Gupta v Northcott [2022] FCA 661

Federal Court of Australia

Gupta v Northcott [2022] FCA 661 File number(s): NSD 420 of 2022

Judgment of: HALLEY J

Date of judgment: 3 June 2022

Date of publication of reasons: 6 June 2022

Catchwords: PRACTICE AND PROCEDURE – urgent ex parte application for asset preservation orders – where sufficiently strong prima facie case establishing real risk of dissipation of assets – application granted

Legislation: Federal Court Rules 2011 (Cth) rr 1.39, 10.24

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Number of paragraphs: 20

Date of hearing: 3 June 2022

Counsel for the Applicants: Mr E Finnane

Solicitor for the Applicants: Ironbridge Legal

Counsel for the Respondent: The Respondent did not appear

ORDERS NSD 420 of 2022

BETWEEN: RAHUL GUPTA IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS TRUSTEE OF THE RAHUL GUPTA SELF MANAGED SUPERANNUATION FUND First Applicant

STEWART ANTHONY MCCLAY IN HIS CAPACITY AS TRUSTEE OF THE RAHUL GUPTA SMSF (ABN: 48 115 870 643) Second Applicant

AND: NOEL WILLIAM JAMES NORTHCOTT Respondent

order made by: HALLEY J DATE OF ORDER: 3 JUNE 2022

THE COURT ORDERS THAT: 1. In the first instance, service of the originating application filed on 3 June 2022 be dispensed with. 2. In the first instance, the originating application be returnable at 2.15 pm on 3 June 2022. 3. In the first instance, the applicants have leave to read in this proceeding the affidavit affirmed by Rahul Gupta in his personal capacity and in his capacity as trustee of Rahul Gupta Self Managed Superannuation Fund (ABN 48 115 870 643) on 3 June 2022. 4. Pursuant to rule 1.39 of the Federal Court Rules 2011 (Cth) (Rules), the time for service of the application, the affidavit affirmed by Rahul Gupta on 3 June 2022, and the Concise Statement be abridged to 5.00 pm AEST on Monday, 6 June 2022. 5. Upon the Applicants giving the undertakings set out in Schedule A to Annexure A, freezing and ancillary orders be made against the Respondent in the form of Annexure A to these orders. 6. Pursuant to rule 10.24 of the Rules: (a) personal service of the Application on the Respondent be dispensed with; and (b) the Applicant have leave to serve the Documents on the Respondent by emailing the Documents to noel.northcott@bigpond.com. 7. In this order, "Documents" means: (a) the originating application; (b) the interlocutory application; (c) the affidavit of Rahul Gupta filed with the originating application and exhibit RG-1; (d) a transcript of the ex parte hearing, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court; and (e) a copy of these orders. 8. The time for service of the Documents is abridged and service is to be effected by 5.00 pm Monday, 6 June 2022. 9. The originating application be returnable before Justice Yates in his Honour's capacity as Commercial and Corporations Duty Judge at 4.30 pm on Wednesday, 8 June 2022. 10. The costs of this application be reserved. 11. The parties have liberty to apply on reasonable notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A PENAL NOTICE TO: NOEL WILLIAM JAMES NORTHCOTT IF YOU (BEING THE PERSON BOUND BY THIS ORDER): (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THE ORDER FOR THE DOING OF THE ACT; OR (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED. TO: NOEL WILLIAM JAMES NORTHCOTT This is a 'freezing order' made against you on 3 June 2022 by Justice Halley at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order. THE COURT ORDERS: INTRODUCTION: 1. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified. 2. In this order: a. 'applicant', if there is more than one applicant, includes all the applicants; b. 'you', where there is more than one of you, includes all of you and includes you if you are a corporation; c. 'third party' means a person other than you and the applicant; d. 'unencumbered value' means value free of mortgages, charges, liens or other encumbrances. 3. a. If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions. b. If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way. INJUNCTION TO PRESERVE TRACING CLAIMS 4. The Respondent be restrained from transferring, or otherwise dealing with any of the moneys received by the Applicants, or any assets purchased using moneys received by the Applicants, until further order, and without limitation, the following: a. Any money, contracts or other rights held in Account number 22007259 and 1600118636 in the name of Northcott Noel with International Capital Markets Pty Ltd trading as IC Markets; b. Any bank account linked to the IC Markets accounts referred to in the above subparagraph; and c. Any money held in the account with the Bank of Queensland Limited ABN 32 009 656 74OQ, with the following details: i. Account name: Noel Northcott BSB: 126-540 Account number: 2317-1436. FREEZING OF ASSETS 5. a. You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia ('Australian assets') up to the unencumbered value of $1,250,000 ('the Relevant Amount'). b. If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount. c. If the unencumbered value of your Australian assets is less than the Relevant Amount, and you have assets outside Australia ('ex-Australian assets'): i. You must not dispose of, deal with or diminish the value of any of your Australian assets and ex-Australian assets up to the unencumbered value of your Australian and ex-Australian assets of the Relevant Amount; and ii. You may dispose of, deal with or diminish the value of any of your ex-Australian assets, so long as the unencumbered value of your Australian assets and ex-Australian assets still exceeds the Relevant Amount. 6. For the purposes of this order, a. your assets include: i. all your assets, whether or not they are in your name and whether they are solely or co-owned; ii. any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and iii. the following assets in particular: 1. Your interest in the property known as H 121 Cook Avenue Hillary 6025, being Lot 362 on Plan 16390 or, if it has been sold, the net proceeds of the sale; 2. Any surplus funds held in your mortgage accounts with the Perpetual Limited and Adelaide Bank; 3. The assets including accounts referred to in paragraph 4; and 4. Any assets which you obtained or purchased using any of the moneys transferred to you by the Applicants. b. the value of your assets is the value of the interest you have individually in your assets. PROVISION OF INFORMATION DISCLOSURE 7. Subject to paragraph 9, you must, within 10 working days after being served with this order, swear and file an affidavit disclosing in full the following: a. The receipt of all moneys transferred to you by the Applicants; b. Where and how such moneys have been invested, transferred, withdrawn spent or otherwise dealt with; and c. Any assets purchased using moneys transferred to you by the Applicants; d. The current account/location of the moneys transferred to you by the Applicants, and the location of any assets purchased by you using moneys transferred to you by the Applicants. 8. Further, subject to paragraph 9, you must: a. at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets world-wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets; b. within 10 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information. 9. a. This paragraph (9) applies if you are not a corporation and you wish to object to complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that you: i. have committed an offence against or arising under an Australian law or a law of a foreign country; or ii. are liable to a civil penalty. b. This paragraph (9) also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively: i. have committed an offence against or arising under an Australian law or a law of a foreign country; or ii. are liable to a civil penalty. c. You must: i. disclose so much of the information required to be disclosed to which no objection is taken; and ii. prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and iii. file and serve on each other party a separate affidavit setting out the basis of the objection. EXCEPTIONS TO THIS ORDER 10. Subject to paragraph 11, this order does not prohibit you from: a. paying up to $2,000 a week for your ordinary living expenses; b. paying up to $50,000 for reasonable legal expenses; c. dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and d. in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation. 11. Paragraph (10) above does not permit you to make any payments from or deal with or dispose of any of the moneys, assets or accounts referred to in Order 4. 12. You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly. 13. a. This order will cease to have effect if you: i. pay the sum of $1,250,000 into Court; or ii. pay that sum into a joint bank account in the name of your lawyer and the lawyer for the applicant as agreed in writing between them; or iii. provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court. b. Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency. c. If this order ceases to have effect pursuant 12(a) above, you must as soon as practicable file with the Court and serve on the applicant notice of that fact. COSTS 14. The costs of this application are reserved to the Court hearing the application on the Return Date. PERSONS OTHER THAN THE APPLICANT AND THE RESPONDENT 15. Set off by banks This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order. 16. Bank withdrawals by the respondent No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order. 17. Persons outside Australia a. Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia. b. The terms of this order will affect the following persons outside Australia: i. you and your directors, officers, employees and agents (except banks and financial institutions); ii. any person (including a bank or financial institution) who: 1. is subject to the jurisdiction of this Court; and 2. has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and 3. is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and iii. any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person's assets. 18. Assets located outside Australia Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party's application, reasonable written notice of the making of the application is given to the applicant. SCHEDULE A UNDERTAKINGS GIVEN TO THE COURT BY THE FIRST APPLICANT 1. The first applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order. 2. As soon as practicable, the first applicant will file and serve upon the respondent copies of: a. this order; b. the application for this order for hearing on the return date; c. the following material in so far as it was relied on by the applicant at the hearing when the order was made: i. affidavits (or draft affidavits); ii. exhibits capable of being copied; iii. any written submission; and iv. any other document that was provided to the Court. d. a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court; e. the originating process, or, if none was filed, any draft originating process produced to the Court. 3. As soon as practicable, the first applicant will cause anyone notified of this order to be given a copy of it. 4. The first applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent's assets. 5. If this order ceases to have effect the first applicant will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect. 6. The first applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding. 7. The first applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent's assets. SCHEDULE B AFFIDAVITS RELIED ON Name of deponent Date affidavit made (1) Rahul Gupta 3 June 2022