ASIC v Karl Suleman Enterprizes [2003] NSWSC 400

Reported Decision : (2003) 45 ACSR 401 (2003) 21 ACLC 1180

New South Wales Supreme Court

CITATION : ASIC v Karl Suleman Enterprizes [2003] NSWSC 400 HEARING DATE(S) : 21/02/03 and written submission 21/03/03 and 16/04/03 JUDGMENT DATE : 15 May 2003

JURISDICTION: Equity Division Corporations List JUDGMENT OF : Barrett J DECISION : Direction given to liquidators

CATCHWORDS : CORPORATIONS - unregistered managed investment scheme - moneys paid to operator of unregistered managed investment scheme still held as unpresented bank cheques when winding up of operator commenced - liquidators of operator also appointed liquidators to wind up scheme - whether bank cheques or quarantined proceeds should be restored to investors - where no contracts had been made with would-be investors - where contracts had been made with investors - contraventions of managed investment scheme provisions and of prohibition upon soliciting investment in debentures without disclosure document - whether liquidators justified in proceeding on basis of past fraudulent misrepresentation - statutory illegality - restitution LEGISLATION CITED : Corporations Act 2001 (Cth), ss.9, 92(3), 446A, 601ED, 601EE, 601MB, 706, 708, 727 Australian Breeders Co-operative Society Ltd v Jones (1997) 26 ACSR 26 Australian Securities and Investments Commission v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240 Australian Securities and Investments Commission v Landy DFK Securities Ltd (2002) 20 ACLC 1613 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 Baumgartner v Baumgartner (1987) 164 CLR 137 Cornelius v Phillips [1918] AC 199 Re Diplock [1948] Ch 465 Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (1948) 76 CLR 463 Fitzgerald v Leonhardt Pty Ltd (1997) 189 CLR 215 CASES CITED : Glazier Holdings Pty Ltd v Australian Men's Health Pty Ltd (unreported, NSWSC, Young J, 30 April 1998) Hewett v Court (1983) 149 CLR 639 Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 Ex parte James; re Condon (1874) LR 9 Ch App 609 Kiriri Cotton Co Ltd v Dewani [1960] AC 192 McCarthy Bros (Milk Vendors) Pty Ltd v The Dairy Farmers Co-operative Milk Co Ltd (1945) 45 SR (NSW) 266 Re Mineral Securities Australia Ltd [1973] 2 NSWLR 207 Nelson v Nelson (1995) 184 CLR 538 Permanent Trustee Co Ltd v FAI Insurances Ltd [2003] HCA 25 Re Tyler [1907] 1 KB 865 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 411 Australian Securities and Investments Commission - Plaintiff Karl Suleman Enterprizes Pty Limited (In Liquidation) - First Defendant Suleman Investments Pty Limited (In Liquidation) - Second Defendant PARTIES : Karl Suleman - Third Defendant Vivian Suleman - Fourth Defendant Paul G Weston and Neil R Cussen (in their capacity as Liquidators of the First and Second Defendants) - Fifth Defendants/Applicants Pal Holdings Pty Ltd (In Liquidation) - Sixth Defendant AND 7 others named in Schedule A FILE NUMBER(S) : SC 5415/01 COUNSEL : Mr J E Thomson/Mr C D Wood - First and Fifth to Eleventh Defendants Mr T Bland - Intervenor - KSS Enterprises Pty Limited SOLICITORS : Coudert Brothers - First and Fifth to Eleventh Defendants F D Hammond & Associates - KSS Enterprises Pty Limited