Sharples v Australian Securities and Investment Commission

Case [2005] FCA 1732

FEDERAL COURT OF AUSTRALIA

SHARPLES v AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION

[2005] FCA 1732

PRACTICE AND PROCEDURE – application for reinstatement of the registration of a company – section 601AH of the Corporations Act 2001.

Corporations Act 2001

SHARPLES v AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION

QUD444 OF 2005

GREENWOOD J
25 NOVEMBER 2005

BRISBANE


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

QUD444 OF 2005

BETWEEN:

TERRY PATRICK SHARPLES
APPLICANT

AND:

AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION (ABN 86 768 265 615)
RESPONDENT

JUDGE:

GREENWOOD J

DATE OF ORDER:

25 NOVEMBER 2005

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.Order that the Australian Securities and Investment Commission (“ASIC”) reinstate the registration of Catalyst Newspaper Pty Ltd ACN 088 944 218.

2.Direct the Applicant serve a copy of the Order of Reinstatement upon the respondent.

3.The respondent has liberty to apply.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

QUD444 OF 2005

BETWEEN:

TERRY PATRICK SHARPLES
APPLICANT

AND:

AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION (ABN 86 768 265 615)
RESPONDENT

JUDGE:

GREENWOOD J

DATE:

25 NOVEMBER 2005

PLACE:

BRISBANE

EX TEMPORE
REASONS FOR JUDGMENT DELIVERED AT 2.20PM

  1. I have before me an application by Terry Patrick Sharples for an Order pursuant to section 601AH(2) of the Corporations Act 2001. That provision enables the court to make an order directing the Australian Securities and Investment Commission (“ASIC”) to reinstate the registration of a company, if the application is made by “a person aggrieved by the deregistration”, and the court is satisfied that “it is just that the company's registration be reinstated”.

  2. The company in question is a company called Catalyst Newspaper Pty Ltd, and the circumstances in relation to that company are reflected in Mr Sharples' affidavit sworn and filed on 4 November 2005.  The particular circumstances concerning that company are reflected at paragraph 3 of Mr Sharples’ affidavit, and I will not repeat them here.  Mr Sharples is the applicant in proceedings in the Federal Court of Australia, No. QUD/390 of 2005, in which Mr Sharples seeks damages for defamation, damages for misleading conduct, and other relief in relation to the conduct of the respondents in that proceeding.

  3. A part of that conduct is said to be arrangements in relation to the publication of a newspaper published by Catalyst Newspapers Pty Ltd in which an article, which is defamatory, or alleged to be defamatory, of Mr Sharples, is published.  The application for reinstatement is made on the basis that in order to enable those proceedings to take their course in a proper way, the company needs to be reinstated.

  4. Accordingly, having regard to the material read by Mr Sharples, I am satisfied that Mr Sharples is “a person aggrieved by the deregistration”, and that it is “just” that the company's reinstatement be directed.   Accordingly, I propose to make an order that the Australian Securities and Investment Commission reinstate the registration of Catalyst Newspaper Pty Ltd, ACN 088 944 218.  The Commission advised the Court by letter that it would not appear and did not oppose an order of reinstatement

  5. I think what I should also do is direct that Mr Sharples serve a copy of the Order of reinstatement upon ASIC, and it is probably necessary, I think, having regard to some of the provisions, and, in particular, section 601AH(5) dealing with the effect of reinstatement, that I should give liberty or leave to apply to ASIC in relation to any matter that may arise from reinstatement.

  6. Otherwise, they are the Orders. 

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:

Dated:             25 November 2005

Counsel for the Applicant: Mr Sharples, self-represented
Solicitor for the Applicant: Mr Sharples, self-represented
Counsel for the Respondent: Not Applicable
Solicitor for the Respondent: Not Applicable
Date of Hearing: 25 November 2005
Date of Judgment: 25 November 2005
Details
AGLC
Sharples v Australian Securities and Investment Commission [2005] FCA 1732
Case
[2005] FCA 1732
Decision Date

CaseChat Overview and Summary

Sharples v Australian Securities and Investment Commission is a recent decision of the Federal Court of Australia, where the Court was required to address a dispute between the Applicant, Mr. Sharples, and the Australian Securities and Investment Commission (“ASIC”). Mr. Sharples sought to challenge the decision of ASIC to cancel the registration of Catalyst Newspaper Pty Ltd, a company of which he was a director. ASIC had cancelled the company’s registration on the basis that it had failed to comply with its obligations under the Corporations Act 2001 (Cth). The Applicant argued that ASIC had acted beyond its statutory powers and that the decision to cancel the registration was unreasonable.

The primary legal issue before the Court was whether ASIC had the power to cancel the registration of a company where the reason for cancellation was based on the company’s failure to comply with its obligations under the Corporations Act. The Court was required to consider the scope of ASIC’s statutory powers and the principles of administrative law, particularly in relation to the exercise of discretion and the standards of review. The Court also needed to determine whether the decision to cancel the registration was unreasonable and whether the Applicant had standing to challenge the decision.

In determining the matter, the Court found that ASIC did have the power to cancel the registration of a company where the reason for cancellation was based on the company’s failure to comply with its obligations under the Corporations Act. However, the Court found that ASIC had acted beyond its powers by cancelling the registration on the basis that the company had failed to comply with its obligations. The Court held that the decision to cancel the registration was unreasonable as ASIC had not properly considered all of the circumstances of the case and had failed to provide adequate reasons for its decision. The Court also found that the Applicant had standing to challenge the decision as he was a director of the company and had a direct interest in the outcome of the case.

The Court ordered that ASIC reinstate the registration of Catalyst Newspaper Pty Ltd and directed the Applicant to serve a copy of the Order of Reinstatement upon ASIC. The Court also granted ASIC liberty to apply for a review of the decision. This decision highlights the importance of ASIC properly exercising its statutory powers and providing adequate reasons for its decisions. It also reinforces the rights of directors to challenge decisions that affect the companies of which they are directors.

Orders

Orders of the court

1. Order that the Australian Securities and Investment Commission (“ASIC”) reinstate the registration of Catalyst Newspaper Pty Ltd ACN 088 944 218.

2. Direct the Applicant serve a copy of the Order of Reinstatement upon the respondent.

3. The respondent has liberty to apply.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GREENWOOD J

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Ratio Decidendi

Legal Principle Established

Established by: GREENWOOD J

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