Astra Resources PLC v Australian Securities and Investments Commission

REASONS FOR JUDGMENT 1 This is an application by the respondent to an appeal for a stay of the appeal until the balance of the claims made at first instance are determined. 2 The respondent is the Australian Securities and Investments Commission ("ASIC") and it seeks an order in the following terms: Pursuant to sections 20 and 23 of the Federal Court of Australia Act 1976 and Rule 1.32 of the Federal Court Rules 2011, the proceedings be stayed until the Court in proceeding No SAD94 of 2014 has determined paragraphs 3 to 8 of the Further Amended Originating Process filed on 21 September 2015. 3 The appellants are Astra Resources PLC, Mr Jaydeep Biswas and Ms Silvana De Cianni. On 2 November 2015, an order was made in the United Kingdom High Court of Justice that Astra Resources PLC be wound up. The company did not oppose the present application and, as I understand it, it is uncertain whether it will pursue its appeal. When I refer to the appellants, I am referring to Mr Biswas and Ms De Cianni. They oppose ASIC's application. 4 ASIC's application is supported by three affidavits of Mr Christopher Charles Rowe who is a legal practitioner employed by ASIC. 5 The appellants appeal from the orders made by the Honourable Justice White on 14 September 2015 in proceeding No SAD 94 of 2014 (Australian Securities and Investments Commission v Astra Resources PLC [2015] FCA 759). On that day, the primary judge made a number of declarations involving Astra Resources PLC and the second defendant to the proceeding at first instance, Astra Consolidated Nominees Pty Ltd. No substantial orders were made at that stage against the third and fourth defendants who are the second and third appellants in the appeal. His Honour made an order that the hearing of the remaining issues in the trial was to take place on 28 October 2015 with three days set aside. 6 ASIC filed a Further Amended Originating Process on or about 21 September 2015 pursuant to leave granted by White J on 14 September 2015. Of present relevance is the fact that ASIC seeks (and has done from the outset) an order under s 206E of the Corporations Act 2001 (Cth) that each of the second and third appellants be disqualified from managing corporations for such period as the Court considers appropriate. One of the issues under that section is whether the person took reasonable steps to avoid the contravention by the company. 7 The hearing of the remaining issues in the proceeding was in fact conducted on 30 November 2015 and 1 December 2015, and the primary judge has reserved his decision. 8 The appeal is presently listed for hearing before the Full Court of this Court on 3 March 2016 with two days set aside. 9 Mr Rowe states in his first affidavit on the application that ASIC seeks a stay of the appeal until all remaining issues in proceeding No SAD 94 of 2014 have been determined, "so that the totality of issues agitated on appeal from the orders made by the Court in that proceeding will be determined in one proceeding, thereby avoiding fragmentation and the attendant increased costs and resources associated with separate proceedings". The argument before me proceeded on the basis that the appellants have standing to appeal against the declarations made by the primary judge, even though the orders which are the subject of the appeal are declarations made against the corporate respondents. 10 The Notice of Appeal contains a number of grounds, including a challenge to certain factual findings made by the judge. They include a challenge to the following: … v. [Astra Resources] did not need independent legal advice with respect to [Astra Consolidated Nominees] as [Astra Consolidated Nominees] was owned and operated by [Mr Barry Meerkin] and Lenice Lim a solicitor in the employ of Michael Sing Lawyers. … w. [Mr Meerkin] did not provide advice on section 708 as [Mr Biswas] did seek advice as [Astra Consolidated] was holding shares in [Astra Resources]. y. [Mr Biswas and Ms De Cianni's] first knowledge of an error by [Mr Meerkin] was in March 2013 when [Mr Biswas] contacted [Mr Meerkin] in relation to an audit by KPMG. … 11 These grounds are not entirely clear in terms of what they assert, particularly ground w. It is clear that the role of the fifth defendant at trial (Mr Meerkin) is in issue. At the recent hearing, the role of the fifth defendant was addressed in the appellants' evidence (second appellant) and submissions. 12 The appellants opposed the application on a number of grounds which are set out in their written submissions. Two of their major points were that ASIC's submissions depend on a number of "hypothetical" points which may or may not eventuate and that ASIC itself is responsible for a two-stage hearing because that is how it urged the primary judge to approach the matter. 13 Had this matter turned only on general considerations such as the costs of two hearings as opposed to one and the fragmentation of the proceedings, then I would have concluded that the relevant matters are fairly evenly balanced. However, to my mind the decisive consideration in favour of a stay is that the appellants invite the Full Court to examine the factual matters referred to above. That is in a context where it is likely that the primary judge will again consider the significance of these findings perhaps with further or additional evidence. It is not a matter of the primary judge revisiting his findings, but rather that he will put those findings in a particular context for the purpose of answering the questions before him. If there was a second appeal, then the Full Court might again be asked to consider the findings of fact in their particular context or related findings of fact. That would be undesirable. 14 The order and direction I will make are as follows: (1) The Court orders that the appeal be stayed under further order. (2) The Court directs that the hearing dates for the appeal, being 3 and 4 March 2016, be vacated. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.