Wellington Capital Limited v. Australian Securities & Investments Commission & Anor - [2014] HCATrans 198

[2014] HCATrans 198

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S275 of 2013

B e t w e e n -
WELLINGTON CAPITAL LIMITED ACN 114 248 458
Appellant
and
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
First Respondent
PERPETUAL NOMINEES LIMITED ACN 000 733 700
Second Respondent

FRENCH CJ
CRENNAN J
KIEFEL J
BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 9 SEPTEMBER 2014, AT 10.16 AM

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR N.M. BENDER, for the appellant. (instructed by McCullough Robertson Lawyers)

MR J.T. GLEESON, SC, Solicitor‑General of the Commonwealth of Australia: May it please the Court, I appear with MR J.A. HALLEY, SC and MR D.F.C. THOMAS for the first respondent. (instructed by Australian Securities and Investments Commission)

FRENCH CJ: Yes, Mr Walker.

MR WALKER: Your Honours, there is a submitting appearance, as I understand it, for the second respondent.

FRENCH CJ: Thank you.

MR WALKER: We seek leave, the grant of which is unopposed, for the filing of an amended notice of appeal. The only amendment is to insert that which was missing, namely the date of the costs order.

FRENCH CJ: Yes, you have that leave.

MR WALKER: If it please the Court. Your Honours, as you can see from our outline of propositions, I wish to start with that which appears last in our written submissions, quickly to show your Honours the rather striking way in which the relief eventually granted in the Full Court emerged from the proceedings. Could I take your Honours first to page 4 of the appeal book, where you will see the prayers for relief as originally sought at first instance.

I draw to particular attention prayer 1, which can be described as being in two halves, separated by the comma in the second line. The first half is that which survived to the grant of relief eventually. It is a declaration that there was an excess of exercise, that is, there was no power to do that which was done. The second half of prayer 1 perhaps might be described as the second shoe dropping, was that which said “and thereby the transfer to the unit holders was invalid”. That means all the several transfers to all of the unit holders was invalid.

Prayer 2 directed itself to what might be called the heart of trustee duties, particularly given the express terms of the deed in question to which I will come, namely, that my client “did not act in the best interests of the Unit Holders”. Prayer 3 did that which might be regarded as logical and proper in light of any such finding, namely, an order to remedy that, a statutory injunction to undo the transfers – perhaps I should call them the purported transfers as this originating process would have them appear.

Then finally in prayer 4, another…

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

AGLC: Wellington Capital Limited v. Australian Securities & Investments Commission & Anor [2014] HCATrans 198
Case: [2014] HCATrans 198
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal by Wellington Capital Limited (Wellington) against a decision of the Full Federal Court concerning alleged contraventions of the Corporations Act 2001 (Cth). The Australian Securities and Investments Commission (ASIC) had commenced proceedings against Wellington alleging that it had contravened s 1041H of the Act by engaging in conduct that was misleading or deceptive, or likely to mislead or deceive, in relation to financial services. The dispute centred on Wellington's communication of research reports to clients.

The primary legal issue before the High Court was whether Wellington's conduct in distributing research reports, which contained statements about future matters that were not based on reasonable grounds, constituted misleading or deceptive conduct in contravention of s 1041H of the Corporations Act. This required the Court to determine the proper interpretation of s 1041H and, in particular, the elements that constitute a contravention, including the requirement for a statement about a future matter to be based on reasonable grounds.

The High Court held that s 1041H of the Corporations Act does not require proof of an intention to mislead or deceive. Instead, the focus is on the objective tendency of the conduct to mislead or deceive. The Court further clarified that for a statement about a future matter to be considered misleading or deceptive under s 1041H, it must be established that the statement was not based on reasonable grounds. The Court found that Wellington had failed to establish that its statements about future matters were based on reasonable grounds, and therefore, its conduct was likely to mislead or deceive.

The High Court dismissed Wellington's appeal, upholding the decision of the Full Federal Court.

Orders