23 May 2001 for refusing to accept that all the respondents including Mrs Corbett need access to the frozen assets to fund their continued defence. I dealt particularly with Mr Corbett's position in pars 18 to 20 of my reasons of 23 May. So far as Mrs Corbett herself is concerned, what were booked to her in Anscor's accounts as loans totalling over $1.5 million were transferred to Mr Corbett in June 1997. Being loans, it is unlikely that Mrs Corbett paid any tax on the sums totalling that large amount, ie, she was able to expend the whole of that sum as she pleased. 7 After 30 June 1997 she continued to take very large sums in total from Anscor by way of loans, again, no doubt, tax free. The details are set out in exhibit DLC55 to Mr Clout's affidavit, exhibit C2. After 30 June 1997 it is apparent that Mrs Corbett paid her credit cards and a range of other specifically identified personal expenses from Anscor moneys that were booked to her as loans. By way of example only, in the month of July 1997 approximately $73,200 in all went to pay her Visa and MasterCard debts. In September 1997 she bought a Range Rover for herself with a loan from Anscor of $111,500 and in August 1997, she bought the now-frozen properties at 628 Mt Crosby Road and Lot 10 Cantwell Street with loans from Anscor totalling $250,000. Further, she received wages, substantial in amount, from Anscor. So far as the evidence before me indicates, in the year ending 30 June 1997 when it is said the $1.5 million worth of loans, in all, to her were taken over by her husband, she received gross wages from Anscor of $171,000 approximately, with tax instalments of approximately $74,000 being taken out of those wages. In the nine months to mid March 1998, it appears she received gross wages of $242,307 from Anscor from which tax instalments of a little over $110,000 were deducted. 8 But, in addition to wages and loan moneys from Anscor received by Mrs Corbett since 30 June 1997 to pay what I will described as her specifically identified expenses, such as her Visa and MasterCard accounts, DLC 55 shows that in the nine months between 30 June 1997 and mid-March 1998 very large sums, totalling $520,000 in all, were taken by Mrs Corbett from Anscor's funds. They are described in Anscor's books only by the single word "loan". 9 She has never offered any explanation for how it is that, despite her substantial wages and despite payment from loan moneys received by her from Anscor of specifically identified personal expenses of hers, very large in total amount, she has nothing to show for the other large sums that she has personally received, for example, in the nine months to March 1998. In the face of this evidence as to the large amounts of cash which have passed from Anscor to Mrs Corbett personally, I am not prepared to accept Mrs Corbett's bald assertion that she, personally, now has access to no assets other than her frozen property to obtain the cash needed to meet the quite modest amount she says she now needs for legal representation in the remainder of the proceedings. 10 There is a further consideration that needs to be noted. It is apparent that, despite the restrictions imposed by the injunctions of May 2000, moneys very substantial in amount have been found until recently to meet the expenses, including the legal expenses of defending these actions, of all the Anscor respondents, including Mrs Corbett. 11 In my judgment of 4 May 2001, I said this about the sum of $1.155 million identified by the applicant trustee as having been paid by Anscor to the thirteenth respondent as a contribution to the superannuation fund for Anscor employees said to be controlled by the thirteenth respondent: "… Mr Corbett, in that affidavit of February last, said that, of the $1.155 million disbursed to Pacific International: 'approximately $600,000 has been spent during that period on the various overheads, costs and expenses of Anscor, including the payment of significant legal costs associated with the various court actions that Anscor, my wife and I are involved in.'" 12 In my judgment of 23 May 2001, I referred to what Mr Francken, of the thirteenth respondent, has recently said of those moneys which Anscor paid to the thirteenth respondent: "… Mr Francken sent to Mr Corbett a facsimile [ie, a facsimile dated 23 May last] enclosing what Mr Francken describes as an application to grant leave [ie, to Mr Corbett to represent the thirteenth respondent]. This refers to the thirteenth respondent as being the trustee of the Anscor Superannuation Fund, all of whose funds are 'tied up in illiquid investments and not available for its use'. ... … … I am not prepared to accept that the Anscor respondents, who have been meeting the thirteenth respondent's legal expenses, are financially unable now to fund the litigation. Further, Mr Francken does not deal with the possibility of borrowing against the Anscor Fund investments, 'illiquid' though he says they are, in order to raise moneys to protect the trust fund, of which it is trustee, against the applicant's claims on it." 13 There is yet another source of funds that according to Mr Corbett have been available until recently to assist in meeting the legal and other expenses of all the Anscor respondents including Mrs Corbett. In my judgment of 23 May last, I also said: "He [ie, Mr Corbett] acknowledges, however, that he is a director of a company which has a sandalwood farm operation in Western Australia and which, through the past three years, has been able to loan the first respondent $567,000 and the tenth respondent a further $289,000 'to support them through the past 3 years'. But he submits, without providing any evidentiary support, that this company does not have the capacity to provide further assistance now which might enable the Anscor respondents' legal expenses to be met." 14 There is no satisfactory explanation offered, as I have noted, why the thirteenth respondent, and Mr Corbett's Western Australian company, cannot or are not prepared now to continue to assist the Anscor respondents, including Mrs Corbett, with their legal defence. 15 Once the position is reached that I am not prepared to accept that any of Mrs Corbett, or the other Anscor respondents, needs access to the frozen assets to fund their defence to the present action, Mrs Corbett's application for an adjournment on medical grounds cannot, in my opinion, justify putting the case against her off either indefinitely or until mid August next for the purpose of enabling her to obtain a specialist opinion on her capacity to represent herself in Court. There is nothing in the medical evidence to suggest that Mrs Corbett is now incapable of giving instructions for her own defence to a legal representative. Dr Cox says only: "This lady as previously noted is suffering from acute anxiety state which has been precipitated by her court appearances. I cannot see that this situation will change whilst the precipitating factors remain. The only alternative is to sedate her and I am loath to do this as it may interfere with her ability to think clearly." 16 No ground for an indefinite adjournment is laid in the medical evidence, ie, an indefinite adjournment of the kind that on the face of Dr Cox's report will be necessary to remove the cause of what is said to be Mrs Corbett's disabling condition. I therefore reject both the most recent application by Mrs Corbett for a relaxation of the Mareva injunction and her application for an adjournment of the proceedings against her. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. Associate: Dated: 12 June 2001 Counsel for the Applicant: Mr P McMurdo QC and Mr D Quayle Solicitor for the Applicant: Mallesons Stephen Jaques Counsel for the Ninth Respondent: The Ninth Respondent appeared in person. Date of Hearing: 7 June 2001 Date of Judgment: 7 June 2001