LAWFUEL – Australia Law & Business – The Federal Court of Australia yesterday refused an application by the Australian Securities and Investments Commission (ASIC) seeking to extend orders freezing the assets of Rold Corporation Pty Ltd (Rold). Rold is a company owned and controlled by Alan Frank Carey, the brother of Norman Carey who is the founder of the Westpoint Group of companies.
ASIC’s investigations indicated that Rold was party to a transaction in which it received $1 million, from funds ultimately sourced from Westpoint Corporation Pty Ltd. In August 2006 ASIC made an urgent ex parte application to the Federal Court in Perth seeking orders for the appointment of receivers to the property of Rold. On 7 August 2006 the Federal Court made interim asset freezing orders in relation to certain property of Rold. Those interim orders were subsequently expanded to include all of Rold’s property and remained in place with the consent of Rold until yesterday.
At the further hearing of ASIC’s application on 26 February 2007, ASIC sought to continue the existing asset freezing orders in relation to the property of Rold and, in the alternative, to have receivers appointed to its property.
ASIC’s application was made pursuant to s1323 of the Corporations Act, s23 of the Federal Court Act and the implied jurisdiction of the Court. Rold now opposed this application.
ASIC’s principal concern in seeking to continue the freezing orders was to protect, for the purposes of a potential claim against Rold by the liquidator of Westpoint Corporation, approximately $935,000 held in a bank account in the name of Rold. ASIC argued that this money was essentially the property of Westpoint Corporation.
In refusing to extend the orders and dismissing ASIC’s application, Justice French found that:
1. The Federal Court did not have the power either under s1323 of the Corporations Act or s23 of the Federal Court Act to make orders freezing Rold’s property without being satisfied that the grounds for the appointment of receivers under s1323 of the Corporations Act had been made out.
2. In the circumstances of this case there was not sufficient risk of the moneys held in Rold’s account being dissipated as to warrant the appointment of receivers under s1323, nor the making of orders under s23 of the Federal Court Act.
3. ASIC’s application was brought for the protection of a potential claim by the liquidator of Westpoint Corporation and the liquidator could apply for interlocutory relief (including a freezing order) if they considered that the property was at risk.
Significantly, in reaching his conclusion Justice French noted that it would be desirable that consideration be given to an amendment to s1323 of the Corporations Act to include a power in the Court to freeze property.