Prime Trust

Updated 7 November 2019

Background to ASIC's investigation

Following reports and concerns regarding the collapse of Australian Property Custodian Holdings Ltd (ACN 095 474 436) (In Liquidation) (Receivers and Managers Appointed) (Controllers Appointed) (APCHL) and The Prime Retirement and Aged Care Property Trust (ARSN 097 514 746) (the Prime Trust) ASIC commenced an investigation into the conduct of the responsible entity, APCHL and the management of the Prime Trust.

Current status of ASIC's proceedings against APCHL and former directors

On 2 December 2014 Justice Murphy of the Federal Court delivered the Courts judgment declaring contraventions of the Act and making orders disqualifying Mr Lewski, Dr Wooldridge, Mr Butler and Mr Jaques from managing corporations for varying periods. He also made pecuniary penalty orders against the four directors and Mr Clarke. 

The directors appealed and the Full Court of the Federal Court of Australia (Full Court) delivered its judgment on 14 July 2016. After the reasons of the Full Court were handed down, the parties were invited to make submissions in relation to the final orders to be made in the appeals. 

As an interim step, and until final orders in the appeals were made, the Full Court stayed the orders made by Justice Murphy against each of the directors. You can view the orders of the Full Court dated 10 August 2016 here.

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.

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 was joined as a respondent in all applications.  

In relation to Mr Clarke, ASIC did not seek to appeal against the Full Court’s decision setting aside the orders that Justice Murphy made against Mr Clarke personally. ASIC’s appeal related only to those parts of the Full Court’s orders made in Mr Clarke's case that applied to the other directors and APCHL.

On 18 May 2018, ASIC was granted leave to appeal to the High Court. 

The appeals were heard on 17 and 18 October 2018 in the High Court in Canberra before Kiefel CJ, Bell J, Gageler J, Keane J and Edelman J, with judgment reserved.

View recordings of the hearings and browse documents relating to the appeals.

On 13 December 2018, the High Court handed down judgment in the appeals brought by ASIC against Mr Lewski, Dr Wooldridge, Mr Butler and Mr Jaques.

The Court unanimously allowed ASIC’s appeals in part, finding that ASIC had succeeded in two of its three grounds of appeal. The effect of the High Court’s decision was to set aside orders made by the Full Court and reinstate all declarations made by Murphy J in the Federal Court at first instance, other than those in relation to Mr Clarke and those that related to the ground of appeal upon which ASIC did not succeed.

The proceeding was ordered to be remitted to the Full Court for determination of what effect, if any, the decision had on the pecuniary penalties and disqualification orders made against the directors (other than Mr Clarke), together with ASIC’s cross-appeals about the adequacy of the penalties ordered by Murphy J.

View the High Court summary and Judgment.

For further information, please see ASIC Media Release 18-377MR High Court decision on Prime Trust directors.

The remittal was heard from 12-13 August 2019 and on 11 October 2019 the Full Court made orders which effectively reinstated the pecuniary penalty orders and disqualification orders made by Justice Murphy at trial, less time already served in respect of the periods of disqualification.

The disqualification order against Dr Wooldridge was stayed until 23 October 2019. On that date, after a contested hearing, Justice Middleton declined to grant any further stay and Dr Wooldridge’s disqualification period was varied by order made that day, the effect of which was that it commenced from 23 October 2019.

View the Full Court’s Judgment.

For further information (and links to the orders), please see ASIC Media Release 19-290MR Penalty orders re-imposed in proceedings against former Prime Trust directors

Summary of ASIC's proceedings

On 21 August 2012 ASIC commenced civil penalty proceedings in the Federal Court of Australia against six defendants:

  1. APCHL
  2. Mr William Lionel Lewski, a former director and company secretary
  3. Mr Mark Frederick Butler, a former director
  4. Mr Kim Jaques, a former director
  5. Mr Michael Richard Lewis Wooldridge, a former non-executive director, and
  6. Mr Peter Clarke, a former director.

ASIC sought declarations that the five former directors (directors), in their capacity as officers of APCHL (as the responsible entity of Prime Trust) breached their duties owed to members of Prime Trust.

The Court can order a maximum pecuniary penalty of $200,000 to be paid by each director in respect of each contravention, and can disqualify the former directors from managing corporations for specified periods.

ASIC also sought declarations that APCHL breached its duties under the Corporations Act 2001 in exercising its powers and carrying out its duties as the responsible entity of Prime Trust.

The liability stage of the trial was conducted from 1 May 2013 to 27 May 2013 before his Honour Justice Murphy. Central to ASIC commencing this proceeding is the duty of officers of responsible entities to act in the best interests of the members of the scheme and to refrain from making improper use of their position as an officer to cause detriment to the members of the scheme.

In his judgment on liability delivered on 12 December 2013 Justice Murphy found that the directors had breached their duties as officers of APCHL. APCHL was also found to have breached its duties as Responsible Entity. For further information, please see ASIC Media Release 13-339MR Prime Trust directors found to have breached duties.

Following the judgment on liability, a hearing on exoneration and penalty took place before Justice Murphy from 28-31 July 2014. At the hearing, each of the directors submitted that he should be relieved from liability for the breaches of duty found by Justice Murphy. In the judgment delivered 2 December 2014, Justice Murphy did not exonerate any director from liability. The following penalties were awarded by the Court:

  • William Lionel Lewski - disqualified for managing a company for 15 years and fined $230,000
  • Mark Frederick Butler - disqualified for managing a company for 4 years and fined $20,000
  • Kim Jaques - disqualified for managing a company for 4 years and fined $20,000
  • Dr Michael Wooldridge – disqualified for managing a company for 2 years, 3 months and fined $20,000
  • Peter Clarke – He was not disqualified for managing a company but fined $20,000

The Court also made declarations of contravention against APCHL, the first defendant.  APCHL did not participate in the proceeding and the only relief sought by ASIC against it was declaratory relief. For further information please see ASIC Media Release 14-323MR Prime Trust directors disqualified and fined.

From 25-27 May 2015 the Full Court of the Federal Court of Australia heard the appeals and cross-appeals.  Judgment was delivered on 14 July 2016, with the Full Court allowing the appeals and setting aside the orders of Justice Murphy on 2 December 2014.  In light of the decision, the Full Court considered that it was unnecessary to make findings on ASIC's cross-appeal.

On 18 May 2018 ASIC was granted special leave to appeal the Full Court’s decision to the High Court.

From 17-18 October 2018 the matter was heard before the High Court.

On 13 December 2018 the High Court allowed ASIC’s appeal in part and remitted the Full Court to consider penalty.

On 20 February 2019 ASIC filed notices of remittal.

From 12-13 August 2019 the remittal was heard before the Full Court (constituted by the same members as on appeal).

On 11 October 2019 the Full Court made orders which effectively reinstated the pecuniary penalty orders and disqualification orders (less time already served) made by Justice Murphy at trial against Mr Lewski, Dr Wooldridge, Mr Jaques and Mr Butler. The disqualification order against Dr Wooldridge was stayed until 23 October 2019.

On 23 October 2019, after a contested hearing, Justice Middleton declined to grant any further stay and Dr Wooldridge’s remaining disqualification period commenced from that date.

Information to assist investors

At the second meeting of creditors held on 23 November 2011, the creditors of APCHL voted to place the company and Prime Trust into liquidation. Stirling Horne and Mr Petr Vrsecky of PKF Melbourne (formerly Lawler Draper Dillon) were appointed liquidators.

Investors in the Prime Trust seeking information about the affairs of APCHL and the Prime Trust, including any court proceedings being conducted, should contact the liquidators, PKF Melbourne, directly.

Investors can access PKF Melbourne's website at www.pkf.com.au. The offices of PKF Melbourne are situated at Level 12, 440 Collins Street, Melbourne Victoria, 3000.

As APCHL is currently in liquidation, it is the role of the liquidators to investigate and report to creditors about the company's affairs, realise the company's assets, enquire into the failure of the company and possible offences by people involved with the company and report them to ASIC and to distribute proceeds of any realisation of the company's assets in accordance with the priorities under the Corporations Act 2001. ASIC will monitor the liquidation process but will generally not become involved in matters of commercial judgment by a liquidator.

ASIC's guide on the process of liquidation may also assist investors and is accessible at: Information Sheet 45 Liquidation: a guide for creditors (INFO 45). Investors can also access additional information at www.asic.gov.au/insolvency-investors.

General information on investing

ASIC has published information on investing in managed funds and other investments. You can find this information at www.moneysmart.gov.au/investing.

Last updated: 07/11/2019 02:51