In the matter of Idylic Solutions Pty Ltd - Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Idylic Solutions Pty Ltd - Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106 Hearing dates: 14 and 17 December 2012 Decision date: 21 February 2013 Jurisdiction: Equity Division - Corporations List Before: Ward JA Decision: Imposition of disqualification orders and pecuniary penalties against first, third and eighth defendants; disqualification orders against fourth defendant; costs. Catchwords: CORPORATIONS - multiple civil penalty contraventions and other contraventions of Corporations Act and ASIC Act (in relation to operation of unregistered managed investment scheme, provision of financial services without an Australian Financial Services Licence, misrepresentations, improper use of corporate position to obtain benefits at the detriment of companies) - relief and consequential orders following findings of liability - consideration of relevant principles and factors in determination of penalties - power to make disqualification orders under s 1324 where no declaration of contravention of s 1101B - principles applicable in relation to exercise of discretion for grant of declaratory relief - appointment of receiver to assets of defendants in jurisdiction - costs Legislation Cited: Australian Securities and Investments Act 2001 (Cth) Civil Procedure Act 2005 Companies Act 1986 (Cth) Companies Act 1993 (NZ) Corporate Law Reform Act 1992 Corporate Law Reform Bill 1992 Corporate Law Reform Bill Explanatory Memorandum 1992 (Cth) Corporations Act 2001 (Cth) Corporations Act Explanatory Memorandum 2001 (Cth) Financial Advisors Act 2008 (NZ) Securities Industry Act 1980 (Cth) Uniform Civil Procedure Rules 2005 Cases Cited: ACCC v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 ACCC v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10;(1992) 175 CLR 564 Airpeak Pty Ltd v Jetstream Aircraft Ltd (1997) 73 FCR 161 Allen v Atalay (1993) 11 ACSR 753 ASC v Form-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 ASIC v Adler (No 5) [2002] NSWSC 483; (2002) 42 ACSR 80 ASIC v Citrofresh International Ltd (ACN 064 551 426) (No 3) [2010] FCA 292; (2010) 268 ALR 303 ASIC v Loiterton (2004) [2004] NSWSC 897; 50 ACSR 693 ASIC v Nandan (1997) 23 ACSR 743 Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663 Australian Competition and Consumer Commission v 1MB Group Pty Ltd (1999) ATPR 41-688, [1999] FCA 313 Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; 190 ALR 169 Australian Competition and Consumer Commission v Ozdirect Online Brands Pty Ltd [2009] FCA 1604 Australian Securities & Investments Commission v McDougall [2006] FCA 427; (2006) 229 ALR 158 Australian Securities & Investments Commission v West [2008] SASC 111; (2008) 100 SASR 496 Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43; (2012) 287 ALR 693 Australian Securities and Investments Commission v Beekink [2007] FCAFC 7; (2007) 238 ALR 595 Australian Securities and Investments Commission v Cyclone Magnetic Engines Inc [2009] QSC 58; (2009) 224 FLR 50, (2009) 71 ACSR 1 Australian Securities and Investments Commissionv Elm Financial Services Pty Ltd [2005] NSWSC 1065; (2005) 55 ACSR 544; [2005] NSWSC 1065; Australian Securities and Investments Commission v Forge [2007] NSWSC 1489 Australian Securities and Investments Commission v Fuelbanc Australia Limited [2007] FCA 960; 162 FCR 174 and, as amended, in [2006] FCA 940 Australian Securities and Investments Commission v Gramax Investment Club Ltd [2005] FCA 1708 Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; (2011) 196 FCR 430; (2011) 284 ALR 734 Australian Securities and Investments Commission v MacDonald (No 12) [2009] NSWSC 714; (2009) 73 ACSR 638 Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd [2002] NSWSC 741; (2002) 42 ACSR 605 Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373 Australian Securities and Investments Commission v Parkes [2001] NSWSC 377; (2001) 38 ACSR 355 Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561 Australian Securities and Investments Commission v Preston [2005] FCA 1805 Australian Securities and Investments Commission v Soust (No 2) [2010] FCA 388; (2010) 76 ACSR 1 Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 Australian Securities and Investments Commission V West & Anor [2008] SASC 111; 100 SASR 496 Australian Securities and Investments Commission v White [2006] VSC 239; (2006) 58 ACSR 261 Australian Securities Commission v Donovan (1998) 28 ACSR 583 Australian Securities Commission v Nandan(1996) 23 ACSR 743 Australian Softwood Forest Pty Ltd v Attorney-General (NSW) [1981] HCA 49; (1981) 148 CLR 121 Brian Cassidy Electrical Industries Pty Ltd (in prov liquidation) and another v Attalex Pty Ltd [1984] 3 NSWLR 52 Broken Hill Pty Co Ltd v Bell Resources Ltd (1984) 2 ACLC 157 Brookfield Multiplex Ltd v International Litigation Funding Partners Pty Ltd (2009) 180 FCR 11 Caines v Australian Securities and Investments Commission [2012] AATA 289 Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075 Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 322 Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 Gillfillan v ASIC [2012] NSWCA 370 Hanson v Radcliffe UDC [1922] 2 Ch 490 Hawkins (1993) 67 A Crim R 64 Hayes v ASIC [2006] AATA 506 Ibeneweka v Egbuna [1964] 1 WLR 219 ICI Australia Operations Pty Limited v TPC (1992) 38 FCR 248 In the matter of Melinda Scott and Roach Graham Scott Pty Ltd [2012] NSWSC 1643 Jimmy v the Queen [2010] NSWCCA 60 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; (1990) 97 ALR 45 Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362; 20 ACLC 58 McDougall and Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (ACN 106 761 826) [2006] VSC 192; (2006) 57 ACSR 553 Mercedes Holdings Pty Ltd v Waters (No 2) [2010] FCA 472; (2010) 186 FCR 450 Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128 Mill v R [1988] HCA 70; (1988) 166 CLR 59; 83 ALR 1 NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 Oates v Hawkins [2010] NSWSC 491 Ohn v Walton (1995) 36 NSWLR 77 Oil Basins Ltd v Commonwealth [1993] HCA 60; (1993) 178 CLR 643; 117 ALR 338 Old v McInnes and Hodgkinson [2011] NSWCA 410 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; (1998) 152 ALR 83 Pearce v R (1998) 194 CLR 610; 156 ALR 684; [1998] HCA 57 Postiglione v R [1997] HCA 26; (1997) 189 CLR 295 Rahme v R (1989) 43 A Crim R 81 Re Austral Knitting Mills Ltd (1926) 43 WN (NSW) 131 Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257 Re McDougall [2006] FCA 427; 229 ALR 158 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 Russian Commercial and Industrial Bank [1921] 2 AC 438 Seagrim v Australian Securities and Investments Commission [2012] AATA 583 Triton Underwriting Insurance Agency [2003] NSWSC 1145; (2003) 48 ACSR 249 Texts Cited: Austin and Black, Annotations to the Corporations Act Austin and Ramsey, Ford's Principles of Corporations Law (15th edn) Lang Thai, "Statutory injunction - call for amendment to s 1324 of the Corporations Act" (2006) 24 C&SLJ 41 Thomas, Principles of Sentencing 2nd edn 1979 Thomson Reuters, Annotated Corporations Act, 2012 edn Category: Consequential orders Parties: Australian Securities and Investments Commission (Plaintiff) David John Hobbs (First Defendant) Min Hua Li (Second Defendant) David John Collard (Third Defendant) Huimin Wu (Fourth Defendant) Con Koutsoukos (Fifth Defendant) Brian John Wood (Sixth Defendant) Jimmy Truong (Seventh Defendant) Jacqueline Hobbs (Eighth Defendant) Idylic Solutions Pty Ltd ACN 121 960 754 (Ninth Defendant) 888 Management Inc (Tenth Defendant) Geneva Financial Ltd (Eleventh Defendant) Barclaywest Ltd (Twelfth Defendant) Preserved Investment Group Ltd (Thirteenth Defendant) North Wave Ltd (Fourteenth Defendant) G P Global Ltd (Fifteenth Defendant) Representation: J A Halley SC with J R Clarke (Plaintiff) Ms G Hayden, Solicitor for Australian Securities and Investments Commission (Plaintiff) File Number(s): 07/258119