Plaintiff v Defendant

Plaintiff v Defendant - [2012] VSC 332 - VSC 2012 case summary — Zoe

[130]

Corporations Act Provisions - Part 9.4B

1317DA Definitions

In this Act:

corporation/scheme civil penalty provision means a provision referred to in subsection 1317E(1), other than in paragraphs 1317E(1)(ja) to (jg).

financial services civil penalty provision means a provision referred to in any of paragraphs 1317E(1)(ja) and (jaa) to (jg).

1317E Declarations of contravention

(1) If a Court is satisfied that a person has contravened 1 of the following provisions, it must make a declaration of contravention:

(a) subsections 180(1) and 181(1) and (2), 182(1) and (2), 183(1) and (2) (officers' duties);

...

(d) subsection 344(1) (requirements for financial reports);

...

(g) subsection 601FD(3) (duties of officers of responsible entity)

...

These provisions are the civil penalty provisions.

Note: Once a declaration has been made ASIC can then seek a pecuniary penalty order (section 1317G) or (in the case of a corporation/scheme civil penalty provision) a disqualification order (section 206C).

(2) A declaration of contravention must specify the following:

(a) the Court that made the declaration;

(b) the civil penalty provision that was contravened;

(c) the person who contravened the provision;

(d) the conduct that constituted the contravention;

(e) if the contravention is of a corporation/scheme civil penalty provision - the corporation or registered scheme to which the conduct related.

1317F Declaration of contravention is conclusive evidence

A declaration of contravention is conclusive evidence of the matters referred to in subsection 1317E(2).

1317G Pecuniary penalty orders

Corporation/scheme civil penalty provisions

(1) A Court may order a person to pay the Commonwealth a pecuniary penalty of up to $200,000 if:

(a) declaration of contravention by the person has been made under section 1317E; and

(aa) the contravention is of a corporation/scheme civil penalty provision; and

(b) the contravention:

(i) materially prejudices the interests of the corporation or scheme, or its members; or

(ii) materially prejudices the corporation's ability to pay its creditors; or

(iii) is serious.

Penalty a civil debt etc

(2) The penalty is a civil debt payable to ASIC on the Commonwealth's behalf. ASIC or the Commonwealth may enforce the order as if it were an order made in civil proceedings against the person to recover a debt due by the person. The debt arising from the order is taken to be a judgment debt.

206C Court power of disqualification - contravention of civil penalty provision

(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if:

(a) declaration is made under:

(i) s 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; or

(ii) [Not relevant]

(b) the Court is satisfied that the disqualification is justified.

Matters to which the Court may have regard

(2) In determining whether the disqualification is justified, the Court may have regard to:

(a) the person's conduct in relation to the management, business or property of any corporation; and

(b) any other matters that the Court considers appropriate.

[225]

[1] Pursuant to s 1317E(1) of the Corporations Act 2001 (Cth) (the Act), the Court declares that the defendant Andrew Alexander Lindberg (the defendant) contravened s 180(1) of the Act in that between April 2003 and August 2004 he failed to make inquiries and ascertain whether:

(a) the recovery of the Tigris Debt from the United Nations (UN) escrow account was contrary to UN resolutions; and

(b) the recovery of the Tigris Debt was to occur with the knowledge and approval of the UN.

and thereby failed to exercise his powers and discharge his duties as Chief Executive and Managing Director of AWB Limited (AWB) with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of the corporation in AWB Ltd's circumstances and occupied the office held by, and had the same responsibilities within the corporation as the defendant.

[2] Pursuant to s 1317E(1) of the Act, the Court declares that defendant contravened s180(1) of the Act in that from September 2004 he failed to inform the Board of AWB of the limitations of the Project Rose investigation identified in paragraph 5 of the statement of contraventions and qualify the statements identified in paragraph 4 of the statement of contraventions and thereby failed to exercise his powers and discharge his duties as Chief Executive and Managing Director of AWB with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of the corporation in AWB Ltd's circumstances and occupied the office held by, and had the same responsibilities within the corporation as the defendant.

[3] Pursuant to s 1317E(1) of the Act, the Court declares that the defendant contravened s 180(1) of the Act in that on or about 14 December 2004 he failed to inform the boards of AWB and AWB International Limited (AWBI):

(a) of the Tigris Agreement;

(b) that the Tigris Agreement misdescribed the payment to Tigris as a service fee, whereas it was in fact a debt owed to Tigris by the IGB which had been recovered from the UN escrow account; and

(c) that the Tigris Agreement misdescribed the commission retained by AWBI as a "success fee".

and thereby failed to exercise his powers and discharge his duties as Chief Executive and Managing Director of AWB with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of the corporation in AWB Ltd's circumstances and occupied the office held by, and had the same responsibilities within the corporation as the defendant.

[4] Pursuant to s 1317E(1) of the Act, the Court declares that the defendant contravened s 180(1) of the Act in that between February 2005 and September 2005 he failed to inform the boards of AWB and AWBI of the matters that had been put to him by the UN Independent Inquiry Committee into the Oil-for-Food Programme identified in paragraph 19 of the statement of contraventions and thereby failed to exercise his powers and discharge his duties as Chief Executive and Managing Director of AWB with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of the corporation in AWB Ltd's circumstances and occupied the office held by, and had the same responsibilities within the corporation as the defendant.

At a glance

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Judgment (526 paragraphs)

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Legislation Cited (8)

Cases Cited (12)