Australian Securities Commission v Rohani, Rohyeh - [1998] FCA 1196

FEDERAL COURT OF AUSTRALIA

Corporations – whether the ASC has standing to seek the winding up of the third respondent – whether it is an essential condition of the conduct of an investigation under s 13(1) of the Australian Securities Commission Act 1989 that it be established by the ASC that the decision to investigate had been made and was evidenced in some appropriate formal manner.

Corporations Law – ss 461(k), 462(2), 464(1)

Australian Securities Commission Act 1989 – s 13

Little River Goldfields NL v Moulds (1991) 32 FCR 456 – foll.
Boys v ASC (1997) 24 ACSR 1 – foll.

AUSTRALIAN SECURITIES COMMISSION V ROHYEH ROHANI, HAMISH BAKER REAL ESTATE PTY LIMITED AND GLOBAL FINANCE CORPORATION PTY LIMITED

NG 3098 OF 1998

JUDGE:        BEAUMONT J.
PLACE:        SYDNEY
DATE:          3 SEPTEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3098 of 1998

BETWEEN:

AUSTRALIAN SECURITIES COMMISSION
APPLICANT

AND:

ROHYEH ROHANI
FIRST RESPONDENT

HAMISH BAKER REAL ESTATE PTY LIMITED
SECOND RESPONDENT

GLOBAL FINANCE CORPORATION PTY LIMITED
THIRD RESPONDENT

JUDGE:

BEAUMONT J.

DATE OF ORDER:

3 SEPTEMBER 1998

WHERE MADE:

SYDNEY

RULING:

The applicant has standing to commence these proceedings.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3098 of 1998

BETWEEN:

AUSTRALIAN SECURITIES COMMISSION
APPLICANT

AND:

ROHYEH ROHANI
FIRST RESPONDENT

HAMISH BAKER REAL ESTATE PTY LIMITED
SECOND RESPONDENT

GLOBAL FINANCE CORPORATION PTY LIMITED
THIRD RESPONDENT

JUDGE:

BEAUMONT J.

DATE:

3 SEPTEMBER 1998

PLACE:

SYDNEY

REASONS FOR RULING

BEAUMONT J.

In these proceedings a preliminary question has arisen as to the standing of the Australian Securities Commission (“the Commission”) to claim the relief sought in its amended application filed in Court on 5 June 1998 and, in particular, order 4 there sought. That is, that the third respondent be wound up pursuant to s 461(k) of the Corporations Law (“the Law”). By s 461(k) it is provided that:

“The Court may order the winding up of a company if:
…
(k)the Court is of opinion that it is just and equitable that the company be wound up.”

By s 462(2) of the Law it is provided that:

“(2)… any one or more of the following may apply for an order to wind up a company:

…
(e) the Commission pursuant to section 464…”

By s 464(1) of the Law it is provided as follows:

“(1)Where the Commission is investigating, or has investigated, under Division 1 of Part 3 of the ASC Law:

(a) matters being, or connected with, affairs of a company; or
(b) matters including such matters;
the Commission may apply to the Court for the winding up of the company.”

By s 13(1) of the Australian Securities Commission Act 1989 (“the Act”) it is provided:

“13(1)The Commission may make such investigation as it thinks expedient for the due administration of a national scheme law of this jurisdiction where it has…

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: [1998] FCA 1196
Decision Date: 3 SEPTEMBER 1998

CaseChat Overview and Summary

The case of Australian Securities Commission v Rohani, Rohanyeh involves a dispute between the Australian Securities Commission (ASC) and three respondents, Rohani, Hamish Baker Real Estate Pty Limited, and Global Finance Corporation Pty Limited. The ASC sought the winding up of the third respondent under section 461(k) of the Corporations Law. The central legal issue was whether the ASC had the standing to seek the winding up of the third respondent and whether an investigation by the ASC required a formal decision. The court was also required to determine if the ASC's investigation into the affairs of the third respondent was sufficient to grant it standing to apply for the winding up of the company.

The court found that the ASC had standing to commence the proceedings, despite the absence of a formal decision to investigate. The court ruled that there was no requirement under section 13(1) of the Australian Securities Commission Act 1989 for the ASC to establish a formal decision or record a decision to investigate. The language of section 13(1) allowed for a degree of informality in conducting investigations, as did section 464(1) of the Corporations Law. The court emphasised that the operation of section 464(1) did not depend on the existence of a formal decision to investigate, but rather on whether the ASC was investigating or had investigated the relevant matters. The court found that the ASC's investigation into the affairs of Empire Systems Pty Limited, a company related to the third respondent, was sufficient to grant it standing to apply for the winding up of the third respondent. The court also found that the inter-company transactions between Empire Systems Pty Limited and the third respondent, in which the first respondent and her husband were actively involved, provided sufficient grounds for the ASC's investigation.

In conclusion, the court ruled that the ASC had standing to commence the proceedings, and the application for the winding up of the third respondent could proceed. The court found that the ASC's investigation into the affairs of Empire Systems Pty Limited and the involvement of the first respondent and her husband in the inter-company transactions provided sufficient grounds for the ASC to have standing to apply for the winding up of the third respondent. The court also emphasised that there was no requirement for a formal decision or record of a decision to investigate under section 13(1) of the Australian Securities Commission Act 1989. The court's decision sets a precedent for future cases involving the ASC's standing to apply for the winding up of companies.

Orders