The Court of Appeal of the Supreme Court of
Western Australia has rejected ASIC’s appeal against the decision of trial judge Justice Simmonds, that promissory notes issued by Emu Brewery
(part of the now collapsed Westpoint group) with a face value of at least $50,000 were not debentures for the
purposes of the Corporations Act. (ASIC v Emu Brewery Mezzanine Limited. Now available online as PDF)

 This means that the provisions of the Corporations
Act relating to the issue of debentures, including the requirement for
investors to receive a complying disclosure document, and a debenture
trust deed and an independent trustee did not apply to the issue of
promissory notes by Emu Brewery (and, by extension, other Westpoint
companies involved in issuing promissory notes).

ASIC will ask that the Act will be reviewed to determine whether consumer protection in this area is more important than not imposing burdensome regulation on legitimate fundraisers.

 ASIC commenced proceedings against Emu Brewery in
May 2004.

Justice Simmonds ruled on 19 November 2004 that the promissory notes were not debentures and that the
promissory notes gave rise to interests in a managed investment scheme.
His Honour did not find the representations in the information
memoranda issued by Emu Brewery were misleading or deceptive.