[PS 4]
Policy Statement 4
Intervention
Chapter
9 Miscellaneous
Issued
3/6/1991
[PS 4.1] Under s1330 of the Corporations Law (Law), the ASC is entitled to
intervene in any proceedings relating to a matter arising under the Law. The
ASC has received various requests by parties to civil proceedings, both before
the Federal Court and State Supreme Courts, that it intervene and it was
thought appropriate that the ASC publish its policy in relation to
intervention. This policy is for the assistance of litigants and their advisers,
but will be reviewed on a case by case basis subject to the merits of any
particular application.
[PS 4.2] In many civil proceedings matters may arise which ‘‘relate to’’ a matter
arising out of the Law. The term ‘‘relating to’’ in s1330(1) will be construed
broadly. Proceedings may be purely commercial in nature, but may give rise to
questions of law, including as to the construction of the Law, which make the
proceedings those ‘‘relating to a matter arising’’ under the Law. The ASC may
consider that the matter is of sufficient importance that it should intervene.
[PS 4.3] The ASC will be reluctant to intervene in proceedings of a pure commercial
nature, where the various parties of those proceedings are well able properly
to make submissions on all relevant facts to the court. However, the ASC will consider intervention
in the following circumstances:
Certain cases will raise issues which affect the integrity of the financial
markets or are of such financial or commercial significance that the ASC would
wish to make submissions.
For example: The ASC has indicated that it will intervene in
proceedings
between the liquidator of The Duke Group Ltd, as
plaintiff,
and Ernst & Young, as defendant, because those proceedings
concern
the role of an independent expert providing a report to
shareholders
in the context of a takeover offer. The ASC is concerned
1.ASIC
POLICY STATEMENTS [PS 4.3]
that
the role of the expert, which is fundamental to various provisions of the Law,
should be clearly defined and would make submissions to the court in relation
to these matters.
As a regulator responsible for enforcement of the Corporations Law, the
ASC believes that it is important that judicial interpretation of the Law
occurs consistently and with the benefit of submissions from the ASC, when the
ASC can make pertinent and useful submissions.
Where matters in issue will be determined by interpretation of a provision
of the Law, in respect of which it is contended there is an ambiguity, the ASC
will often wish to make submissions as to its interpretation of that provision.
In certain cases, the ASC will have information which could assist the court
which is acquired through its investigative procedures. This information may
include information acquired through examination of witnesses, under s21 of the
Australian Securities Commission Act (ASC Act), through its review of documents
acquired by the ASC in exercise of its powers, or through the assistance of
foreign regulators. Much of this
information may be confidential and the ASC may elect only to disclose this
information to the court through formal intervention. Whenever the ASC holds
information which is relevant to the determination of an issue before the
court, by reason of its own investigations, it will seek to ensure that the
court is informed of those matters.
Under s50 of the ASC Act the ASC may cause proceedings to be carried on
in the name of a company, or any other person with that person’s consent, where
it appears to the Commission to be in the public interest for those proceedings
to be brought as a result of an investigation or examination under that Act. If
civil proceedings to which the ASC is not a party concern matters, by reason of
which the ASC would otherwise cause proceedings to be commenced under s50, and
the court would in the usual circumstances order joinder of those two sets of
proceedings, the ASC will seek to intervene and exercise its powers pursuant to
s50 as a party to the first proceedings. In this manner, the ASC can ensure, to
the extent practicable, that the court makes orders for the benefit of all
parties who should properly be joined in the proceedings.
[PS 4.4] The ASC believes that the private plaintiff is best able to assess
the
costs and benefits of litigation. The ASC is reluctant to undertake civil
proceedings,
where there is a potential plaintiff with sufficient funds to
bring
those proceedings, but is not prepared to do so. However, where the
ASC
is satisfied that civil proceedings which may be justified by reason of
a
contravention of the Corporations Law cannot be brought, because of the
2.ASIC
POLICY STATEMENTS [PS 4.5]
financial
circumstances of a potential plaintiff, the ASC will consider an application
for assistance. The ASC may be prepared to undertake a greater role in ensuring
the prosecution of those proceedings if it appears to be in the public interest
for the proceedings to be brought. For
example: If the ASC was satisfied that the affairs of a corporation were being
conducted in a manner oppressive to minority shareholders, and those minority
shareholders had insufficient resources to bring appropriate proceedings, the
ASC may consider a request for intervention under s1330 of the Law.
[PS 4.5] The ASC does not regard intervention as a method by which it may
subsidise litigation brought by a private party. The ASC will not agree to bear
the cost of any party to civil proceedings. Rather, the ASC will exercise its
right of intervention on the following basis:
(a) The ASC will bear its own costs in relation to
intervention and to the extent that certain costs can be shared with some other
party where the ASC sees a community of interest (eg experts’ fees,
consultants’ reports etc) and the ASC may consider a request for a cost sharing
arrangement.
(b) The ASC will appear through its own staff
member or legal adviser and will not agree to be represented as an intervening
party by any other party to the proceedings.
(c) Where the ASC supports submissions being made
by another party to the proceedings, the ASC will, to the extent permitted by
s127 of the ASC Act, agree to exchange information with that other party. However, any information which the ASC
provides to another party to the proceedings will be on a confidential basis
and subject to the agreement of the other party that the ASC will exercise an
overriding discretion as to whether that information is put before the court by
the ASC as an intervening party.
(d) Where the ASC has conducted examinations, in
relation to matters arising in the proceedings, the ASC will consider
favourably a request to provide to other parties to the proceedings a copy of
the record of examination and all related ‘‘books’’ (as defined by the ASC Act)
pursuant to s25 of that Act. The ASC believes that, notwithstanding intervention,
it is entitled to continue an investigation conducted under Pt 3 of the ASC
Act. However, the ASC will generally prefer to intervene in any civil
proceedings only after it has completed an investigation, in order that it can
put before the court all relevant information disclosed by reason of that
investigation.
3.ASIC POLICY STATEMENTS [PS 4.6]
[PS 4.6] The ASC will assess any request for intervention, on the basis of a
written request by the party to the proceedings or its solicitors, containing
the following information:
(a) a copy of all pleadings filed in the proceedings;
(b) legal advice (whether by the solicitors or counsel) concerning the likelihood
of succeeding in those proceedings and identifying, to the extent practicable,
matters where submissions by the ASC could assist; and © a summary of the
matters which would recommend ASC intervention, conforming to the policies
stated above.
[PS 4.7] Any request for intervention should be sent to the Regional General
Counsel in the jurisdiction in which the proceedings are to be brought. Where
intervention is sought on the basis of the significance of the proceedings, the
Regional Office will liaise with the Office of the Chairman. It is unnecessary
and inappropriate for any submission to be made directly to the Office of the
Chairman.
[PS 4.8] The ASC regards itself as an instrumentality of the Crown in right of
the Commonwealth. Accordingly, when the ASC intervenes in civil proceedings, a
party suing on behalf of the Commonwealth will be a party to those proceedings
and the original jurisdiction of the High Court of Australia under s75 of the
Constitution is thereby invoked. Accordingly, where a matter under the
Corporations Law is being heard before a State Supreme Court, the
jurisdictional basis will alter from that of State jurisdiction to Federal
jurisdiction from the time the ASC intervenes.
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