The NSW Court of Appeal (Justices Mason, Giles and Beazley) today handed down its decision on the appeals by former HIH Insurance Limited director, Mr Rodney Adler, and former HIH Chief Executive Officer, Mr Ray Williams, against the findings of Justice Santow of the Supreme Court, that Messrs Adler and Williams had breached their duties as directors of HIH Casualty and General Insurance Ltd.
The Court upheld Mr Adler’s appeal against the finding that he had breached s183 of the Corporations Act (wrongly using information obtained as a company officer) but confirmed all other breaches decided by Justice Santow against Mr Adler and Mr Williams.
The Court also upheld the bans, pecuniary penalties and compensation ordered against the defendants, subject to a recalculation of the interest component of the compensation. The Court awarded costs of the appeal to ASIC (which are additional to the approximately $600,000 costs payable to ASIC in relation to the original proceedings).
‘ASIC is pleased with today’s result’, Chairman of the Australian Securities and Investments Commission (ASIC), Mr David Knott said.
‘The Court’s decision to uphold the penalties ordered by Justice Santow confirms the seriousness of the breaches committed by the defendants. While the recalculated interest will result in a reduction to the compensation, the principal amount of $7,049,931 payable by Messrs Adler and Williams remains unchanged’, Mr Knott said.
‘As a result of today’s decision ASIC expects to authorise the release to the HIH liquidator of the recalculated compensation within the next month. This will be paid from monies already secured under the original orders. The pecuniary penalties of $1.155 million have already been paid to consolidated revenue.
‘As Mr Adler is presently facing criminal charges on related matters ASIC will not be commenting further on today’s decision’, he said.
Background
In March 2002, Justice Santow found that Mr Adler, Mr Williams and former HIH Chief Financial Officer, Mr Dominic Fodera, had breached their duties as directors under the Corporations Act, in relation to a payment of $10 million by an HIH subsidiary (HIH Casualty and General Insurance Limited) to Pacific Eagle Equities Pty Ltd, a company of which Mr Adler was a director.
As a result of the decision, Mr Adler was banned from acting as a director of any company for 20 years. Mr Williams was banned for ten years.
Mr Adler and Adler Corporation were each ordered to pay pecuniary penalties of $450,000 (totalling $900,000). Mr Williams was ordered to pay pecuniary penalties of $250,000 and Mr Fodera was ordered to pay pecuniary penalties of $5,000.
In addition, Messrs Adler and Williams were ordered to pay compensation of $7,986,402 to HIH Casualty and General Insurance Limited. The Court of Appeal has ordered that the interest component of that sum be recalculated.
End of release