ASIC v Somerville & Ors (No 2) [2009] NSWSC 998

ASIC v Somerville & Ors (No 2) [2009] NSWSC 998

The defendants were not entitled to exoneration because their conduct was not honest for the purposes of s 1318, and in any event they ought not fairly be excused. Declarations of contravention having been made, disqualification was justified under s 206C because the restructures removed assets from companies facing...

Source-derived case information.

Jurisdiction
Australia
Judgment Date
24 September 2009
Procedural Posture
Corporations Civil Penalty Proceedings Concerning Contraventions of the Corporations Act 2001 (cth) / Hearing on Exoneration Under Ss 1317 S and 1318 and Asic's Application for Disqualification Orders Following Earlier Findings of Contravention
Outcome
Exoneration refused and orders for disqualification made.
Legal Topics
["directors' Duties" 'exoneration From Liability' 'disqualification From Managing Corporations' 'insolvent Company Restructures' "creditors' Interests"]
['corporations Law' 'civil Penalties'] ["directors' Duties" 'exoneration From Liability' 'disqualification From Managing Corporations' 'insolvent Company Restructures' "creditors' Interests"]

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Procedural Posture

Corporations Civil Penalty Proceedings Concerning Contraventions of the Corporations Act 2001 (cth) / Hearing on Exoneration Under Ss 1317 S and 1318 and Asic's Application for Disqualification Orders Following Earlier Findings of Contravention

Legal Issues

  1. 1 ['Whether the defendants should be excused for the breaches under ss 1317S and 1318 of the Corporations Act 2001 (Cth).' "Whether ASIC's requested disqualification orders should be made under s 206C of the Corporations Act 2001 (Cth)." 'What period of disqualification was appropriate for each defendant having regard to their responsibility, conduct, hardship and the interests of creditors.']

Ratio Decidendi

The defendants were not entitled to exoneration because their conduct was not honest for the purposes of s 1318, and in any event they ought not fairly be excused. Declarations of contravention having been made, disqualification was justified under s 206C because the restructures removed assets from companies facing creditor claims and deprived creditors of statutory rights; Mr Somerville's role as architect of the scheme was far more serious, warranting six years' disqualification, while two years was appropriate for the other individual defendants.

Court Disposition

Exoneration refused and orders for disqualification made.

Orders

  • ['Order that the first defendant be disqualified from managing companies for a period of six years.' 'Order that each of the third, fourth, fifth, sixth, seventh, eighth, ninth and tenth defendants be disqualified from managing companies for a period of two years.' 'The disqualification period for the above orders...