CORPORATIONS - application for leave to proceed against companies in liquidation - application granted
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CORPORATIONS - application for leave to proceed against companies in liquidation - application granted
Judgment (6 paragraphs)
[1]
On the plaintiff undertaking to the Court not to take any step to enforce against the first or the third defendants, any order for the payment of any amount of money, whether by way of penalty, costs or otherwise, without the further leave of the Court, the Court orders that:
[2]
The plaintiff is granted leave to file an amended originating process pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) (Federal Court Rules).
By 22 December 2020, the plaintiff is to provide the second defendant with a complete schedule of particulars setting out the individual instances of the alleged contravening conduct set out in the draft concise statement at pages 6 to 13 of the Affidavit of Lucy Groenewegen dated 30 November 2020 (Draft Concise Statement).
By 1 February 2021, the plaintiff is to provide the second defendant with copies of all documents referred to in those particulars.
By 1 March 2021, the second defendant is to inform the plaintiff whether it consents to the filing of the Draft Concise Statement.
The plaintiff is granted leave to proceed as against the first defendant pursuant to s 471B of the Corporations Act 2001 (Cth) (Corporations Act).
The plaintiff is granted leave to proceed as against the third defendant pursuant to s 500(2) of the Corporations Act.
The liquidators of Union Standard International Group Pty Ltd (in liq), as the first defendant, and the liquidators of BrightAU Capital Pty Ltd (in liq), as the third defendant, have liberty to apply to the Court, including liberty to apply concerning the costs and expenses of the litigation.
The first and the third defendants be permitted to file a submitting notice under r 12.01(1) of the Federal Court Rules stating that each party submits to any order that the Court may make, except as to the question of relief, in respect of which the first and the third defendants reserve their rights to be heard.
The first and the third defendants are granted leave of the Court to withdraw any submitting notice filed pursuant to paragraph 8 of these orders under r 12.01(3) of the Federal Court Rules so as to be heard on the question of relief.
The matter be listed for a further case management conference at 9.00 am on 8 March 2021.
Costs otherwise reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
[3]
WIGNEY J:
1 The plaintiff in this matter, the Australian Securities and Investments Commission (ASIC), seeks leave to proceed against the first and third defendants, Union Standard International Group Pty Ltd (USG) and BrightAU Capital Pty Ltd (Bright), both companies in liquidation, pursuant to s 471B and s 500(2) of the Corporations Act 2001 (Cth). For the reasons which follow, I have concluded that leave to proceed should be granted.
[4]
Relevant background
2 The background to this application may be found in an earlier judgment of this Court: see Australian Securities and Investments Commission v Union Standard International Group Pty Ltd [2020] FCA 603.
3 In brief, ASIC commenced proceedings against USG, Bright and the second defendant, Maxi EFX Global AU Pty Ltd, along with various other persons in December 2019. The relief sought by ASIC in those proceedings was relief pursuant to s 1323 of the Corporations Act, the general nature of which was to freeze or preserve the assets of the defendants while ASIC conducted its investigation into suspected contraventions of that Act. Orders were made pursuant to s 1323 on an interim basis on 12 December 2019. Those orders have been varied on a number of occasions since.
4 ASIC has now progressed its investigation to the point where it wishes to amend its originating application to seek relief in respect of the alleged contraventions of the Corporations Act by the defendants which were the subject of its investigation. ASIC's amendment application was initially opposed by Maxi, essentially on the basis that ASIC proposed to proceed by way of concise statement rather than pleadings. Ultimately, however, the parties agreed that ASIC should be given leave to file an amended originating application, but that a regime of orders requiring ASIC to provide particulars and documents should also be made. The question of whether the matter should proceed by way of concise statement with particulars as opposed to pleadings will be considered after the service of the relevant particulars and documents.
5 Both USG and Bright have entered into liquidation since ASIC commenced these proceedings: USG as a winding up by the Court; Bright as a voluntary winding up. ASIC is therefore required to obtain leave to proceed against USG and Bright pursuant to s 471B and s 500(2) of the Corporations Act respectively.
[5]
Leave to proceed
6 Neither USG nor Bright ultimately opposed leave being granted to ASIC to proceed against them on the terms proposed by the regulator. It is nevertheless necessary for the Court to be satisfied that the grant of leave to proceed is appropriate in all the circumstances.
7 A critical consideration in considering whether leave to proceed is appropriate in this proceeding is that ASIC is bringing the proceeding as an independent regulator seeking to enforce the standards prescribed by the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth). There is a clear public interest in permitting a regulator such as ASIC to pursue proceedings of that type, even against a company in liquidation: see Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 at [26].
8 Other considerations also suggest that a grant of leave is appropriate in this case.
9 First, as has already been noted, the liquidators of both USG and Bright have advised that they do not oppose ASIC being granted leave to proceed. They have also indicated that they intend to file submitting appearances save as to the question of relief. It should be noted, in that regard, that ASIC has undertaken not to enforce any pecuniary penalty, non-party compensation order or costs order against USG and/or Bright without further leave of the Court. The liquidators are therefore unlikely to be burdened or distracted from their duties in winding up the companies by the grant of leave to ASIC to pursue these proceedings.
10 Second, there is evidence to suggest there is a serious issue or question to be tried against both USG and Bright. It is unnecessary for present purposes to detail that evidence.
11 Third, ASIC will, in any event, be pursuing the proceeding against Maxi. The factual and legal issues that are likely to arise in the proceeding against Maxi are likely to overlap to a considerable extent with the issues that arise in ASIC's case against both USG and Bright. The grant of leave to proceed against those parties will not increase the length or complexity of the proceedings, particularly since, as adverted to, USG and Bright intend to file submitting appearances save as to relief.
12 Fourth, ASIC would not be able to obtain either declaratory relief or pecuniary penalties against USG or Bright if leave to proceed is not granted and ASIC were simply left to prove in the winding up of those companies. Declaratory relief and pecuniary penalties are important remedies in a regulator's armoury in enforcing compliance with statutory standards and norms.
[6]
Disposition and conclusion
13 In all the circumstances, I consider that it is appropriate to grant ASIC leave to proceed against both USG and Bright. As noted earlier, the other issue as to the amendment of the originating application has been resolved as between the parties, and I propose to make the relevant case management orders in that regard.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.