ASIC v Sydney Investment House Equities Pty Ltd

LEGISLATION CITED : Supreme Court Rules 1970 Part 34 r 7 Uniform Civil Procedure Rules 2005 rr 29.9, 29.10(1)

Australian Securities and Investments Commission (P) Sydney Investment House Equities Pty Ltd (D1) Sydney Investment House Capital Ltd (D2) Edwin James Goulding (D3) Stephen Geagea (D4) PARTIES : Sydney Investment House Pty Ltd (D5) Sydney Investment House (Newcastle) Pty Ltd (D6) Sydney Investment House (Beaconsfield) Pty Ltd (D7) Melbourne Investment House Pty Ltd (D8) Melbourne Investment House (Hawthorn) Pty Ltd (D9) Melbourne Investment House (Collingwood) Pty Ltd (D10)

A J McInerney & D J Barnett (P) COUNSEL : In Person (D3) No other appearances

Kim Turner, Solicitor (P) SOLICITORS : In Person (D3) No other appearances

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2941/06 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v SYDNEY INVESTMENT HOUSE EQUITIES PTY LTD & ORS JUDGMENT 1 HIS HONOUR: This judgment concerns four matters that have been dealt with today in relation to these proceedings. 2 The first matter that was dealt with was as follows. Yesterday, Mr Olde, the liquidator, who was the last witness to give oral evidence in the plaintiff's case, finished his cross examination by the third defendant, Mr Goulding, and was shortly re examined by Mr McInerney, leading counsel for the plaintiff. This morning, Mr McInerney made four further tenders of documentary material and then announced that he closed the plaintiff's case. Upon his doing that the third defendant, who appears in person, announced that he made an application to the Court under r 29.9(1)(a) of the Uniform Civil Procedure Rules 2005 ("the UCPR"). Rule 29.9, as far as is relevant, provides as follows: "(1) A defendant in proceedings in which the plaintiff is the beginning party may apply to the court for an order: (a) for the dismissal of the proceedings, or (b) for the dismissal of the proceedings to the extent to which they concern any cause of action relevant to the plaintiff's claim for relief against that defendant, on the ground that, on the evidence given, a judgment for the plaintiff could not be supported.

(2) Such an application may be made at any time after the conclusion of the evidence for the plaintiff in his or her case in chief.

(3) The plaintiff may argue, or decline to argue, the question raised by the application.

(4) The court may not make an order under this rule unless the plaintiff argues the question raised by the application and the defendant satisfies the court that, on the evidence given, a judgment for the plaintiff could not be supported.

(5) If the plaintiff declines to argue the question raised by the application, or if the defendant fails to satisfy the court that, on the evidence given, a judgment for the plaintiff could not be supported, the defendant:

(b) may make an application under rule 29.10." 3 This rule superseded Part 34 r 7 of the Supreme Court Rules 1970 ("the SCR"). That rule replaced the common law principles as to a defendant's right to apply that a plaintiff be non suited. As under the common law, Part 34 r 7 was limited to proceedings on a common law claim, whereas r 29.9 of the UCPR extends the procedure to all claims in all courts in which the UCPR apply. 4 After the third defendant announced that he made an application under rule 29.9(1)(a), Mr McInerney rose and announced, pursuant to subr (3), that the plaintiff declined to argue the question raised by the application. 5 The courses that may be followed upon such an announcement are set out in subr (5). It was always taken under the common law rules as to non suits and, so far as I am aware, under SCR Part 34 r 7, that there was no avenue for the application to be argued if the plaintiff announced that it declined to argue the non suit. 6 The third defendant, however, has put to me that, despite the plaintiff's announcement that it declined to argue the non suit, the Court had a discretion to permit the non suit to be argued. This was based on the fact that the terms of subr (4) were that the Court, "may not make an order under this rule", unless the plaintiff argues the question raised, rather than, "must not make an order". The use of the word "may", it was submitted, confers on the Court a discretion to that effect. 7 There are two things to be said about that. The first is that, whilst the matter might be clearer if the word "must" rather than the word "may" were used in subr (4), the language of the rule would have to be tortured for the rule to be treated as conferring on the Court any such discretion. This is particularly so, in view of the fact that subr (5) sets out, it would seem to me, exhaustively, the courses that may be followed if the plaintiff declines to argue the question. 8 Secondly, if there were any ambiguity in the rule, which I think there is not, the rule could be considered in the light of its history, traced back through SCR Part 34 r 7, to the common law relating to non suits. It was quite clear in the predecessor law that there was no discretion in the Court to permit argument where the plaintiff declined to argue the question. I cannot see any indication in the terminology of r 29.9 that would indicate that there was any intention to alter the law in the fashion claimed upon r 29.9 replacing Part 34 r 7. I, therefore, rule that no discretion is conferred on the Court by r 29.9, under which the Court could permit argument of the question raised in the face of the plaintiff's declining to argue it. 9 After it was made plain to the third defendant that the courses available to him were the two courses spelt out in r 29.9(5), the third defendant announced that he made an application to the Court under r 29.10(1). The application that he made was framed as an application for judgment for the third defendant generally, on the ground that, on the evidence given, a judgment for the plaintiff could not be supported. 10 After announcing that that application was made, the third defendant applied for the matter to be adjourned from today and tomorrow to the next day fixed for hearing, which is 4 August 2008, so that he might have time to prepare his submissions on his r 29.10(1) application. The second matter with which I deal in this judgment is a determination of that adjournment application. 11 The third defendant announced that his application for adjournment was made, essentially, on two grounds. The first was that he was not prepared to argue the r 29.10(1) application today. In order to prepare his submission, he needs to go through a thousand pages of transcript and a large volume of affidavits and exhibits. 12 The second ground on which he makes the application is that of his physical and mental state, said to flow from pain he is suffering in the neck. In support of this second ground, he tendered a report of Dr David J Evans, whom he had seen earlier this morning. That was a very short report which, on its face, depended entirely on matters related to Dr Evans by the third defendant and in which the doctor did not express a view as to the extent to which any condition from which the third defendant was suffering would impinge upon his ability or fitness to continue immediately with the trial. I rejected the tender. 13 Upon Dr Evans' report being rejected as containing no relevant material, the third defendant went into the witness box and gave oral evidence on the adjournment application. It was to the effect that he suffers from time to time symptoms arising from a neck condition, which include nausea and pain. The symptoms tend to be brought on by his standing or sitting for protracted periods, both of which he has, of course, been doing in the course of participating in this trial. It is to be noted that yesterday, for the first time in the trial, he complained of suffering from neck pain. 14 The third defendant was allowed to be cross examined on this subject matter by Mr McInerney who, in short, put it to him that the real reason for the application for adjournment was to obtain advice from other people concerning his submissions and that the complaint of neck pain was fabricated for the purposes of the application. These propositions the third defendant denied. 15 I am not prepared, at this time, to make a finding that the third defendant's complaints of neck pain are fabricated or that that pain is non existent. I am unable to assess the degree to which it impinges on him, although I am well aware that back and neck pain generally can be very debilitating. I do not need to say more than that, because it seems to me that, quite apart from the neck pain as a factor in favour of an adjournment, an adjournment is fully justified upon the first ground that the third defendant put forward, of not being prepared to make his submission immediately and of needing time to prepare it. 16 Mr McInerney has submitted to me that the application under r 29.10(1) is so lacking in merit and so unlikely to succeed that an adjournment, even, effectively, for only a day and a half of trial time, is totally wasted and should not be allowed. 17 I am not prepared, without receiving the third defendant's submission, to make that ruling. Whilst there may well be some force in Mr McInerney's submission that, the application, being for judgment in the third defendant's favour on the whole of the plaintiff's case, may be difficult to substantiate, I believe I should hear the third defendant's considered submission before making that ruling. 18 There was also a submission from Mr McInerney that the third defendant should have been preparing for this application whilst the trial has been going on for some 15 days up to and including today. I do not think that that is a very realistic submission. 19 In determining the adjournment application, a number of things must be borne in mind. First, what will be lost, as things turn out, is less than a day and a half in a trial that is likely to take some 20 days or more. 20 Another is that I have this week been able to assign two weeks in addition to the two weeks already fixed for the continuation of the trial, so that there seems to be no risk of the trial not finishing in the time assigned. 21 Thirdly, it is correct, as the third defendant states, that he must traverse some thousand pages of transcript, affidavits and exhibits, in order to prepare his submission. 22 Fourthly, I must bear in mind that the third defendant has to date conducted the trial on his own behalf. He has striven valiantly in doing so, although it is a daunting task for a litigant in person to conduct a case of the size, difficulty and complexity of the present case. I should not be surprised, if the application were made by counsel, if counsel asked me for a day to assemble the material necessary to make the application. If counsel told me that he or she needed that, I should certainly accept that assertion. 23 Fifthly, the suggestion has been raised that the r 29.10(1) application should be conducted wholly on written submissions and it seems to me that there is merit in that course. As a six week adjournment is coming up, the submissions can be prepared during that time and that will mean that time in court will be saved. I propose to give directions to that effect. 24 Sixthly, it may be that, if the defendant (and I decline to rule this out) is in some pain and discomfort as a result of neck symptoms, that may be an additional reason for allowing the adjournment, but the necessity to prepare an orderly submission is, of itself, sufficient to justify the application, which I intend to grant. The proceedings will be adjourned to 4 August 2008 at 10am before me part heard. 25 The third matter that I propose to deal with in these reasons for judgment is the question of interlocutory relief. On 6 December 2007, I granted to the plaintiff interlocutory relief in relation to the third defendant up to and including 13 December 2007. On 13 December 2007, that relief was continued until 13 June 2008. 26 It escaped the plaintiff's attention until yesterday or today that that interlocutory relief had expired. I believe the reason for this is that there was debate at the time of the grant of extension of the relief as to whether it should be extended, not to a finite date, but until the determination of the proceedings. It had wrongly lodged in the plaintiff's mind that it was in that form that the relief had been granted. 27 The plaintiff has now asked that that relief be granted until the determination of the proceedings. I propose to grant that relief now, up to and including the day on which judgment in the proceedings is delivered. 28 The third defendant has not opposed this, except that he has asked for an additional exception to order 1(c) of 6 December 2007, to permit the third defendant to do acts as a director of Boston Sterling Pty Ltd in relation to the sale of the company. The plaintiff takes no objection to that additional exception being included in the relief. 29 The third defendant, at one stage, asked that an undertaking as to damages be required, although, that was at a time before it was plain that he would have the benefit of the additional exception in relation to acts as a director of Boston sterling Pty Ltd. In any event, I propose not to require an undertaking as to damages, as I did not previously require one. This is on the basis that the plaintiff, in pursuing these proceedings and obtaining interlocutory relief during their course, is a public body carrying out its public duties. 30 I shall, therefore, grant injunctive relief in the form that I have indicated and note that an undertaking as to damages is not required. 31 The fourth matter intended to be dealt with in these reasons for judgment is the location of about 30 boxes of documents brought into Court. They were originally delivered to Mr Olde, who is the liquidator of companies in the Sydney Investment House Group and the receiver of various relevant trusts, in his capacity as liquidator and receiver. Present in Court are about 30 of about 40 boxes that fall into this category. They were brought to Court and delivered into the custody of the Court by Mr Olde for the purposes of the proceedings and have since remained in Court, where both sides have been able to have access to them. 32 At one stage, I was considering making arrangements for them to remain in the Court House during the adjournment so access could continue. However, as the exercise that the third defendant will be carrying out is an exercise involving a review of the affidavits, transcript and exhibits in the case, it seems to me there is no need for the boxes to continue to be available at the moment and Mr Olde requests that they be returned to him. I shall be glad if the Court does not have the responsibility of storing and securing them. 33 I, therefore, propose that they be released to Mr Olde, upon the understanding that they will be produced by him again to the Court during the continuation of the proceedings, as required, and I shall make a direction accordingly. 34 I shall reserve the costs of the adjournment.

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