Cassimatis v Australian Securities and Investments Commission [2020] FCAFC 52

Cassimatis v Australian Securities and Investments Commission [2020] FCAFC 52

The majority (Greenwood and Thawley JJ) held that the appellants, as directors exercising extraordinary control, failed to exercise the required objective degree of care and diligence by allowing the Storm model to be applied to financially vulnerable investors without reasonable investigation or appropriate advice. This exposed Storm to a foreseeable risk of serious harm, including regulatory action capable of threatening its existence. Shareholder approval and solvency did not mitigate the statutory standard of care owed by directors under s 180(1).

Jurisdiction
Australia
Judgment Date
27 March 2020
Procedural Posture
Appeal / Final Judgment on Appeal
Outcome
Appeal dismissed by majority (Greenwood and Thawley JJ); Rares J dissenting.
Legal Topics
["directors' Duties" 'duty of Care and Diligence' 'financial Services' 'personal Advice Obligations' 'civil Penalties' 'accessorial Liability']
['corporations Law'] ["directors' Duties" 'duty of Care and Diligence' 'financial Services' 'personal Advice Obligations' 'civil Penalties' 'accessorial Liability']

Case Brief

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Procedural Posture

Appeal / Final Judgment on Appeal

Legal Issues

  1. 1 ['Whether the appellants contravened s 180(1) of the Corporations Act 2001 (Cth) by failing to exercise due care and diligence as directors of Storm Financial Pty Ltd' 'Whether Storm Financial contravened s 945A(1)(b) and (c) and related provisions by providing inappropriate financial advice to vulnerable investors' 'Whether directors can be liable under s 180(1) where they are also shareholders and the company is solvent' "Relationship between directors' duty of care and the company's compliance with statute"]

Ratio Decidendi

The majority (Greenwood and Thawley JJ) held that the appellants, as directors exercising extraordinary control, failed to exercise the required objective degree of care and diligence by allowing the Storm model to be applied to financially vulnerable investors without reasonable investigation or appropriate advice. This exposed Storm to a foreseeable risk of serious harm, including regulatory action capable of threatening its existence. Shareholder approval and solvency did not mitigate the statutory standard of care owed by directors under s 180(1).

Court Disposition

Appeal dismissed by majority (Greenwood and Thawley JJ); Rares J dissenting.

Orders

  • ['The appeal is dismissed.' "The appellants pay the respondent's costs of and incidental to the appeal."]