Australian Securities Commission v Sheraton Finance Ltd

[1991] FCA 799

199 Q\

JUDGMENT No ....,.,.. L.,-.....

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY )	No. NG 3155 of 1991

)

GENERAL DIVISION )

BETWEEN :	AUSTRALIAN	SECURITIES
COMMISSION

Applicant

AND :  SHERATON FINANCE LIMITED

Respondent

22 November 1991

REASONS FOR JUDGMENT

LOCKHART J.

This is a matter which commenced on 8 November 1991 by the filing of an application on behalf of the applicant, the Australian Securities Commission ("the Commission"), joining as respondent a company Sheraton Finance Limited. The application by the Commission seeks various forms of relief but all directed to restraining the respondent from carrying on an investment advice business and entering into agreements which are said to involve the respondent in the carrying on of the business of

and 15 November this year. On 13 November the Court made certain	foot. It is sufficient if I refer to the orders of 13 November
orders which I will summarise as follows. First, the Court made
orders which restrained the respondent for a limited time from
dealing with its funds in certain banking accounts and from
otherwise operating on those accounts. Second, the Court made
orders in effect restraining the respondent from carrying on the
business of dealing in securities without a dealer's licence or
from carrying on investment advice business without an investment
adviser's licence. On 15 November the Court continued those
orders as summarised, with the first type of order being made up

dealing in securities, or holding itself out as doing so, without a dealer's licence, in alleged contravention of S. 780 of the Corporations Law.

Affidavits have been filed by the parties and the matter has
come before another Judge of the Court on more than one occasion.
Interlocutory orders have been made, some of which are still on

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to and including 4.15 p.m. today.

Today counsel for the parties have argued the case at least initially on a general footing which I will summarise this way. The Commission says that it comes to the Court, as indeed it does, as the guardian of the public interest in this field of law. It says, on the material which it has placed before the Court in the form of affidavits, but which have not been read today, and perhaps other material, which in due course it might

obtain, that the respondent is, so it alleges, not being the	holder of a relevant dealer's or investment adviser's licence,
carrying on a business of dealing in securities or investment advice or giving investment advice contrary to law. The respondent denies those assertions.
The respondent is prepared to give undertakings to the Court, until further order, which have the effect of permanence, subject of course to the rights of the respondent to come back to the Court at some future date to seek to be relieved of its undertakings, but a matter on which the Commission would be heard and each party entitled to give evidence. The undertakings which the respondent is prepared to give are in substantially the same tens as the orders which were made by the Court on an interlocutory footing on 13 November 1991, to which I have briefly referred.
The Commission says that although it does not find anything unacceptable in the undertakings themselves, the material before

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the Court would still cause concern as to the matters to which I shall now refer. It would appear that the respondent has carried on a business activity related to the obtaining or handling of money for the purpose of there being conducted a syndicate relating to the seeking out and salvaging of gold cargo off the coast of Papua New Guinea. It would appear from what has been said from the Bar Table and indeed, from the evidence, that those operations are in progress at the moment or at least are imminent. There are some fourteen syndicate holders (in one case

invested money in this particular undertaking. There is evidence	two people have a joint interest) and they appear to have
from each of them in the form of a statutory declaration in basically common form, to the effect that, having invested sums of money and indeed, in some cases, substantial sums of money in the relevant syndicate, whatever rights they may have under S .
1073(2) of the Corporations Law (which are rights that flow from
the consequences of any relevant contraventions in this case by the respondent) then they do not wish to exercise those rights but release and abandon them. There is correspondence from five of the syndicate members which sets out in more conversational form their attitude to the matter before the Court. One letter, perhaps the most eloquent of the letters, is from a Mr Crago from South Australia. He makes three points. He says first that the group or syndicate is made up of fourteen business people, known to each other either through business or socially or both, who have decided among themselves to become a private syndicate for the purpose of providing finance for a salvage venture to the north of Australia and at no time have they ever considered opening this up as an investment offe; to the general public. Secondly, that as business people they have understood and fully accepted the risks associated with this particular project. Thirdly, that although appreciating the Commission's interest in the venture, they formally request that their rights be recognised as business people to conduct their own affairs as they wish and ask for the release of any relevant restraining order over the funds which are required to further this salvage project to the north of Australia.
The attitude of the Commission, as the guardian of the public interest in this branch of the law, is one that is fully understood by the Court and is to be commended. I think, however, the Commission has, in all the circumstances, done all that can be reasonably expected of it in the light of the material before me. If the undertakings that have been suggested for counsel for the respondent are proffered to the Court on the basis which he mentioned, I am satisfied that they should be accepted and that the restraining orders that have been made on an interlocutory footlng restralnlng the use of the respondent's funds in the banking accounts to which I have referred ought to be discharged. Any question of costs should be reserved to a later day.

I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate /?L&L-

Dated:  2 2 November 1991

Counsel for the Applicant	M. Oakes
Solicitors tor the Applicant :	Peter J. Stepek
Counsel for the Respondent	W. Marler
Solicitors for the Respondent :	Davls Hyde Page

Date of Hearing	22 November 1991
Date of Judgment	22 November 1991