FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Pacnet Services Ltd [2007] FCA 264 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v PACNET SERVICES LTD, PACIFIC NETWORK SERVICES LTD, PACIFIC NETWORK SERVICES (EUROPE) LTD AND CHEXX INC QUD60 OF 2007 COLLIER J 23 FEBRUARY 2007 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD60 OF 2007 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: PACNET SERVICES LTD First Respondent PACIFIC NETWORK SERVICES LTD Second Respondent PACIFIC NETWORK SERVICES (EUROPE) LTD Third Respondent CHEXX INC Fourth Respondent JUDGE: COLLIER J DATE OF ORDER: 23 FEBRUARY 2007 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. Upon the applicant giving the usual undertaking as to damages, and pending further or other order, each of the respondents be restrained from removing from Australia, or otherwise dealing with, any cheques in Australia for presentation by it to any bank or any funds held by it in bank accounts in Australia, including funds held in accounts numbered 204105, 224288, 224309 and 228682 at the Brisbane branch BSB 034000 of the Westpac Banking Corporation for, or on behalf of, or in relation to those persons it acts for or on behalf of when dealing with cheques made out to any of the following namely: 1.1 SMG 1.2 Sentinel Marketing Group 1.3 NAC 1.4 Worldwide Cash Registry 1.5 WCR 1.6 TAC 1.7 Smithhaven 1.8 FDF 1.9 TWI 1.10 HGA 1.11 CHP 1.12 TDFINT 1.13 Security Services 1.14 International Award Treasury 1.15 CPH 1.16 ACP 1.17 National Winner Identifiers 1.18 NWI 1.19 Gold Rush Sweepstakes Release 1.20 GSR 1.21 Huntington Prize Report 1.22 HPR 1.23 Bank Vault 1.24 Adler and Associated 1.25 A&A 1.26 PWI 1.27 Cashalert 1.28 Cashorama 1.29 Paid 1.30 OUP 1.31 Rutger & Co 1.32 CDJ 1.33 IPD 1.34 CDI 1.35 MWAC 1.36 CAR 1.37 CAHQ 1.38 CAP 1.39 CACH 1.40 E&S Inc 1.41 FPR 1.42 IEA 1.43 Winners Circle 1.44 Payment Reporting System 1.45 Release Delivered 1.46 RRCD 1.47 Hemstead Rosen Cornwall 1.48 DC Bureau 1.49 RCRS 1.50 CAHCO 1.51 Cornerstone Finance 1.52 PRCO 1.53 Release Delivery 1.54 IMP 1.55 CTDS 1.56 CAL 1.57 Prize giveaway 1.58 CIDS 1.59 Monies Advisory. 2. Each of the respondents, by no later than 7 days from the date of these orders, provides to the applicant at its offices at Level 3, 500 Queen Street, Brisbane, Queensland, Australia: 2.1 a list of all bank accounts operated in Australia by them, or by any other person in relation to their business of collecting or distributing funds in Australia, whether on behalf of themselves or other persons, specifying: 2.1.1 the name and number of the account; 2.1.2 the bank and branch at which it is held; 2.1.3 the daily balances in the account for each day from 23 November 2006 to 23 February 2007; 2.2 in respect of each account so identified a list specifying the person or persons on whose behalf, or in relation to whom, they are seeking to present cheques, deposit funds or remit funds specifying in each case: 2.2.1 all known particulars of the said person or persons including their contact details, the country or countries in which they are based or operate and the accounts into which funds collected on their behalf are to be paid; 2.2.2 the present amount held in Australia and the present value of cheques to be presented in Australia, for each such person; 2.2.3 the total amounts collected for each such person in Australia since 1 November 2006; 2.2.4 if known, the business or businesses conducted by each such person in Australia; 2.2.5 the person or persons on behalf of whom they deposit cheques made out to: 2.2.5.1 SMG 2.2.5.2 Sentinel Marketing Group 2.2.5.3 NAC 2.2.5.4 Worldwide Cash Registry 2.2.5.5 WCR 2.2.5.6 TAC 2.2.5.7 Smithhaven 2.2.5.8 FDF 2.2.5.9 TWI 2.2.5.10 HGA 2.2.5.11 CHP 2.2.5.12 TDFINT 2.2.5.13 Security Services 2.2.5.14 International Award Treasury 2.2.5.15 CPH 2.2.5.16 ACP 2.2.5.17 National Winner Identifiers 2.2.5.18 NWI 2.2.5.19 Gold Rush Sweepstakes Release 2.2.5.20 GSR 2.2.5.21 Huntington Prize Report 2.2.5.22 HPR 2.2.5.23 Bank Vault 2.2.5.24 Adler and Associated 2.2.5.25 A&A 2.2.5.26 PWI 2.2.5.27 Cashalert 2.2.5.28 Cashorama 2.2.5.29 Paid 2.2.5.30 OUP 2.2.5.31 Rutger & Co 2.2.5.32 CDJ 2.2.5.33 IPD 2.2.5.34 CDI 2.2.5.35 MWAC 2.2.5.36 CAR 2.2.5.37 CAHQ 2.2.5.38 CAP 2.2.5.39 CACH 2.2.5.40 E&S Inc 2.2.5.41 FPR 2.2.5.42 IEA 2.2.5.43 Winners Circle 2.2.5.44 Payment Reporting System 2.2.5.45 Release Delivered 2.2.5.46 RRCD 2.2.5.47 Hemstead Rosen Cornwall 2.2.5.48 DC Bureau 2.2.5.49 RCRS 2.2.5.50 CAHCO 2.2.5.51 Cornerstone Finance 2.2.5.52 PRCO 2.2.5.53 Release Delivery 2.2.5.54 IMP 2.2.5.55 CTDS 2.2.5.56 CAL 2.2.5.57 Prize giveaway 2.2.5.58 CIDS 2.2.5.59 Monies Advisory. 3. Until further order, service of the orders, together with the application and supporting affidavit be effected on the respondents by: 3.1 forwarding a copy of the same by electronic mail to the respondents at info@pacnetservices.com and info@chexxinc.com; and 3.2 delivering a copy of same to Hopgood and Ganim, solicitors, Brisbane; and 3.3 forwarding a copy of same by electronic mail to Westpac Banking Corporation at spacialis@westpac.com.au; and 3.4 delivering a copy of same to the Queen and George Streets branch of Westpac Banking Corporation. 4. Parties have liberty to apply on 2 days notice. 5. The matter be listed for further hearing on 2 March 2007. 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 QUD60 OF 2007 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: PACNET SERVICES LTD First Respondent PACIFIC NETWORK SERVICES LTD Second Respondent PACIFIC NETWORK SERVICES (EUROPE) LTD Third Respondent CHEXX INC Fourth Respondent JUDGE: COLLIER J DATE: 23 FEBRUARY 2007 PLACE: BRISBANE REASONS FOR JUDGMENT 1 I have before me an urgent application for ex parte orders under O 15A and O 25A Federal Court Rules to provide information and to freeze funds in relation to alleged contraventions of s 52 Trade Practices Act 1974 (Cth) (the Act). 2 Order 15A permits the court to order preliminary discovery and discovery from a non-party. 3 Order 25A allows the court to make a "freezing order" upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied: O 25A r 2(1). Order 25A r (2)(2) states that a freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets. 4 The facts upon which this application is based are set out in detail in the affidavit of Mr Carl Buik sworn 23 February 2007 and its attachments. In summary, the applicant contends that the respondents have information relevant to a possible claim pursuant to s 52 of the Act. The nature of this claim is that the respondents are engaged on behalf of foreign entities in dealing with cheques sent by Australian consumers in response to what is allegedly a "scam" involving purported lottery winnings, where the consumer sends funds as "fees", "release fees" or "administration fees" to secure alleged winnings in foreign lotteries. 5 Mr Buik gave oral evidence in court as to why the four respondents have been nominated as the respondents to this application. 6 The urgency of the matter is exacerbated, not only by the possibility that further funds are being paid into the accounts of the respondents in accordance with the possible scam, but that, as deposed by Mr Buik, the Westpac Banking Corporation has currently placed an internal stop on dealing with the funds but has said that it could not guarantee that stop on the funds remaining in place beyond Monday 26 February 2007. 7 I understand from counsel's submissions that the applicant is of the view that Westpac Banking Corporation will abide by the order of this court in respect of an order made concerning those four respondents to freeze the funds in question. 8 I note that O 15A Federal Court rules: · Is beneficial in character and permits some degree of "fishing": Tamberlin J in Sony Music Entertainment (Australia) Ltd v University of Tasmania (No 1) (2003) 129 FCR 472. · Further, in respect of r 3, the applicant is not required to demonstrate the existence of a prima facie case against the prospective respondent, but the power is not to be used in favour of a person who intends to commence merely speculative proceedings: Hooper v Kirella Pty Ltd (1999) FCA 1584. 9 In this case there is no indication that the proceedings are in any way merely speculative. On the evidence provided by the applicant and submissions of counsel, I am satisfied that the applicant intends to commence proceedings in respect of what it considers to be serious breaches of s 52. 10 Further, in light of the submissions of counsel I am prepared at this stage to accept that the inference may be drawn that relevant funds would be removed from this jurisdiction if the respondents were served in advance of this order being made. 11 The order sought by the applicant is limited to such funds of the respondents as relate to cheques in favour of entities who prima facie appear to have a connection with possible breaches of the Act. 12 It appears that, prima facie, the respondents are carrying on business in Australia for the purposes of s 52, or, in any event are caught by the extended application of the Act pursuant to ss 6(2)(a)(i) or 6(3) of the Act. 13 Finally, I note that the applicant proposes to serve the orders on the respondents, together with the application and supporting affidavits, by email to the respondents; by delivering a copy of same to Hopgood and Ganim Solicitors in Brisbane, who the applicant understands is acting on behalf of the respondents, by forwarding a copy of same to Westpac Banking Corporation by email and, by serving a copy on Westpac Banking Corporation, corner of Queen and George Street, Brisbane. The Federal Court rules allow substituted service in certain circumstances in accordance with O 7 r 9. Given the facts of this case, in particular the uncertainty of the location of the respondents, I am prepared to order substituted service. 14 Accordingly, I am prepared to make the order sought, including that the matter return for further hearing on 2 March 2007. THE COURT ORDERS THAT: 1. Upon the applicant giving the usual undertaking as to damages, and pending further or other order, each of the respondents be restrained from removing from Australia, or otherwise dealing with, any cheques in Australia for presentation by it to any bank or any funds held by it in bank accounts in Australia, including funds held in accounts numbered 204105, 224288, 224309 and 228682 at the Brisbane branch BSB 034000 of the Westpac Banking Corporation for, or on behalf of, or in relation to those persons it acts for or on behalf of when dealing with cheques made out to any of the following namely: 1.1 SMG 1.2 Sentinel Marketing Group 1.3 NAC 1.4 Worldwide Cash Registry 1.5 WCR 1.6 TAC 1.7 Smithhaven 1.8 FDF 1.9 TWI 1.10 HGA 1.11 CHP 1.12 TDFINT 1.13 Security Services 1.14 International Award Treasury 1.15 CPH 1.16 ACP 1.17 National Winner Identifiers 1.18 NWI 1.19 Gold Rush Sweepstakes Release 1.20 GSR 1.21 Huntington Prize Report 1.22 HPR 1.23 Bank Vault 1.24 Adler and Associated 1.25 A&A 1.26 PWI 1.27 Cashalert 1.28 Cashorama 1.29 Paid 1.30 OUP 1.31 Rutger & Co 1.32 CDJ 1.33 IPD 1.34 CDI 1.35 MWAC 1.36 CAR 1.37 CAHQ 1.38 CAP 1.39 CACH 1.40 E&S Inc 1.41 FPR 1.42 IEA 1.43 Winners Circle 1.44 Payment Reporting System 1.45 Release Delivered 1.46 RRCD 1.47 Hemstead Rosen Cornwall 1.48 DC Bureau 1.49 RCRS 1.50 CAHCO 1.51 Cornerstone Finance 1.52 PRCO 1.53 Release Delivery 1.54 IMP 1.55 CTDS 1.56 CAL 1.57 Prize giveaway 1.58 CIDS 1.59 Monies Advisory. 2. Each of the respondents, by no later than seven (7) days from the date of these orders, provides to the applicant at its offices at Level 3, 500 Queen Street, Brisbane, Queensland, Australia: 2.1 a list of all bank accounts operated in Australia by them, or by any other person in relation to their business of collecting or distributing funds in Australia, whether on behalf of themselves or other persons, specifying: 2.1.1 the name and number of the account; 2.1.2 the bank and branch at which it is held; 2.1.3 the daily balances in the account for each day from 23 November 2006 to 23 February 2007; 2.2 in respect of each account so identified a list specifying the person or persons on whose behalf, or in relation to whom, they are seeking to present cheques, deposit funds or remit funds specifying in each case: 2.2.1 all known particulars of the said person or persons including their contact details, the country or countries in which they are based or operate and the accounts into which funds collected on their behalf are to be paid; 2.2.2 the present amount held in Australia and the present value of cheques to be presented in Australia, for each such person; 2.2.3 the total amounts collected for each such person in Australia since 1 November 2006; 2.2.4 if known, the business or businesses conducted by each such person in Australia; 2.2.5 the person or persons on behalf of whom they deposit cheques made out to: 2.2.5.1 SMG 2.2.5.2 Sentinel Marketing Group 2.2.5.3 NAC 2.2.5.4 Worldwide Cash Registry 2.2.5.5 WCR 2.2.5.6 TAC 2.2.5.7 Smithhaven 2.2.5.8 FDF 2.2.5.9 TWI 2.2.5.10 HGA 2.2.5.11 CHP 2.2.5.12 TDFINT 2.2.5.13 Security Services 2.2.5.14 International Award Treasury 2.2.5.15 CPH 2.2.5.16 ACP 2.2.5.17 National Winner Identifiers 2.2.5.18 NWI 2.2.5.19 Gold Rush Sweepstakes Release 2.2.5.20 GSR 2.2.5.21 Huntington Prize Report 2.2.5.22 HPR 2.2.5.23 Bank Vault 2.2.5.24 Adler and Associated 2.2.5.25 A&A 2.2.5.26 PWI 2.2.5.27 Cashalert 2.2.5.28 Cashorama 2.2.5.29 Paid 2.2.5.30 OUP 2.2.5.31 Rutger & Co 2.2.5.32 CDJ 2.2.5.33 IPD 2.2.5.34 CDI 2.2.5.35 MWAC 2.2.5.36 CAR 2.2.5.37 CAHQ 2.2.5.38 CAP 2.2.5.39 CACH 2.2.5.40 E&S Inc 2.2.5.41 FPR 2.2.5.42 IEA 2.2.5.43 Winners Circle 2.2.5.44 Payment Reporting System 2.2.5.45 Release Delivered 2.2.5.46 RRCD 2.2.5.47 Hemstead Rosen Cornwall 2.2.5.48 DC Bureau 2.2.5.49 RCRS 2.2.5.50 CAHCO 2.2.5.51 Cornerstone Finance 2.2.5.52 PRCO 2.2.5.53 Release Delivery 2.2.5.54 IMP 2.2.5.55 CTDS 2.2.5.56 CAL 2.2.5.57 Prize giveaway 2.2.5.58 CIDS 2.2.5.59 Monies Advisory. 3. Until further order, service of the orders, together with the application and supporting affidavit be effected on the respondents by: 3.1 forwarding a copy of the same by electronic mail to the respondents at info@pacnetservices.com and info@chexxinc.com; and 3.2 delivering a copy of same to Hopgood and Ganim, solicitors, Brisbane; and 3.3 forwarding a copy of same by electronic mail to Westpac Banking Corporation at spacialis@westpac.com.au; and 3.4 delivering a copy of same to the Queen and George Streets branch of Westpac Banking Corporation. 4. Parties have liberty to apply on 2 days notice. 5. The matter be listed for further hearing on 2 March 2007. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 6 March 2007 Counsel for the Applicant: S Couper QC Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Date of Hearing: 23 February 2007 Date of Judgment: 23 February 2007