FEDERAL COURT OF AUSTRALIA ASIC v Ludgates Corporate & Investment Advisory Services Pty Ltd (No. 1) [2005] FCA 827 ASIC v LUDGATES CORPORATE & INVESTMENT ADVISORY SERVICES PTY LTD (No. 1) NSD 3037 OF 2003 GRAHAM J 14 JUNE 2005 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 3037 of 2003 BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPLICANT AND: LUDGATES CORPORATE & INVESTMENT ADVISORY SERVICES PTY LTD (ACN 053 972 320) FIRST RESPONDENT BENJAMIN PAUL WHITEHOUSE SECOND RESPONDENT JENNIFER MARTINE SISSON THIRD RESPONDENT JUDGE: GRAHAM J DATE OF ORDER: 14 JUNE 2005 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. Leave be granted to the Applicant to effect amendments to paragraphs 11(c), 17(c), 23(c) and 29(c) of the statement of claim in accordance with the "Third Version of Second Amended Statement of Claim" (Exhibit AA2) on the undertaking of the Applicant that it will not in the proceedings seek any relief under section 780 of the Corporations Law for an alleged contravention thereof by the Second or Third Respondent. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 3037 of 2003 BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPLICANT AND: LUDGATES CORPORATE & INVESTMENT ADVISORY SERVICES PTY LTD (ACN 053 972 320) FIRST RESPONDENT BENJAMIN PAUL WHITEHOUSE SECOND RESPONDENT JENNIFER MARTINE SISSON THIRD RESPONDENT JUDGE: GRAHAM J DATE: 14 JUNE 2005 PLACE: BRISBANE REASONS FOR JUDGMENT 1 These proceedings were commenced by an application filed in Court on 17 June 2003. The statement of claim presently filed is an amended statement of claim filed 11 February 2004. On 8 June I granted leave to the Applicant to file and serve an amended application seeking relief in the terms proposed in paragraphs 229 to 265 inclusive of the amended statement of claim. No such application or amended application has yet been filed, but I understand that one will be filed either later today or tomorrow. What is presently before the Court is an application by the Applicant for leave to substitute a third version of second amended statement of claim for the amended statement of claim filed 11 February 2004. 2 The First Respondent is a company known as Ludgates Corporate and Investment Advisory Services Proprietary Limited (ACN 053 972 320) (in liq). It would appear that company formerly traded as Ludgate Investment Services Proprietary Limited. That company is in liquidation. Leave has been granted to proceed against the company, notwithstanding that it is in liquidation. It has been called outside the Court three times this morning and it does not appear. Indeed, it was not expected that the liquidator would appear on the hearing of this application. 3 The Second and Third Respondents are Benjamin Paul Whitehouse and Jennifer Martine Sisson. They are said to have been partners in the firm of chartered accountants known as Ludgates. They are also said to be directors of the first respondent, which it is claimed held a dealer's licence. In the original pleading relief was sought against them as securities representatives of the First Respondent. 4 The application to substitute the third version of second amended statement of claim contains four different categories of amendment: one dealing with partnership authority; one dealing with the first respondent's security adviser status; one dealing with additional particulars of alleged existing contraventions; and one dealing with amendments to the enforceable undertaking claimed. 5 Mr Whitehouse, who appears in person, has indicated that he has no problem with the proposed third version of second amended statement of claim. Mr Porter, on the other hand, who appears for the Third Respondent Ms Sisson, takes objection to the proposed amendments within the second and third categories. 6 What I am presently dealing with is the application to effect amendments which are within the second category. The relevant amendments have been identified as the amendments to paragraphs 11(c), 17(c), 23(c) and 29(c). For the purposes of argument, the parties have addressed me in relation to the proposed amendment to paragraph 11(c), and have indicated that the other amendments will either fall or stand with the position that is taken in respect of 11(c). 7 The nub of the matter from the Applicant's point of view is that it is contending that the Second and Third Respondents were securities advisers who contravened s 851(1) of the Corporations Law 2000 (Cth) as it then stood. The expression "securities adviser" includes both dealers, and securities representatives of dealers. In the case of the Second and Third Respondents, the Applicant now wishes to say that they breached the section as securities representatives of a dealer, namely the First Respondent, if they acted within the scope of their authority from the First Respondent. Alternatively, it is said that they breached or contravened the section as dealers, if it be found that in making the recommendations which they made they acted outside the scope of the authority from the First Respondent. 8 Mr Porter urges that if the amendment is allowed and contraventions are found to have been committed by his client as a dealer, then it will also mean that his client is guilty of contraventions of s780 of the Corporations Law 2000 (Cth) as a person who has carried on a securities business without being the holder of a dealer's licence. The Applicant has met this concern of the Third Respondent by indicating that, in these proceedings, the applicant will not seek relief in respect of any alleged contravention by the Second or Third Respondent of s780 of the Corporations Law 2000 (Cth) i.e., it will not be contended by the Applicant that Mr Whitehouse or Ms Sisson carried on a securities business without being the holder of a dealer's licence, or, indeed, committed any other contravention of s780 of the Corporations Law 2000 (Cth). 9 In those circumstances, it seems to me that the objection taken to the proposed amendment ceases to have any significance. It is said by the Applicant that the evidence will be the same whether one result is sought or the other under s851, and it seems to me there is some force in that submission. In the circumstances, and given the clear undertaking that has been given by the Applicant in respect of other forms of relief that may be sought, I propose to allow the amendments to paragraphs 11(c), 17(c), 23(c) and 29(c) that have been proposed. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham Associate: Dated: 14 June 2005 Counsel for the Applicant: Mr D Stack Solicitor for the Applicant: Australian Securities and Investments Commission The Second Respondent appeared in person Counsel for the Third Respondent: Mr B Porter Solicitor for the Third Respondent: Clayton Utz Date of Hearing: 14 June 2005 Date of Judgment: 14 June 2005