ASIC v Burnard & Ors [2006] NSWSC 611

New South Wales Supreme Court

CITATION : ASIC v Burnard & Ors [2006] NSWSC 611

HEARING DATE(S) : 13 & 14 June 2006

JUDGMENT DATE : 13 June 2006

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 06/13/2006

DECISION : Orders continued for short time to enable ASIC to investigate further and report to the Court.

CATCHWORDS : CORPORATIONS – ASSET FREEZING ORDER – INVESTIGATIONS – ex parte orders made for surrender of passport and freezing of assets in aid of ASIC's investigations – investigations at early stage – no allegation of wrongdoing yet made – whether orders should be continued to ensure investigation not frustrated – whether affidavit disclosing assets should be required.

LEGISLATION CITED : - Australian Securities and Investments Commission Act 2001 (Cth) – s.13 - Corporations Act 2001 (Cth) – s.1323, s.1324

CASES CITED : ASIC v Carey (No 3) [2006] FCA 433

Australian Securities and Investments Commission – Plaintiff PARTIES : Neil Austin Burnard – First Defendant Palentia Pty Ltd – Second Defendant Tenala Pty Ltd – Third Defendant

FILE NUMBER(S) : SC 3061/06

COUNSEL : D.R. Stack – Plaintiff P.M. Wood – Defendants

SOLICITORS : Conrad Gray, Solicitor for ASIC – Plaintiff Atanaskovic Hartnell – Defendants

JUDGMENT – Ex tempore 13 June, 2006

1 The Plaintiff, Australian Securities and Investment Commission ("ASIC"), seeks the continuation of certain orders made under s.1323 and s.1324 of the Corporations Act 2001 (Cth) and under the Court's inherent jurisdiction against the Defendants. Additional relief is also sought. 2 On 2 June ASIC made an ex parte application to Austin J, as a result of which his Honour made orders up to and including 5pm today, the effect of which was to restrain the First, Second and Third Defendants from dealing with or disposing of their assets and which required the First Defendant, Mr Burnard, to surrender his passport so that he was prevented from leaving the country. 3 The basis of the application, in brief compass, was as follows. Mr Burnard and the Second and Third Defendants are said to have been involved in the solicitation of investment from the public in the Westpoint Group of companies, which collapsed in mid-2005 with what is thought to be a deficiency in assets of some $300 million. It is said that the Second Defendant, which I will refer to as "Kebbel", has raised in excess of $112 million from the Australian public. Kebbel is said to have earned from its activities commissions exceeding $6 million. 4 On 9 March 2006, ASIC commenced an investigation into the affairs of Kebbel and various associated companies under s.13 of the Australian Securities and Investments Commission Act 2001 (Cth) ("ASIC Act"). 5 On 13 March 2006, ASIC issued a s.30 notice to Kebbel designed to elicit the production of the documents which the notice specified. 6 On 14 March the notice was served on Mr Burnard, who is a director of Kebbel. 7 ASIC's case in this application, in essence, is that the activities of Kebbel and Mr Burnard in raising investment funds for the Westpoint Group require careful investigation to determine whether or not contraventions of the Corporations Act and of the general law have been committed. ASIC says that it has had insufficient time to conduct its investigations adequately since 9 March 2006 so that at this stage the investigation is only in a very preliminary stage. 8 However, ASIC says that there is sufficient to indicate the possibility that Kebbel and Mr Burnard may have been involved in a number of contraventions of the Corporations Act. These possible contraventions include: