Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) (No 3) [2013] FCA 1342

Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) (No 3) [2013] FCA 1342

The Responsible Entity and its directors breached their duties under the Corporations Act by approving and effectuating amendments to the scheme constitution that conferred substantial new fees benefitting themselves, contrary to the constitution and without proper member approval or consideration of members’...

Source-derived case information.

Jurisdiction
Australia
Judgment Date
12 December 2013
Procedural Posture
Civil / Liability Judgment Before Relief and Penalty Hearing
Outcome
Defendants found liable for contraventions; declarations to be made; further hearing required on relief and penalty.
Legal Topics
['responsible Entity Duties' 'director Duties' 'managed Investment Schemes' 'conflict of Interest' 'related Party Transactions' 'corporate Governance' 'statutory Construction']
['corporations Law' 'equity and Trusts'] ['responsible Entity Duties' 'director Duties' 'managed Investment Schemes' 'conflict of Interest' 'related Party Transactions' 'corporate Governance' 'statutory Construction']

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Procedural Posture

Civil / Liability Judgment Before Relief and Penalty Hearing

Legal Issues

  1. 1 ['Did the Responsible Entity and its officers breach statutory duties under s 601FC and s 601FD of the Corporations Act?' 'Were invalid amendments made to the constitution of the managed investment scheme?' 'Did paying itself the Listing Fee constitute a breach of s 208 (related party transactions)?' 'Were the directors involved in the contravention of s 208?' 'What is the objective standard for the best interests duty under the Corporations Act?']

Ratio Decidendi

The Responsible Entity and its directors breached their duties under the Corporations Act by approving and effectuating amendments to the scheme constitution that conferred substantial new fees benefitting themselves, contrary to the constitution and without proper member approval or consideration of members’ interests. The directors failed to exercise care and diligence, failed to address conflicts of interest, and did not obtain or act upon unequivocal legal advice or member approval. The purported amendments and the payment of the Listing Fee were invalid and constituted related party transactions in breach of s 208, with the directors knowingly involved in the contraventions.

Court Disposition

Defendants found liable for contraventions; declarations to be made; further hearing required on relief and penalty.

Orders

  • ['Parties to confer and propose dates for hearing on relief from liability and/or penalty.' 'Parties to prepare and file draft minutes for the timetabling of further hearing and draft declarations by 31 January 2014.']