Coral Coast Distributors (CAIRNS) Pty Ltd and Australian Securities & Investments Commission

Coral Coast Distributors (Cairns) Pty Ltd (the Applicant) sought a stay of a stop order issued by the Australian Securities and Investments Commission (ASIC). The stop order, made under section 994J(2) of the Corporations Act 2001, prevented the Applicant from engaging in retail product distribution conduct concerning a credit facility offered at its retail outlets, which permitted repayments via the Centrepay bill paying service. ASIC's concern was that the Applicant's target market, which included vulnerable consumers with limited English proficiency and financial literacy, was not adequately protected by the Applicant's design and distribution obligations (DDOs).

The primary legal issue before the Tribunal was whether to grant an interlocutory stay of ASIC's stop order pending the final determination of the Applicant's review application. To grant a stay, the Tribunal needed to consider whether it was necessary to secure the effectiveness of the hearing and determination of the review application, assessing the prospects of success of the review, the prejudice to the parties, and the public interest. Specifically, the Tribunal had to determine if the review application would be rendered nugatory if the stay was refused, and whether the impact on third parties, such as consumers, warranted the continuation of the stop order.

The Tribunal reasoned that a stay was not warranted. It noted that ASIC had already suspended the Applicant from using Centrepay, and this suspension was ongoing, meaning a stay would not significantly alter the Applicant's current circumstances. Furthermore, the Tribunal found that the Applicant had poor prospects of success in its review application, citing persuasive evidence of widespread harm and risks to consumers associated with the Applicant's credit facility. The Tribunal also considered that even if the Applicant might attract fewer customers without the credit facility, the material did not demonstrate that the business was at risk of imminent collapse.

Consequently, the Tribunal ordered that the stay application be refused. The stop order made by ASIC on 24 April 2024 remained in force pending the final determination of the review application.