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R v Firns

R v Firns

Case [2001] NSWCCA 191 21 May 2001

Insider Trading

Statutory Interpretation

Corporate Law & Governance

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Reported Decision:
(2001) 161 FLR 294
(2001) 38 ACSR 223
(2001) 19 ACLC 1495
124 A Crim R 157

New South Wales

Court of Criminal Appeal

CITATION: REGINA v FIRNS [2001] NSWCCA 191

FILE NUMBER(S): CCA 60215/00

HEARING DATE(S): 8 December 2000

JUDGMENT DATE:
21 May 2001

PARTIES :

REGINA v Kenneth John FIRNS

JUDGMENT OF: Mason P at 1; Hidden J at 95; Carruthers AJ at 96

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S) : 98/11/0895

LOWER COURT JUDICIAL
OFFICER : Sides J

COUNSEL : Appellant: M Hobart/D Allen
Respondent: T A Game SC/M Buscombe

SOLICITORS: Appellant: Tzovaras Yandel
Respondent: Commonwealth Director of Public Prosecutions

CATCHWORDS: Corporations Law - s1002G - insider trading - legislative history of Division 2A of the Corporations Law - when is material "readily observable" - whether a judgment read in open court constitutes "readily observable" information - whether information must be available in Australia before it is "readily observable" - appeal upheld. D

DECISION: Appeal upheld, conviction and sentence quashed and acquittal entered.

CCA 60215/00

MASON P

HIDDEN J

CARRUTHERS AJ

Monday 21 May 2001

REGINA v Kenneth John FIRNS

Carpenter Pacific Resources NL (Carpenter) was an Australian company listed on the Australian stock exchange. Its main business in 1995 was holding exploration licences in Papua New Guinea through wholly owned subsidiaries.

The appellant’s father, Mr Ron Firns, was an executive director at the time, as was Mr Richard Hill, the chairman and company secretary. The role of general manager was undertaken temporarily by Mr James Kruse, an employee of Mr Hill’s accountancy firm.

One of Carpenter’s subsidiaries registered in Papua New Guinea, Matu Mining Pty Ltd (Matu), was granted in 1994 an exploration licence over a large area in Papua New Guinea thought to have gold prospects. Within this area, a smaller area was the subject of a special mining lease, and owned by an unrelated company, Kare Puga Development Corporation Pty Ltd. The introduction of new regulations under the Papua New Guinea Mining Act 1992 added hard rock rights to the alluvial right under the special mining lease, effectively divesting Matu of a valuable incident of its exploration licence.

Matu challenged the validity of the regulation in the National Court of Papua New Guinea, and having lost at first instance later appealed to the Supreme Court of Papua New Guinea. The appeal was heard in October 1994 in open court, and judgment was reserved.

On Friday 28 July, at about 9:30am the judgment was handed down in open court, upholding the appeal and declaring the regulation invalid. Mr Kruse and a solicitor from the firm representing Carpenter in Papua New Guinea were present. At 9:40 the news was telephoned to Mr Hill. Mr Hill telephoned his fellow directors, beginning with Mr Firns senior. Mr Firns senior telephoned the news to the appellant in Brisbane at about 10:08am. Shortly before 10:27 the appellant phoned a Brisbane stockbroker and purchased 400,000 Carpenter shares at two and half cents in his wife’s name.…

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.

Continue reading R v Firns

Details

AGLC: R v Firns [2001] NSWCCA 191
Case: [2001] NSWCCA 191
Decision Date: 21 May 2001

CaseChat Overview and Summary

In the case of R v Firns, the appellant, an insider in a company, was convicted by the Supreme Court of New South Wales of insider trading. The matter was appealed to the High Court of Australia, which considered the interpretation of "readily observable" information under section 1002G of the Corporations Law. The case hinged on whether a judgment read in open court constituted information that was readily observable and if such information needed to be available in Australia before it could be deemed "readily observable".

The legal issues before the court involved the interpretation of "readily observable" information for the purposes of insider trading legislation. Specifically, the court had to determine whether information made public in a judgment read in open court in Australia could be considered readily observable information under the statute, and if the information needed to be available in Australia before it was considered readily observable. This required an examination of the legislative history and intent behind the enactment of Division 2A of the Corporations Law.

The High Court examined the legislative history and found that the term "readily observable" was intended to cover information that was readily available and easily accessible to the public. The court held that a judgment read in open court did not constitute information that was readily observable for insider trading purposes. Additionally, the court found that the information needed to be available in Australia before it could be considered readily observable. Based on these findings, the court held that the trial judge had erred in his interpretation of the term and accordingly upheld the appeal. The conviction was quashed and the matter was remitted to the Supreme Court of New South Wales for further consideration.

The High Court quashed the conviction of the appellant and remitted the matter to the Supreme Court of New South Wales for further consideration in light of the court's findings on the interpretation of "readily observable" information.

Orders