Case: Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380
Outcome: cited
Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380 the question arose whether s 23 would authorise a mareva type order against persons not party to the proceedings in which it was sought. The High Court held, inter alia, that such an order was appropriate where the third party might be subject to some court process whereby, whether following the appointment of a liquidator or otherwise, the third party may be obliged to disgorge property. In their discussion of s 23 , Gaudron, McHugh, Gummow and Callinan JJ made the point that the section does not authorise the court to grant injunctive relief where jurisdiction is acquired under another statute which provides an exhaustive code of available remedies and that code does not authorise the grant of an injunction (at [33]). They referred in this connection to Byrne v Australian Airlines Ltd [1995] HCA 24 ; (1995) 185 CLR 410 at 425-426 and Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30 ; (1998) 195 CLR 1 at 29. Consistent with the approach which appears to have been adopted by the High Court in the s 75(v) cases, and bearing in mind what was said in Cardile [1999] HCA 18 ; 198 CLR 380 , I accept that where, in an application under s 1323, the grounds for the appointment of receivers are made out, then a lesser order restricting or prohibiting dealings with the relevant property may be made instead. While s 1323 sets out the specific orders which may be made on an application brought under it, it does not, in my opinion, provide an exhaustive code of remedies to the extent that the power to appoint receivers excludes the lesser alternative of orders restricting or prohibiting dealings with the subject property. It may be, for example, that the appointment of receivers would be necessary or desirable to protect the interests of a potential claimant against the property of the company or individual to which the receivers are to be appointed. At the same time, such an appointment might inflict significant damage on an ongoing business which is detrimental to that business and perhaps also to third parties. In that event a lesser order freezing or limiting dealings with the subject property could be regarded as an exercise of the power under s 23. Contrary, therefore, to the first submission put by ASIC, the application under which such orders can be made is not to be characterised as one "primarily made pursuant to section 23 of the Federal Court Act ". Section 23 does not confer jurisdiction. It confers powers on the Court to make orders in the exercise of the Court's jurisdiction. The sources of jurisdiction are to be found elsewhere. Jurisdiction under the Corporations Act is conferred on the Federal Court by s 1337B(1) and, for the purposes of this proceeding, defined by s 1323. It is open to the Court under s 1323(1)(h) to appoint receivers with powers defined according to the circumstances of the case. Such receiverships might be characterised as restrictive or light according to the nature of the powers and the range of dealings with the affected property permitted by the order. However it must be recognised that even though a receiver may be appointed with limited powers allowing for ongoing dealings in the ordinary course of business, the fact that a receiver has been appointed may trigger default provisions in security documents or otherwise cause practical difficulties with customers, contractors, suppliers and financiers dealing with an ongoing business.