Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 | Case summary

What happened

ASIC commenced extensive civil penalty proceedings in the New South Wales Supreme Court against former One.Tel officers John David Rich (first defendant) and Mark Alan Silbermann (fourth defendant). The proceedings were brought under the Corporations Act and alleged, principally, contraventions of the statutory duty of care and diligence (see the Catchwords and the Table of Contents, especially chapter 23, 'DUTY OF CARE AND DILIGENCE AND THE BUSINESS JUDGMENT RULE'). The trial was extraordinarily long and multi-sited, with hearing dates recorded across 2004–2007 and even a London hearing in 2005 (see 'Hearing Date(s)').

Following the trial, Austin J delivered reasons for judgment on 18 November 2009. The operative outcome is succinctly recorded: "Judgment to be entered for the first and fourth defendants." The Court's reasons traverse factual findings about One.Tel's business, management, finances and share price (chapters 4–21), procedural and evidentiary issues (chapters 2–3), and legal analysis of the statutory duty and related doctrines (chapter 23). The Court concluded that ASIC had not established its civil penalty case against the named defendants.

Why the court decided this way

The judgment engages two intertwined strands that lead to the verdict for the defendants: the application of the statutory standard (what s 180 requires in the facts of this case) and the sufficiency and character of the plaintiff's evidence.

Statutory standard and business judgment rule (see chapter 23). The Court examined the content of the directors' duty of care and diligence set out in s 180, and analysed how that standard operates when applied to decisions made by officers of a complex, international corporate group over months. The business judgment rule and authorities about the standard of care for company officers were considered as part of assessing whether the defendants' conduct fell below the statutory standard.
Evidence and proof (see Catchwords and chapters 2–3). ASIC bore the onus of proving contraventions on the balance of probabilities; where allegations are serious or potentially stigmatic, Briginshaw-type caution is relevant. The Court specifically addressed the operation of evidentiary rules and doctrines usually invoked in civil and regulatory contexts, including Blatch v Archer, Jones v Dunkel and Browne v Dunn (see Catchwords and Cases Cited). The Court assessed the plaintiff's evidence in light of those principles and found the proofs wanting for the purposes of establishing breaches of s 180.
Pleadings and particulars. Given the scale and complexity of the proceedings, the Court was attentive to whether ASIC was running an unpleaded case or had failed to particularise material allegations, which affects fairness to defendants and can be material to the weight the Court gives to contested evidence (see Catchwords: 'PLEADINGS ... unpleaded case and lack of particulars').

Taken together, the Court's factual conclusions about One.Tel's management and finances across the relevant period (see the chapters dealing with 1995–2001 and the month-by-month chapters for 2000–2001) and its application of legal principles to that evidence led to the conclusion that ASIC had not carried its case.

Before and after state of the law

Before this judgment the applicable legal architecture included a developed line of authorities concerning directors' duties (for example Daniels v Anderson and later authorities), well-established evidentiary principles in civil contexts (Briginshaw, Jones v Dunkel, Browne v Dunn) and disputes about how the business judgment rule operates with s 180. This judgment applies those established principles in the setting of a large, factually complex, commercial case and clarifies how cautious evidentiary assessment and pleading requirements inform civil penalty claims against officers.

After this decision (and as expressed in its reasons), practitioners and courts can observe a concrete example of the Court's approach where a regulator pursues civil penalties against senior officers: a careful, fact-specific application of s 180 in the context of extensive documentary and testimonial evidence; rigorous application of Briginshaw caution; and insistence on adequate pleadings and particulars. The decision illustrates the limits of inferring breaches from corporate failure alone, emphasising the need for focused proof of director misconduct or want of care.

Key passages with plain-English translation

The authoritative dispositive statement:

"Judgment to be entered for the first and fourth defendants."
- Plain English: The Court has dismissed ASIC's case against Mr Rich and Mr Silbermann and ruled in their favour.

The legal themes in the Catchwords:

"statutory duty of care and diligence - standard of care - duty of skill - whether res ipsa loquitur applicable - scope of 'business judgment rule'"
- Plain English: The judgment examines what the law requires of company officers, whether the court can infer fault simply because the company failed (res ipsa loquitur), and how the business-judgment protection might apply to decisions made by directors.
"onus and standard of proof in civil penalty proceedings - rules in Blatch v Archer, Jones v Dunkel and Browne v Dunn in civil penalty proceedings - duty of fairness of regulator as plaintiff in civil penalty proceedings"
- Plain English: The Court stresses that ASIC, as the plaintiff, must prove alleged breaches in civil penalty proceedings, paying attention to recognised evidence rules, and must conduct the case fairly.

Where the judgment discusses One.Tel's finances month-by-month (see chapters 8–17), the Court is translating volume evidence into concrete findings about cashflow, creditor pressure, provisioning and the decision environment in which the officers acted. Plain English: the Court reconstructed the operational and financial context in which directors made choices, and judged those choices against statutory standards.

What fact patterns trigger this precedent

This judgment is most relevant where:

A regulator asserts civil penalty claims against senior corporate officers for alleged breaches of s 180 arising from company financial stress or failure during a defined period (particularly where financial deterioration is alleged to have occurred over months rather than isolated incidents).
The proceedings are document-heavy and rely on complex factual reconstructions of corporate group finances, liquidity positions, provisioning and creditor/debtor treatment.
The plaintiff's case depends on inferences from corporate outcomes rather than direct evidence of want of care, and where issues of pleading particularity and fairness are contested.
The defendant relies on decision-process evidence, advice received, and the business judgment rule as part of the defence.

In those fact patterns, the Court's approach in this judgment will be engaged: careful evaluation of documentary and testimonial proof; application of Briginshaw caution; scrutiny of pleadings; and clear attention to what the statutory standard of care requires in practical, often commercial, contexts.

How later courts have treated it

This judgment forms part of a broad jurisprudence dealing with directors' duties and civil enforcement by ASIC. The published metadata lists numerous related decisions and authorities the Court considered (see the Cases Cited and the multiple prior and subsequent ASIC v Rich entries). The decision is consistent with an established approach that requires robust proof before imposing civil penalties on officers and that applies evidentiary rules appropriately in regulatory civil litigation. Readers should look to subsequent appellate treatments and citations of Austin J's reasons for the precise way later courts have relied on or distinguished aspects of this judgment, in particular on the assessment of evidentiary sufficiency and the application of the business judgment rule in s 180 contexts.

Still-open questions

Several issues remain areas for careful attention in future cases:

The exact contours of how the business judgment rule interacts with s 180 in prolonged, multi-month financial deterioration. While this judgment applies the rule in context, doctrinal tensions remain about its limits when systemic financial decline is alleged.
The precise circumstances in which a tribunal may draw adverse inferences under Jones v Dunkel in large, document-rich regulatory cases. The judgment applies classic evidentiary rules but does not convert absence of evidence into culpability without care.
The application and possible limits of res ipsa loquitur-type reasoning in corporate governance contexts. The Court in this matter was cautious about allowing outcome-based inferences to substitute for affirmative proof of deficient conduct.
How procedural obligations of regulators (particularity, fairness) should be operationalised in future long, complex civil penalty matters, particularly where new categories of documentary or overseas evidence (e.g. international group dealings) arise.

Practitioners handling similar cases should be prepared to address these open questions in pleadings, evidence strategies and submissions about the standard and burden of proof.

This deep dive has been prepared from the uploaded judgment metadata, the table of contents and the judgment's catchwords and decision line. It summarises the structure, legal themes and practical implications of Austin J's reasons in Australian Securities and Investments Commission v Rich [2009] NSWSC 1229.

This is general legal information, not legal advice. I can make mistakes. Before you act on this, rely on it, or use any draft or summary extracted here, get a qualified Australian lawyer to check it.

Judgment (13 paragraphs)

[1]

Reported Decision : 75 ACSR 1 236 FLR 1

[2]

CITATION : Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 This decision has been amended. Please see the end of the judgment for a list of the amendments.

[3]

HEARING DATE(S) : 6 - 8, 13 - 17, 20 - 23, 29 - 30 September 2004, 5 - 8, 11 - 15, 18 - 20, 25 - 29 October 2004, 1 - 5, 8 - 10, 12, 15 - 18, 22 - 25, 29 - 30 November 2004, 1 - 2, 7, 14 - 15 December 2004, 31 January 2005, 4, 7, 16, 28 February 2005, 7 - 8, 10 - 11, 21 - 23, 30 March 2005, 5 - 7, 18 April 2005, 2, 5, 11, 16 - 20,23 - 24, 27 May 2005, 15 - 16, 20 - 22 June 2005, 4 - 5, 7 - 8, 11 - 15, 25 - 26 July 2005, 8 - 9, 11 August 2005; 26 - 29 September 2005, 4 - 7, 10 - 11, 14, 17 - 21, 25 - 28, 31 October 2005, 1, 3 - 4, 9 - 10, 14 - 18, 22 - 24, 28, 30 November 2005, 1 -2, 5 - 6, 8 - 9, 12 - 13, 16 December 2005, 30 January 2006, 1 - 2, 6 - 9, 13 February 2006, 5 April 2006, 2, 13 - 16, 19 - 22, 26 - 29 June 2006, 3 - 6, 10 - 13, 17 - 18, 20, 24 - 26, 28 July 2006, 1 - 3, 7 - 9, 14, 17, 21 - 23, 28 - 31 August 2006, 1, 4 - 7, 11 - 13, 15, 18, 20 - 21, 27 November 2006, 5 - 6, 14 - 15 February 2007, 30 March 2007, 21 May 2007, 6 - 8, 20 - 21 August 2007 London hearing 24 - 26, 30 - 31 August 2005, 1 - 2, 5 - 6 September 2005

[4]

DECISION : Judgment to be entered for the first and fourth defendants

[5]

CATCHWORDS : CORPORATIONS - civil penalty proceedings - statutory duty of care and diligence - standard of care - duty of skill - whether res ipsa loquitur applicable - scope of "business judgment rule" - application of statutory standard to financial management of large international corporate group over a period of months - PRACTICE AND PROCEDURE - pleadings - principles regarding unpleaded case and lack of particulars - application to complex pleading and long trial - EVIDENCE - onus and standard of proof in civil penalty proceedings - rules in Blatch v Archer, Jones v Dunkel and Browne v Dunn in civil penalty proceedings - duty of fairness of regulator as plaintiff in civil penalty proceedings

[6]

Civil Procedure Act 2005 (NSW), ss 14, 56, 57, 58, Sch 6 Corporations Act 2001 (Cth), ss 5, 180, 206C, 1305, 1317G, 1317H, 1317L, 1399, 1400 LEGISLATION CITED : Corporations Law, ss 232, 1317EA, 1317ED, 1317FA Evidence Act 1995 (NSW), s 140 Judiciary Act 1903 (Cth), ss 55ZF, 55ZG, 55N Uniform Civil Procedure Rules (NSW), rr 14.7, 15.1

[7]

Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) (2006) 67 NSWLR 341; [2006] NSWCA 282 Adler v ASIC (2003) 46 ACSR 504; [2003] NSWCA 131 Adler v Director of Public Prosecutions (2004) 185 FLR 443; [2004] NSWCCA 352 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568; [2005] HCA 26 Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 Apollo Shower Screens Pty Ltd v Building & Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 Applicant Veal of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88; [2005] HCA 72 Arnotts Ltd v Trade Practices Commission (1990) 97 ALR 555 ASIC v Adler (2002) 41 ACSR 72; [2002] NSWSC 171 ASIC v Doyle (2001) 38 ACSR 606; [2001] WASC 187 ASIC v Loiterton [2004] NSWSC 172 ASIC v MacDonald (2008) 68 ACSR 126; [2008] NSWSC 995 ASIC v Macdonald (No 11) (2009) 71 ACSR 368; [2009] NSWSC 287 ASIC v Maxwell (2006) 59 ACSR 373; [2006] NSWSC 1052 ASIC v Plymin (2003) 46 ACSR 126; [2003] VSC 123 ASIC v Plymin (No 1) (2003) 21 ACLC 700; [2003] VSC 123 ASIC v Rich (2003) 44 ACSR 341; [2003] NSWSC 85 ASIC v Rich (2003) 44 ACSR 682; [2003] NSWSC 186 ASIC v Rich (2005) 188 FLR 416; [2005] NSWSC 62 ASIC v Rich (2005) 53 ACSR 752; [2005] NSWSC 417 ASIC v Rich [2004] NSWSC 467 ASIC v Rich [2005] NSWCA 152 ASIC v Rich [2005] NSWSC 1187 ASIC v Rich [2005] NSWSC 149 ASIC v Rich [2005] NSWSC 417 ASIC v Rich [2005] NSWSC 471 ASIC v Rich [2005] NSWSC 489 ASIC v Rich [2005] NSWSC 491 ASIC v Rich [2005] NSWSC 62 ASIC v Rich [2005] NSWSC 650 ASIC v Rich [2005] NSWSC 706 ASIC v Rich [2005] NSWSC 939 ASIC v Rich [2005] NSWSC 940 ASIC v Rich [2005] NSWSC 999 ASIC v Rich [2006] NSWSC 266 ASIC v Rich [2006] NSWSC 712 ASIC v Rich [2006] NSWSC 826 ASIC v Rich [2007] NSWSC 39 ASIC v Vines (2003) 48 ACSR 282; [2003] NSWSC 995 ASIC v Vines (2003) 48 ACSR 322; [2003] NSWSC 1116 ASIC v Vines (2005) 55 ACSR 617; [2005] NSWSC 738 ASIC v Vines (2006) 58 ACSR 298; [2006] NSWSC 760 Australian Competition and Consumer Commission v Australian Safeway Shores Pty Ltd (2001) 119 FCR 1; [2001] FCA 1861 Australian Postal Commission v Hayes (1989) 87 ALR 283 AWA Ltd v Daniels (1992) 7 ACSR 759 Baker v Campbell (1983) 153 CLR 52; [1983] HCA 39 Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664 BHP Pty Co Ltd v Mason (1996) 67 SASR 456 Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Bristol and West Building Society v Mothew [1998] Ch 1 Browne v Dunn (1893) 6 R 67 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Cashflow Finance Pty Ltd (in liq) v Westpac Banking Corporation [1999] NSWSC 671 CEO of Customs v Labrador Liquor Wholesale (2003) 216 CLR 161; [2003] HCA 49 Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2004) 216 CLR 161; [2003] HCA 49 Clarkson v DPP [1990] VR 745 Clayton Robard Management Ltd v Siu (1988) 6 ACLC 57 Colgate Palmolive Company v Cussens Pty Ltd (1993) 118 ALR 248; (1993) 46 FCR 225 Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Limited (1991) 22 NSWLR 389 Commonwealth Bank of Australia v Friedrich (1991) 5 ACSR 115 Consolidated Constructions Pty Ltd v The Satellite Group Ltd [2000] NSWSC 984 Cubillo v Commonwealth (2000) 103 FCR 1; [2000] FCA 1084 Customs and Excise Commissioners v A [2003] 2 All ER 736 Daniels v Anderson (1995) 16 ACSR 607; (1995) 37 NSWLR 438 Daniels v Anderson (1995) 37 NSWLR 438; (1995) 16 ACSR 607 Darbyshire v Leigh [1896] 1 QB 554 Davy v Garrett (1878) 7 Ch D 473 Deangrove Pty Ltd (recs and mgrs apptd) v Buckby (2006) 56 ACSR 630; [2006] FCA 212 Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 Digi-Tech (Aust) Ltd v Brand (2004) 62 IPR 184; [2004] NSWCA 58 Donoghue v Stevenson [1932] AC 562 Downey v Crawford (2004) 51 ACSR 182; [2004] FCA 1264 Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 Dyers v The Queen (2002) 210 CLR 285; [2002] HCA 45 East-West Airlines (Operations) Ltd v Commonwealth of Australia (1983) 57 ALJR 783 Edingbay Pty Ltd v Horwath (Vic) Pty Ltd [1999] VSC 317 Fabre v Arenales (1992) 27 NSWLR 437 Florins v The Bank of Victoria Ltd (1891) 17 VLR 183 Francis v United Jersey Bank 432 A 2d 814 (NS 1981) Glover v Australian Ultra Concrete Floors [2003] NSWCA 80 Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers [2006] QCA 335 Goldberg v Ng (1995) 185 CLR 83; [1995] HCA 39 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 Greek Herald Pty Ltd v Nikolopoulos (2002) 54 NSWLR 165; [2002] NSWCA 41 Hampton Court Ltd v Crooks (1957) 97 CLR 367; [1957] HCA 28 He Kaw Teh v R (1985) 157 CLR 523; [1985] HCA 43 Hedley Byrne v Heller [1964] AC 465 CASES CITED : Helton v Allen (1940) 63 CLR 691 [1940] HCA 20 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 Hillier v Lucas [2000] SASC 331 Hksar v Lee Ming Tee [2004] 1 HKLRD 513 Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 In re Abbott Laboratories 325 F.3d 795 (7th Circ, 2003) In re WorldCom, Inc Securities Litigation 346 F.Supp.2d 628 (S.D.N.Y. 2004) Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 JPQS Pty Ltd v Cosmarnan Constructions Pty Ltd [2003] NSWCA 66 Kingham v Cole (2002) 190 ALR 679; [2002] FCA 45 Kioa v West (1985) 159 CLR 550; [1985] HCA 81 Knight v Maclean [2002] NSWCA 314 Koheler v Cerebos (Australia) Ltd (2005) 222 CLR 44; [2005] HCA 15 Liberato v R (1985) 159 CLR 507; [1985] HCA 66 Macdonald v ASIC (2007) 65 ACSR 299; [2007] NSWCA 304 Manly Council v Byrne [2004] NSWCA 123 McCall v Scott 239 F 3d 808 (6th Circ 2001); Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333; [1912] HCA 69 Minister for Immigration & Multicultural Affairs v B (2000) 105 FCR 304 Mulligan v Coffs Harbour City Council (2005) 223 CLR 486; [2005] HCA 63 MWJ v The Queen (2005) 80 ALJR 329; [2005] HCA 74 National Australia Bank Ltd v Rusu (1999) 47 NSWLR 309; [1999] NSWSC 539 National Companies and Securities Commission v News Corp Ltd (1984) 156 CLR 296; [1984] HCA 29 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66 Nowlan v Marson Transport Pty Ltd (2003) 53 NSWLR 116; [2001] NSWCA 346 O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1; [1983] HCA 12 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Overend & Gurney Co v Gibb & Darby (1872) LR 5 HL 480 Pacific National (ACT) Ltd v Queensland Rail (2005) 215 ALR 544; [2005] FCA 535 Palmer v Dolman [2005] NSWCA 361 Patrick v Capital Finance Pty Ltd [2003] FCA 206 Payne v Parker [1976] 1 NSWLR 191 People's Department Store Inc v Wise [2004] 3 SCR 461 Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 Permanent Building Society v Wheeler (1994) 11 WAR 187 R v Birks (1990) 19 NSWLR 677 R v Chin (1985) 157 CLR 671; [1985] HCA 35 R v Leyland Justices; ex parte Hawthorn [1979] QB 283 R v Lucas [1973] VR 693 R v Manunta (1989) 54 SASR 17 R v Mills [1998] AC 382 R v Reardon (No 2) [2004] NSWCCA 197 R v Ward [1993] 1 WLR 619 Rales v Blasband 634 A.2d 927 (Del 1993) Re B (Children) (Sexual Abuse: Standard of Proof) [2008] 3 WLR 1; [2008] UKHL 35 Re City Equitable Fire Insurance Company Ltd [1925] Ch 407 Re Coles & Ravenshear [1907] 1 KB 1 Re Dawson (dec' d); Union Fidelity Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 Re Moline and Comcare [2003] AATA 827 Reid v Kerr (1974) 9 SASR 367 Rich v ASIC (2004) 220 CLR 129; [2004] HCA 42 Rich v ASIC [2003] NSWCA 342 Rishmawi v Minister for Immigration and Multicultural Affairs [1977] FCA 611 Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18 Sali v SPC Ltd (1993) 67 ALJR 841; [1993] HCA 47 Schellenberg v Tunnel Holdings (2000) 200 CLR 121; [2000] HCA 18 SCI Operations Pty Ltd v Commonwealth (1996) 69 FCR 346 Scott v Handley [1999] FCA 404 Seneviratne v R [1936] 3 All ER 36 Seven Network Ltd v News Ltd [2007] FCA 1062 Shalhoub v Buchanan [2002] NSWSC 99 Shaw v R (1952) 85 CLR 365; [1952] HCA 18 Silvia v Commissioner of Taxation [2001] NSWSC 562 Smith v Samuels (1976) 12 SASR 573 Smith v Van Gorkom 488 A.2d 858 (Sup Ct Del, 1985) South Australia v Marcus Clark (1996) 19 ACSR 606; (1996) 14 ACLC 1019 State of Queensland v JL Holdings (1997) 189 CLR 146; [1997] HCA 1 The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 The Duke Group Ltd (in liq) v Pilmer (1994) 15 ACSR 255; (2006) SASR 364 The Queen v Apostilides (1984) 154 CLR 563; [1984] HCA 38 Thomas Witter v TBP Industries Ltd [1996] 2 All ER 573 Timbs v Shoalhaven City Council (2004) 132 LGERA 397; [2004] NSWCA 81 Trade Practices Commission v Legion Cabs (Trading) Co-operative Society Ltd (1978) 35 FLR 372 Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69 Trevitt v NSW Tafe Commission [2001] NSWCA 363 Trust Co of Australia v Perpetual Trustees WA Ltd (1997) 42 NSWLR 237 Unioil International Pty Ltd v Deloitte Touche Tomatsu (A Firm) (1997) 17 WAR 98 Vairy v Wyong Shire Council (2005) 223 CLR 422; [2005] HCA 62 Vines v ASIC (2007) 62 ACSR 1; [2007] NSWCA 75 Vines v ASIC (2007) 63 ACSR 505; [2007] NSWCA 126 Vines v ASIC [2007] NSWCA 75 Vrisakis v Australian Securities Commission (1993) 11 ACSR 162; (1993) 9 WAR 395 Watson v Foxman (2000) 49 NSWLR 315 Wentworth v Rogers [1999] NSWCA 403 White v Overland [2001] FCA 1333 Whitehorn v The Queen (1983) 152 CLR 657; [1983] HCA 42 Whitlam v ASIC (2003) 57 NSWLR 559; 46 ACSR 1; [2003] NSWCA 183 Williams v Keelty (2001) 111 FCR 175; 184 ALR 411 Wyong Shire Council v Shirt (1980) 146 CLR 40; [1980] HCA 12 Ziems v The Prothonotary (1957) 97 CLR 279; [1957] HCA 46 Zoia v Secretary, Department of Education, Employment and Workplace Relations [2009] FCA 661

[8]

Australian Securities and Investments Commission (Plaintiff) PARTIES : John David Rich (First Defendant) Mark Alan Silbermann (Fourth Defendant)

[9]

COUNSEL : R B S Macfarlan QC with J P A Durack (Plaintiff) D L Williams SC with M J Steele and S A Goodman (First and Fourth Defendants)

[10]

SOLICITORS : Georgina Hayden, Solicitor for Australian Securities and Investments Commission (Plaintiff) Thompson Eslick (First and Fourth Defendants)

[11]

DETAILED TABLE OF CONTENTS 1 INTRODUCTION 2 PLEADINGS 3 ISSUES ABOUT EVIDENCE 4 MANAGEMENT, DIRECTORS, FINANCIAL ORGANISATION AND SHARE PRICE 5 WITNESSES 6 THE YEARS 1995 TO 1999 7 THE YEAR 2000 8 JANUARY 2001 9 ONE.TEL'S CIRCUMSTANCES AT THE END OF JANUARY 2001 10 FEBRUARY 2001 11 ONE.TEL'S FINANCIAL CIRCUMSTANCES AT THE END OF FEBRUARY 2001 12 MARCH 2001 13 ONE.TEL'S FINANCIAL CIRCUMSTANCES AT THE END OF MARCH 2001 14 APRIL 2001 15 ONE.TEL'S FINANCIAL CIRCUMSTANCES AT THE END OF APRIL 2001 16 MAY 2001 17 AFTER MAY 2001 18 CREDITORS 19 DEBTORS AND PROVISIONING 20 EARNINGS AND OTHER FINANCIAL ISSUES 21 LIQUIDITY 22 MR CARTER'S EVIDENCE 23 DUTY OF CARE AND DILIGENCE AND THE BUSINESS JUDGMENT RULE 24 OTHER MATTERS 25 CONCLUSIONS APPENDIX A APPENDIX B APPENDIX C APPENDIX D

[12]

25/11/2009 - Revised to amend incorrect paragraph numbers from Chapter 3 onwards. No other changes. - Paragraph(s) From Chapter 3 onwards 27/11/2009 - Coversheet amended to note additional counsel. - Paragraph(s) n/a

[13]

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Australian Securities and Investments Commission v Rich

At a glance

Result

Key principles

Issues before the court

Plain English Summary

Cited legislation

Deep Dive

What happened

Why the court decided this way

Before and after state of the law

Key passages with plain-English translation

What fact patterns trigger this precedent

How later courts have treated it

Still-open questions

Judgment (13 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (194)

Cited By (50)

AI Analysis