ASIC v Somerville & Ors [2009] NSWSC 934

ASIC v Somerville & Ors [2009] NSWSC 934

The impugned transactions, carried out on the advice and with the involvement of Somerville, stripped assets from insolvent or near-insolvent companies for no proper consideration, benefitting new entities under the directors' control and depriving vendor companies and their creditors. This constituted breaches of ss 181, 182 and 183 of the Corporations Act 2001 (Cth) by the directors. Somerville, having devised, recommended, prepared, and implemented the transactions, was involved in the contraventions within the meaning of s 79.

Parties
Plaintiff: Australian Securities and Investments Commission; First Defendant: Timothy Donald Somerville; Second Defendant: Somerville & Co Pty Limited; Third Defendant: Nicholas Eugene Jones; Fourth Defendant: Simon Durant; Fifth Defendant: Calvin Bert Rowley; Sixth Defendant: John Lancelot Bradnam; Seventh Defendant: Christopher Paul Martin Jones; Eighth Defendant: Adam Leslie Troost; Ninth Defendant: John William Monsell; Tenth Defendant: Arthur James Wells
Jurisdiction
Australia
Judgment Date
08 September 2009
Procedural Posture
Principal Judgment / Findings on Liability and Declarations—orders to Be Further Considered
Outcome
Breaches of ss 181, 182 and 183 by directors established. Solicitor (Somerville) found involved in contraventions. Declarations accordingly. Final form of orders and declarations to be considered after further submissions.
Legal Topics
Directors' Duties, Breach of Duty, Involvement in Contravention, Good Faith and Proper Purpose, Use of Position, Use of Information
Corporations Law Equity Directors' Duties Breach of Duty Involvement in Contravention Good Faith and Proper Purpose Use of Position Use of Information

Case Brief

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Parties

Australian Securities and Investments Commission

Plaintiff

Timothy Donald Somerville

First Defendant

Somerville & Co Pty Limited

Second Defendant

Nicholas Eugene Jones

Third Defendant

Simon Durant

Fourth Defendant

Calvin Bert Rowley

Fifth Defendant

John Lancelot Bradnam

Sixth Defendant

Christopher Paul Martin Jones

Seventh Defendant

Adam Leslie Troost

Eighth Defendant

John William Monsell

Ninth Defendant

Arthur James Wells

Tenth Defendant

Procedural Posture

Principal Judgment / Findings on Liability and Declarations—orders to Be Further Considered

Legal Issues

  1. 1 Whether directors breached ss 181, 182, 183 Corporations Act 2001 (Cth) by entering asset sale arrangements
  2. 2 Whether solicitor (Somerville) was involved in the contraventions under s 79 of the Act

Ratio Decidendi

The impugned transactions, carried out on the advice and with the involvement of Somerville, stripped assets from insolvent or near-insolvent companies for no proper consideration, benefitting new entities under the directors' control and depriving vendor companies and their creditors. This constituted breaches of ss 181, 182 and 183 of the Corporations Act 2001 (Cth) by the directors. Somerville, having devised, recommended, prepared, and implemented the transactions, was involved in the contraventions within the meaning of s 79.

Court Disposition

Breaches of ss 181, 182 and 183 by directors established. Solicitor (Somerville) found involved in contraventions. Declarations accordingly. Final form of orders and declarations to be considered after further submissions.

Orders

  • Declarations of breach as sought (subject to further refinement after submissions)
  • Injunctions and disqualification orders to be further considered