ASIC V Edwards

In these civil penalty proceedings under Part 9.4B of the Corporations Act 2001 (Cth), the defendant seeks a stay of the hearing on penalty because of the pendency of an appeal to the High Court in the matter of Australian Securities and Investments Commission v Forge heard on 7 and 8 February 2006 (see [2006] HCA Trans 22 and 25). The appeal involves, among other things, resolution of questions concerning the effectiveness of the transitional provisions in the corporations legislation designed to ensure that circumstances arising before 15 July 2001 may be dealt with under the substantive Corporations Act provisions that commenced at that time.

The grant of special leave in the Forge matter occurred in December 2005, that is to say, after my substantive judgment in these proceedings on 24 August 2005: see Australian Securities and Investments Commission v Edwards (2005) 220 ALR 148. However, the Forge matter had been in the High Court and the transitional issue had been exposed to the High Court in May 2005 (see [2005] HCA Trans 313; [2005] HCA Trans 383), which was before I gave my decision.

The transitional issue had, in any event, been the subject of discussion between the parties before the substantive hearing before me even commenced and no question of stay or delay based on the transitional provisions was raised when I embarked on the hearing of the proceedings.

Uncertainty about the ultimate truth of the law exists on a continuing basis under our system which, according to traditional theory, sees the law progressively disclosed by courts. My decision referred to the issue concerning the transitional provisions and to relevant decisions of the New South Wales Court of Criminal Appeal and the Full Federal Court on the matter ( R v Frawley (2005) 52 ACSR 461; Kennedy v Australian Securities and Investments Commission (2005) 52 ACSR 301). Paragraph 4 of my judgment of 24 August 2005 was as follows: “Another condition of applicability of these provisions is that the time of the incurring of the debt is at or after the commencement of the Corporations Act 2001 (Cth). That commencement occurred on 15 July 2001, more than two years after most of the acts and events on which ASIC relies in this case. By virtue of s.1400, however, those acts and events may be so relied upon, where those acts and events gave rise to an equivalent liability under a provision of the Corporations Law as in force before 15 July 2001. It is submitted by ASIC and not denied by the defendant that this transitional provision applies in the present case. The correctness of that conclusion is, in any event, clearly indicated by both R v Frawley (2005) 52 ACSR 461 and Kennedy v Australian Securities and Investments Commission (2005) 52 ACSR 301.

The position emerging from the decisions to which I have just referred remains the law. That position may or may not change. The possibility that it may change is not sufficient to cause the court to decline to exercise its jurisdiction with respect to penalty, particularly where, as here, the issue was not raised at the outset and the matter has reached a point where an appeal against the substantive findings on liability has been initiated and the court has already declined an earlier application for a stay, partly on the basis that matters of stay can, in such circumstances, be more adequately dealt with in the Court of Appeal.

The present application for a stay is therefore refused.