Case: Australasian Memory Pty Limited v Brien (2000) 200 CLR 270
Outcome: applied
similar approach is justified by the remarks of Stone J in one of the "asterisk cases", ACCC v Signature Security Group Pty Ltd [2003] FCA 3 ; (2003) ATPR 41-908. Her Honour observed at [27] that the degree of prominence which must be given to a qualifying statement may well vary with the potential of the primary statement to be misleading and deceptive. [Emphasis added] I am not here deciding a misleading or deceptive conduct claim, only whether I am satisfied that it is in the interests of creditors that Storm Financial continue under administration rather than be wound up. Mr and Mrs Cassimatis have not persuaded me that their Information Memorandum has had and could not have had any material effect on creditors or that it has not and will not yield proxies in favour of their solicitor. That is material in deciding whether the administration should continue. It does not inexorably follow from the features of the Information Memorandum which I have identified that it is not in the interests of creditors for the company to continue in administration rather than be wound up. Subsection 447B(2) would, in my opinion, permit the Court to direct the removal of the Information Memorandum and reference to it from the web site of Mrs Cassimatis and the publication on that web site that the Court had ordered the removal with a link to the Court's judgement. It would also permit the making of an order revoking or directing the administrators not to accept any proxy directed to Mr Russell on or after 16 March 2009 and before the publication of remedial advertising (or perhaps out of an abundance of caution, given the date of the Information Memorandum, after 9 March 2009). As with s 447A(1) of the Act, it would require cogent reasons to read down the generality of the power conferred by s 447B(2) so as to preclude the making of such orders and none are apparent: cf Australasian Memory Pty Limited v Brien (2000) 200 CLR 270 at 279-280, [17] to [10] . It was submitted on behalf of Mr and Mrs Cassimatis that the making of any such orders would disenfranchise creditors. It may, and a concern is that, having sent off a proxy in favour of Mr Russell, the corrective advertising and the chance of a fresh proxy or attendance in person at the creditors' meeting may not come to the attention of a creditor. With respect it would be odd to allow an administration to continue so as to allow a trained proxy to be utilised. Were I persuaded that the DOCA did offer the prospect of a better return to creditors than a liquidation even though false or misleading statements had been made concerning it, this alternative would carry greater weight. However, the more I reflect upon this DOCA, the more it seems to me that it is a chimera; creative, but hardly constructive insolvency. For its unquantified and unquantifiable benefits, the creditors are being asked to decide to wait 60 days or perhaps 120 days to see whether the DOCA sum will emerge as available for ECA to pay from litigation closely contested for reasons good enough to constitute a serious question to be tried. I have a further concern in relation to it being in the interests of creditors for the administration to continue. The DOCA requires Mr and Mrs Cassimatis to co-operate with the administrators in respect of all matters done under it (cl 28). The DOCA consigns to Mr and Mrs Cassimatis a role in relation to litigation other than as witnesses. It is not, it must be said, an unfettered role. It is intended that the administrators will also play a part. Further, the DOCA contains an elaborate dispute resolution process that may see Storm being wound up under a creditors' voluntary winding up (see cl 30 to cl 36). In my opinion, the present proceedings, including the separate application made by Mr and Mrs Cassimatis, are eloquent as to the prospects of their co-operation and dispute in relation to litigation decisions in the DOCA. The administrators have made a considered value judgement, which includes taking legal advice about the prospects of success in the Supreme Court in respect of the DOCA sum, that it is in the interests of creditors that Storm be wound up. Mr and Mrs Cassimatis concede there is a serious issue to be tried in those Supreme Court proceedings but offer no proof of a better return to creditors that creditors might factor in to an assessment as to whether it is nonetheless in their interests to approve the DOCA. It is inherently likely that many of the claims contemplated for prosecution under the DOCA will require either or each of Mr and Mrs Cassimatis to give evidence. It is likewise inherently likely that difficult issues will arise concerning prospects, which will include an assessment of the credibility of their evidence and the strength of competing evidence offered, for example, by the Commonwealth Bank. Of course, self critical decisions fall to be made by any client who prosecutes a cause of action for his benefit. Under the DOCA Mr and Mrs Cassimatis would be called upon to make such decisions not just for their own benefit or that of companies they control but also for the benefit of a potentially very wide class of creditors. When regard is also had to the tone of such of their web site as has been reproduced in evidence, and with all due respect, I doubt whether they would bring to decision-making under the DOCA the same clinical detachment that creditors are entitled to expect from a court appointed liquidator alone. For example, on the web page (Exhibit MRR8 to Mr Ryan's affidavit, p 214) that links to the Information Memorandum one see this statement apparently authored by them, "We have owned and operated Storm (in its various forms) over the years and feel strongly that we will be more passionate about the pursuit of justice in this matter than anyone else."; on another web page (Exhibit MRR8 to Mr Ryan's affidavit, p 218), an apparent "mission statement" by Mr Cassimatis, "My crusade is to find justice for all affected Storm Financial clients. I will not rest in this." Passion is one thing, sober, perhaps self critical, assessment of the prospects of litigation is quite another. If there is to be litigation which might yield benefits for creditors I am not persuaded for this further reason that it is in the interests of creditors for the administration to continue so as to permit this DOCA to be considered either at a creditors' meeting on 30 March 2009 or even perhaps shortly after the fate of the Supreme Court proceedings on 8 April 2009 is known.