Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 (18 November 2009)

Last Updated: 3 May 2012

NEW SOUTH WALES SUPREME COURT

CITATION:
Australian Securities and Investments Commission v Rich [2009] NSWSC 1229
This decision has been amended. Please see the end of the judgment for a list of the amendments.

JURISDICTION:
Equity

FILE NUMBER(S):
5934/01

HEARING DATE(S):
6 – 8, 13 – 17, 20 – 23, 29 - 30 September 2004, 5 – 8, 11 – 15, 18 – 20, 25 – 29 October 2004, 1 – 5, 8 – 10, 12, 15 – 18, 22 – 25, 29 - 30 November 2004, 1 – 2, 7, 14 – 15 December 2004, 31 January 2005, 4, 7, 16, 28 February 2005, 7 – 8, 10 – 11, 21 – 23, 30 March 2005, 5 – 7, 18 April 2005, 2, 5, 11, 16 – 20,23 – 24, 27 May 2005, 15 – 16, 20 – 22 June 2005, 4 – 5, 7 – 8, 11 – 15, 25 – 26 July 2005, 8 – 9, 11 August 2005; 26 – 29 September 2005, 4 – 7, 10 – 11, 14, 17 – 21, 25 – 28, 31 October 2005, 1, 3 – 4, 9 – 10, 14 – 18, 22 – 24, 28, 30 November 2005, 1 –2, 5 – 6, 8 – 9, 12 - 13, 16 December 2005, 30 January 2006, 1 – 2, 6 – 9, 13 February 2006, 5 April 2006, 2, 13 – 16, 19 – 22, 26 – 29 June 2006, 3 – 6, 10 – 13, 17 – 18, 20, 24 – 26, 28 July 2006, 1 – 3, 7 – 9, 14, 17, 21 – 23, 28 – 31 August 2006, 1, 4 – 7, 11 – 13, 15, 18, 20 – 21, 27 November 2006, 5 – 6, 14 – 15 February 2007, 30 March 2007, 21 May 2007, 6 – 8, 20 - 21 August 2007
London hearing 24 – 26, 30 – 31 August 2005, 1 – 2, 5 – 6 September 2005

JUDGMENT DATE:
18 November 2009

PARTIES:
Australian Securities and Investments Commission (Plaintiff)
John David Rich (First Defendant)
Mark Alan Silbermann (Fourth Defendant)


JUDGMENT OF:
Austin J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
R B S Macfarlan QC with J P A Durack (Plaintiff)
D L Williams SC with M J Steele and S A Goodman (First and Fourth Defendants)


SOLICITORS:
Georgina Hayden, Solicitor for Australian Securities and Investments Commission (Plaintiff)
Thompson Eslick (First and Fourth Defendants)



CATCHWORDS:
CORPORATIONS
civil penalty proceedings
statutory duty of care and diligence - standard of care
duty of skill
whether res ipsa loquitur applicable
scope of "business judgment rule"
application of statutory standard to financial management of large international corporate group over a period of months
PRACTICE AND PROCEDURE
pleadings
principles regarding unpleaded case and lack of particulars
application to complex pleading and long trial
EVIDENCE
onus and standard of proof in civil penalty proceedings
rules in Blatch v Archer, Jones v Dunkel and Browne v Dunn in civil penalty proceedings
duty of fairness of regulator as plaintiff in civil penalty proceedings

LEGISLATION CITED:
Civil Procedure Act 2005 (NSW), ss 14, 56, 57, 58, Sch 6
Corporations Act 2001 (Cth), ss 5, 180, 206C, 1305, 1317G, 1317H, 1317L, 1399, 1400
Corporations Law, ss 232, 1317EA, 1317ED, 1317FA
Evidence Act 1995 (NSW), s 140
Judiciary Act 1903 (Cth), ss 55ZF, 55ZG, 55N
Uniform Civil Procedure Rules (NSW), rr 14.7, 15.1


CASES CITED:
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ASIC v Macdonald (No 11) (2009) 71 ACSR 368; [2009] NSWSC 287
ASIC v Maxwell (2006) 59 ACSR 373; [2006] NSWSC 1052
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ASIC v Rich (2003) 44 ACSR 341; [2003] NSWSC 85
ASIC v Rich (2003) 44 ACSR 682; [2003] NSWSC 186
ASIC v Rich (2005) 188 FLR 416; [2005] NSWSC 62
ASIC v Rich (2005) 53 ACSR 752; [2005] NSWSC 417
ASIC v Rich [2004] NSWSC 467
ASIC v Rich [2005] NSWCA 152
ASIC v Rich [2005] NSWSC 1187
ASIC v Rich [2005] NSWSC 149
ASIC v Rich [2005] NSWSC 417
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Australian Postal Commission v Hayes [1989] FCA 176; (1989) 87 ALR 283
AWA Ltd v Daniels (1992) 7 ACSR 759
Baker v Campbell (1983) 153 CLR 52; [1983] HCA 39
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Hampton Court Ltd v Crooks (1957) 97 CLR 367; [1957] HCA 28
He Kaw Teh v R (1985) 157 CLR 523; [1985] HCA 43
Hedley Byrne v Heller [1963] UKHL 4; [1964] AC 465
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Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1
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JPQS Pty Ltd v Cosmarnan Constructions Pty Ltd [2003] NSWCA 66
Kingham v Cole (2002) 190 ALR 679; [2002] FCA 45
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Knight v Maclean [2002] NSWCA 314
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TEXTS CITED:


DECISION:
Judgment to be entered for the first and fourth defendants



JUDGMENT:


TABLE OF CONTENTS

	DETAILED TABLE OF CONTENTS
1	INTRODUCTION
2	PLEADINGS
3	ISSUES ABOUT EVIDENCE
4	MANAGEMENT, DIRECTORS, FINANCIAL ORGANISATION AND SHARE PRICE
5	WITNESSES
6	THE YEARS 1995 TO 1999
7	THE YEAR 2000
8	JANUARY 2001
9	ONE.TEL’S CIRCUMSTANCES AT THE END OF JANUARY 2001
10	FEBRUARY 2001
11	ONE.TEL’S FINANCIAL CIRCUMSTANCES AT THE END OF FEBRUARY 2001
12	MARCH 2001
13	ONE.TEL'S FINANCIAL CIRCUMSTANCES AT THE END OF MARCH 2001
14	APRIL 2001
15	ONE.TEL'S FINANCIAL CIRCUMSTANCES AT THE END OF APRIL 2001
16	MAY 2001
17	AFTER MAY 2001
18	CREDITORS
19	DEBTORS AND PROVISIONING
20	EARNINGS AND OTHER FINANCIAL ISSUES
21	LIQUIDITY
22	MR CARTER'S EVIDENCE
23	DUTY OF CARE AND DILIGENCE AND THE BUSINESS JUDGMENT RULE
24	OTHER MATTERS
25	CONCLUSIONS
	APPENDIX A
	APPENDIX B
	APPENDIX C
	APPENDIX D

AMENDMENTS:


25/11/2009 - Revised to amend incorrect paragraph numbers from Chapter 3 onwards. No other changes. - Paragraph(s) From Chapter 3 onwards

27/11/2009 - Coversheet amended to note additional counsel. - Paragraph(s) n/a


LAST UPDATED:
27 November 2009