• Any

Australian Securities and InvestmentsCommission v SunEnergy Asia Pacific Pty Ltd[2011] FCA 275

THE COURT DECLARES THAT:

1. Theconduct of the first defendant set out in Schedule A heretowas:

(a)conduct in this jurisdiction (as defined ins 9 of theCorporations Act 2001(Cth) (the Act));

(b)conduct in relation to a financial product or service, namely;

(i)dealing in;

(ii)issuing; and/or

(iii)publishing a notice in relation to

a financial product within the meaning ofs 1041H(2) of the Act;

(c)misleading or deceptive or likely to mislead or deceive contrary tos1041H(1) of the Act.

2.The conduct of the second defendant set out in Schedule A hereto was:

(a)conduct in this jurisdiction;

(b)conduct in relation to a financial product or service, namely;

(i)dealing in;

(ii)issuing; and/or

(iii)publishing a notice in relation to

a financial product within the meaning ofs 1041H(2) of the Act;

(c)misleading or deceptive or likely to mislead or deceive contrary tos1041H(1) of the Act.

3.The conduct of the third defendant set out in Schedule A hereto was:

(a)conduct in this jurisdiction;

(b)conduct in relation to a financial product or service, namely;

(i)dealing in;

(ii)issuing; and/or

(iii)publishing a notice in relation to

a financial product within the meaning ofs 1041H(2) of the Act;

(c)misleading or deceptive or likely to mislead or deceive contrary tos1041H(1) of the Act.

4.The conduct of the fourth defendant set out in Schedule A hereto was:

(a)conduct in this jurisdiction;

(b)conduct in relation to a financial product or service, namely:

(i)dealing in;

(ii)issuing; and/or

(iii)publishing a notice in relation to

a financial product within the meaning ofs 1041H(2) of the Act;

(c)misleading or deceptive or likely to mislead or deceive contrary tos1041H(1) of the Act.

5. Theconduct of the fourth defendant in or about July 2007 in relation to the issueof shares in the second defendant to replace sharespreviously issued toshareholders of Advanced Energy Systems (Australia) Ltd ACN 118 790 444 (AESA)was:

(a)conduct in this jurisdiction;

(b)conduct in relation to a financial product or service, namely;

(i)dealing in;

(ii)issuing; and/or

(iii)publishing a notice in relation to

a financial product within the meaning ofs 1041H(2) of the Act;

(c)misleading or deceptive in that he did not disclose to those shareholdersthat the second defendant was a separate legal entityto AESA.

AND THE COURT ORDERS THAT

6. Pursuanttos 1324 of the Act, the defendants, and each of them, by themselves, theirofficers, servants, agents and employees or otherwise are restrainedfrom:

6.1making any statement; and

6.2publishing any notice

in this jurisdiction, whether orally, in writing, by electronic means, orotherwise whatsoever, containing any of the informationor statements set out inSchedule B hereto for a period of seven years from the date of these orders.

7. Pursuanttos 1324 of the Act each of the defendants shall, within 72 hours of service ofthese Orders upon them, refund in full any monies receivedby any of them inconnection with an application for the issue or purchase of shares, convertiblenotes or other financial productsof the first, second or third defendant wherethe shares, convertible notes or financial products had not been issued ortransferredto the applicant prior to the making of these Orders.
8. TheOrders made pursuant tos 1323(1) and (3) of the Act on 23 December 2010 bedischarged.

9.A copy of this Order be served on the CommonwealthBank of Australia.

10.The defendants pay the costs of the plaintiff of this action.

11. Serviceof these Orders on each of the defendants is to be effected by attaching a copyof the sealed Orders to an email sent to john.Price@sunenergy.netand by sendingthese Orders by facsimile to (08) 6543 5662 (that being the facsimile numberfrom which the affidavits of John ErnestPrice and Dr Johan Coetzee were sent tothe Court as well as the number from which Ms McEvoy sent communications to ASICon behalfof the defendants), and further upon the first and second defendantsby delivering the same to their respective registered offices.
    
    
12. Ifthe defendants do not obey the orders, they will be liable to Court proceedingsand punishment for contempt and compelled to obeythe orders.
    
    

Note:Settlement and entry of orders is dealt with in Order 36 ofthe Federal Court Rules.

The text of entered orders can be located usingFederal Law Search on the Court’s website.

SCHEDULE A

1. Statementsmade in various documents issued by or on behalf of the first, second, thirdand/or fourth defendant between September2007 and October 2010 that, or to theeffect that, the second defendant will be listed on the Australian SecuritiesExchange withina specified time frame.
   
   
2. Statementsmade in various documents issued by or on behalf of the first, second, thirdand/or fourth defendant between September2007 and October 2010 that, or to theeffect that, an entity called SunEnergy Asia Pacific Limited or some otherunidentified entityor asset associated with “SunEnergy” will belisted on the Australian Securities Exchange within a specified timeframe.
   
   
3. Statementsmade in various documents issued by or on behalf of the first, second, thirdand/or fourth defendant between September2007 and October 2010 that, or to theeffect that, one of the first, second, third or fourth defendants, an entitycalled SunEnergyAsia Pacific Limited or some other unidentified entity or assetassociated with “SunEnergy” has satisfied or will satisfyAustralianSecurities Exchange listing requirements.
   
   
4. Statementsmade in various documents issued by or on behalf of the first, second, thirdand/or fourth defendant between September2007 and October 2010 that, or to theeffect that:

4.1there exists an entity called SunEnergy AsiaPacific Limited, associated with one or more of the first, second or thirddefendants;and/or

4.2SunEnergy Asia Pacific Limited was an entity capable of issuing financialproducts to investors and of being listed on the AustralianSecuritiesExchange

4.3when no company by that name was registered on the public register ofcompanies maintained by the plaintiff.

5. Statementsmade in various documents issued by or on behalf of the first, second, thirdand/or fourth defendant between September2007 and October 2010 that , or to theeffect that:

5.2Ty McCoy;

5.3Michael Eckhart; and/or

5.4Graham Spurling

were, at the time the statements were made, directors of one or more of thefirst, second, third or fourth defendants when there wasno reasonable basis formaking such statements.

6. Statementsmade in various documents issued by or on behalf of the first, second, thirdand/or fourth defendant between September2007 and December 2010 that, or to theeffect that, AESA, the second defendant or one of the first, second or thirddefendants hassecured 200,000 acres of land in the Flinders Ranges, SouthAustralia for the purpose of building a Solar Farm.
   
   
7. Statementsmade in various documents issued by or on behalf of the first, second, third and/or fourth defendant that, or to the effectthat the second plaintiff or“SunEnergy” provided “grid feed” product to the SydneyOlympic Games.
   
   

SCHEDULE B

1. Anyrepresentation or publishing any information in this jurisdiction on the websitewith the domain name www.sunenergy.com.au oron any other websitewhich:

1.1contains or directs the reader to an offer of financialproducts to be issued or sold by any of the first, second or third defendantsorby an associate (as defined in s 50AAA of the Act) of any of the defendants;

1.2refers directly or indirectly to or gives information about an offerdescribed in paragraph 1.1 above;

1.3invites applications for shares, convertible notes or other financialproducts to be issued or sold by any of the first, secondor third defendants orby an associate of any of the defendants;

(a)whether in English or in any other language.

2. Providingto any person in this jurisdiction, whether orally or in writing, informationwhich:

2.1contains or directs the recipient to an offer offinancial products to be issued or sold by the first, second or third defendantor by an associate of any of the defendants;

2.2refers directly or indirectly to or gives information about an offerdescribed in paragraph 2.1 above;

2.3invites applications for shares, convertible notes or other financialproducts to be issued or sold by the first, second or thirddefendant or by anassociate of any of the defendants;

2.4unless such information is accompanied by a Product Disclosure Statementin accordance with the requirements of Division 2 ofPart 7.9 of the Act.

3. Makingan offer of securities for issue, inviting applications for the issue ofsecurities or making an offer for the sale of securitiesof the first, second orthird defendant or of an associate of any of the defendants which is capable ofacceptance by persons inthis jurisdiction whether or not those persons havepreviously accepted offers of financial products issued by any of the first,second or third defendants unless such offer complies in full with therequirements of Chapter 6D of the Act.
   
   
4. Makingan offer of financial products to be issued or sold by the first, second orthird defendant or by an associate of any of thedefendants which is capable ofacceptance by persons in this jurisdiction in the course of, or because of, anunsolicited meeting,an unsolicited telephone call or other unsolicited contactwith the person to whom the offer is made;
   
   
5. Acceptingan application for shares, convertible notes or other financial products of thefirst or second defendant or for shares,convertible notes or other financialproducts to be issued by the third defendant to a person in this jurisdictionunless such applicationrelates to an offer made in compliance with theseorders; and
   
   
6. Acceptingany money paid in consideration for shares, convertible notes or other financialproducts of the first or second defendantor in consideration for shares,convertible notes or other financial products of the third defendant to beissued or sold to a personin this jurisdiction unless such payment relates tothe acceptance of an offer that complies with these orders.
   
   

REASONS FOR JUDGMENT

1. Thisapplication is made because Australian Securities and Investments Commission(ASIC) became concerned about certain fund-raisingactivities associated withAdvanced Energy Systems (Australia) Ltd ACN 118 790 444 (AESAL), ACN 124 647 609Ltd, previously knownas SunEnergy Ltd (SEL), SunEnergy Asia Pacific Pty Ltd(ACN 136 736 395) (SEAPPL), an American entity SunEnergy Incorporated (SEI)andJohn Ernest Price (Mr Price).
2. SEIwas incorporated in Delaware on 21 March 2007. Its sole director is Mr Price. It changed its name to SunEnergy America Incon 14 August 2009.
3. Thematerial before the Court also refers to two other entities: Advanced EnergySystems Ltd ACN 066 908 530 (AESL) and SunEnergyAsia Pacific Ltd (SEAPL). SEAPL is an entity which is not registered in Australia, and therefore does notexist (s 119Corporations Act 2001(Cth) (the Act).
4. On22 December 2010, I made certain ex parte orders against the defendants. It isnot necessary to refer to them at this point. I also directed that notice ofthe originating application and the Orders then made should be given to SEI andto Mr Price by deliveringthem to the address within Australia provided by SEIin its Convertible Note Application Form, namely 101 Collins Street, Level 27,Melbourne Victoria 3000 and by sending the originating application and theorders then made by facsimile to the facsimile addressthere given (specified inthe Order) and by email to john.price@sunenergy.net. The orders were made inthose terms, in the lightof the evidence indicating that service of theapplication but through those avenues communicated with the public or ASIC orboth.
5. Theproceedings were duly served on SEAPPL and AESAL, and notified to SEI and MrPrice.
6. Isubsequently ordered on 1 February 2011 under O 8 r 3 of theFederal CourtRules that the notice given to Mr Price takes the place of service of theapplication on him nunc pro tunc. I fixed a time for any ofthe defendants tofile any answering affidavits.
7. Nodefendant has chosen to file an appearance or to file or serve any affidavitsresponsive to the material now relied on by ASIC. That material has been servedupon them. The only material lodged with the Court on behalf of any of them arean affidavit of MrPrice of 23 February 2011 and an affidavit of Dr Coetzee, aspecialist urologist. Neither is in proper form, but pursuant to O 14rr 5 and6, I order that each be filed notwithstanding any irregularity in them and eachbe used for the purposes of consideringASIC’s current application forfinal orders. It is also convenient to make an order under O 14 rr 5 and 6 thatthe affidavitof Frederick Fargher irregularly sworn on 16 February 2011 (asannexed to the affidavit of Richard Dunstone sworn on 18 March 2011)also beused in this proceeding.
8. DrCoetzee indicates that he has been treating Mr Price for a serious illness sinceSeptember 2010, that Mr Price is not fit to participatein any demanding orstressful activities or to instruct lawyers on this matter, and will be unlikelyto be fit to do so “forat least six months if at all”. He does notsay when Mr Price reached that state of disability. Mr Price’s affidavitis a little surprising for what it does not say. He refers mainly to hismedical condition and the recurrence of that conditionfor which he was firsttreated in 2005. He seeks an order that the proceedings be adjourned for sixmonths. Furthermore, he seeksan order that all affidavits in the proceeding besealed, but without giving any reason for that request. Finally, he refers toearlier email communications with ASIC in November and December 2010, one ofwhich (dated 15 November 2010) is signed by “ShaunaghMcEvoy”, whosays instructions were to be sought from a Mr Sharkey and from Mr Price“in order to get our attorney’sto respond to you”. Anotheremail communication annexed to Mr Price’s affidavit and again signed by“ShaunaghMcEvoy” (dated 24 November 2010) says Mr Sharkey isnow instructing Australian attorneys and that, after speaking to Mr Price,“he and SunEnergy would co-operate fully”. A third emailcommunication, similarly signed (dated 30 January 2011) raisedthe possibilityof enforceable undertakings being proffered by Mr Price. ASIC responded byseeking details of the incorporationand registration of “SunEnergyInc” before exploring the prospect of enforceable undertakings. Noresponse was received.
9. Iam not prepared to adjourn the proceedings for six months as requested by MrPrice. There is no explanation for why SEAPPL orSEL cannot, through theirdirectors, conduct the proceedings. There is no explanation of the role of MrSharkey, or why he has notresponded in any way to the proceedings as wasforeshadowed. There is no evidence to suggest that the affairs of SEI, orindeedof Mr Mr Price, are not being conducted during his illness. Indeed, therole of Ms McEvoy as implied by her email communicationswould tend to suggestto the contrary. Obviously, notwithstanding Mr Price’s illness there wassomeone available to instructher to communicate the prospect of enforceableundertakings, if she herself did not have the authority to explore thispossibility. If, on the other hand, Mr Price is the only person capable inpractice of making decisions on behalf of SEAPPL, SEL and SEI, aswell as on hisown behalf and (as I accept) he is not able to attend to the affairs of thoseentities or his own affairs for a lengthyperiod, there is every reason topromptly address the issues raised by ASIC. Otherwise, those entities will besimply rudderlessfor some months. That is not to say that the directors of thethree corporate defendants would abrogate their responsibilities inthat way. Iconclude that they have simply chosen not to participate in these proceedings,despite the serious allegations madeby ASIC. They have had ample opportunityto do so. Nor is there reason to think that Mr Price’s position isin any way differentfrom that of the corporate defendants. However, theevidence tends to the contrary. It shows that Mr Price is an integral actorinthe matters to be considered. But as I am not persuaded that Mr Price, despitehis illness, has been unable to secure legal representationover the period thatASIC has been communicating with him, or that there are not others who candirectly instruct legal representativeson his behalf (even if in recent timesthe finer details of his instructions might not have been capable of beinggiven), I proposeto proceed with the hearing against him. There are documentsunder his signature at least up to October 2010 promoting one or otherof theinvestment opportunities. However, no material has been presented on behalf ofany of the defendants to suggest the claimis in any way defensible; thesuggestion of the provision of enforceable undertakings suggests that there isno defence.
10. Inthe absence of any responsive material from any defendant, I gave leave to ASIC,on five days notice to the defendants, to applyto the Court for furtherdirections. It has given that notice. It now seeks final orders. To determinewhether final orders shouldbe made, it is necessary to consider and record myfindings on the basis of the extensive affidavit evidence of ASIC.
11. Thefollowing findings are based on that material.
12. Fromapproximately June 2007 to at least October 2010, AESAL, SEL and SEI haveoffered shares or options for shares or convertiblenotes to convert to sharesin themselves, and in other entities which are not clearly identified, or areunidentified. The offershave been made to persons and entities in Australia,and a number of persons and entities have subscribed for shares, options and/orconvertible notes, as a result of the offers.
13. Theoffers have been made in a series of documents titled as Information Memoranda,Corporate or Investor Profiles, Shareholder Reports,and in emails and letters(the Materials). The offers have been made in stages. In June 2007, there wasan offer to buy sharesin AESAL. In September 2007, there was an offer for theissue of “replacement” share certificates in SEL. Between October2007 and January 2009, there were invitations to subscribe for, and the issue ofshares in, SEL. In 2009, invitations were madeto subscribe for, and there werethe issue of shares in, variously, SEL and SEI. From May 2009, those wereinvitations to subscribefor convertible notes, and then the issue ofcertificates promising shares in SEI and SEAPL. Finally, from February 2010there wereinvitations to participate in one or more “SunEnergy”rights issues.
14. ASICcontends that the evidence shows a history of misleading or deceptive statementsmade in connection with these offers and consequentpayment for shares and“options”. In my judgment, each of the six allegations of ASIC aremade out.
15. Firstly,there has been a failure to identify clearly the entities in which investmentsare made or invited to be made. There areseveral elements of that misleadingor deceptive conduct.
16. Theevidence reveals extensive communications over that time. On 1 June 2007, therewas published an AESAL Information Memorandum. That induced investments inAESAL shares. In July 2007, an investor was sent an AESAL “EntitlementCertificate” forordinary shares, but by September 2007 that investor wassent by SEL, an SEL “Entitlement Certificate” for its ordinaryshares. That was followed in October 2007 by an SEL InformationMemorandum.
17. Afurther SEL Information Memorandum was issued on 6 June 2008. Subsequently SELin correspondence with investors, wrote variouslyof the issue of sharecertificates in “SunEnergy”, and of SEL Share “EntitlementCertificates” and SEL Option“Entitlement Certificates”. Correspondence with investors appears to have randomly come from SEL orSEI.
18. By25 August 2009, certificates in the form of convertible notes in the name of theapparently now existent SEAPL were being issued,funding the listing of SEAPL,and on the basis that conversion of the notes will result in the issues ofshares in SEI and SEAPL. By March 2010 certificates were being issued toinvestors in the name of SEI, but also for shares in SEAPL.
19. Themisleading and deceptive conduct involved the substitution of SEL for AESAL,without identifying that they are two differententities; the substitution ofSEI for SEL; the use of the unqualified name “SunEnergy”; theissuing of documents in thename of SEAPL when SEAPL was (and still is) not acompany registered under the Act; and the issuing certificates in the name ofSEIand SEAPL asserting entitlements to shares in SEI and SEAPL when SEAPL“is quoted on the Australian Securities Exchange”. Suchlast-mentioned conduct, incidentally, may contravene s 726 of the Act whichprohibits the offer of securities of a body thathas not been formed or does notexist if the offer would need disclosure to investors under Part 6D.2 if thebody did exist.
20. Inmany of those communications, Mr Price was the signatory or apparentauthor.
21. Second,the conduct of the defendants (they seem to move within the proposals withoutany clear difference between them) has beenmisleading and deceptive about thelisting proposals on the Australian Securities Exchange, both as to the proposedlisted entityand as to the time of listing. There is considerable documentaryevidence to support that conclusion. I shall not refer to it;it is listed anddescribed in the Index to Materials: ASX Listing provided by ASIC. Thatmisleading and deceptive conduct is constitutedby promises of listing on theASX when:
    • the entity to belisted was and remains uncertain. It changes from AESAL to SEI to “theAsia Pacific business” or “activities”;
    • the date uponwhich listing was set to be achieved was consistently not met and a later datesubstituted; and
    • statements weremade to the effect that SEL (or “SunEnergy” or “our AsiaPacific Business” or similar) meetscriteria for listing and is in aposition to, or is ready to, list within a short time. In fact, none of theAustralian entitiesqualify for listing: see ASX Listing Conditions Rule 1.1Conditions 7.8 Rule 1.2.2, 1.2.3. Ultimately, the material suggests thatbyAugust 2009 the only intention was to incorporate a new company SEAPL, ratherthan to list an existing entity.
22. Thirdly,the conduct of the defendants was misleading and deceptive by their statementsthat large numbers of shares in AESAL, SEIor SunEnergy were committed or wereon issue. That was not correct. In fact, the ASIC national database (ASCOT)records the shareholdingsof the only three Australian entities to be:
    • AESAL:2,000,0001 ordinary shares;
    • SEL: 3 ordinaryshares; and
    • SEAPPL: 5ordinary shares (owned by SEI).
23. Thepower to issue shares arises under s 124(1)(a) of the Act. Under s 254X(1), acompany must lodge a notice with ASIC within 28days after issuing shares. Nonotices presenting any different picture have been lodged. Moreover, in respectof SEAPPL, s 113of the Act requires that it have no more than 50 non-employeeshareholders. There has been no process of change of company typeas requiredby ss 162, 163 and 164 so its presentation as an investment entity could nothave been accurate. Again, there is ampledocumentary evidence identified byASIC in its submissions to support that conclusion.
24. Fourthly,statements that the Board and Management of SunEnergy includes Ty McCoy, MichaelEckhart, Graham Spurling, Richard Dewhurst(Dewhurst) and Andrew Cooke aremisleading and deceptive. Cooke never agreed to become a director, as revealedby his own affidavit.
25. Accordingto the ASIC Public Register, the directors of the Australian entities are:
    • AESAL: MrPrice, Dewhurst and Sharkey. Dewhurst denies he has ever been a director;
    • SEL: Dewhurst,Mr Price, Sharkey (Longbottom and Spurling are recorded as former directors,having ceased on 6 August 1997); and
    • SEAPPL: MrPrice

There has been no process of notice of change ofdirectors as required by ss 295A and 205B.

26. Fifthly,the defendants have made misleading and deceptive statements to the effect thatAESAL and SEL have secured land in the FlindersRangers for the construction ofa solar farm. The evidence shows that there is no such agreement.
27. Sixthly,the evidence shows the defendants have engaged in misleading and deceptiveconduct by statements to the effect that AESAL,SEL and/or SEI have provided“grid Feed” products to the Sydney Olympics, associated with aphotograph of solar panels. In fact, no such products were provided.

Thesestatements have been made and repeated in various forms in association withinvitations to subscribe to securities. I findthat individually each statementreferred to above was misleading, and that collectively they comprise a courseof misrepresentationwith the effect of exaggerating the continuity of thecorporate entities involved and their activities, and of concealing orminimisingthe changes in identity of the corporations in which investment wassolicited, exaggerating the size, experience and capabilitiesof management, andinducing initial and continuing investment in several entities under the name“SunEnergy”.

29. Inreaching that conclusion, I have applied the objective test as explained inTaco Co v Taco Bell[1982] FCA 136;(1982) 42 ALR 177. Thus, conduct is misleading ordeceptive if it does, or is likely to, cause a person to misinterpret, or bedeluded as to, the facts:Weitmann v Katies(1977) 29 FLR 336 at 342. It is likely to mislead or deceive if there is a real or not remote possibilityof it doing so:Global Sportsman v Mirror Newspapers[1984] FCA 180;(1984) 55 ALR 25 at30. There must, in the circumstances of the case, be a nexus between therelevant conduct and misconception or deception:Campomar Societad v NikeInternational(2000)[2000] HCA 12;202 CLR 45.
30. Ifind on the evidence that a number of investors were in fact induced to investby the particular conduct identified: seeHornsby Building Information Centrev Sydney Building Information Centre[1978] HCA 11;(1978) 140 CLR 216;NationalExchange v Australian Securities and Investments Commission(2004) 49 ACSR369.
31. Iaccept ASIC’s contention that the conduct of the defendants, as evidencedby the affidavit material, shows a cavalier disregardto accurate identificationof the entities in which investment is sought or was sought and the interestsacquired or to be acquired. That is indicated by the unilateral substitution ofSEL for AESAL by the gradual transfer of invitations from SEL to SEI; theintroductionof offers to acquire securities in SEAPL; the nature of the“certificates” issued to investors; and the issuing of“certificates”in the name of SEI and SEAPPL where the offer hadbeen for convertible notes to convert to shares in SEL: see generallyAustralian Securities and Investments Commission v Maxwell[2006] NSWSC 1052;(2006) 59 ACSR373 at[78].

Section1041H of the Act deals with misleading or deceptive conduct within Australia inrelation to a financial product or a financialservice. I have found that thedefendants have engaged in conduct within Australia that is misleading ordeceptive or is likelyto mislead or deceive.

33. Itis necessary to determine whether that conduct was in relation to a financialproduct or financial service. As to that matter,the words “in relationto” are words of great breadth:Australian Securities and InvestmentsCommission v Narain[2008] FCAFC 120;(2008) 169 FCR 211 at[72]. I have no doubt that therequired connective link is made out in these circumstances.
34. Theterm “financial product” is defined in s 763A. The evidenceestablishes that the defendants have offered facilities(ss 763A(1), 762C),through which persons make financial investments(ss 763A(1), 763B). Moreover, independently of s 763A(1), the issue of certificates purporting torecord shares or interests in sharesfalls within subparagraphs (a) or (c) ofthe definition of “security” (s 761A). They are thus financialproducts (s764A(1)(a)), and the convertible notes, as they offer to payinterest until conversion, also fall within s 763B(a)(ii) so theiracquisitionis a financial investment, and they are to be termed financialproducts: see generallyAustralian Securities and Investments Commissionv West[2008] SASC 111 at[169]-[186] and [189]. I am satisfied the conductwas in relation to financial products.
35. Theterm “financial service” is defined in s 766A. The evidenceestablishes that the defendants have made recommendationsor statements ofopinion intended to influence persons, or which could reasonably be regarded asbeing intended to have such an influence,within the meaning of s 766B(1), andthus have given financial product advice within the meaning of s 766A(1)(a). Somuch is clearfrom any of the introductions to the Information Memoranda inevidence, as well as from many of the accompanying emails and letters. Theyhave also issued or varied certificates purporting to record shareholdings,interests in shares, or entitlements to shares,within the meaning of s766A(1)(b). I am also satisfied their conduct was in relation to financialservices.

Theapplication is primarily for declarations and final injunctive relief unders.1324(1) of theCorporations Act. Palmer J inAustralian Securities andInvestments Commission v Mauer-Swisse Securities Ltd and Anor[2002] NSWSC741 at[36] summarised the applicable principles as follows:

• the jurisdictionwhich the Court exercises unders.1324 CA is a statutory jurisdiction, not theCourt’s traditional equity jurisdiction;
  
  
• Parliament hasmade it increasingly clear by successive statutory enactments that the Court, inexercising its statutory jurisdictionunders.1324, is not to be confined by theconsiderations which would be applicable if it were exercising its traditionalequity jurisdiction;
  
  
• amongst theconsiderations which the Court must take into account in an application for aninjunction unders.1324 CA are the wider issues referred to by Austin J inSweeney and Parkes, and by Davies AJ in Pegasus; they may be gathered under thebroad question whether the injunction would have some utility or would servesome purpose within the contemplation of theCorporations Act;
  
  
• theseconsiderations are to be taken into account regardless of whether theapplication is for a permanent injunction unders.1324(1) or for an interiminjunction unders.1324(4);
  
  
• where anapplication unders.1324(4) is made by ASIC rather than a private litigant theCourt is more likely to give greater weight to the broad question whether theinjunction would serve a purpose within the contemplation of theCorporationsAct;
  
  
• where there isan appreciable – that is, not fanciful – risk of particular futurecontraventions of theCorporations Act by a defendant, it would serve a purposewithin the contemplation of theCorporations Act that the Court grant not only apermanent injunction but, in an appropriate case, an interim injunctionrestraining such conduct.Section 1324 evinces an intention that the possiblysevere consequences and the relative promptness of proceedings for contempt ofCourt be addedto criminal prosecutions as a deterrent to contraventions of theCorporations Act;
  
  

37. Inthis matter, even exercising caution in granting final relief on affidavits, inthis case there is a substantial body of evidencemaking out breaches ofs1041H. Much of that evidence comprises the defendants’ own documents. There is a total lack of any acceptable explanation or responseby any of thedefendants, even accepting that Mr Price is seriously ill. It is available tome to more comfortably then, reach theconclusions I made.
38. Thebalance of the relief sought is secondary to the injunction orders. It fallswithin the additional powers at the conclusionofs 1324(1). I am satisfiedthat it is appropriate to grant it.
39. Therewill be orders to give effect to these conclusions. They include ordersdeclaratory of the contraventions, and an injunctiveorder. I consider theinjunctive order should operate for a period of seven years. I also make anorder unders 1324 of the Act for the refund of subscriptions or other moniesreceived by any of the defendants by reason of their offending conduct.
    
    

Associate:

Dated:24March 2011