Australian Securities and Investments Commission v Dawson [2020] FCA 1144

Federal Court of Australia

Australian Securities and Investments Commission v Dawson [2020] FCA 1144 File number: VID 521 of 2020

Judgment of: ANASTASSIOU J

Date of judgment: 7 August 2020

Catchwords: CORPORATIONS – application by Australian Securities and Investments Commission following investigation – defendants allegedly obtaining 'investment' by masquerading under colours of legitimate businesses – application under s 1323 of the Corporations Act 2001 (Cth) – orders sought appointing receiver over property of the defendants, restraining dealings with that property and restraining the first defendant from leaving Australia without leave – orders granted

Legislation: Australian Securities and Investments Commission Act 2001 (Cth), ss 13 and 102 Corporations Act 2001 (Cth), ss 911A, 911C, 1041E, 1041H and 1323 Crimes Act 1900 (NSW) ss 192E and 192G

Division: General Division

Registry: Victoria

National Practice Area: Commercial and Corporations

Sub-area: Regulator and Consumer Protection

Number of paragraphs: 13

Date of hearing: 7 August 2020

Counsel for the Plaintiff: Ms C. van Proctor

Solicitor for the Plaintiff: Australian Securities and Investments Commission

ORDERS VID 521 of 2020

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff

AND: LARRY JOHN DAWSON First Defendant

PW KITT CO PTY LTD (ACN 635 767 047) Second Defendant

order made by: ANASTASSIOU J DATE OF ORDER: 7 AUGUST 2020

THE COURT ORDERS THAT:

1. Until further order, pursuant to s 1323(1)(h)(ii) of the Corporations Act, Michael John Hill, Anthony Norman Connelly and Katherine Sozou of McGrathNichol (the Receivers) be appointed as Receivers and Managers to the property and assets of the First and Second defendant for the purpose of: (a) identifying, collecting and securing the property of defendants; (b) ascertaining the amount of investor funds received by the defendants; (c) identifying any dealings with, payments of, or distributions by or uses made of investor funds by the defendants; (d) identifying any property purchased or acquired with investor funds; (e) recovering investor funds; and (f) providing a report to the Court within 42 days in relation to the matters referred to in subparagraphs (a)-(e) above. 2. For the purpose of attaining the objectives for which the Receivers are appointed, the Receivers shall have the following powers: (a) the powers set out in subs 420(1) and 420(2)(a), (e), (f), (k), (o), (p), (q) and (u) of the Corporations Act; and (b) the power to apply to the Court for directions or further orders. 3. The Receivers shall, within 42 days of this Order, provide to the Court and to the Plaintiff a report as to the affairs of the First and Second Defendants, including: (a) the identification of the assets and liabilities of the First and Second Defendants; (b) an opinion as to the solvency of the First and Second Defendants; (c) an opinion as to the value of the assets of the First and Second Defendants; (d) the likely return to creditors, if the Second Defendant is wound up; (e) an opinion as to whether the Second Defendant holds proper financial records; (f) any other information necessary to enable the financial position of the First and Second Defendants to be assessed; (g) any suspected contraventions of the Act by the Second Defendant; and (h) any suspected contraventions of the Act by the First Defendant in his personal capacity and in his capacity as director of the Second Defendant. 4. The Defendants are to cooperate and provide all assistance required of them by the Receivers, including making available to the Receivers all books and records of the Second Defendant. 5. The Plaintiff is to provide to the Receivers all books and records in the Plaintiff's possession that the Plaintiff considers relevant to the Receivers' report as to the affairs of the First and Second Defendants. 6. Pursuant to sections 1323(1) and 1323(3) of the Act and/or section 23 of the FCA Act, until further order, each of the Defendants, by themselves and their servants, agents and employees or any other person on their behalf, be restrained from: (a) removing, or causing or permitting to be removed any of the property (as defined in s 9 of the Corporations Act) or assets of, or held by, for, or in the name of, the Defendants, including, but not limited to, funds in bank accounts held by the Defendants; (b) selling, charging, mortgaging or otherwise dealing with, disposing of and/or diminishing the value of any property or assets of or held by, for, or in the name of, the Defendants; (c) without limiting the terms of sub-paragraphs (a) and (b) above, incurring new liabilities for the Defendants, including, without limitation, liabilities incurred either directly or indirectly, through the use of a credit card, a credit facility, a drawdown facility or a re-draw facility; (d) causing or permitting the property or assets of the Defendants to be sold, charged, mortgaged or otherwise dealt with, disposed of, or diminished in value; and (e) without limiting the terms of sub-paragraphs (a) to (d) above, withdrawing, transferring or otherwise disposing of or dealing with, any monies available to the Defendants in any account with any bank, building society or other financial institution in which the Defendants have any legal or equitable interest. 7. Paragraph 6 of this Order, shall not prevent: (a) each of the Defendants from paying or otherwise incurring a liability for costs reasonably incurred in this proceeding and any criminal proceedings arising from the Plaintiff's investigation into the affairs of each of the Defendants; (b) any bank, building society or financial institution from exercising any right of set-off which it may have in respect of a facility afforded by it to each of the Defendants prior to the date of this order. (c) the First Defendant from dealing with his assets for the following purposes: (i) the payment of ordinary living expenses not exceeding $800 per week; (ii) the payment of reasonable legal expenses; and (iii) dealings and dispositions in the discharge of obligations bona fide and properly incurred under a contract entered into by the First Defendant before these orders were made. (d) the Second Defendant from dealing with its assets for the following purposes: (i) the payment of reasonable legal expenses; (ii) dealings and dispositions in the ordinary and proper course of the Second Defendant's business, including paying business expenses bona fide and properly incurred; and (iii) dealings and dispositions in the discharge of obligations bona fide and properly incurred under a contract entered into by the Second Defendant before these orders were made. 8. Pursuant to section 1323(1)(k) of the Act, until further order, the First Defendant be restrained from leaving or attempting to leave Australia without the consent of the Court. 9. Service of the Originating Process and the supporting affidavits be dispensed with. 10. Service of this Order, the Originating Application, the supporting affidavit and the Plaintiff's submissions dated 7 August 2020 be effected on the Defendants as soon as possible. 11. The matter be listed for case management at 2:15 pm on 13 August 2020. 12. Liberty to apply. 13. Costs reserved. 14. The Plaintiff has leave to give notice of this Order to any: (a) relevant authorities that record, control and regulate the ownership of real property, motor vehicles and maritime vessels; and (b) bank, building society or other financial institution through which, to the best of the Plaintiff's belief, the Defendants may operate any account; and (c) any other person or entity, holding or controlling property, which, to the best of the Plaintiff's belief, may belong to the Defendants. 15. For the purpose of this Order: (a) "dealing" includes: (i) causing, procuring, assisting or permitting any property in the possession or under the control of the Defendants (as applicable) to be removed from Australia or from the jurisdiction of this Court; and/or (ii) transferring, selling, charging, mortgaging, encumbering, securing, diminishing, disposing of, parting with possession, making any declaration of trust in relation to, exercising any power to vary or modify any trust deed or any interest under any trust in relation to the Defendants' property; (b) "property" means all real or personal property, assets or interests in property of any kind (including cryptocurrency), within or outside Australia including, by virtue of subsection 1323(2A) of the Act, any property held otherwise than as sole beneficial owner. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.