#7357 - Plaintiff Actions - Securities and Financial Services Regulation

• [Dispute resolution systems iro dealings with retail clients] A licensee that provides FS to retail clients have to have a DR procedure complying with s 912A(2)

• [Compensation arrangements iro dealings with retail clients] An AFSL must have adequate arrangements for compensating those persons for pecuniary losses suffered because of breaches of relevant obligations under Ch 7 satisfying the requirements under the regulations. This includes a requirement that licensees have adequate professional indemnity insurance

S 10141I – civil action for loss or damage for contravention of s 1041E to 1041H

1. A person who suffers loss or damage by conduct of another person that was engaged in in contravention of s 1041E, F, G, H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention, w/o/n that other person ro any person involved in the contravention has been convicted of an offence iro the contravention

(1A) The court can reduce damages proportionately according to a claimants failure to take reasonable care, the defendants lack of intention or fraud in causing the damage to the extent it considers J&E

2. [6 years limitation of action from when the COA arises]

3. S 1317S applies in relation to liability under (1) as if:

   1. The sections referred to in (1) were CPP; and

   2. Proceedings under (1) were eligible proceedings

S 1317H – Compensation orders: corporation/scheme civil penalty provisions

1. A Court may order a person to compensate a corporation or registered scheme for damage suffered by the corporation or scheme if:

   1. The person has contravened a corporation/scheme CPP irt the corporation or scheme; and

   2. The damage resulted from the contravention

The order must specify the amount of compensation and not contingent on a declaration under s 1317E

Damages includes profits

2. In determining the damage suffered by the corporation or scheme ftpo making a compensation order, include profits made by any person resulting from the contravention or the offence

Damage includes diminution of value of scheme property

3. In determining the damage suffered by the scheme ftpo making a compensation roder, include any diminution in the value of the property of the scheme

4. [Scheme property]

Recovery of damage

5. A compensation order may be enforced as if it were a judgment of the Court

S 1324 – Injunctions

1. Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute:

   1. A contravention of this Act; or

   2. Attempting to contravene this Act; or

   3. Aiding, abetting, counselling or procuring a person to contravene this Act; or

   4. Inducing to attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or

   5. Being in any way, (/in)directly, knowingly concerned in, or party to, the contravention by a person of this Act; or

   6. Conspiring with others to contravene this Act

The Court may, on the application of ASIC or a person whose interests have/would be affected by the conduct, grant an injunction on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing.

2. Where a person refuses or proposes to refuse to do an Act or thing required by this Act, the Court may, on the application of:

   1. ASIC; or

   2. Any person whose interests have been, are or would be affected by the refusal or failure to do an act or thing;

grant an injunction, on such terms as the Court thinks appropriate, requiring the first-mentioned person to do that act or thing

10. Where the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person

s 1325 – Other Orders

1. In proceedings for a contravention of the Fundraising (Ch 6D), the Court finds that a person has suffered or is likely to suffer loss or damage because of conduct of another person that was engaged in such a contravention, the Court may make such an order as it thinks appropriate against the person engaged in the conduct or a person who was involved in it (any of the orders mentioned in (5)) if the the Court considers that the order(s) concerned will compensate the first-mentioned person in whole or part for the loss or damage

2. [Applications by a Person] The court can, on the application of a person who has suffered or likely to suffer loss or damage because of conduct in contravention of the Fundraising provisions [or on the application of ASIC in accordance with (3)] on behalf

3. of such person(s), make such an order(s) as the Court thinks appropriate against the person who engaged in or was involved in the contravention (including the orders under (5)) if the court thinks it will compensate the first-mentioned-person in whole or part for the loss or damage

4. [Applications by ASIC] Where in a proceeding for a contravention of the fundraising provisions, or instituted by ASIC under s 1324, a person is found to have engaged in conduct in in contravention of such provisions, ASIC can make an application for an order under (2) for such an order

5. [Limitations] An application can be made within 6 years after the day on which a COA arose

6. [The orders] The orders referred to in (1)-(2) are:

   1. [Declaration that a contract is void] An order declaring the whole or any part of the contract made between the person who suffered or is likely to suffer, loss or damage, and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab inito or at all times on and after a specified day before the order is made;

   2. [Variation] An order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract/arrangement to have had effect as so varied on and after a specified day before the order is made; and

   3. [Enforcement] An order refusing to enforce any or all of the provisions of such a contract;

   4. [Direction to refund] An order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage

   5. [Direction to pay] An order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay the person who suffered the loss or damage

   6. [Direction to supply services] An order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at the person’s own expense, to supply specified services to the person who has suffered the loss or damage

s 1330 – ASIC’s Power to intervene in proceedings

1. ASIC may intervene in any proceeding relating to a matter arising under this Act

2. Where ASIC intervenes in a proceeding referred to in (1), ASIC is taken to be a party to the proceeding, and s.t. this Act, rights, duties and liabilities of such a party

3. WL (2), ASIC may appear and be represented in any proceeding in which it wishes to intervene under (1):

   1. By a staff member of ASIC; or

   2. By a natural person to whom, or by an officer or employee of a person or body to whom or to which, ASIC has delegated its functions and powers under this Act or such of those functions and powers as relate to a matter to which the proceeding relates; or

   3. By solicitor or counsel