ASIC spent more than five years pursuing Rich, alleging Rich and finance director Mark Silbermann misled the board and the market about the company's true financial position and breached their director's duties by not ceasing trading three months before it finally collapsed into voluntary administration in May 2001.
Packer and Murdoch have previously said they were "profoundly misled" about the state of the company's financial position.
However, yesterday's judgement has cleared Rich of this claim. NSW Supreme Court judge Justice Robert Austin said ASIC had "failed to prove its case" and lashed out against ASIC for bringing such a wide-ranging case against Rich.
"There is a real question whether ASIC should even bring civil proceeding seeking to prove so many things over such a period of time as in this case," Austin said in his judgement.
Speaking to reporters outside the court, Rich was thrilled with the verdict and said the ruling "should put to bed once and for all the ridiculous statement" made by Packer and Murdoch.
But Rich has always blamed Murdoch and Packer for pulling the pin on a $132 million rights issue just before the company collapsed.
While Austin refused to reach any conclusions on whether or not the rights issue would have allowed the company to survive, it's an issue that One.Tel's special liquidator Paul Weston will be keen to investigate. He is seeking to recover $132 million plus interest.
"The judgment... of some 3,100 pages will take some time to digest in terms of how it will affect my proceedings against a number of defendants including James Packer and Lachlan Murdoch," he said in a statement released after the court decision.
"It is not the outcome of ASIC v Rich but rather specific findings of fact that will be relevant to my proceedings and I will need to closely review this aspect with my legal team. Now that the judgment has been delivered, I can proceed in earnest with the special purpose of my appointment to finalise litigation funding and pursue my proceedings."
However, Professor Ian Ramsay, director of the Centre for Corporate Law and Securities Regulation at the University of Melbourne, told ABC television that it is unlikely that Murdoch and Packer will be forced to pay compensation.
"It generally is quite open to major investors in a company to decide whether or not to put more money into a company or whether to stop and not put additional money into a company, albeit that the consequences may be that the company goes into insolvency," Ramsay said.
"That typically is a commercial decision, an investment decision for the key investors."
Justice Austin sharply criticised Packer and Murdoch, who both gave evidence during the long trial. The judge particularly lashed the pair's faulty memory - Packer use the phrase "I do not recall" or similar 1,951 times, while Murdoch had 881 memory problems during his evidence.
Packer came in for particularly heavy criticism.
"Essentially Mr Packer jnr appeared to misunderstand the purpose of cross-examination, and treated it as an opportunity to attempt to 'put his side of the story' by argumentative and non-responsive answers and even occasionally evasive answers."
In contrast, Austin said Rich's evidence was exemplary.
ASIC, which has not ruled out an appeal to the decision, has been ordered to pay Rich's costs, which he says were about $15 million.
