Australian Securities and Investments Commission v Secure Finance and Investment Services (Australia) Pty Ltd
[2002] WASC 242
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION -v- SECURE FINANCE & INVESTMENT SERVICES (AUSTRALIA) PTY LTD & ANOR [2002] WASC 242
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 242 | |
| Case No: | COR:127/2002 | 10 OCTOBER 2002 | |
| Coram: | HASLUCK J | 10/10/02 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application refused | ||
| B | |||
| PDF Version |
| Parties: | AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECURE FINANCE & INVESTMENT SERVICES (AUSTRALIA) PTY LTD (ACN 094 169 481) PHILLIP GARRY CRANE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION |
Catchwords: | Practice and procedure Application to strike out pending interlocutory process Whether matter is in a fit state to proceed Turns on own facts |
Legislation: | Corporations Act 2001, s 461(1)(k), s 601ED(5), s 601EE, s 727(1), s 781, s 995(2) Rules of the Supreme Court, O 2 r 2, O 81G r 12 |
Case References: | Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778 Australian Securities and Investments Commission v Koala Quality Produce Ltd (2002) 41 ACSR 628 ASC v AS Nominees Ltd (1995) 18 ACSR 459 ASC v Cooke 22 ACSR 580 ASIC v ABC Fund Managers (2001) 39 ACSR 443 ASIC v McNamara [2002] FCA 1005 ASIC v Parkes (2001) 38 ACSR 355 Australian Securities & Investment Commission (ASIC) v Secure Finance & Investment Services (Australia) Pty Ltd [2002] WASC 163 Australian Securities & Investments Commission (ASIC) v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240 Australian Securities & Investments Commission (ASIC) v Hutchings (2001) 38 ACSR 387 Australian Securities & Investments Commission (ASIC) v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 Australian Securities & Investments Commission v Enterprise Solutions 2000 Pty Ltd (2000) 158 FLR 220 Australian Softwood Forests Pty Ltd v A-G (NSW) (1981) 148 CLR 121 Broken Hill Proprietary Co Ltd v Bell Resources Ltd (1984) 8 ACLR 609 Buzolich Patent Damp-Resisting & Anti-Fouling Paint Co Ltd, In re (1884) 10 VLR (E) 276 CAC v Transphere Pty Ltd (1989) 7 ACLC 205 Central Commodities Services Pty Ltd, Re [1984] 1 NSWLR 25 Challoner v Minister for Immigration & Multicultural Affairs (No 2) [2000] FCA 1601 Diamond Epress Ltd, In re (1903) 6 WALR 2 Electrona Carbide Industries Pty Ltd, Re (1984) 2 ACLC 808 Fraser v NRMA Holdings Ltd (1994) 52 FCR 1 Glover v Willert (1996) 20 ACSR 182 Hungier v Grace & Bent (1972) 127 CLR 210 Hyde v Sullivan (1955) 56 SR (NSW) 113 Media Press Pty Ltd, Re (1980) 4 ACLR 867 Mellor v Mellor [1992] 4 All ER 10 Mutual Home Loans Management Co (Qld) Ltd, Re [1974] Qd R 111 National Companies & Securities Commission v Monsoon Nominees Pty Ltd (1990) 3 ACSR 361 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Wade v A Home Away Pty Ltd [1981] VR 475 Westpac Banking Corp v Totterdell (1998) 20 WAR 150 Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
Secure Finance & Investment Services (Australia) Pty Ltd (ACN 094 169 481)
- Applicant
AND
SECURE FINANCE & INVESTMENT SERVICES (AUSTRALIA) PTY LTD (ACN 094 169 481)
First Defendant
PHILLIP GARRY CRANE
Second Defendant
(Page 2)
Catchwords:
Practice and procedure - Application to strike out pending interlocutory process - Whether matter is in a fit state to proceed - Turns on own facts
Legislation:
Corporations Act 2001, s 461(1)(k), s 601ED(5), s 601EE, s 727(1), s 781, s 995(2)
Rules of the Supreme Court, O 2 r 2, O 81G r 12
Result:
Application refused
Category: B
Representation:
Counsel:
Applicant : Mr K G Robson & Mr T A Staples
First Defendant : Mr J Gilmour QC & Mr S P Crabb
Second Defendant : Mr J Gilmour QC & Mr S P Crabb
Interim Receiver and Manager : Mr C F McLeod
Solicitors:
Applicant : Australian Securities & Investment
Commissions
First Defendant : Clayton Utz
Second Defendant : Clayton Utz
Interim Receiver and Manager : Deacons
(Page 3)
Case(s) referred to in judgment(s):
Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778
Australian Securities and Investments Commission v Koala Quality Produce Ltd (2002) 41 ACSR 628
Case(s) also cited:
ASC v AS Nominees Ltd (1995) 18 ACSR 459
ASC v Cooke 22 ACSR 580
ASIC v ABC Fund Managers (2001) 39 ACSR 443
ASIC v McNamara [2002] FCA 1005
ASIC v Parkes (2001) 38 ACSR 355
Australian Securities & Investment Commission (ASIC) v Secure Finance & Investment Services (Australia) Pty Ltd [2002] WASC 163
Australian Securities & Investments Commission (ASIC) v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240
Australian Securities & Investments Commission (ASIC) v Hutchings (2001) 38 ACSR 387
Australian Securities & Investments Commission (ASIC) v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561
Australian Securities & Investments Commission v Enterprise Solutions 2000 Pty Ltd (2000) 158 FLR 220
Australian Softwood Forests Pty Ltd v A-G (NSW) (1981) 148 CLR 121
Broken Hill Proprietary Co Ltd v Bell Resources Ltd (1984) 8 ACLR 609
Buzolich Patent Damp-Resisting & Anti-Fouling Paint Co Ltd, In re (1884) 10 VLR (E) 276
CAC v Transphere Pty Ltd (1989) 7 ACLC 205
Central Commodities Services Pty Ltd, Re [1984] 1 NSWLR 25
Challoner v Minister for Immigration & Multicultural Affairs (No 2) [2000] FCA 1601
Diamond Epress Ltd, In re (1903) 6 WALR 2
Electrona Carbide Industries Pty Ltd, Re (1984) 2 ACLC 808
Fraser v NRMA Holdings Ltd (1994) 52 FCR 1
Glover v Willert (1996) 20 ACSR 182
Hungier v Grace & Bent (1972) 127 CLR 210
Hyde v Sullivan (1955) 56 SR (NSW) 113
Media Press Pty Ltd, Re (1980) 4 ACLR 867
Mellor v Mellor [1992] 4 All ER 10
Mutual Home Loans Management Co (Qld) Ltd, Re [1974] Qd R 111
(Page 4)
National Companies & Securities Commission v Monsoon Nominees Pty Ltd (1990) 3 ACSR 361
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
Wade v A Home Away Pty Ltd [1981] VR 475
Westpac Banking Corp v Totterdell (1998) 20 WAR 150
Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642
(Page 5)
1 HASLUCK J: This is an application by the defendants for dismissal of the plaintiff's interlocutory process dated 16 August 2002.
2 The application also contemplates that the plaintiff should be required to file an affidavit in compliance with O 81G r 12 of the Rules of the Supreme Court. The reasons for the defendants' stance in that regard will become apparent in a moment.
3 The interlocutory process to which this application is directed is listed for hearing before a Judge in Chambers in a few days' time; namely, Monday next, 14 October 2002. I understand that Heenan J, who has had some previous association with this litigation, will be dealing with the matter.
4 In order to understand the reason for the application before me, and the circumstances of urgency, I must return to the beginning of the proceedings.
5 It seems that by an originating process dated 30 April 2002 the plaintiff, the Australian Securities and Investments Commission, known as ASIC, sought various orders against the defendants, Secure Finance and Investment Services Pty Ltd ("SFI") and Phillip Gary Crane, including orders that the defendant company and the schemes referred to in the relevant papers be wound up. This was to be on the basis that the first defendant was operating a managed investments scheme in this jurisdiction which was required to be registered. In that respect I refer to s 601ED(5) of the Corporations Act.
6 It is said the defendants made an offer for securities in respect of the scheme without a disclosure document having been lodged with ASIC in contravention of s 727(1) of the Act; that they engaged in misleading and deceptive conduct in making certain representations in contravention of s 995(2) of the Act; that they carried on a securities business without being licensed to do so in contravention of s 781 of the Act.
7 Those matters and some additional matters are referred to in the originating process dated 30 April 2002. It is common ground before me that the plaintiff subsequently sought and obtained ex parte injunctive relief and appointed an interim receiver and manager to the scheme and to the first defendant. Those matters were the subject of written reasons provided by Heenan J in the decision he handed down on 26 June 2002.
8 Subsequent to those events, a further phase of the proceedings was initiated on 16 August 2002, being an interlocutory process for winding-
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- up of the defendant company, that is to say, SFI, pursuant to Corporations Act s 461(1)(k). Provision was made for appointment of a scheme liquidator pursuant to s 601EE of the Corporations Act.
9 Put shortly, if a person operates a managed investment scheme in contravention of the statutory provisions, application may be made to have the scheme wound up. The Court is allowed broad powers in that it may make any orders it considers appropriate for the winding-up of the scheme.
10 It was against this background that various affidavits were filed in support of the case that the plaintiff intended to present. It follows from the narrative that the plaintiff's case was defined to some extent at least by the originating process and the interlocutory process I have mentioned.
11 I will not traverse the full range of matters dealt with by the affidavits. Counsel for the defendants suggested that the affidavits are so lengthy as to be diffuse. They do not make it clear precisely which material facts and what evidence the plaintiff will be relying upon in endeavouring to obtain the relief it seeks.
12 Programming orders were made by McKechnie J with a view to having the interlocutory Chamber summons of 16 August 2002 which I have referred to, dealt with at a hearing. As I have said, the matter has now been listed for hearing on Monday, 14 October 2002.
13 This brings me to the present application. The defendants by their solicitors have complained of a lack of particularity and a prejudice to the case they wish to present to the Court. It is the presence of those concerns and the fact that the matter has been listed for hearing in a few days' time which has led to the application before me.
14 Counsel for the defendants has filed submissions in support of his argument that relief of the kind sought should be granted, namely, that the plaintiff's interlocutory process should be struck out. I will not go to the full particularity of these submissions but, in essence, it has been put to me that as the matter has developed, and against the background of prolix affidavits of the kind I have described in general terms, the defendants have not been given any proper understanding of the case against them, and thus they are disadvantaged.
15 This aspect of the defendants' complaint is put succinctly in a letter written by Mr Crabb of Clayton Utz as solicitors for the defendants dated 27 September 2002. He says that while it may be possible to discern from
(Page 7)
- the affidavit material a number of factual allegations (disputed by the defendants) on which ASIC may or may not choose to rely, no affidavit identifies the material facts alleged to support each head of relief claimed in the originating process.
16 This plea was developed in argument before me. Counsel for the defendants says that the plaintiff's affidavits, being multifarious and in a diffuse form, do not comply with the requirements of Rules of the Supreme Court O 81G r 12, which requires that an originating process be supported by an affidavit, "stating the facts in support of the process."
17 Further, counsel for the defendants says that the interlocutory process to be heard on 14 October 2002 is misconceived in that, in effect, it is an application for final relief by an interlocutory method which is not allowed for by the relevant procedural requirements.
18 The defendants' position as to both those matters and its argument generally is drawn together succinctly in par 15 of counsel's submissions dated 10 October 2002, in which he says this:
"The court plainly has power to dismiss an interlocutory process if it is misconceived. In this case the interlocutory process to wind up is procedurally flawed. The application should not be allowed to run its course because the parties will be put to the unnecessary time and expense of preparing for what is to be a lengthy hearing involving substantial argument on issues of law and fact."
19 Counsel for the plaintiff submits that the breadth of the powers in s 601EE of the Corporations Act that I have referred to allow for a procedural process of the kind contemplated. He says further, placing reliance upon some recently decided cases, that this is recognised in previous decisions. The same cases recognise also that, in regard to the present case, there is a strong basis for asserting that orders of the kind sought should be made.
20 He refers in particular to Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778, being a decision of Owen J of this Court. Reference is made also to the recent decision of Barrett J in Australian Securities and Investments Commission v Koala Quality Produce Ltd (2002) 41 ACSR 628.
21 It was not put in this way by counsel for the plaintiff, but I understand it to be inherent in his argument that there is a further
(Page 8)
- consideration. Even if O 81G r 12 and related rules were thought to be the appropriate point of reference, nonetheless, given the generality in which the requirement to file supporting affidavits is expressed, it cannot be readily assumed that there has been a lack of compliance in a matter of this complexity. Counsel points also to other, related documents which suggest that the defendants have been given adequate notice of the case they have to meet. Reference is made in that respect to the plaintiff's schedule of references to evidence dated 8 October 2002.
22 Counsel for the plaintiff refers also to O 2 r 2 of the Rules of the Supreme Court. This suggests that if there is some irregularity in compliance with the Rules, that does not give rise to an invalidity but should be the subject of an application to strike out or some similar form of relief.
23 It is against this background that I return to the application before me. It would be unusual for a Justice of this Court to seek to strike out some other pending interlocutory process simply because there are some doubts as to whether it has prospects of success, or because there are doubts as to whether there has been sufficient compliance with the Rules.
24 The normal assumption is that the Judge dealing with the relevant application, in this case the interlocutory process of 16 August 2002, would review all matters in issue and rule upon them. It seems to me that everything that has been raised with me this morning by counsel for the defendant are matters that can be raised with the Judge who deals with the application on 14 October 2002.
25 I recognise that the Court might be at liberty to dismiss a pending interlocutory process if it were clearly misconceived, or fatally flawed owing to a lack of compliance with the Rules, or clearly not in a fit state to be brought to the Court. In such a case it would simply be a waste of the Court's time to allow the matter to proceed.
26 I have to say, however, upon the basis of what is before me, that I am not persuaded that the matter is of that order. As I have said, counsel for the plaintiff has pointed to some previously decided cases, and some broad provisions in the legislation itself, which suggest that, procedurally, it is arguably open to the plaintiff to proceed in the manner contemplated. The plaintiff has reasonable prospects of success in persuading the Court that the schemes in question should be wound up, and with the consequence that the defendant company should be wound up also.
(Page 9)
27 I pause to say that nothing in the comment I have just made should be regarded as in any way foreclosing matters to be determined in due course. However, I cannot see that this is a clear case where what is proposed, either procedurally or as a matter of substantive law, is misconceived or fatally flawed. For that reason, I am not prepared to allow the application brought before me.
28 If it transpires that further orders or programming directions are required in order to give greater precision to what is alleged against the defendants, then that will be a matter for the listed Judge to deal with. I take account also of what was put to me by Mr McLeod as counsel for the receiver that a question could arguably arise if I acceded to the application that the position of the receiver might be prejudiced or terminated.
29 This is a further reason as to why I am not prepared to accede to the application to strike out.
30 In summary, then, I will dismiss the primary relief sought by the application. It is inherent in what I have just said that I will also not accede to the ancillary aspects of the application, whereby directions are sought concerning the filing of further affidavits. Again, it seems to me that it would be precipitate for me to intervene in such a way. It might pre-empt or cut across something that the listed Judge is to deal with when the matter is presented to him in a few days time.
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