In the matter of Opal Producers Australia Limited (ACN 112 322 442) [2011] NSWSC 689 (23 June 2011)

Last Updated: 6 July 2011

Supreme Court New South Wales

Case Title:	In the matter of Opal Producers Australia Limited (ACN 112 322 442)
Medium Neutral Citation:	[2011] NSWSC 689
Hearing Date(s):	23 June 2011
Decision Date:	23 June 2011
Jurisdiction:	Equity Division - Corporations List
Before:	Bergin CJ in Eq
Decision:	Matter not referred
Catchwords:	[Referral of matters to Regulator] - purpose - whether appropriate in the circumstances
Legislation Cited:	Crimes Act 1900 (NSW)
Cases Cited:	Hiu & Ling [2010] FamCA 743
Texts Cited:
Category:	Interlocutory applications
Parties:	Graham Hornabrook (1st Plaintiff) Wambinga Pty Limited (ACN 001 077 425) (2nd Plaintiff) Warren William Moore (3rd Plaintiff) Opal Producers Australia Limited (ACN 112 322 442) (1st Defendant) Peter Bruce Sutton (2nd Defendant) Kathryn Elizabeth Primmer (3rd Defendant) Rodney Herbert Lummis (4th Defendant) Robert George Imrie (5th Defendant) Elaine Raines (6th Defendant) Haymaker Investments Pty Limited (ACN 118 677 295) (7th Defendant) Jammie Steps Pty Limited (ACN 089 193 224) (8th Defendant) Madison Asset Services Pty Limited (ACN 103 775 944) (9th Defendant) Active Capital Partners Pty Limited (ACN 137 573 810) (10th Defendant) Bluemount Capital NSW Pty Limited (ACN 086 406 064) (11th Defendant)
Representation
- Counsel:	Counsel: D L Williams SC/N M Bender (Plaintiffs) IE Davidson SC/C Alexander (2nd to 6th Defendants) V Gray (7th to 11th Defendants)
- Solicitors:	Solicitors: Thompson Eslick (Plaintiffs) Teddington Legal (2nd to 6th Defendants) Newhouse & Arnold (7th to 11th defendants)
File number(s):	2011/00118106
Publication Restriction:

JUDGMENT - EX TEMPORE

1. These proceedings are before me today for consideration of whether I should refer the papers in this matter to the Australian Securities and Investments Commission (ASIC). The conduct in respect of which I have heard submissions this morning was exposed during the hearing of an oppression suit. Although the suit was listed for two and a half days, it was then moving into its sixth day. One of the reasons for the extension of the hearing was the disclosure of documentation to the plaintiffs just prior to and during the course of the trial.
   
2. The relevant conduct in respect of which relief was sought by the plaintiffs occurred only on 4 April 2011. The matter was expedited by the Corporations List Judge and heard on a final basis. Fortunately for all parties they attended a mediation on Sunday 19 June 2011 and were able to settle their differences by the end of the day on 20 June 2011, when I made final orders.
   
3. Three of the directors of the 1 st defendant, the 2 nd , 3 rd and 6 th defendants, were provided with the protection of section 128 certificates under the Evidence Act 1995 in relation to their conduct of either directly accessing the Chairman of the 1 st defendant's (Company) email in-box covertly, or alternatively being a party to and requesting that such conduct should occur. That conduct continued between approximately late January/early February 2011 and 4 April 2011. It extended not only to the accessing of the in-box of the Chairman of the Company, but to publication of the contents of the material obtained to third parties who were seeking to obtain a majority shareholding in the Company. The access also included accessing privileged material in which the Chairman sought legal advice, it would appear, on a personal basis.
   
4. At the close of the case on Monday 20 June 2011 I asked Mr Davidson SC, for the directors, for his submissions as to why I should not refer the papers to ASIC. He has taken instructions and now puts forward three affidavits, each sworn by each of the directors whose conduct I have just discussed. He submits that the content of those affidavits and the additional oral evidence of the 6 th defendant disclose a clear understanding of the gravity of the conduct, which he submitted had not been the subject of clear understanding prior to this trial. He submits that in those circumstance I would be satisfied that it is unnecessary to refer the papers to ASIC.
   
5. There are a number of other aspects to which Mr Davidson draws attention. One is the settlement that was reached in this case. It is clear that the history between the parties to this litigation is vexed, to use a neutral term. Obviously the issues did not have to be finally determined, but Mr Davidson submitted that the Chairman's conduct triggered the defendant directors' desire to protect the shareholders and to find a way to stop what they believed was conduct that was having an adverse impact on the Company and the shareholders. However their choice of method to raid the in-box of the Chairman covertly for some months and then publish it to those seeking to obtain control of the Company was quite inappropriate.
   
6. Mr Davidson points to the fact that each of the directors has resigned from directorships of the Company and that the outcome achieved in the settlement for the Company could not have been achieved had the litigation proceeded to finality. He submitted that the defendant directors have enabled some good to come out of this process by their acknowledgment and agreement in the settlement.
   
7. Mr Davidson also asked me to consider the defendant directors' deep concern in relation to the financial difficulty of the Company as at 4 April 2011, and their concern that they did not breach their obligations by proceeding to allow the Company to trade insolvently. He submitted that I would have regard to the defendant directors' desire to be true to their obligations, notwithstanding their obvious misunderstanding, as he would have it, of their obligations in respect of the raiding of the email in-box.
   
8. Reliance was placed on a decision of the Family Court of Australia in Hiu & Ling [2010] FamCA 743 at [16]- [22]. The passage in that judgment related to the referral of matters involving possible criminal conduct. There are instances where there is little choice but to refer the papers to prosecuting or regulatory authorities: eg s316 of the Crimes Act 1900 (NSW). In other cases in which the circumstances do not involve the prospect of criminal conduct matters may be referred to regulators to ensure that the regulator is aware of conduct about which the Court has deep concern.
   
9. However the affidavits of each of the directors and the additional oral evidence of the 6 th defendant convinces me that I shoulder exercise my discretion not to refer the papers to ASIC on this occasion. I am satisfied that the salutary lessons to which the directors have referred are matters that they will take into account in their future lives, both in business and otherwise. Accordingly, I do not intend to take any further action.
   

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