ASIC v Secured Bond Ltd [2009] NSWSC 1261

New South Wales Supreme Court

CITATION : ASIC v Secured Bond Ltd [2009] NSWSC 1261 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 18 September 2009

JUDGMENT DATE : 18 September 2009

JURISDICTION : Equity

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 18 September 2009

DECISION : Refer to paras 33-35 of judgment.

CATCHWORDS : CORPORATIONS – investigation by ASIC - application to restrain third defendant from leaving Australia or obtaining passport – no charges laid against third defendant and no material about which ASIC presently wishes to question third defendant – low risk that third defendant would not return if allowed to depart – third defendant proffers undertakings to the court – application dismissed

LEGISLATION CITED : Corporations Act 2001 (Cth) Australian Securities and Investments Commission Act 2001 (Cth)

CASES CITED : ASIC v Hawley [2008] FCA 1423; (2008) 68 ACSR 79 ASIC v Mauer-Swisse Securities Ltd (2002) 20 ACLC 1530

PARTIES : Plaintiff: Australian Securities and Investments Commission 3rd Defendant: David John Collard

FILE NUMBER(S) : SC 4532/08

COUNSEL : Plaintiff: Mr J Halley SC with Ms J Single 3rd Defendant: Ms A Ketas

SOLICITORS : Plaintiff: ASIC 3rd Defendant: n/a

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

WHITE J

Friday, 18 September 2009

4532/08 Australian Securities and Investments Commission v Secured Bond Ltd as trustee for the Master Fund & 12 Ors JUDGMENT 1 HIS HONOUR: This is an application by the Australian Securities and Investments Commission ("ASIC") that until 30 November 2009, the third defendant be restrained from leaving, or attempting to leave Australia and from applying for the issue of a passport. Pursuant to earlier orders of the court, the third defendant has delivered up his passport to the court. 2 Orders of this character have been made from time to time from 2 September 2008. Proceedings were commenced on that day naming Secured Bond Ltd as the first defendant company and various individuals and other companies as the second to thirteenth defendants. 3 The investigation which led to the proceedings started in August 2008. Today ASIC is investigating suspected contraventions of ss 911A, 601ED, 1041E, 1041G and 1041H of the Corporations Act 2001 (Cth). It is investigating the operation of a number of suspected unregistered managed investment schemes. The third defendant, Mr Collard, is a director of a number of the companies said to have been involved in the operation of such schemes and to have played a role called "administrator" in relation to the schemes. Other persons who are said to have a similar involvement include a Mr Hobbs and a Ms Li. 4 In the course of its investigation ASIC has used its powers to obtain documentary records from the companies and from individuals concerned. It says that the records which it has obtained are incomplete and many of the decisions made by at least Secured Bond Ltd are not recorded, and that other matters such as the basis on which payments were made to shareholders, the basis on which returns were paid to investors, and the basis on which commissions were paid, are also not recorded. 5 It also contends that Mr Collard and others received payments from the companies or the funds which form part of the scheme which are not properly accounted for in the records of the companies. It says that its investigations disclose prima facie serious contraventions of the Act. It submits that Mr Collard is likely to be a defendant to proceedings which are yet to be brought, but which are likely to contain allegations of serious contraventions of the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"), including several penalty provisions. 6 Orders restraining Mr Collard from travelling outside Australia have been renewed from time to time during 2008 and 2009. On 15 and 16 June 2009 Austin J dealt with an application by ASIC for the extension of asset preservation orders, orders requiring the surrendering of Mr Collard's passport, and restraints on his travel overseas. 7 His Honour records in his reasons for judgment at ([4]-[6]): " [4] When the case opened this morning ASIC informed the court that it wished to extend the orders in relation to both asset preservation and surrendering of passport until 30 November 2009. However, when during the course of submissions I expressed some reluctance as to whether, in the circumstances of this case, the court ought to extend the passport orders for such a long period of time, senior counsel for ASIC took instructions and put forward a revised position. He informed the court that the work that was necessary to be done in relation to the third defendant, including preparation for further examination and the conduct of the examination, required that the orders be extended for eight weeks but that ASIC would not press the court for any extension beyond that time.