Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission

Park Trent Properties Group Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the primary judge who had refused an application to amend its defence on the sixth day of trial. The dispute concerned whether the appellant carried on a financial services business without a licence, contrary to the Corporations Act 2001 (Cth). The appellant's business involved advising members of existing superannuation funds to exit those funds and establish self-managed superannuation funds (SMSFs) for leveraged investments in real property, with the members becoming directors of the new trustee of the SMSF. The appellant contended that its conduct fell within the scope of Corporations Regulation 7.1.29, which deemed certain circumstances not to constitute the provision of a financial service, thereby exempting it from licensing requirements.

The central legal issues before the Court of Appeal were whether the primary judge erred in refusing the amendment to the defence, and if so, whether the proposed defence was legally sound. Specifically, the court had to determine if the appellant's construction of Regulation 7.1.29 was correct, and whether the primary judge's refusal constituted a *House v King* error, considering the timing of the application, the potential for contested factual questions, the relevance of delay in expedited enforcement proceedings brought by the Australian Securities and Investments Commission (ASIC), and the question of costs.

The Court of Appeal rejected the appellant's literal construction of Regulation 7.1.29, preferring a construction that accorded with the regulation's purpose and structure, as well as its explanatory statement. The court found that the primary judge's refusal to allow the amendment was not an error, particularly given that the proposed defence was considered bad in law. The court emphasised the importance of statutory construction within its proper context.

Consequently, the appeal was dismissed, and the appellant was ordered to pay ASIC's costs.