ASIC v Mauer-Swisse Securities Ltd - [2002] NSWSC 684

Reported Decision:
(2002) 20 ACLC 1530

New South Wales

Supreme Court

CITATION: ASIC v Mauer-Swisse Securities Ltd and Anor [2002] NSWSC 684

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 3823/02

HEARING DATE(S): 31 July and 1 August, 2002

JUDGMENT DATE: 2 August 2002

PARTIES :

Australian Securities and Investments Commission - Plaintiff
Mauer-Swisse Securities Limited - First Defendant
Alan Goldman - Second Defendant

JUDGMENT OF: Palmer J

COUNSEL : D.R. Stack - Plaintiff
B.R. McClintock, P.J. Brereton - Second Defendant

SOLICITORS: Jan Redfern, Regional General Counsel, ASIC - Plaintiff
Blake Dawson Waldron - Second Defendant

CATCHWORDS: CORPORATIONS - SECURITIES INDUSTRY - INVESTIGATION - ASIC commences investigation into apparently fraudulent investment scheme - company involved is incorporated in New Zealand - director of New Zealand company served while in Australia with a Notice to Produce documents under s.33 ASIC Act - director claims ASIC has no jurisdiction to compel production of documents by New Zealand company - ASIC obtains ex parte orders under s.1323(1) and (3) of Corporations Act requiring director to deliver up passport and not depart from Australia - director claims Court has no power under s.1323 to detain a person in Australia for the purpose of assisting ASIC in its investigations - principles discussed. HELD: It is within the purposes of protecting the interests of aggrieved persons, within the meaning and operation of s.1323(1), that a person be detained in Australia to assist ASIC in its investigations into a possibly fraudulent scheme involving Australian investors.

LEGISLATION CITED: Australian Securities and Investments Commission Act - s.33
Corporations Act, 2001 (Cth) - s.79, s.911A, s.1041F, s.1041G, s.1041H, s.1041I, s.1323(1), (3), s.1324(1), (4)
Sharebrokers Act, 1908 (NZ)

CASES CITED: ASIC v Australian Investors Forum Pty Ltd [2001] NSWSC 1180

DECISION: Orders under s.1323(1)(j) and (k) of the Corporations Act continued, subject to review.

Introduction
1 On 30 July 2002 the Plaintiff (“ASIC”) applied for urgent ex parte orders against the Defendants (“MSS” and “Mr Goldman”) under s.1323(1) and (3) and s.1324(1) and (4) of the Corporations Act, 2001 (Cth) (“CA”). The orders included an order under CA s.1323(1)(k) prohibiting Mr Goldman from leaving Australia without the consent of the Court and an order under ss.(1)(j) requiring him to deliver his passport to the Court. I made certain orders ex parte, up to 4.00pm on 1 August 2002, including orders under s.1323(1)(j) and (k), abridged time for service of the Originating Process, and made the Originating Process returnable before me at 10.00am on 1 August. 2 When the matter was called on yesterday, Mr Stack appeared for ASIC and Mr McClintock SC appeared with Mr Brereton for Mr Goldman. Mr Stack sought the continuation of the orders which I had earlier made until 5.00pm on 8 August, while Mr McClintock opposed any continuation of the orders. After hearing evidence and submissions until late in the afternoon, I extended the orders, with some variations and additions, up to 3.00pm on 2 August and stood the matter over until 2.00pm on that day. I…

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] NSWSC 684
Decision Date: 2 August 2002

CaseChat Overview and Summary

In the matter of Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd, the Australian Securities and Investments Commission (ASIC) sought to investigate an alleged fraudulent investment scheme. The defendant, Mauer-Swisse Securities Ltd, is a New Zealand incorporated company. The dispute centred on ASIC's authority to compel the production of documents from the company and the jurisdiction of the Australian court to enforce such a directive. Additionally, the case examined whether the court could detain a director of the company in Australia to assist with the investigation.

The court was tasked with determining the extent of ASIC's powers under the ASIC Act to investigate companies incorporated outside Australia. It also considered whether ASIC could compel a New Zealand-incorporated company to produce documents in Australia, and if the court had the authority to detain a non-resident director to assist with the investigation. The key legal issue was whether the provisions of the Corporations Act, specifically section 1323, could be applied to a New Zealand-incorporated company and its directors while they were in Australia.

The court held that ASIC had the jurisdiction to investigate and compel the production of documents from a New Zealand-incorporated company if it involved Australian investors and potentially fraudulent activities. It concluded that the purposes of protecting the interests of aggrieved persons, as outlined in section 1323(1), justified detaining a person in Australia to assist with the investigation. The court found that the power to detain a person under section 1323 was not limited to Australian residents and could be exercised in cases where it was necessary to protect the interests of Australian investors. This reasoning affirmed the court's authority to issue ex parte orders to compel the production of documents and detain the director to assist in the investigation.

As a result, the court upheld ASIC's authority to investigate the New Zealand-incorporated company and compel the production of documents. The court also authorised the detention of the director in Australia to assist with the investigation. The orders required the director to surrender their passport and refrain from leaving Australia. The court's decision provided clarity on the jurisdictional reach of the Australian securities legislation and reinforced the powers of ASIC to protect Australian investors in cross-border investigations.

Orders