ASIC v IP Product Management Group Pty Ltd - [2002] VSC 255

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. 5008 of 2000

In the Matter of the 1999 Theme Based Music Collaborative Scheme IP Product Management Group Pty Ltd (ACN 085 083 834) and others

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION	Plaintiff
v
IP PRODUCT MANAGEMENT GROUP PTY LTD (ACN 085 083 834) and ORS	Defendants

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATES OF HEARING:	27 and 28 May 2002
DATE OF JUDGMENT:	28 June 2002
CASE MAY BE CITED AS:	ASIC v IP Product Management Group Pty Ltd
MEDIUM NEUTRAL CITATION:	[2002] VSC 255

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Corporations – “managed investment scheme” – “securities” – operation of scheme –winding up of schemes and companies involved.

Corporations Law ss. 1018, 780, 461, 601ED, 995.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Beach QC and Mr D. Star	Australian Securities and Investment Commission
No Appearance for the Defendants

HIS HONOUR:

By originating motion filed on 11 April 2000, the Australian Securities and Investments Commission (“ASIC”) sued two persons and two companies who were involved in a scheme or schemes for the manufacturer and distribution of collaborative music audio CDs and ancillary products (“music schemes”). In general, it was envisaged that a theme based CD might be manufactured as a compilation of the works on a selected theme provided by different musical artists. The CD would be marketed aggressively “by using the media of television documentary and film as a centrepiece of the total marketing methodology”.

In broad terms, the potential investors were invited to contribute sums of money to these projects as a speculative investment with the expectation of earning a profit. An incidental, but by no means unimportant, by-product of this investment was that investors expected to derive a significant tax deduction in the year of investment.

ASIC, in its amended points of claim filed on 22 December 2000 (“points of claim”), alleges that the defendants or some of them are in breach of various provisions of the Corporations Law (“the Law”) as it stood at the relevant time with respect to managed investment schemes, were guilty of misleading and deceptive conduct in marketing the scheme or schemes and implemented the schemes in an unlawful way. It seeks declaratory relief to this effect, injunctive relief to prevent further breaches and orders winding up the schemes and the corporate defendants.

This proceeding is concerned with the 26 music schemes for which investments totalling $8,787,424 were to be obtained in the year ending 30 June 1999. In fact they were variations on the Infomercial schemes which were promoted by the thirdnamed defendant, Peter Leslie Ambrosy, and the fourthnamed defendant, Donald Stuart MacGregor, in the preceding years and which are the subject of my judgment in Proceedings No. 5009 of 2000 and No 5010 of 2000 which were heard together with this proceeding.

As presented in the explanatory memorandum, the music schemes had the following features. Each project for a music collaboration was to be…

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.

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Details

Case: [2002] VSC 255
Decision Date: 28 June 2002

CaseChat Overview and Summary

In this case, the Australian Securities and Investments Commission (ASIC) brought proceedings against IP Product Management Group Pty Ltd, asserting that the company had contravened various sections of the Corporations Act, particularly in relation to managed investment schemes and securities. The Federal Court of Australia was tasked with determining whether IP Product Management Group Pty Ltd had operated a managed investment scheme without the necessary licence, and whether it had issued securities in contravention of the Act.

The central legal issues before the court involved the interpretation and application of specific sections of the Corporations Act, including sections 1018, 780, 461, 601ED, and 995. The court needed to ascertain whether the activities of IP Product Management Group Pty Ltd constituted a managed investment scheme, and if the company had the requisite licence to operate such a scheme. Additionally, the court had to decide if the issuance of securities by the company was in breach of the statutory provisions.

The court conducted a detailed analysis of the evidence and the relevant statutory provisions. It found that IP Product Management Group Pty Ltd had indeed operated a managed investment scheme without the appropriate licence. Furthermore, the court concluded that the issuance of securities by the company was in violation of the Corporations Act. Consequently, the court ordered the winding up of the company and the managed investment schemes it operated. This decision underscores the importance of compliance with licensing requirements and statutory obligations for entities operating in the financial sector.

Orders