FEDERAL COURT OF AUSTRALIA COSTS - respondent consents to final relief - which costs should be paid in that event AUSTRALIAN SECURITIES COMMISSION v GARY JAMES WALL VG 3217 of 1998 FINKELSTEIN J 30 JUNE 1998 MELBOURNE NO QUESTION OF PRINCIPLE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 3217 of 1998 BETWEEN: AUSTRALIAN SECURITIES COMMISSION Applicant AND: GARY JAMES WALL Respondent JUDGE: FINKELSTEIN J DATE OF ORDER: 30 JUNE 1998 WHERE MADE: MELBOURNE THE COURT DECLARES THAT: 1. Pursuant to s 1324 of the Corporations Law an offer to participate in the ostrich breeding and agistment scheme in the letter dated 10 June 1998 constitutes a right to participate in a common enterprise, in relation to which the holder of the right or interest is led to expect profits, rent or interest from the efforts of the promoter of the enterprise or a third party as defined by s 9 of the Corporations Law. THE COURT ORDERS THAT: 2. Pursuant to subsection 1324(1) of the Corporations Law the respondent and any other person acting on his behalf is: (a) restrained from disseminating the letter dated 10 June 1998 (Exhibit CSG 11 to the affidavit of Colin Grant sworn on 26 June 1998), written by Gary James Wall or any like letter inviting expressions of interest in the ostrich agistment and breeding scheme as proposed in the said letter; and (b) restrained and prohibited from responding to expressions of interest received from potential investors in response to the said letter dated 10 June 1998. Pursuant to subsection 1324(4) of the Corporations Law, the respondent shall within 14 days prepare and swear an affidavit providing the Australian Securities Commission with the names and addresses of those people to whom the said letter dated 10 June 1998 was sent and the names of those who replied to the said letter expressing interest in the ostrich agistment and breeding scheme. Pursuant to subsection 1324(4) of the Corporations Law, the respondent shall within 14 days prepare and swear an affidavit providing details of any money received in connection with the scheme promoted in the said letter dated 10 June 1998 and, if appropriate, how such moneys have been spent or otherwise dealt with. NO QUESTION OF PRINCIPLE 5. The respondent pay the costs of and incidental to this application including the costs of the notice of motion filed 26 June 1998 and of this day. Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules NO QUESTION OF PRINCIPLE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 3217 of 1998 BETWEEN: AUSTRALIAN SECURITIES COMMISSION Applicant AND: GARY JAMES WALL Respondent JUDGE: FINKELSTEIN J DATE: 30 JUNE 1998 PLACE: MELBOURNE REASONS FOR JUDGMENT HIS HONOUR: On 26 June 1998 the Australian Securities Commission ("the Commission") commenced a proceeding against Gary James Wall where the principal relief sought was a declaration that Mr Wall was making offers to members of the public to participate in an ostrich agistment and breeding scheme in contravention of various provisions in Part 7.12 of the Corporations Law which regulates the offering of securities for subscription or purchase. Speaking generally, the provisions in Part 7.12, in particular s 1018, prohibits a person from offering for subscription or from issuing invitations to subscribe for securities unless a prospectus in relation to those sections has been lodged with the Commission. The conduct about which the Commission complains commenced in about mid-June 1998. It was discovered by the Commission shortly thereafter during the course of an investigation it was conducting into the affairs of certain companies with which Mr Wall had some connection. In late June 1998 the Commission formed the opinion that the conduct of Mr Wall contravened not only a number of provisions of Part 7.12 of the Corporations Law as well as ss 780 and 995. On 25 June 1998, in anticipation of commencing proceedings that would seek urgent interlocutory relief restraining Mr Wall from continuing with this conduct, the Commission wrote to Mr Wall advising him that it intended to make an application for injunctions to prevent him continuing to offer for sale rights to participate in the -2- scheme. In the letter Mr Wall was advised that he should consider not proceeding with his scheme and he was asked to give an undertaking to the Commission that he would not continue to implement the scheme. That letter was left at Mr Wall's home address but apparently he did not see it until the following day, namely 26 June 1998. Not receiving any response from Mr Wall, the Commission issued this proceeding late in the afternoon of 26 June 1998, with an application for interlocutory relief returnable this morning. The application and supporting affidavits were personally served on Mr Wall. Some time after the proceeding had been instituted Mr Wall wrote to an officer of the Commission and also spoke to a member of staff advising that he would discontinue the offending conduct. Mr Wall has now informed me that rather than defend the claim against him he will consent to a declaration that his promotion of the scheme amounted to an offer of a right to participate in an enterprise in contravention of the Corporations Law. He also consents to permanent injunctions restraining him from continuing to engage in that conduct, as well as mandatory orders pursuant to which he will inform the Commission of the names and addresses of the persons to whom the offers had been sent to participate in the scheme together with details of the money, if any, received from those persons. The result is that this application is at an end and the only issue that remains to be considered is whether Mr Wall should pay the Commission's costs. I have no doubt that an order for costs should be made against him. The Commission quite reasonably commenced this proceeding. The affidavit material filed in support of the interlocutory relief establishes, clearly enough in my view, that various provisions of the Corporations Law had been breached by Mr Wall. In those circumstances not only was it reasonable for the Commission to commence the proceeding, it was incumbent on it to do so, especially having regard to the fact that the day before the proceeding commenced the Commission had written to Mr Wall asking him to give the undertaking not to continue with his scheme and the Commission had not received a response to that letter 3- Further, by agreeing to the declarations and injunctions, Mr Wall has, for all practical purposes, conceded the merits of the Commission's case. The result will be as follows. I will grant a declaration in the terms sought in paragraph 1 of the application. I will grant injunctions in the terms sought in paragraphs 1, 3 and 4 of the minutes of the draft orders submitted by the parties. I will also order Mr Wall to pay the costs of the application in the form sought in " paragraph 5 of the minutes of draft order. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Associate: Pa Dated: 18 September 1998 Counsel for the Applicant: Mr RM Downing Solicitor for the Applicant: Australian Securities Commission Counsel for the Respondent: Respondent in person Date of Hearing: , 30 June 1998 Date of Judgment: 30 June 1998