Australian Securities and Investments Commission v Robyn a C Cochrane and 1Ors

[1999] NSWSC 814

CITATION:	Australian Securities and Investments Commission v Robyn A C Cochrane & 1Ors [1999] NSWSC 814
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	2980/99
HEARING DATE(S):	09/08/1999
JUDGMENT DATE:	9 August 1999
PARTIES :	Australian Securities and Investments Commission (Plaintiff) Robyn Ann Carrolle Cochrane (First Defendant) Steven Michael Cochrane (Second Defendant
JUDGMENT OF:	Santow J

COUNSEL :	T Lynch (Plaintiff) E A Collins (Second Defendant)
SOLICITORS:	Jan Redfern, Solicitor for the Australian Securities and Investments Commission (Plaintiff) P J Donnellan & Co (city agent: Wilshire Webb) (Second Defendant)
CATCHWORDS:	CORPORATIONS LAW — Breach of enforceable undertaking given to ASIC — Injunction restraining giving independent advice without a licence — Compensatory payment by First Defendant for breach of undertaking with respect to loss or damage suffered — Freezing assets of First Defendant.; COSTS — Indemnity costs awarded to Plaintiff in absence of Defendant.
ACTS CITED:	ASIC Act ss93AA(4)(c) Corporations Law ss780 and 781, s1324(10)
CASES CITED:	Briginshaw v Briginshaw (1938) 60 CLR 336
DECISION:	Orders enforcing undertaking with indemnity costs.

REVISED — 11 August, 1999
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 2980/99
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
ROBYN ANN CARROLLE COCHRANE
First Defendant
STEVEN MICHAEL COCHRANE
Second Defendant
JUDGMENT — ex tempore

9 August 1999 1    What follows are my reasons for the orders which are appended to this judgment, made on the application of ASIC as Plaintiff against the First Defendant pursuant to a Summons dated 2 July 1999. I note that although the First Defendant has been advised of these proceedings, the First Defendant has not appeared. Nor has she put any matter to the Court in opposition to the orders. 2    The Orders sought in broad terms are substantially to the effect that

(a) the First Defendant breached an enforceable undertaking given to ASIC not to provide independent advice without a licence in contravention of ss780 and 781 of the Corporations Law and to so inform certain persons to whom she had previously given investment advice,

(b) restraining by way of injunction the First Defendant from giving such advice, in contravention of ss780 and 781 of the Corporations Law , and

(c) by way of compensatory orders pursuant to s93AA(4)(c) of the ASIC Act and s1324(10) of the Corporations Law requiring the First Defendant to pay to one of the persons to whom she, still unlicensed and in breach of undertaking, gave investment advice, the sum of $163,666.17 for the loss or damage suffered by him on account of her breaches of the Corporations Law and of her undertaking in respect of him.

3    The orders also include a freezing order over certain of the First Defendant’s assets with undertakings for the benefit of innocent third parties who may be affected. Significantly, my orders also include costs in favour of ASIC on an indemnity basis, a matter to which I will return. 4    Upon the materials before me including in particular affidavits from the two investment advisory clients concerned, Mr Owen Sattler dated 2 July 1999 and Mrs Row dated 23 July 1999 coupled with the record of interview dated 29 July 1999 by officers of ASIC with the First Defendant in which she admits to signing cheques as if signed by Mr Sattler, the following can be concluded:

(a) as stated by way of declaration in the accompanying orders, the First Defendant has contravened the prohibitions on giving investment advice without a licence and has subsequently breached her undertakings in that regard,

(b) in so contravening her undertakings and breaching the Corporations Law , the First Defendant took, without authority, monies belonging to Mr Owen Sattler in the amount of $163,666.17 and replicated his signature without his authority on seven cheques including a cheque for $121,656.35 in favour of Mrs Row, thereby taking money belonging to Mr Sattler and misappropriating it.

5    In those circumstances, a compensatory order was properly sought pursuant to the relevant provisions of the ASIC Act and the Corporations Law, namely s93AA(4)(c) and s1324(10) respectively. The standard of proof is the civil standard, but in the rigour of its application, rising to the level called for by the gravity of the matters in question; Briginshaw v Briginshaw (1938) 60 CLR 336. 6 The First Defendant did not attend Court having had the opportunity to do so nor put any matter in opposition. In those circumstances, I concluded that the Plaintiff should be in no different a position so far as indemnity costs are concerned than if the First Defendant were to have attended Court and put no matter to the Court or only such matters as did not amount to any kind of plausible or arguable case. In those latter circumstances, she could not have resisted an order for indemnity costs. Should ASIC be in any worse position because she did not attend Court and put no matter in opposition to the orders sought? 7 Although it appears that ASIC has not as yet formulated any policy to the effect that it would automatically seek indemnity costs in the circumstances here applicable, ASIC via its Counsel, after consideration of the matter, did seek indemnity costs. I consider that they are properly awarded. It may be that ASIC will wish to consider this matter for the future as a broader issue of policy. In that regard while ASIC will no doubt not wish to discourage defendants with hopeless cases from not turning up to court, there seems no reason to reward such defendants if they fail to waste the court’s time by the lesser sanction of party and party costs. This is particularly as the failure to turn up at all may be not unconnected with a desire to avoid explicit admissions, though I make no finding either way in that regard in the present case.

ORDERS

In respect of the First Defendant, THE COURT:

1. Declares that in her dealings with Margaret Row and Owen Sattler after about 16 October 1998 the First Defendant, contrary to para 2.1 of the undertaking given by her and accepted by the Plaintiff pursuant to s 93AA(1) of the ASC Law of New South Wales (the “ASCA”) dated 16 October 1998 (the “Undertaking”), did provide investment advice contrary to the requirements of ss 780 and 781 of the Corporations Law of NSW (the “CL”).

2. Declares that in respect of Margaret Row, the First Defendant, contrary to para 2.6 of the Undertaking, did not within 14 days of the date thereof write to Margaret Row in the terms required by that paragraph.

3. Declares that the statutory declaration of the First Defendant made on 28 November 1998 and provided by the First Defendant to the Plaintiff for the purposes of para 2.7 of the Undertaking falsely stated compliance with that paragraph had occurred.

4. Orders, pursuant to s 93AA(4)(a) ASCA and s 1324(1)(a) CL, that the first Defendant refrain from providing investment advice to any person, including but not limited to any person associated with, or being a client of Chapel Road Pty Ltd, in whatever capacity, in contravention of ss 780 and 781 CL.

5. Orders, pursuant to s 93AA(4)(c) ASCA and s 1324(10) CL, the First defendant to pay to Owen Sattler $163,666.17 for the loss or damage suffered by him on account of her breaches of CL and of her undertaking in respect of him.

6. Upon the Plaintiff by its Counsel renewing the undertaking given to the Court on 27 July 1999:

(1) continues order No 4 made that day until 5.00pm on Monday 6 September 1999, and

(2) extends the time for the First Defendant to comply with the order made that day until 5.00pm Monday 16 August 1999.

7. Vacates, except as provided for in 6 above in respect of the First Defendant, all interim orders made herein.

8. Directs that the First Defendant be given notice of these orders by delivering a copy thereof to 38 Donald Ave Umina by 5:00pm, on 10 August 1999.
9. First Defendant to pay the Plaintiff’s costs in these proceedings, so far as they relate to her and on an indemnity basis.

10. These orders to be taken out forthwith.

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Last Modified: 08/11/1999