Australian Securities and Investments Commission v Union Standard International Group Pty Ltd

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.

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.

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.

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.