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ASIC v Lindberg (No 2)

ASIC v Lindberg (No 2)

Case [2010] VSCA 19 19 February 2010

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 3902 of 2009

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION	Applicant
v
ANDREW ALEXANDER LINDBERG (No 2)	Respondent

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JUDGES:	MAXWELL P, BUCHANAN and WEINBERG JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	27 January 2010
DATE OF JUDGMENT:	19 February 2010
MEDIUM NEUTRAL CITATION:	[2010] VSCA 19
JUDGMENT APPEALED FROM:	Re AWB Limited (No 10) [2009] VSC 566 (Robson J)

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PRACTICE AND PROCEDURE – Abuse of process – Stay of proceedings – Civil penalty proceedings – Two sets of proceedings with related subject-matter – First proceeding commenced in 2007 – Second proceeding instituted in 2009 after failed attempts to include allegations in first proceeding by amendment – Whether reasonable explanation for failure to include allegations when first proceeding issued – Prejudice to respondent by reason of delay – Appellant acting in public interest – Whether issue of second proceeding circumvented rulings refusing leave to amend – Appeal allowed – Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 23.01.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr M J Colbran QC with Ms M C Wall and Mr C H Truong	Australian Securities and Investments Commission
For the Respondent	Mr D G Collins SC with Mr K J A Lyons and Ms M Tittensor	Galbally & O’Bryan

MAXWELL P
BUCHANAN JA
WEINBERG JA:

Introduction

On 19 December 2007, the appellant (‘ASIC’) brought a proceeding (‘the first proceeding’) against the respondent alleging breaches of the respondent’s duties as a director and officer of AWB Ltd (‘AWB’) arising out of the alleged payment of fees, said to be transportation and service fees, to the former government of Iraq.

ASIC sought declarations, civil penalties and injunctions. The breaches of duty were pleaded as contraventions of ss 180(1) and 181(1) of the Corporations Act 2001 (Cth). ASIC alleged that the payments were bribes to facilitate the sale of wheat by AWB to the Iraqi Grain Board. ASIC alleged that the purpose of the fees paid by AWB was to allow the government of Iraq to obtain internationally traded currency and thereby circumvent United Nations sanctions against Iraq.

Between 1996 and 2003, the United Nations operated the Oil-for-Food Programme, whereby proceeds from Iraq’s oil imports were held in a United Nations escrow account and, where authorised by the United Nations, used by Iraq to buy humanitarian goods. During this period, United Nations resolutions otherwise prohibited the provision of any financial or economic benefit to Iraq, including the provision of hard currency.

AWB sold wheat to the Iraqi Grain Board under the Oil-for-Food Programme. Between 1999 and 2003, Iraq imposed and AWB paid a purported inland transportation fee in connection with all AWB shipments of wheat to Iraq. The fee was paid by AWB in hard currency to a Jordanian company which was part owned by the government of Iraq. From 1999, each AWB contract with Iraq was inflated by the amount of the purported inland transportation fee and this amount, having been paid to the Jordanian company,…

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 Lindberg (No 2)

Details

AGLC: Australian Securities and Investments Commission v Lindberg (No 2) [2010] VSCA 19
Case: [2010] VSCA 19
Decision Date: 19 February 2010

CaseChat Overview and Summary

The Australian Securities and Investments Commission (ASIC) brought proceedings against Mr. Lindberg, primarily concerning alleged breaches of financial services laws. The dispute reached the court after Lindberg sought a stay of proceedings on the grounds that ASIC had abused the court's process by initiating a second set of proceedings that duplicated the subject matter of a previous proceeding that had commenced in 2007. The second proceeding was instituted in 2009, after ASIC's attempts to include the allegations in the first proceeding by amendment had been unsuccessful. The primary legal issues for the court were whether there was a reasonable explanation for ASIC's failure to include the allegations in the initial proceeding and whether Lindberg was prejudiced by the delay, despite ASIC acting in the public interest. Additionally, the court needed to determine if the second proceeding circumvented previous rulings that had refused leave to amend the initial proceeding.

The court examined the circumstances leading to the initiation of the second proceeding and found that while ASIC's role in the public interest was significant, it did not excuse the failure to include all relevant allegations in the initial proceeding. The court emphasised the importance of adhering to procedural fairness and the potential for prejudice to the respondent due to the delay. The court also noted that the second proceeding had effectively bypassed earlier rulings that had refused leave to amend the first proceeding, which was not permissible under the rules governing civil procedure. Consequently, the court concluded that ASIC's actions amounted to an abuse of process.

The appeal was allowed, and the proceedings were stayed on the basis that ASIC had abused the court's process by initiating the second proceeding. The court found that there was no reasonable explanation for ASIC's failure to include the allegations in the initial proceeding, and that Lindberg had been prejudiced by the delay. The court further determined that the second proceeding circumvented earlier rulings and thus was not in accordance with the Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 23.01. The court's decision underscored the importance of procedural integrity in civil penalty proceedings and the need for parties to include all relevant allegations in their initial submissions to avoid potential abuse of process.

Orders