The Full Court of the Federal Court of Australia has upheld an appeal by former directors of Australian Property Custodian Holdings Ltd) (APCHL), the responsible entity of The Prime Retirement and Aged Care Property Trust (Prime Trust), finding that the trial judge should not have found that any of the former directors had contravened the Corporations Act as alleged by ASIC. As a result, the previous disqualifications and pecuniary penalties imposed on the directors will be set aside.

The former directors:

• Mr William Lewski;
• Dr Michael Wooldridge;
• Mr Mark Butler;
• Mr Kim Jaques; and
• Mr Peter Clarke

had appealed against Justice Murphy's findings on liability [This media release was amended on 4 January 2024 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.] that the directors had breached their duties as officers of APCHL. APCHL was also found to have breached its duties as responsible entity.

ASIC cross-appealed the disqualification and pecuniary penalties made against Mr Lewski, and the pecuniary penalty orders made against Dr Wooldridge, Mr Butler and Mr Jaques  on the basis that they were manifestly inadequate. In light of the decision, the Full Court considered that it was unnecessary to make findings on ASIC's cross-appeal.

Download a copy of the Full Court's decision

ASIC is currently reviewing the decision and has no further comment at this time.

Background

APCHL was the responsible entity of the Prime Trust, a managed investment scheme which owned retirement villages in Queensland, NSW and Victoria. On 18 October 2010, voluntary administrators were appointed to APCHL. On 23 November 2011 Stirling Horne and Petr Vrescky of PKF Lawler (formerly Lawler Draper Dillon) were appointed liquidators following the creditors voting to place the company into liquidation. Approximately 9,700 investors contributed over $500 million in the Prime Trust.

Editor's note:

On 10 August 2016, the Full Court stayed the orders made by Justice Murphy against each of the directors until final orders in the appeals are made. At a directions hearing on 15 August 2016, Justice Middleton made timetabling orders in relation to finalising the form of final orders in the appeals.

Editor's note 2:

On 22 September 2016, the Court made orders that the appeals be set down for a further hearing on 12 and 13 December 2016.

Editor's note 3:　

The further hearing in the appeals was held on 12 and 13 December 2016 before the Full Court of the Federal Court of Australia. The Full Court has reserved its decision.

Editor's note 4:

On 1 November 2017, the Full Federal Court of Australia made final orders allowing the appeals of the former directors of Australian Property Custodian Holdings Ltd, the responsible entity of The Prime Retirement and Aged Care Property Trust and setting aside the declarations of contravention and orders made by the trial judge against the directors and APCHL.

Editor's note 5:

On 29 and 30 November 2017, ASIC applied to the High Court of Australia for special leave to appeal from the orders made by the Full Court on 1 November 2017. APCHL has been joined as a respondent in all applications. 　

In relation to Mr Lewski, Dr Wooldridge, Mr Butler and Mr Jaques, if special leave is granted ASIC will  seek to set aside all orders made by the Full Court insofar as they relate to those individuals and APCHL and restore the orders made by the trial judge (Justice Murphy) in December 2014. 　

In relation to Mr Clarke, if special leave is granted ASIC  will not seek to appeal against the Full Court’s decision setting aside the orders that Justice Murphy made against Mr Clarke personally. Its proposed appeal relates only to those parts of the Full Court’s orders made in Mr Clarke's case that apply to the other directors and APCHL.

Editor's note 6:

On 18 May 2018 ASIC was granted leave to appeal to the High Court.  A date for the High Court appeal hearing is yet to be fixed.

Editor's note 7:

On 18 May 2018, ASIC was granted leave to appeal to the High Court. The appeal will be heard on 17 and 18 October 2018 in the High Court in Canberra.

Editor's note 8:

The appeal was heard on 17 and 18 October 2018 in Canberra. On 13 December 2018 the High Court unanimously allowed ASIC’s appeal in part, finding that ASIC had succeeded in two of its three grounds of appeal and ordered the remittal of the matters to the Full Court of the Federal Court (18-377MR).

Editor's note 9:

On 15 March 2019 at a case management hearing the Court said that it would list the matter for hearing on a date (to be advised) in August 2019. Download the Court’s procedural orders

Editor's note 10:

The appeal was heard on 17 & 18 October 2018 in Canberra. On 13 December 2018 the High Court unanimously allowed ASIC’s appeal in part, finding that ASIC had succeeded in two of its three grounds of appeal and ordered the remittal of the matters to the Full Court of the Federal Court (18-377MR).

Editor's note 11:

On 15 March 2019 at a case management hearing the Court said that it
would list the matter for hearing on a date (to be advised) in August 2019. Download the Court’s procedural orders - 15 March 2019.

Editor's note 12:

The remittal has been listed before the Full Federal Court for two days commencing 12 August 2019.

Editor's note 13:

The remitted hearing before the Full Court of the Federal Court concluded on 13 August.  The court reserved its decision. 

Editor's note 14:

On 11 October 2019, the Full Court of the Federal Court of Australia made disqualification and pecuniary penalty orders against William Lewski, Mark Butler and Kim Jacques (19-290MR).

Editor's note 15:

On 29 October 2019, Dr Wooldridge discontinued his application for leave to manage four corporations.