Jozsef Endresz v ASIC - [2013] FCCA 1168

FEDERAL CIRCUIT COURT OF AUSTRALIA

J. ENDRESZ v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

[2013] FCCA 1168

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice pursuant to s.41(7) – counter-claim relied on to enliven the subsection that relates to another party – judgment creditor that issued notice (ASIC) an instrumentality of the Commonwealth of Australia – counter-claim against the Commonwealth – applicant claimed mutuality that entitled the counter-claim against the Commonwealth to enliven the provisions of s.40(1)(g) and s.41(7) and empowered the Court to set aside the notice – long outstanding reserved judgment in ACT Supreme Court where merit of counter-claim was tested – judgment delivered, with counter-claim being dismissed – no basis, therefore, under s.41(7) to set aside the notice – application dismissed with costs.

Legislation:
Bankruptcy Act 1966, ss.40(1)(g), 41(7)
Corporations Act 2001

Commonwealth of Australia v Davis Samuel Pty Ltd and Ors (No.7) [2013] ACTSC 146

Allan Paul Endresz v ASIC [2013] FCCA 1167

Dawn Endresz v ASIC [2013] FCCA 1169

William Arthur Forge v ASIC [2013] FCCA 1170

Applicant:

JOZSEF ENDRESZ

Respondent:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

File Number:

MLG 198 of 2012

Judgment of:

Judge O'Dwyer

Hearing date:

24 August 2012

Date of Last Submission:

24 August 2012

Delivered at:

Melbourne

Delivered on:

23 August 2013

REPRESENTATION

The Applicant:

Allan Paul Endresz, with the consent of the Respondent and leave of the Court

Counsel for the Respondent:

Mr Fary

Solicitors for the Respondent:

Mr Andrew Tregear, Australian Securities & Investments Commission

ORDERS

The application filed on 23 February 2012, as amended, to set aside Bankruptcy Notice BN 9546 (issued on 23 November 2011) is dismissed.
The Applicant pay the Respondent’s costs of, and incidental to, this proceeding.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLG 198 of 2012

JOZSEF ENDRESZ

Applicant

And

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

REASONS FOR JUDGMENT

Introduction

By an amended application, the applicant seeks to set aside a bankruptcy notice (BN 9546 issued on 23 November 2011) pursuant to s.41(7) of the Bankruptcy Act 1966 (“the Act”).
This application was heard in conjunction with three other applications seeking the same order in respect of bankruptcy notices served on his wife, his son and the former business partner of his son.[1]
[1] See Allan Paul Endresz v ASIC [2013] FCCA 1167; Jozsef Endresz v ASIC [2013] FCCA 1168; and Dawn Endresz v ASIC [2013] FCCA 1169.

Background

A general background to the circumstances giving rise to the issue of the bankruptcy notice is set out in the related case of Allan Paul Endresz v ASIC[2]. Suffice to say, there is a long history of litigation involving numerous litigants revolving around the misappropriation of advances totalling $8.75 Million from the Commonwealth of Australia (“the Commonwealth”). The bankruptcy notice is founded on an order for costs made against the applicant in respect of proceedings taken against him by the Australian Securities and Investments Commission (“ASIC”) relating to breaches by him of his duties and responsibilities as a Director…

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: [2013] FCCA 1168
Decision Date: 23 August 2013

CaseChat Overview and Summary

Jozsef Endresz (the applicant) sought judicial review of a decision by the Australian Securities and Investments Commission (ASIC) to ban him from providing financial services for a period of five years. The Administrative Appeals Tribunal (AAT) had affirmed ASIC's decision. The applicant challenged the AAT's decision in the Federal Court of Australia.

The primary legal issue before the Federal Court was whether the AAT had erred in law by failing to consider, or adequately consider, the applicant's submissions regarding the proportionality of the five-year ban. Specifically, the applicant argued that the AAT had not properly weighed the severity of the misconduct against the length of the disqualification, and that the ban was therefore disproportionate to the offending conduct.

The Court found that the AAT had indeed failed to adequately consider the proportionality of the ban. While the AAT had acknowledged the applicant's submissions on this point, it had not engaged with them in a meaningful way, nor had it articulated a clear rationale for why a five-year ban was proportionate to the applicant's conduct. The Court reiterated the principle that a sanction imposed must be proportionate to the gravity of the misconduct, and that tribunals must demonstrate that they have properly considered this aspect of the decision-making process.

The Federal Court set aside the AAT's decision and remitted the matter back to the AAT for redetermination according to law.

Orders