ASIC v A.B.C. Fund Managers Ltd [2001] VSC 396 | Case summary

Supreme Court of Victoria|2001-10-15|Before: Warren J

The application is made, as I say, on the basis that the defendants fear the appeal would be rendered nugatory if the winding up order with respect to the first and third to sixth defendants is not stayed pending appeal against such order. The basis for the stay application is set out in an affidavit sworn in support of the application by one John Gianchino of 15 October 2001.

Mr Gianchino is a director and shareholder of the second defendant, Wharton Partners Pty Ltd. In my reasons for judgment in this proceeding [2001] VSC 383, I observed (at [11]) that Mr Gianchino owns 25 per cent of Wharton Partners Pty Ltd, the second defendant and is a consultant accountant at Wharton Partners, the firm. I observed, also, that ownership and control of the defendants and their related interests and the interests of Mr Gianchino are interconnected through cross-shareholdings. Mr Gianchino sets out a number of matters in his affidavit, including the disclosure of further cross-interests and shareholdings that were not revealed at trial. In particular, Mr Gianchino asserts in his affidavit, among other matters, to his belief that the winding up of the first and third to sixth defendants will cause "severe and irreparable damage to the trading activity and value of the business" of Wharton Partners Pty Ltd, the second defendant. He asserts, further, that the winding up of the fifth defendant, Tye Nominees Pty Ltd, "will have serious and irreparable consequences to its subsidiaries". The assertions are not substantiated.

Mr Gianchino did not give evidence during the course of the trial to the matters that are now the subject of assertions as set out in his affidavit. Indeed, the failure of Mr Gianchino to give evidence at trial was the subject of observations in the course of the reasons for judgment (paras [138], [140], [143]). Furthermore, I note that a number of matters are asserted by Mr Gianchino in the affidavit that could potentially have been the subject of evidence at trial and for reasons known best to the defendants, that evidence was not elicited. Indeed, failure to adduce such evidence or sufficient evidence was again the subject of observation in the course of the reasons published previously (paras [143], [144]).

Nevertheless, the defendants seek a stay for the reasons stated and undertakings are proffered. The undertakings proffered are the continuation of the undertaking given on 24 November 2000 not to conduct the subject trusts together with a further undertaking to assist the liquidator in the winding up of the relevant schemes. I am mindful of the fact that time has elapsed since the trial finished. I am mindful, also, that an undertaking to the effect of the first undertaking proffered has been in place since 24 November 2000. However, I am conscious of the fact that this is a matter that was extremely complex involving extensive evidence. I am further conscious that the ultimate findings that I have reached are findings of a serious nature.

With some hesitation I am satisfied in accordance with the usual principles, namely, that any appeal might otherwise be rendered nugatory, that it is appropriate that a short period of stay be granted to the defendants in all the circumstances. Accordingly on the basis of the undertakings proffered this day on behalf of the first and third to sixth defendants, I will stay the order for the winding up of those companies until 4 p.m. on 26 October 2001 or further order.

I turn now to consider an application on behalf of the first and third to sixth defendants to stay the proposed winding up order with respect to those defendants on the basis that any appeal with respect to the orders pronounced will be rendered nugatory in accordance with the usual principles: see Scarborough v Lew's Junction Stores P/L [1963] VicRp 20; [1963] VR 129, 130; Sun Alliance Insurance Ltd v Steiger, unreported judgment of the Full Court of the Supreme Court of Victoria dated 22 March 1985.

The Court of Appeal has observed that it may prove cumbersome if a trial judge makes orders that might tie the hands of the Court of Appeal with respect to a proposed appeal: see Coles Myer Ltd v Bowman [1995] VICSC 219; [1996] 1 VR 457, 460.

ASIC v A.B.C. Fund Managers Ltd