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ASIC v Barrack Mortgage Managers Pty Ltd

ASIC v Barrack Mortgage Managers Pty Ltd

Case [1999] NSWSC 272 30 March 1999

Breach of Contract

Unconscionable Conduct

Judicial Review

Winding Up & Liquidation

Corporate Law & Governance

Insolvency Law

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CITATION: ASIC v Barrack Mortgage Managers Pty Limited; ASIC v Credit Alliance Pty Limited; ASIC v W. G. Herle Pty Limited [1999] NSWSC 272

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 1642/99; 1643/99; 1644/99

HEARING DATE(S): 30 March 1999

JUDGMENT DATE:
30 March 1999

PARTIES :

Australian Securities & Investments Commission (P)
Barrack Mortgage Managers Pty Limited (D)
Credit Alliance Pty Limited (D)
W. G. Herle Pty Limited (D)

JUDGMENT OF: Master McLaughlin

COUNSEL : Mr. R. J. Weber (P)
No appearance for the Defendant

SOLICITORS: Jan Redfern (P)

CATCHWORDS:

ACTS CITED: Corporations Law

DECISION:

- 5 -
SUPREME COURT OF
NEW SOUTH WALES
EQUITY DIVISION
MASTER McLAUGHLIN
Tuesday, 30 March 1999
1642/99 - AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION -v- BARRACK MORTGAGE MANAGERS PTY LIMITED
1643/99 - AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v CREDIT ALLIANCE PTY LIMITED
1644/99 - AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v W G HERLE PTY LIMITED
1 MASTER: In each of these three matters the Australian Securities and Investments Commission has filed a summons seeking the winding up of the defendant upon the ground set forth in section 461(1)(k) of the Corporations Law, that ground being that the Court is of opinion that it is just and equitable that the company be wound up.
2 I have been taken to the judgment of his Honour Justice Finn in the Federal Court of Australia in Australian Securities Commission v A S Nominees Limited (1995) 13 ACLC 1822. I would respectfully agree with the view expressed by his Honour in that decision that the just and equitable ground has an appropriate role to serve as an instrument of investor protection.
3 The Australian Securities and Investments Commission has a role of protecting the investing public as a matter of public interest. It therefore has the standing to bring about a winding up of a company upon the just and equitable ground.
4 His Honour in that case said that a court entertaining an application by the Australian Securities Commission (the statutory predecessor to the Australian Securities and Investments Commission), grounded on considerations of public interest, had to evaluate the reasons put forward by the Commission, in order to form a view on whether they did afford sufficient reasons for making a winding up order on the just and equitable ground.
5 In the instant case, none of the three defendants has seen fit to appear. The evidence discloses a consistently series of breaches of the Corporations Law in the case of each of the companies. Those breaches include improper dealings with moneys raised from the public, failure to keep or to produce appropriate records, and failure to provide that degree of basic public accountability as to the operations of each of the companies as is required under the Corporations Law.
6 It is clear from the evidence that one Damien Parkes, an undischarged bankrupt, has been involved in the management of all three companies. Indeed, it is clear that he has had the control of the three…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading ASIC v Barrack Mortgage Managers Pty Ltd

Details

AGLC: Oceanic Life Limited v HIH Casualty and General Insurance Limited [1999] NSWSC 272
Case: [1999] NSWSC 272
Decision Date: 30 March 1999

CaseChat Overview and Summary

The Australian Securities and Investments Commission (ASIC) filed a summons seeking the winding up of three companies: Barrack Mortgage Managers Pty Limited, Credit Alliance Pty Limited, and W. G. Herle Pty Limited, on the basis that it was just and equitable to do so under section 461(1)(k) of the Corporations Law. The defendants did not appear before the court, and the evidence presented by ASIC showed a series of breaches of the Corporations Law by all three companies. These breaches included improper handling of public funds, failure to maintain appropriate records, and a lack of accountability. The companies were effectively controlled by an undischarged bankrupt, Damien Parkes, who had denied the nominal directors their roles and access to company records. None of the companies had filed annual reports, and Credit Alliance Pty Limited had ceased trading, with its assets being transferred to W. G. Herle Pty Limited.

The court was required to determine whether the public interest was sufficiently served to justify the winding up of the companies. The court referenced the Federal Court's decision in Australian Securities Commission v A S Nominees Limited (1995) 13 ACLC 1822, which affirmed the role of the just and equitable ground in investor protection. Given the evidence of ongoing breaches of the Corporations Law and the mismanagement by Parkes, the court found that it was in the public interest to wind up the companies to protect the public from further harm.

The court concluded that ASIC had demonstrated sufficient grounds for the winding up of each company, and ordered that an official liquidator be appointed to investigate the companies' affairs, ascertain their assets and liabilities, and determine if any further breaches of the law had occurred. The court made orders for the winding up of each company and appointed Steven John Sherman as liquidator, with the defendants to pay ASIC's costs. The exhibits were to be retained with the court file.

Orders