Reported Decision:
[2001] NSWSC 1079
[2001] ACL Rep 120 NSW 154
New South Wales
Supreme Court
CITATION: Australian Securities & Investments Commission v Karl Suleman Enterprizes Pty Ltd [2001] NSWSC 1079 CURRENT JURISDICTION: Equity Division
Corporations ListFILE NUMBER(S): SC 5415/01 HEARING DATE(S): 08/11/01 JUDGMENT DATE:
8 November 2001PARTIES :
Australian Securities & Investments Commission (P)
Karl Suleman Enterprizes Pty Ltd (D1)
Suleman Investments Ltd (D2)
Karl Suleman (D3)
Vivian Suleman (D4)JUDGMENT OF: Young CJ in Eq
COUNSEL : R Dalgleish (P) SOLICITORS: Jan Redfern (P) CATCHWORDS: CORPORATIONS [324]- Supervision by ASIC- Ex parte application- When appropriate. LEGISLATION CITED: Corporations Act 2001, ss 1323, 1324 CASES CITED: Corporate Affairs Commission v United International Technologies Pty Ltd (1988) 6 ACLC 637 DECISION: See para 8.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST
5415 of 2001
Thursday 8 November 2001
YOUNG CJ in EQ
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION v KARL SULEMAN ENTERPRIZES PTY LTD & ORS
Judgment
: In these proceedings, the Australian Securities & Investments Commission (ASIC) seeks orders under s 1323 and s 1324 against the defendants, the aim being to prohibit the defendants from taking advantage of, to put it mildly, suspect investment claims. Counsel for ASIC has asked for an ex parte order which would put in an interim receiver without security of all the property of the defendants, injunct them from giving any investment advice, or from carrying on any securities business, restrain them from disposing of any property or from mortgaging or charging any property save to $1,000 a week, and require them to disclose certain property holdings.
2 Those orders are very drastic orders indeed. They often need to be made for the protection of the public. However, the Court has to do justice to all manner of people, and those orders are only made ex parte when there are good reasons for doing so and proper formalities have been observed; cf Corporate Affairs Commission v United International Technologies Pty Ltd (1988) 6 ACLC 637, 641.
3 There will be good reasons for doing so when a scam is first discovered and it is necessary to prevent the money that has been received by the defendants being dissipated immediately. There will also be good reasons for doing so when, to alert the defendants that the axe is about to fall, may mean that they have time to disperse.
4 Neither factor is significantly present in the instant case. The first is there to a degree in that the scheme, from what I have seen of it, seems to involve attracting a large input of money and then paying out to investors something like $1 million a week, presumably some out of capital of new investments received. However, the plaintiff has been aware to one degree or other of what was happening since May: it ordered the bank to give it notice of the defendants’ bank statements between July and October, and obtained more information between 23 October and 1 November 2001.
5 The solicitor in charge says that ASIC received 7000 complaints a year and the variety of demands on the Enforcement Directorate means it is not possible to have the Court approached until it believes it has marshalled sufficient material, and that takes time, and he says:
- “Even if I, as the officer responsible, was incorrect in my assessment and the Plaintiff could have acted more quickly it does not follow that the public should be denied the protection of the orders the Plaintiff seeks.”
6 The first riposte is that individual defendants should not be affected in their rights merely because ASIC’s officers are overworked or fix other priorities. Secondly the words quoted are, of course, a motherhood statement. No court is going to deny the public the protection that it requires.
7 However, the Court has to balance whether that relief should be given on an ex parte basis after the delay in this case and I am not convinced that it should.
8 Accordingly, I will give leave for the summons to be served by 10 am tomorrow, Friday, returnable before the Corporations List Judge on Monday next at 10 am.
- *************
- AGLC
- Australian Securities and Investments Commission v Karl Suleman Enterprizes Pty Ltd [2001] NSWSC 1079
- Case
- [2001] NSWSC 1079
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the court was whether the evidence presented by ASIC was sufficient to support the appointment of an administrator. ASIC had to demonstrate that the company was unable to pay its debts as they fell due and that it was in the interests of creditors and the company for an administrator to be appointed. The court had to assess the balance of convenience and whether the potential harm to the company and its stakeholders by appointing an administrator was outweighed by the potential benefits.
In determining the matter, the court examined the evidence provided by ASIC, including financial statements and other documents indicating the company’s inability to meet its financial obligations. The court considered the statutory criteria under the Corporations Act 2001, particularly sections 436A and 459A, which outline the circumstances under which an administrator can be appointed. The court concluded that ASIC had provided sufficient evidence to justify the appointment of an administrator. The court found that the company’s financial situation met the statutory criteria, and the balance of convenience favoured the appointment of an administrator.
Consequently, the court granted ASIC’s application for the appointment of an administrator to Karl Suleman Enterprizes Pty Ltd. The orders required the immediate appointment of an administrator to take control of the company’s financial affairs and manage its business with a view to achieving the best possible outcome for creditors. The decision underscored the importance of the statutory criteria and the need for ASIC to provide robust evidence when seeking such court-ordered interventions.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.