The Full Federal Court of Australia has made final orders allowing the appeals of the former directors of Australian Property Custodian Holdings Ltd (APCHL), the responsible entity of The Prime Retirement and Aged Care Property Trust (Prime Trust) and setting aside the declarations of contravention and orders made by the trial judge against the directors and APCHL.
As a result of the Full Court’s judgment, penalties and disqualification orders previously ordered against the five former directors (Mr William Lewski, Mr Mark Butler, Mr Kim Jaques, Mr Peter Clarke and Dr Michael Wooldridge), stayed by order of the Full Court made 15 August 2016, have been set aside.
The conduct in this case focused on a board resolution passed on 22 August 2006 to lodge an amended constitution with ASIC, which the board had previously (on 19 July 2006) resolved, without member approval, to amend to allow fees to be paid to APCHL.
By their reasons for judgment delivered 14 July 2016, the Full Court found that there was only one matter for consideration by the directors at the 22 August 2006 meeting, being whether to lodge the amended constitution. As such, it found there was no obligation on the directors at the 22 August 2006 meeting to turn their minds to whether or not the proposed amendments to the constitution were lawful or proper. The Full Court's reasons delivered today affirmed that approach.
ASIC is considering the judgment.
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.
ASIC commenced civil penalty action against APCHL and its former directors on 21 August 2012 (12-208MR) challenging the lawfulness of the decisions made by the board of APCHL, in circumstances where investors suffered significant losses, and to establish the duties of directors and responsible entities of managed investment schemes
On 12 December 2013, the trial judge found the former directors and APCHL had breached their duties (13-339MR) and handed down a decision on penalty on 2 December 2014 (14-323MR).
The Full Court handed down its first reasons for judgment in the appeals on 14 July 2016. However, final orders were not entered and a further hearing of the appeals was held on 12 and 13 December 2016 (16-225MR).
Further details of the proceeding can be found at ASIC's website in the Key Matters section.
Editor's note:
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 2:
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 3:
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 4:
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 5:
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 6:
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 7:
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 8:
The remittal has been listed before the Full Federal Court for two days commencing 12 August 2019.
Editor's note 9:
The remitted hearing before the Full Court of the Federal Court concluded on 13 August. The court reserved its decision.
Editor's note 10:
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 11:
On 29 October 2019, Dr Wooldridge discontinued his application for leave to manage four corporations.