On 16 December 2021, the Federal Court ordered James Cruickshank, Blue Star Helium’s (formerly Antares Energy and Big Star Energy) former CEO, be disqualified from managing corporations for four years and pay a $40,000 pecuniary penalty.
The Court found Mr Cruickshank failed to discharge his duties as a director, to act with the degree of care and diligence required of his position, in considering whether information in his possession as a director needed to be disclosed to the ASX.
The penalties follow an earlier judgment on 9 October 2020 (20-283MR), finding:
- Blue Star Helium breached continuous disclosure laws with ASX announcements made in 2015 regarding the sales of Blue Star Helium’s Northern Star and Big Star assets and
- former director, Mr Cruickshank, failed to discharge his duty as a director to act with the degree of care and diligence required of his position.
ASIC Commissioner Cathie Armour said, ‘Companies need to highlight key information to the market, comply with continuous disclosure laws and tell it as it is. Mr Cruickshank did not give the full picture to investors during the sale of Blue Star Heliums’s Northern Star and Big Star assets, and as such prevented them from making informed decisions.
‘Directors should see today’s ruling by the Court against a former director as a reminder of their own obligations and the importance of continuous disclosure to the transparency and stability of Australia’s financial markets.’
Her Honour Justice Banks-Smith stated ‘The conduct in question was not inadvertent and involved a degree of deliberate decision-making on Mr Cruickshank's part. The contravention must be taken seriously, given Mr Cruickshank's position within Antares, the degree of departure from the requisite standards of care and diligence required, and the consequences (actual or potential) of the contraventions. I take into account that a disqualification order will therefore serve the purpose of protection of the public whilst also acting as specific deterrence to Mr Cruickshank.
‘[Mr Cruickshank] was an active participant in the events during the Relevant Period and was on notice that the ASX had squarely raised the issue of due diligence and the issue of disclosure of the Purchaser Identity Information.’
The Court has ordered Mr Cruickshank pay 90 per cent of ASIC’s costs of the proceedings.
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Background
On 9 October 2020, the Court found Blue Star Helium contravened the Corporations Act by failing to notify the ASX of the following information:
- Wade Energy was the purchaser under the relevant sale agreements
- Blue Star Helium had not, prior to 15 September 2015, independently verified or otherwise determined the capacity of Wade Energy to complete the purchases, and
- Blue Star Helium had been informed by Wade Energy that it had not yet received all funding approvals necessary to complete the purchase of the Big Star Asset.
Her Honour also found Mr Cruickshank failed to exercise the degree of care and diligence that a reasonable person in his position would have exercised in his consideration of whether Blue Star Helium was required to disclose the information described above, and so causing or otherwise permitting Blue Star Helium to fail to disclose the information to the ASX.
Editor's note:
Mr Cruickshank has appealed the Federal Court’s decision of 16 December 2021 regarding the declarations and orders that were made. A date for the hearing of the appeal is yet to be fixed.
Editor's note 2:
On 16 March 2022 the appeal was listed for hearing on 9 May 2022.
Editor's note 3:
On 9 May 2022 the hearing was held. The decision was reserved.