Australian Securities & Investments Commission v Vella-Arpaci [2019] FCA 644

FEDERAL COURT OF AUSTRALIA

Australian Securities & Investments Commission v Vella-Arpaci [2019] FCA 644 File number: VID 457 of 2019

Judge: DAVIES J

Date of judgment: 6 May 2019

Catchwords: CORPORATIONS – application for interim orders under ss 1323(1)(j) and (k) of the Corporations Act 2001 (Cth) – defendant subject of investigation into suspected fraudulent share sales through use of false identities – investigation may be compromised if defendant leaves Australia – orders necessary and desirable

Legislation: Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 2001 (Cth) Crimes Act 1958 (Vic) Criminal Code Act 1995 (Cth)

Date of hearing: 6 May 2019

Registry: Victoria

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 9

Counsel for the Plaintiff: Mr S. Hibble

Counsel for the Defendant: The Defendant did not appear

ORDERS VID 457 of 2019

BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Plaintiff

AND: JASMINE VELLA-ARPACI Defendant

JUDGE: DAVIES J DATE OF ORDER: 6 May 2019

PENAL NOTICE TO: JASMINE VELLA-ARPACI IF YOU (BEING THE PERSON BOUND BY THIS ORDER): (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS 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. THE COURT ORDERS THAT: Filing and service of process The plaintiff is given leave to file the Originating Process in Court this day. In the first instance, service of the Originating Process in this matter is dispensed with, and the Originating Process is returnable instanter. Time for service of the Originating Process and affidavit of Anthony Flynn sworn 6 May 2019 is abridged to 9 May 2019. Travel restriction The defendant, Jasmine Vella-Arpaci, is restrained from leaving Australia without the consent of the Court until and including 5.00 pm, 16 May 2019 or until further notice. The defendant, Jasmine Vella-Arpaci, deliver up all passports in her name which are in her possession, custody or control, and any tickets for international travel by her, to the Melbourne Registry of this Court by 9.00 am, Eastern Summer Time on 9 May 2019 to be retained by the Court until and including 5.00 pm, 16 May 2019. In the event that the defendant cannot locate any passport by 9 May 2019, she is to file an affidavit stating that fact and exhibiting a copy of a written notification sent by her to the Department of Home Affairs or the Australian Passport Information Service informing them of the same. The defendant may not apply for the issue of any passport without the consent of the Court until and including 5.00 pm, 16 May 2019 or until further notice. Disclosure Orders Except to the extent that a claim of privilege against self-incrimination or civil penalty privilege is made, an order that the defendant file and serve by the time nominated by the Court a full and detailed affidavit setting out what: (a) countries she has citizenship of, or a right of residence in; and (b) passports she has in her possession, custody or control. Notification Orders The plaintiff has leave to give to the Australian Border Force notice of the making of these orders by providing to the Australian Border Force or any of their employees a copy of a minute of the orders. Return of Originating Process The Originating Process is returnable before the Court at 9.00 am, 16 May 2019. Any party served with the Originating Process in this matter has liberty to apply at any time to vary or discharge this order or so much of it as affects the person served and notified. Costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DAVIES J: 1 An urgent ex parte application has been made by the Australian Securities and Investments Commission ("ASIC") for interim orders against the defendant, Jasmine Vella-Arpaci, under ss 1323(1)(j) and (k) of the Corporations Act 2001 (Cth) ("the Corporations Act"). Such orders would require the defendant to deliver up to the Court her passport and prohibit her from leaving Australia without the consent of the Court. ASIC has supported the application by an affidavit of Anthony Flynn, a senior specialist at ASIC, sworn on 6 May 2019. 2 The three relevant requirements for an order under s 1323(1) are: (a) an investigation is being carried out by ASIC under the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") or the Corporations Act in relation to an act or omission by a person that constitutes or may constitute a contravention of the Corporations Act; (b) a "relevant person" is liable, or may become, liable to pay money, whether in respect of a debt, by way of damages or compensation or otherwise or to account for financial products or other property; and (c) the Court considers it necessary or desirable to make an order under s 1323(1) for the purpose of protecting the interests of a person ("aggrieved person") to whom the relevant person may be so liable. 3 Pursuant to s 1323(3) of the Corporations Act, the Court may make interim orders under s 1323(1) pending the determination of an application under s 1323(1) if it is of the opinion that it is desirable to do so. 4 The conditions for the making of an interim order are met. 5 First, ASIC is conducting an investigation under s 13 of the ASIC Act in relation to suspected contraventions by the defendant and others of s 1041F of the Corporations Act and various sections of the Crimes Act 1958 (Vic) and the Criminal Code Act 1995 (Cth) with respect to share sales in Australian listed companies conducted through the use of false identities and without the knowledge or authorisation of the genuine owners of the shares. Mr Flynn has deposed that based on the information presently available to him there is evidence to show that the defendant had access to the knowledge and materials necessary to steal and/or create false identities and participate in cross-border currency transfers. 6 Secondly, the defendant is a "relevant person" being a person who is liable, or may become liable, to pay money, whether in respect of a debt, by way of damages or compensation or otherwise or to account for financial products or other property. Mr Flynn deposed that investigations to date indicate that approximately $2.44 million has been fraudulently obtained and attempts have been made to obtain approximately a further $2.35 million through the sale of shares in this manner as recently as March 2019. 7 Thirdly, for the purposes of protecting the interests of the aggrieved persons who have been defrauded or the subject of attempted fraud, it is desirable to make orders under ss 1323(1)(j) and (k) of the Corporations Act. The investigation is in the very early stages, and ASIC is concerned that the investigation may be compromised if the defendant does not remain in Australia and is not available to assist in the investigation. Having regard to the serious nature of the suspected offences, I accept that her presence in Australia is important to enable ASIC to continue its investigation and to have her assistance in that investigation. 8 The defendant has a valid Australian passport and unless restrained the opportunity would be available to her to leave Australia. Mr Flynn in his affidavit has identified reasons for his concern that the defendant will attempt to leave Australia. They are, first, she is now aware that she is a suspect with respect to the suspected offences; secondly, she is aware of the contents of evidence seized during the course of search warrants that were executed very recently; and thirdly, based on information that Mr Flynn has available to him, he considers that the defendant is likely to have access to assets overseas, particularly assets held in the form of virtual or digital currencies, and she may have contacts overseas. Mr Flynn also deposed that he is unaware of whether the defendant holds any current employment or any means to support herself in Australia. 9 I take into account matters that Mr Flynn has set out in his affidavit of which he is aware that would appear to weigh against the defendant being a flight risk, namely, that she has a six month old daughter, her husband is currently in custody and she is an Australian citizen and he is not aware of her holding citizenship of any other country. Notwithstanding, having regard to the matters I have identified, I accept that the investigation may be compromised if the defendant does not remain in Australia and is not available to assist in that investigation, and it is accordingly desirable to make the orders sought. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.

Associate: Dated: 10 May 2019