Endresz(2) v Whitehouse

[1999] HCATrans 455

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

MelbourneNos M56, M57, M58, M59, M60, M61, M62 and M63 of 1997

B e t w e e n -

ALLAN PAUL ENDRESZ

Applicant

and

PATRICK JOHN WHITEHOUSE

Respondent

Applications for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 10 DECEMBER 1999, AT 3.07 PM

Copyright in the High Court of Australia

MR A.P. ENDRESZ appeared in person.

MS L. LIEDER, QC:   If the Court pleases, I appear for the respondent.  (instructed by the Director of Public Prosecutions (Commonwealth))

GLEESON CJ:   Yes, Mr Endresz.

MR ENDRESZ:   Well, your Honours, we are in two frames of mind at the moment, one with the joyous occasion of finally being here and the other with great anxiety that I am actually in front of you.  Be that as it may I will proceed as best I can. 

The documentation in the appeal books outline three areas of, I consider, concern in the corporate world, which embrace the Takeovers Code, under the old code section 11(5), section 124 of the Securities Code, which I understand is current under the Corporations Law, I believe, sections 998, from memory, and finally, section 125, which is the misleading, false and misleading, statement, I understand, section 999, which - why I am raising that, is the significance, even though they are the old Code, they still apply to the current laws.

Before I go into the issues of why I consider them of great substance for the Court to grant this appeal, I just would like to bring up the issue that the recent decision in Byrnes v The Queen by the Court has outlined that the respondents may not have a right to even be present in these proceedings and that is of grave concern in terms of a natural justice issue, from my part, and one of the reasons why counsel earlier has indicated that we are looking at the constitutional issue for a “as of right” appeal rather than being before your Honours.

If I can just talk briefly about the Byrnes situation.  The court decided – and the provisions or the facts are the same with Byrnes in that they are under the old Code as is this case – that there was no ability for the Commonwealth to pursue an appeal. The question therefore is, does that stop for prosecution at trial and where does that leave the respondents, having put up submissions and arguments through the appeal court process, which has been relied upon to the detriment of my case and even as we speak today. Be that as it may, I leave that issue standing for some direction as to what that means in these proceedings. However, when one considers the issues which are in the appeal book, from memory, the 11(5) significance really comes down to a question of the broadness of the understanding of a associate definitions, which are directly relevant, as indicated, to section 615 under the current Corporations Law.

As I understand it, the Court of Appeal had an interpretation of proposes, which was in an unduly narrow scope, and this is very significant to leave this definition without being overturned by the High Court.  We have a decision of the Magistrate whereby he entered into an area of contract law and, as indicated by the documentation, at no time there was a proposed repudiation of that contract, but at no time, as I, as the applicant, considered the contract at an end and, in any event, that presses the point of the associateship and broadness of which I am talking about on that point alone. 

If it is not, then, of course, that appeal decision will remain precedent and the associateship provisions will be damaged in terms of the breadth with which, interestingly enough, the respondents rely under current law to capture warehousing, and a number of other transactions, of handshake deals or the wink and the nod, if we are limited to relying on a break in contract being the dominant purpose with which the definitions come to an end.

There was no finding of acceptance of the repudiation and I can evidence that by a summary of the argument that was put forth by the respondent on page 2 of their argument - and I have got an old document here, so I apologise to the Court if you are unable to find that.  But:

There was no immediate response by CTC to Rothwell’s letter of 25 August 1989.  Although the Court of Appeal accepted that there was an attempt by the applicant to assert his rights under the agreement, the court below correctly said at page 22 -

this is a criminal proceeding and further, at 3.3, the respondent says:

Far from disclosing that the applicant was continuously and actively seeking to acquire the relevant shares, the evidence demonstrates that when Rothwells treated the agreement at an end as at 25 August 1989, there was some acceptance of this fact by the applicant.

Now again, these are criminal proceedings, and my understanding of that is that beyond reasonable doubt, either there was or there was not, and again, clearly, that was not the case; the associateship continued to prevail.

If I can move along to the issues under section 124, which, as I understand it, this is a leading case in terms of a false and misleading market, which is matter M62/97.  The submission is that there was uncontradicted evidence as to the purpose in relation to undertaking the 4 million buy and sell of those shares, and that purpose was to raise money.  There may have been some areas where the issues of interest payments finally came out in the Court of Appeal, but the fact is the transaction, where there was no beneficial change in interest, was one of dominant purpose being for the purposes of raising funds, not to create a false and misleading market. 

Now, the question here is, as these provisions are very much of the similar nature to the current Corporations Law, what is the extent of a defendant, on a balance of probability, showing what his purpose was, and does that remove the prosecution from proving beyond reasonable doubt, again a serious criminal matter, my intention, in relation to these securities?  So there is grave doubt as to where that onus lies, and I understand that is very well summarised in the submissions, which require some considerable reading, I understand.

The final issue which cannot allow the current corporations world or the business community to go without being reviewed by the High Court, is the section 125 matter relating to false and misleading statements in the marketplace.  Now statements were made.  The lower courts have indicated that not all statements were put forth to the market.  The reality is, as to what extent must a defendant put those statements up, if he has no legal obligation with which to make those statements.  We are talking here issues about conflict of disclosure and conflict of confidentiality between a private company and a public company, and there was no obligation to disclose the confidential affairs of the private company and, from memory, Harkness was a case that highlighted that.  There cannot be piecemeal bits, because one did not go far enough with the disclosure that that then immediately, beyond reasonable doubt, gave the prosecution grounds with which to say, it was a false and misleading statement by omission.

The other issue, in closing, I guess, is that it comes down to uncontradicted evidence in my case, which is a natural justice issue, to be able to proceed, to have these issues before the High Court, in that it is up to the Magistrate to, I understand, draw an inference, if there are conflicting evidence, for the benefit of the defendant, and NCSC v Hurley was an instance of that particular issue before the Court. 

As counsel has indicated, irrespective of this application, I will be proceeding to challenge on three grounds, and bearing in mind this has been a long exercise for me over the last six or seven years, the fines were not great - $13,500 – this is one of principle and one of, I say, a community obligation of rights, particularly as they have a criminal record in these proceedings, that I will raise the Byrnes v The Queen issue in a constitutional statement, as well as the grounds for which this Court has a right to have a discretion in criminal matters, which is the distinguishing feature from Smith-Kline that, as at Federation, there was as of right, that appeal right to the High Court.

GLEESON CJ:   Have you actually filed a notice of appeal?  We have only been looking at applications for special leave to appeal today, but have you filed a notice of appeal?

MR ENDRESZ:   Well the final has not been done, your Honour, because the third ground I am challenging will be the validity of section 11 under the Australia Act, with my right from a State Supreme Court to appeal the Privy Council, and that has been added to the statement.

GLEESON CJ:   I understand.  The only reason I ask the question was that it occurred to me as a possibility that if you are right, and you do not need leave to appeal and you have a right of appeal, you might be out of time.

MR ENDRESZ:   No, I appreciate that, but that is exactly the way ‑ ‑ ‑

GLEESON CJ:   By about two years.

MR ENDRESZ:   Yes, your Honour.  I cannot add any further ‑ ‑ ‑

GLEESON CJ:   Thank you.  We do not need to hear you, Ms Lieder.

There is insufficient reason to doubt the correctness of the decision of the Court of Appeal in this matter to warrant a grant of special leave to appeal and the application is refused with costs.

Was an order for costs made in the Court of Appeal?

MS LIEDER:…..

GLEESON CJ:   Was made.  Yes, thank you.

MR ENDRESZ:   Your Honour, in relation to costs, it is a criminal matter.  Is that correct in - - -

GLEESON CJ:   I asked if an order for costs was made in the Court of Appeal and I was told it was.  Is that right?

MR ENDRESZ:   Yes.

AT 3.20 PM THE MATTER WAS CONCLUDED