ASIC v Plymin and Ors (No 3) - [2002] VSC 358

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 7748 of 2000

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION	Plaintiff
v
PLYMIN AND ORS	Defendant

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 – 27 August 2002
DATE OF JUDGMENT:	28 August 2002
CASE MAY BE CITED AS:	ASIC v Plymin and Ors (No 3)
MEDIUM NEUTRAL CITATION:	[2002] VSC 358	First Revision 28 August 2002

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Corporations – proceeding for civil penalty order – application for stay of proceeding on basis that second defendant was not accorded procedural fairness during the investigative process – whether the Commission was required to prepare an interim report and the consequences, if any, of its failure to do so

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	N.J. Young QC with P. Clarke SC, P. Crutchfield, and E. Heerey	ASIC
For the First Defendant	In person
For the Second Defendant	M.D. Wyles	Tress Cocks & Maddox
For the Third Defendant	L. Glick SC with A. Young	Phillips Fox

HIS HONOUR:

In order to understand the background facts and some aspects of the applicable statutory provisions in relation to this proceeding, these reasons must be read in conjunction with the reasons published on 26 August 2002 in ASIC v Plymin & ors (No. 2) [2002] VSC 356. I will not repeat here what was stated there.

By summons filed 26 August 2002 the second defendant makes a further application for this proceeding to be permanently stayed, as against him, on the ground of lack of procedural fairness. The basis of the application is as follows.

Section 16(1) of the Australian Securities and Investments Commission Act 1989 (Cth) (“the ASIC Act”) provides:

“Where, in the course of an investigation under this Division, the Commission forms the opinion that:
(a)a serious contravention of a law of the Commonwealth or a State or Territory has been committed;
…

it shall prepare an interim report that relates to the investigation and sets out:
(d)if paragraph (a) applies – its findings about the contravention and the evidence and other material on which those findings are based;
…

and such other matters relating to, or arising out of, the investigation as it thinks fit.”

The second defendant submits that the Commission did form the opinion that a serious contravention of a law of a State (the Corporations Law of Victoria) had been committed but failed to prepare an interim report as required by s.16(1) of the ASIC Act. I note that s.18(1) and (2) of the ASIC Act requires the Commission to give a copy of such a report to the Minister and empowers the Commission, where a serious contravention is involved, to give a copy of a whole or part of the report to various authorities including the Director of Public Prosecutions. It is convenient here to also note that s.18(3) of the ASIC Act provides that where such a report or part of a report “relates to a person’s…

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 358
Decision Date: 28 August 2002

CaseChat Overview and Summary

In the case of ASIC v Plymin and Ors (No 3), the Australian Securities and Investments Commission (ASIC) pursued a civil penalty order against the defendants, alleging breaches of the Corporations Act. The defendants contested the proceedings, with a particular focus on the procedural fairness afforded to the second defendant during the investigation. The matter was heard in the Federal Court of Australia. The central legal issue before the court was whether the Commission had a duty to prepare an interim report in relation to the second defendant and, if so, what the implications were for the proceedings due to its failure to do so.

The court examined the statutory framework governing ASIC's investigative powers and the principles of procedural fairness as they apply to administrative actions. The court considered whether ASIC's failure to prepare an interim report constituted a breach of natural justice and whether such a breach necessitated a stay of the proceedings. The court found that while the preparation of an interim report may have been desirable, it was not a mandatory requirement under the Corporations Act. Therefore, the failure to prepare such a report did not necessarily render the proceedings unfair. The court also noted that the second defendant had not demonstrated significant prejudice due to the absence of the interim report.

Ultimately, the court concluded that the failure to prepare an interim report did not warrant a stay of the proceedings. The court held that ASIC's investigative process was generally fair and that the second defendant had not been materially prejudiced by the absence of the interim report. The court dismissed the application for a stay and allowed the proceedings to continue.

Orders