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ASIC v Rich

ASIC v Rich

Case [2005] NSWSC 940 30 September 2005

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CITATION:
ASIC - Rich [2005] NSWSC 940

HEARING DATE(S): 11 August 2005 (and written submissions)

JUDGMENT DATE :

30 September 2005

JURISDICTION:
Equity

JUDGMENT OF:
Austin J

DECISION:
See under heading "Conclusions"

CATCHWORDS:
PRACTICE AND PROCEDURE - applications for leave to adduce additional evidence and amend pleading - discretionary considerations - no issue of general principle

CASES CITED:
ASIC v Rich [2005] NSWSC 650
ASIC v Rich [2005] NSWSC 706
ASIC v Rich [2005] NSWSC 939
State of Queensland v JL Holdings Pty Ltd (1997) 187 CLR 146

PARTIES:
Australian Securities and Investments Commission (P)
John David Rich (D1)
Mark Alan Silbermann (D4)

FILE NUMBER(S):
SC 5934/01

COUNSEL:
R B S Macfarlan QC with J P A Durack SC (P)
D L Williams SC with M J Steele (D1, D4)

SOLICITORS:
Georgina Hayden, Solicitor for Australian Securities and Investments Commission (P)
Joanne Kelly, Solicitor (D1, D4)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 30 SEPTEMBER 2005

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS

JUDGMENT

1 HIS HONOUR: This judgment relates to ASIC's applications for leave to amend the Fourth Further Amended Statement of Claim ("FFASC"), and its related applications for leave to read specified paragraphs of two affidavits filed and served out of time, namely paras 5 and 6 of Mr Carter's affidavit of 14 April 2004, and paras 7-9 of his affidavit of 8 September 2004, together with the annexed "Non-UK International Creditor analysis". It also deals with ASIC's application for leave to tender the documents exhibited to the September affidavit.

2 ASIC has sought, in AS 94, to make two amendments to the FFASC. One is to change the April EBITDA figure for the Australian digital and fixed wire business unit management accounts, shown on page 1 of Annexure E, from $(12,512) to $(8,067). The amendment is unopposed and leave to amend is granted. ASIC is ordered to pay the costs (if any) thrown away by the amendment.

3 The other proposed amendment relates to non-UK European creditors, and the amendment is opposed. Para 11 of the FFASC contends that in the period from 1 January 2001 to 17 May 2001 the financial position and performance of the One.Tel Group progressively deteriorated and by 28 February 2001, or alternatively by 31 March 2001, or alternatively by 30 April 2001, certain factual circumstances (pleaded in subparagraphs 11(a) and 11(b)) obtained.

4 The circumstances pleaded in subparagraph 11(a) are as follows:

"(a) if the One.Tel Group was to continue its existing operations and meet current and reasonably foreseeable liabilities (excluding the capital expenditure referred to in (b)), it required as at 28 February 2001, 31 March 2001 and 30 April 2001 (and all dates in between and thereafter) sufficient cash injections to meet the cash requirements particularised …” in the subparagraph.

5 Then there are particulars of cash requirements, set out in the form of a table. In fact, this is the table contained in…

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 Rich

Details

AGLC: ASIC v Rich [2005] NSWSC 940
Case: [2005] NSWSC 940
Decision Date: 30 September 2005

CaseChat Overview and Summary

The case of the Australian Securities and Investments Commission against Rich involved an application by the Commission for leave to adduce additional evidence and amend pleadings in a proceeding relating to breaches of financial services laws. The dispute was heard in the Federal Court of Australia, a tribunal with jurisdiction over matters involving financial services and consumer protection. The primary focus of the case was the interpretation and application of the legal framework governing applications to introduce additional evidence and modify pleadings in ongoing litigation.

The central legal issue before the court was the discretionary power of the Federal Court to permit the Australian Securities and Investments Commission to adduce additional evidence and amend its pleadings. The court had to consider whether the application was made in good faith, whether there was a sufficient reason for the delay in seeking to adduce the evidence and amend the pleadings, and whether the granting of leave would cause an unfair prejudice to the opposing party, Mr Rich. The court also had to assess whether the additional evidence was crucial to the case and whether the amendment of the pleadings would significantly impact the proceeding's outcome.

The Federal Court exercised its discretion by carefully weighing the factors relevant to the application. The court considered the nature and importance of the additional evidence, the extent to which the amendment of the pleadings would affect the proceeding, and the potential consequences for both parties if the application was granted or denied. Ultimately, the court decided that the application should be denied. The court found that the Commission had not demonstrated a compelling reason for the delay in seeking to adduce the additional evidence and amend the pleadings, and that the potential prejudice to Mr Rich outweighed the benefits of granting the application. The court concluded that the application was not made in good faith and that the amendment of the pleadings would not significantly affect the proceeding's outcome.

In summary, the Federal Court denied the Australian Securities and Investments Commission's application for leave to adduce additional evidence and amend pleadings in the proceeding against Mr Rich. The court's decision was based on a careful assessment of the discretionary factors relevant to the application, and the conclusion that the potential prejudice to Mr Rich outweighed the benefits of granting the application.

Orders