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nsw_caselaw:549ff7443004262463c68ec8:169 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2. The Second Defendant contravened Section 180(1) in relation to JHIL by his conduct, as an officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that reviews of a cashflow model ( Cashflow Model ) of the funding being made available to meet asbestos claims brought against Amaca and Amaba that had been undertaken by PricewaterhouseCoopers ( PwC ) and Access Economics:
(a) were limited to reporting on the logical soundness and technical correctness of the Cashflow Model;
(b) had not verified, and PwC and Access Economics had been specifically instructed not to consider, the key assumptions adopted by the Cashflow Model, being:
(i) fixed investment earnings rates;
(ii) litigation and management costs; and
(iii) future claim costs. | 169 |
nsw_caselaw:549ff7443004262463c68ec8:170 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 3. The Second Defendant contravened Section 180(1) in relation to JHIL by his conduct, as an officer of that corporation, before and at the board meeting of 15 February 2001 in failing either to:
(a) advise the Chief Executive Officer or the board of JHIL that it needed to consider whether or not JHIL was required to disclose the following information ( DOCI Information ) to the ASX, namely, that JHIL had entered into a Deed of Covenant and Indemnity pursuant to which:
(i) Amaca and Amaba provided certain covenants and indemnities to JHIL in respect to its potential asbestos liabilities;
(ii) JHIL agreed to pay certain amounts in exchange for those covenants and indemnities;
(iii) Amaca agreed that it would acquire all the shares in JHIL if it was put to it by a sole registered shareholder of the entirety of JHIL shares; or | 170 |
nsw_caselaw:549ff7443004262463c68ec8:171 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) obtain advice for the Chief Executive Officer or the board, or provide his own advice to the board as to whether or not they were required to disclose the DOCI Information to the ASX; or
(c) advise the Chief Executive Officer or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX;
in circumstances where the second defendant knew or ought to have known that:
(d) if JHIL failed to disclose the DOCI Information to the ASX it risked contravening s 1001A(2) of the Corporations Law as carried over into the Corporations Act ; and
(e) if the DOCI Information was not disclosed to the ASX and JHIL had an obligation under the ASX Listing Rules to do so and that failure was revealed, it would be harmful to JHIL’s interests and harm market perceptions of JHIL.
2.3 Declarations in relation to Mr Morley | 171 |
nsw_caselaw:549ff7443004262463c68ec8:172 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 241 ASIC proposed two declarations against Mr Morley with respect to his failure to advise the board of the shortcomings in the reviews of the Cashflow Model by PwC and Access Economics. For the reasons set out above I am of the view that only one declaration should be made against him with in relation to his failure to advise with respect to both reviews. I will make a declaration in the following terms. | 172 |
nsw_caselaw:549ff7443004262463c68ec8:173 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | The Court declares that: | 173 |
nsw_caselaw:549ff7443004262463c68ec8:174 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. The Third Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as an officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that reviews of a cashflow model ( Cashflow Model ) of the funding being made available to meet asbestos claims brought against two of JHIL’s former subsidiaries Amaca Pty Ltd and Amaba Pty Ltd that had been undertaken by PricewaterhouseCoopers ( PwC ) and Access Economics:
(a) were limited to reporting on the logical soundness and technical correctness of the Cashflow Model;
(b) had not verified, and PwC and Access Economics had been specifically instructed not to consider, the key assumptions adopted by the Cashflow Model, being:
(i) fixed investment earnings rates; | 174 |
nsw_caselaw:549ff7443004262463c68ec8:175 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) litigation and management costs; and
(iii) future claim costs. | 175 |
nsw_caselaw:549ff7443004262463c68ec8:176 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2.4 Declarations in relation to Mr Brown, Ms Hellicar, Mr O’Brien, Mr Terry and Mr Willcox
242 ASIC seeks a declaration in identical form against Mr Brown, Ms Hellicar, Mr O’Brien, Mr Terry and Mr Willcox. The declaration treats the failure to advise of the limitations in the PwC and Access Economics reports as separate matters. I will treat them as one.
243 I will make a declaration in the following terms against Mr Brown and I will make declarations in identical terms against Ms Hellicar, Mr O’Brien, Mr Terry and Mr Willcox.
The Court declares that: | 176 |
nsw_caselaw:549ff7443004262463c68ec8:177 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. The Fourth Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as a director of that corporation, in voting on 15 February 2001 in favour of a resolution of the directors to approve a draft ASX announcement ( Draft ASX Announcement ) and authorise its execution and sending to the Australian Stock Exchange ( ASX ) in circumstances where:
(a) he knew that the Draft ASX Announcement conveyed or was capable of conveying that: | 177 |
nsw_caselaw:549ff7443004262463c68ec8:178 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (i) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Medical Research and Compensation Foundation ( Foundation ) would be sufficient to meet all legitimate present and future asbestos claims brought against two of JHIL’s former subsidiaries Amaca Pty Ltd ( Amaca ) and Amaba Pty Ltd ( Amaba );
(ii) JHIL’s Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iii) all of the directors or at least a majority of them believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 178 |
nsw_caselaw:549ff7443004262463c68ec8:179 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (iv) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) he ought to have known that the Draft ASX Announcement was misleading in those respects. | 179 |
nsw_caselaw:549ff7443004262463c68ec8:180 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2.5 Declarations in relation to Mr Gillfillan and Mr Koffel
244 ASIC seeks a declaration in identical terms against Mr Gillfillan and Mr Koffel. I will make the following declaration against Mr Gillfillan and one in identical terms against Mr Koffel.
The Court declares that: | 180 |
nsw_caselaw:549ff7443004262463c68ec8:181 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. The Fifth Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) in that, as a director of that company, at a meeting of the board of directors of that company on 15 February 2001 during which it resolved to approve a draft ASX announcement ( Draft ASX Announcement ) and authorised its execution and sending to the Australian Stock Exchange ( ASX ) he failed to take any of the following steps:
(a) request that he be provided with a copy of the Draft ASX Announcement;
(b) familiarise himself with its terms; or
(c) abstain from voting in favour of the resolution to approve the Draft ASX Announcement and authorise its execution and sending to the ASX. | 181 |
nsw_caselaw:549ff7443004262463c68ec8:182 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2.6 Declarations in relation to JHIL
245 JHIL does not rely upon the James Hardie (Civil Penalty Compensation Release) Act 2005 (JH Civil Penalty Compensation Release Act).
246 ABN 60 is in statutory winding up under the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (JH Winding up Act). The winding up began on 8 February 2007 and was expected to last up to 40 years. It will continue until the Governor appoints an end to the winding up or until ABN 60 is deregistered under the Corporations Act.
247 The JH Winding up Act regulates the manner in which ABN 60 is able to operate, specifies the types of claims and payments it is liable to make and effectively bars the enforcement of claims against ABN 60 during its statutory winding up period. | 182 |
nsw_caselaw:549ff7443004262463c68ec8:183 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 248 The James Hardie (Civil Liability) Act 2005 (JH Civil Liability Act) extinguishes liabilities of ABN 60 in relation to conduct, the basis of these proceedings. The JH Civil Liability Act defines each of ABN 60, Amaba and Amaca as a “liable entity”. It provides that civil liability incurred by ABN 60 in respect of “protected conduct” is extinguished. That term is defined to mean the transfer of the assets of, and the payment of dividends and management fees by, any specified liable entity; the establishment, funding and underfunding of the Foundation; the transfer of assets from ABN 60 to JHINV, the establishment of the ABN 60 Foundation and the ABN 60 Foundation Trust and the allotment of shares in ABN 60 to the ABN 60 Foundation; the corporate reorganisation of the James Hardie group on 15 February 2001; the corporate reorganisation of the James Hardie group between August and October 2001, including the scheme of arrangement approved by this Court in October 2001 under which JHINV became the holding | 183 |
nsw_caselaw:549ff7443004262463c68ec8:184 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | company for the James Hardie group, and announcements or other representations made in relation to the effect or consequences of that scheme including representations made to this Court; the entry into the DOCI and the DOCIA and the amendment of the DOCIA by the Deed of Rectification executed by the parties to it on 3 February 2004; the issue by ABN 60 of shares in ABN 60 to JHINV and the cancellation of those shares in March 2003; the negotiation of, and entry into, the Heads of Agreement, the Final Funding Agreement or any Related Agreement. | 184 |
nsw_caselaw:549ff7443004262463c68ec8:185 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 249 The JH Civil Penalty Compensation Release Act applies to liability, including a liability imposed by or under legislation, to pay compensation for loss or damage resulting from conduct capable of being the subject of a pecuniary penalty. Any such liability incurred by ABN 60, amongst other entities, in respect of any protected conduct of that person is extinguished.
250 ASIC seeks no penalty against ABN 60.
251 I found that JHIL contravened Section 995(2) and Section 999 in publishing the Final ASX Announcement. I found it contravened Section 995(2) and Section 999 in the statements made at a press conference on 16 February 2001 (Press Conference Statements). I found that those provisions were contravened by JHIL in the 23 February 2001 ASX Announcement and in the 21 March 2001 ASX Announcement. I found that JHIL negligently failed to disclose the DOCI Information on 15 February 2001 in contravention of Listing Rule 3.1 and Section 1001A(2). | 185 |
nsw_caselaw:549ff7443004262463c68ec8:186 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 252 None of those contraventions was of a civil penalty provision and there is no compulsion on the Court under Section 1317E(1) to make declarations of contravention.
253 While ABN 60 objected to any declarations being made against it, it did not object to the form of the declarations proposed by ASIC.
254 In Australian Softwood Forests Pty Ltd v Attorney-General (NSW) [1981] HCA 49; (1980-1981) 148 CLR 121 the High Court overruled the New South Wales Court of Appeal and restored a declaration of contravention of company legislation made by the trial judge.
255 In Corporate Affairs Commission of NSW v Transphere Pty Ltd (1988) 15 NSWLR 596 at 608-609, Young J accepted a submission that the law as to declaratory orders had developed to such a stage that declarations should be made unless there were proper grounds to the contrary. His Honour cited as a proper ground the embarrassment caused in a practical sense to a non-party if the court made the declaration. His Honour concluded his analysis: | 186 |
nsw_caselaw:549ff7443004262463c68ec8:187 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “In my view the court should now adopt the view that it will grant declarations at the suit of the statutory authority which exists to regulate an industry or the professional association which regulates a profession.”
256 That view has been followed by Austin J in Australian Securities & Investments Commission v Sweeney [2001] NSWSC 114 at [30]-[31]; by Davies AJ in Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561 at 571 [38]-[39]; by Young J in Australian Securities and Investments Commission v McDougall [2006] FCA 427; (2006) 229 ALR 158 at 170 [55]; and by Heerey J in Australian Securities and Investments Commission v FUELbanc Australia Ltd [2007] FCA 960; (2007) 162 FCR 174 at 183 [56]-[57]. I adopt the same course. | 187 |
nsw_caselaw:549ff7443004262463c68ec8:188 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 257 In McDougall 229 ALR at 170 [55], Young J said that the making of a declaration on ASIC’s application did not simply record the outcome of enforcement proceedings: “It may also be an appropriate way of marking the court’s disapproval of contravening conduct.”
258 ASIC’s draft declarations with respect to JHIL treat the failure to advise the 15 February 2001 Meeting of the limitations in the PwC review as a distinct breach from the failure to advise of the limitations in the Access Economics review. In the declarations against JHIL I will treat them as a single breach. I will make the following declarations with respect to JHIL. | 188 |
nsw_caselaw:549ff7443004262463c68ec8:189 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | The Court declares that: | 189 |
nsw_caselaw:549ff7443004262463c68ec8:190 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. On or about 16 Febraury 2001 ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) contravened s 995(2) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 995(2) ) by engaging in conduct that was misleading and deceptive, or likely to mislead or deceive, in relation to a notice published in relation to securities, in that it published to the Australian Stock Exchange ( ASX ) an announcement that falsely and misleadingly represented that:
(a) it was certain that the amount of funds made available to the Medical Research and Compensation Foundation ( Foundation ) would be sufficient to meet all legitimate present and future asbestos claims brought against two of JHIL’s former subsidiaries, Amaca Pty Ltd ( Amaca ) and Amaba Pty Ltd ( Amaba ); | 190 |
nsw_caselaw:549ff7443004262463c68ec8:191 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(c) JHIL’s Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(d) all the directors, or at least a majority of them, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 191 |
nsw_caselaw:549ff7443004262463c68ec8:192 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (e) JHIL had received expert advice from PricewaterhouseCoopers ( PwC ) and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba.
2. On or about 16 February 2001 JHIL contravened s 999 of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 999 ) by making a statement or disseminating information, namely, an announcement to the ASX that:
(a) was false in a material particular or materially misleading in that it falsely represented that:
(i) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 192 |
nsw_caselaw:549ff7443004262463c68ec8:193 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iii) JHIL’s Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iv) all of the directors, or at least the majority of them, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and | 193 |
nsw_caselaw:549ff7443004262463c68ec8:194 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (v) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) JHIL knew or ought to have known was false in a material particular or materially misleading; and
(c) was likely to induce the sale or purchase of JHIL’s shares and have the effect of increasing or maintaining the market price of JHIL shares.
3. On or about 16 February 2001 JHIL contravened Section 995(2) in that, in connection with dealings in securities, it engaged in conduct that was misleading and deceptive, or likely to mislead or deceive, in that its Chief Executive Officer, Mr Macdonald, made statements at a press conference that falsely and misleadingly represented that: | 194 |
nsw_caselaw:549ff7443004262463c68ec8:195 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (a) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) the material available to JHIL provided a reasonable basis for the assertion that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(c) Mr Macdonald believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(d) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and | 195 |
nsw_caselaw:549ff7443004262463c68ec8:196 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (e) JHIL did not have any potential claims on the assets of Amaca and Amaba.
4. On or about 16 February 2001 JHIL contravened Section 999 by making a statement or disseminating information, namely, statements made on its behalf by its Chief Executive Officer at a press conference that:
(a) were false in a material particular or materially misleading in that they falsely represented that:
(i) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(ii) the material available to JHIL provided a reasonable basis for the assertion that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 196 |
nsw_caselaw:549ff7443004262463c68ec8:197 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (iii) Mr Macdonald believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iv) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and
(v) JHIL did not have any potential claims on the assets of Amaca and Amaba;
(b) JHIL knew or ought to have known were false in a material particular or materially misleading; and
(c) were likely to induce the sale or purchase of JHIL shares and have the effect of increasing or maintaining the market price of JHIL shares. | 197 |
nsw_caselaw:549ff7443004262463c68ec8:198 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 5. On or about 23 February 2001 JHIL contravened Section 995(2) by engaging in conduct that was misleading and deceptive in relation to a notice published in relation to securities, in that it published to the ASX an announcement that falsely and misleadingly represented that:
(a) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and | 198 |
nsw_caselaw:549ff7443004262463c68ec8:199 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (c) JHIL’s Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba.
6. On or about 23 February 2001 JHIL contravened Section 999 by making a statement or disseminating information, namely, an announcement to the ASX that:
(a) was false in a material particular or materially misleading in that it falsely and misleadingly represented that:
(i) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 199 |
nsw_caselaw:549ff7443004262463c68ec8:200 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and
(iii) JHIL’s Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) JHIL knew or ought to have known was false in a material particular or materially misleading; and
(c) was likely to have the effect of maintaining or stabilising the market price of JHIL shares. | 200 |
nsw_caselaw:549ff7443004262463c68ec8:201 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 7. On or about 21 March 2001 JHIL contravened Section 995(2) by engaging in conduct that was misleading and deceptive in relation to a notice published in relation to securities, in that it published to the ASX an announcement that falsely and misleadingly represented that:
(a) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and
(b) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba. | 201 |
nsw_caselaw:549ff7443004262463c68ec8:202 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 8. On or about 15 February 2001 JHIL contravened s 1001A(2) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) by its conduct as a listed disclosing entity in contravening the provisions of ASX Listing Rule 3.1 and negligently failing to notify the ASX of the following information, namely, that it had entered into a Deed of Covenant and Indemnity with Amaca and Amaba pursuant to which:
(a) Amaca and Amaba provided certain covenants and indemnities to JHIL in respect of its potential asbestos liabilities;
(b) JHIL agreed to pay certain amounts in exchange for those covenants and indemnities; and
(c) Amaca agreed that it would acquire all the shares in JHIL if it was put to it by a sole registered shareholder of the entirety of JHIL shares;
in circumstances where a reasonable person would expect, if it were generally available, that information to have a material effect on the price or value of JHIL shares. | 202 |
nsw_caselaw:549ff7443004262463c68ec8:203 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2.7 Declarations in relation to JHINV
259 In addition to a declaration with respect to JHINV’s breach of Section 674(2), a civil penalty provision, ASIC seeks declarations with respect to the breaches of s 1041H(1) of the Corporations Act (Section 1041H(1)) and s 1041E(1) (Section 1041E(1)) I found JHINV to have made in relation to the ASX Slides. Since these provisions are not civil penalty provisions the Court is not compelled to make the declarations under Section 1317E(1).
260 It was submitted on behalf of JHINV that no utility would be served by making the declarations.
261 I reject that submission. Declarations of breach of those provisions are an appropriate way of marking the Court’s disapproval of the conduct of JHINV. No embarrassment will be caused to a non-party if the declarations are made and the usual practice is for such declarations to be made at the suit of a statutory authority.
262 I will make declarations with respect to JHINV’s contraventions in the following terms. | 203 |
nsw_caselaw:549ff7443004262463c68ec8:204 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | The Court declares that: | 204 |
nsw_caselaw:549ff7443004262463c68ec8:205 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. On or about 10 June 2002 James Hardie Industries NV ( JHINV ) contravened s 1041H of the Corporations Act 2001 (Cth) by engaging in conduct in relation to a financial product, namely, shares in JHINV, that was misleading or deceptive or was likely to mislead or deceive in that it published to the Australian Stock Exchange ( ASX ) a set of slides ( ASX Slides ) which falsely and misleadingly represented that:
(a) it was certain or highly likely that the amount of funds made available to the Medical Research and Compensation Foundation ( Foundation ) would be sufficient to meet all legitimate present and future asbestos claims brought against two former subsidiaries of ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) Amaca Pty Ltd ( Amaca ) and Amaba Pty Ltd ( Amaba ); and | 205 |
nsw_caselaw:549ff7443004262463c68ec8:206 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) the material available to JHINV provided a reasonable basis for the assertion that it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba.
2. On or about 10 June 2002 JHINV contravened s 1041E of the Corporations Act by making a statement or disseminating information to the ASX, namely, the ASX Slides that:
(a) was false in a material particular or materially misleading in that it falsely and misleadingly represented that:
(i) it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and | 206 |
nsw_caselaw:549ff7443004262463c68ec8:207 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) the material available to JHINV provided a reasonable basis for the assertion that it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) JHIL knew was false in a material particular or materially misleading; and
(c) was likely to induce persons in Australia to acquire financial products, namely, securities in JHINV, and to have the effect of maintaining or stabilising the price for trading in financial products, namely, securities in JHINV. | 207 |
nsw_caselaw:549ff7443004262463c68ec8:208 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 3. On and from 25 March 2003 until 30 June 2003 JHINV contravened s 674(2) of the Corporations Act in that, as a listed disclosing entity to which the subsection applied, it failed to notify the ASX in accordance with the ASX Listing Rules of information that it had ( ABN 60 Information ) which those provisions required it to notify the ASX, namely, that JHINV and its subsidiary JHIL had arranged for JHIL’s transfer out of the James Hardie group of companies by the following steps:
(a) the cancellation on 15 March 2003 of partly paid shares issued by JHIL to JHINV;
(b) the consolidation of JHIL’s share capital into one fully paid share held by JHINV on 15 March 2003;
(c) the reduction of JHIL’s share capital by approximately $1.5m and payment of that amount to JHINV on 31 March 2003;
(d) the execution of the ABN 60 Foundation Trust Deed by JHINV on 31 March 2003; | 208 |
nsw_caselaw:549ff7443004262463c68ec8:209 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (e) the execution of a Deed of Covenant, Indemnity and Access by JHINV and JHIL on 31 March 2003;
(f) the issue of 1,000 shares by JHIL to the ABN 60 Foundation as trustee of the ABN 60 Trust on 31 March 2003; and
(g) the cancellation by JHIL of its one fully paid share owned by JHINV for no consideration on or about 14 April 2003;
in circumstances where:
(h) the ABN 60 Information was not generally available; and
(i) a reasonable person would expect, if it were generally available, the ABN 60 Information to have a material effect on the price or value of JHINV shares. | 209 |
nsw_caselaw:549ff7443004262463c68ec8:210 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 3 Penalty
263 In Forem-Freeway 30 ACSR at 349–350 [50] it was suggested that where a penalty is sought as well as a period prohibition it is desirable to deal with the protective aspect before the question of a pecuniary penalty.
264 ASIC seeks both orders of disqualification and pecuniary penalties against the individual directors. I will deal with disqualification first.
265 In Rich 220 CLR at 150-151 [45] McHugh J cited from the explanatory paper accompanying the first draft of the Corporate Law Reform Bill 1992 (Cth) as follows: | 210 |
nsw_caselaw:549ff7443004262463c68ec8:211 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “178. It is expected that in settling an appropriate [civil penalty] order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant’s conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Courts would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy.” | 211 |
nsw_caselaw:549ff7443004262463c68ec8:212 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 4 Disqualification
266 ASIC seeks disqualification orders under s 206C of the Corporations Act (Section 206C). So far as is relevant Section 206C is in the following terms:
“(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if:
(a) a declaration is made under
(i) section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; or
(ii) …; and
(b) the Court is satisfied that the disqualification is justified.
(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. | 212 |
nsw_caselaw:549ff7443004262463c68ec8:213 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (3) …”
267 With respect to the executives of JHIL, Mr Macdonald, Mr Shafron and Mr Morley, ASIC seeks orders, in the alternative, under s 206E of the Corporations Act (Section 206E) which, so far as is relevant, is in the following terms:
“(1) On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if:
(a) the person:
(i) has at least twice been an officer of a body corporate that has contravened this Act … while they were an officer of the body corporate and each time the person has failed to take reasonable steps to prevent the contravention; or
(ii) has at least twice contravened this Act … while they were an officer of a body corporate; or
(iii) … and
(b) the Court is satisfied that the disqualification is justified.
(1A) … | 213 |
nsw_caselaw:549ff7443004262463c68ec8:214 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (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.
(3) …”
268 As McHugh J said in Rich 220 CLR at 152 [48] the leading authority on the reasons for a court exercising its powers under Section 206C or Section 206E is Adler. Santow J in 42 ACSR at 97-99 [56] set out 15 propositions as follows:
“(i) Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards. | 214 |
nsw_caselaw:549ff7443004262463c68ec8:215 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office.
(iii) Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors
(iv) The banning order is protective against present and future misuse of the corporate structure.
(v) The order has a motive of personal deterrence, though it is not punitive.
(vi) The objects of general deterrence are also sought to be achieved.
(vii) In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company. | 215 |
nsw_caselaw:549ff7443004262463c68ec8:216 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (viii) Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty. | 216 |
nsw_caselaw:549ff7443004262463c68ec8:217 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ix) In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public.
(x) It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct.
(xi) A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming.
(xii) The eight criteria to govern the exercise of the court’s powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess:
• character of the offenders;
• nature of the breaches; | 217 |
nsw_caselaw:549ff7443004262463c68ec8:218 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | • structure of the companies and the nature of their business;
• interests of shareholders, creditors and employees;
• risks to others from the continuation of offenders as company directors;
• honesty and competence of offenders;
• hardship to offenders and their personal and commercial interests; and
• offenders’ appreciation that future breaches could result in further proceedings.
(xiii) Factors which lead to the imposition of the longest periods of disqualification (that is disqualifications of 25 years or more) were:
• large financial losses;
• high propensity that defendants may engage in similar activities or conduct; | 218 |
nsw_caselaw:549ff7443004262463c68ec8:219 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | • activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy;
• lack of contrition or remorse;
• disregard for law and compliance with corporate regulations;
• dishonesty and intent to defraud;
• previous convictions and contraventions for similar activities.
(xiv) In cases in which the period of disqualification ranged from 7–12 years, the factors evident and which lead to the conclusion that these cases were serious though not “worst cases”, included:
• serious incompetence and irresponsibility;
• substantial loss;
• defendants had engaged in deliberate courses of conduct to enrich themselves at others’ expense, but with lesser degrees of dishonesty; | 219 |
nsw_caselaw:549ff7443004262463c68ec8:220 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | • continued, knowing and wilful contraventions of the law and disregard for legal obligations;
• lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform.
(xv) The factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were:
• although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated;
• the defendants had no immediate or discernible future intention to hold a position as manager of a company;
• in Donovan’s case, the respondent had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings.” | 220 |
nsw_caselaw:549ff7443004262463c68ec8:221 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 269 In Elliott v Australian Securities and Investments Commission [2004] VSCA 54; (2004) 10 VR 369 at 407 [137] the Victorian Court of Appeal likened many of the items in Santow J’s list to sentencing principles:
“Many of the propositions and factors listed by Santow J bear a similarity to sentencing principles. Matters going to aggravation and mitigation in relation to contraventions of s 588G need to be considered and accorded proper weight. But above all else protection of the public and deterrence, specific and general, must also be given appropriate consideration.
270 In Rich 220 CLR at 155 [52] McHugh J said that both Santow J’s list and the comments of the Victorian Court of Appeal indicated that factors taken into account in criminal jurisdiction – retribution, deterrence, reformation, contrition and protection of the public – were also central to determining whether a disqualification order should be made and, if so, the appropriate period of disqualification. | 221 |
nsw_caselaw:549ff7443004262463c68ec8:222 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 271 In Australian Securities and Investments Commission v White [2006] VSC 239; (2006) 58 ACSR 261 at 265 [18], Hargrave J referred to what McHugh J had said in Rich and distilled his analysis into four general categories of important matters to which Courts have regard when determining whether to order disqualification and if so for what period:
“(1) the nature and seriousness of the contraventions;
(2) protection of the public;
(3) retribution and deterrence;
(4) mitigating factors.”
272 That analysis was recently accepted by Hamilton J in Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2009] NSWSC 144; (2009) 253 ALR 616 at 620 [8]. | 222 |
nsw_caselaw:549ff7443004262463c68ec8:223 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 273 Since the decision in Rich it is clear that the purpose of a disqualification order is not only protective it is also punitive. It may be imposed by way of punishment and for general deterrence (Australian Securities and Investments Commission v Vizard [2005] FCA 1037; (2005) 145 FCR 57 at 65 [35]).
274 That general deterrence is a factor to be taken into account was affirmed by a Full Court of the Federal Court in Australian Securities and Investments Commission v Beekink [2007] FCAFC 7; (2007) 238 ALR 595 at 604 [83] it was held that the overwhelming weight of authority was that general deterrence was a factor to be taken into account in deciding whether, if so for what period, disqualification ought to be imposed.
275 But care must be taken in applying punitive measures. As Bryson J observed in Re OneTel Ltd (in liq); Australian Securities and Investments Commission v Rich [2003] NSWSC 186; (2003) 44 ACSR 682 at [26]: | 223 |
nsw_caselaw:549ff7443004262463c68ec8:224 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “I must respectfully say that I find a distinction between motives of deterrence and a punitive motive as difficult, in practical terms impossible to sustain. The punitive impact of such an order must be recognised; courts apply punitive measures with care, avoid excessive measures and have regard to the circumstances of individuals. No-one should be sacrificed to the public interest.”
276 In Beekink 238 ALR at 607 [113] the Court endorsed this statement by Bryson J that no one should be sacrificed to the public interest. | 224 |
nsw_caselaw:549ff7443004262463c68ec8:225 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 4.1 Disqualification and Mr Macdonald
277 Mr Macdonald is guilty of eleven contraventions of Section 180(1). Contraventions are to be judged individually as well as for their cumulative effect.
278 In Adler 42 ACSR at 103 [68] Santow J observed that not only had there been at least two contraventions of the Corporations Act by HIH and at least two contraventions of by HIHC, the relevant person did not merely fail to take reasonable steps to prevent the contravention but was himself directly involved in it so as himself to contravene the Act and that reinforced the basis for applying Section 206E with a substantial disqualification order. That applies with equal force to Mr Macdonald.
279 Mr Macdonald was the driving force behind Project Green, the project to separate JHIL and its subsidiaries and the James Hardie group. He had the ultimate responsibility of planning the separation proposals. | 225 |
nsw_caselaw:549ff7443004262463c68ec8:226 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 280 Mr Macdonald knew or ought to have known that each of the Draft ASX Announcement, the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement were misleading.
281 ASIC seeks further findings that Mr Macdonald knew that the statements were false or misleading or, alternatively, that he was reckless as to whether those statements were false or misleading. I do not propose to make additional findings at this stage of the proceedings.
282 In Vines 63 ACSR at 551-552 [233], Ipp JA said that for a contravention to be a serious one within meaning of the then provision dealing with disqualification, a higher degree of negligence than that required to establish civil liability for negligence is required. At 527 [110] Spigelman CJ agreed. | 226 |
nsw_caselaw:549ff7443004262463c68ec8:227 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 283 If Mr Macdonald did not know the statements were misleading, that he ought to have known, in the circumstances of this case, carries a degree of negligence beyond that needed to establish tortious liability. The alternative to his knowledge of the misleading nature of the statements is one of gross negligence. A fortiori with respect to statements that were false or misleading.
284 Mr Macdonald was the person appointed by JHIL to make public statements on its behalf concerning separation proposals. He was responsible for dealing with the board on this issue. He bore a high standard of care as a result of his responsibilities on the issue of separation. | 227 |
nsw_caselaw:549ff7443004262463c68ec8:228 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 285 ASIC put a series of indemnities into evidence and submitted that the possibility that some of the defendants might not have to pay a pecuniary penalty diminished the deterrent effect of a pecuniary penalty. The evidence is amorphous. It merely establishes the possibility that indemnities exist with respect to some defendants. And there is a real question whether the indemnities are ineffective in light of the embargo of a company or a related body corporate indemnifying a person against a liability, other than one for costs, for a pecuniary penalty order under Section 1317G in s 199A(2) of the Corporations Act. I do not propose to take the evidence into account in determining a period of disqualification or a pecuniary penalty. | 228 |
nsw_caselaw:549ff7443004262463c68ec8:229 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 286 Bearing the responsibility of leadership on the separation proposal before the board at the 15 February 2001 Meeting, Mr Macdonald’s vote in favour of the resolution to approve the Draft ASX Announcement was a gross departure from the requisite standard of care and diligence that applied in the circumstances. The perceived need to convince the public of the benefits of the proposal led him to condone the use of over emphatic language in the Draft ASX Announcement. And he knew that if the Draft ASX Announcement was released to the public it was likely to have an effect on the JHIL share price. The purpose of the Draft ASX Announcement was to have the public approve the separation of Coy and Jsekarb from the James Hardie group. | 229 |
nsw_caselaw:549ff7443004262463c68ec8:230 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 287 The extent of the departure from the standard expected of a reasonable director in Mr Macdonald’s position was less when he failed to warn the board of the over emphatic terms of the Draft ASX Announcement. This failure was an internal step in the chain that led to the potential announcement in the Draft ASX Announcement and the actual announcement in the Final ASX Announcement.
288 A like failure arose when Mr Macdonald failed to advise the board of the limitation in the PwC and Access Economics reviews of the Cashflow Model. Mr Macdonald knew of the limitations and must have been aware that if the other directors were aware of these limitations they might have taken a different view of the Draft ASX Announcement. To allow the bland statement by Mr Morley that PwC and Access Economics had found the Cashflow Model to be logically sound and technically correct to stand without reservation was an internal failure that led to the actual representations in the Final ASX Announcement. | 230 |
nsw_caselaw:549ff7443004262463c68ec8:231 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 289 Gross negligence was involved in Mr Macdonald’s approval of the Final ASX Announcement. The attempted toning down of the emphatic language was unsuccessful. It still conveyed the certainty that the Foundation had sufficient funds to meet all legitimate present and future asbestos claims brought against Amaca and Amaba. Mr Macdonald had the chance to advise that it not be released or that it be amended. He deliberately chose to authorise its release knowing it conveyed the matters set out in the 4th declaration.
290 And statements that he knew or ought to have known were misleading were made in the Press Conference Statements and repeated in the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement. They, too, were serious breaches of the duty of care and diligence. They involved statements to the public that were misleading as he knew or ought to have known. | 231 |
nsw_caselaw:549ff7443004262463c68ec8:232 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 291 JHIL contravened Section 995(2) and Section 999 in making these statements. And Mr Macdonald was directly involved in each of the company’s contraventions so as himself to have contravened the legislation. A substantial disqualification order is called for.
292 Also a serious breach was the failure of JHIL to disclose the DOCI Information in contravention of Section 1001A(2). Mr Macdonald’s involvement in that failure was a serious breach of Section 180(1) on his part. The importance of continuous disclosure and the need for JHIL to consider whether it needed to disclose the DOCI Information has already been discussed. | 232 |
nsw_caselaw:549ff7443004262463c68ec8:233 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 293 And then there were the deliberate breaches when Mr Macdonald continued to use the language of full funding in the ASX Slides, in the Edinburgh Representations and in the London Representations. I found that despite his knowledge that the Foundation was seriously under funded, Mr Macdonald was prepared to extol JHINV to overseas analysts, fund managers and institutional investors by telling them that the Foundation was fully funded.
294 ASIC claimed that Mr Macdonald was in breach of s 181(1) of the Corporations Law as carried over into the Corporations Act (Section 181(1)) with respect to the Press Conference Statements. In February 2001 it was in the following terms:
“A director or other officer of a corporation must exercise their powers and discharge their duties:
(a) in good faith in the best interests of the corporation; and
(b) for a proper purpose.” | 233 |
nsw_caselaw:549ff7443004262463c68ec8:234 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 295 I said that Mr Macdonald may have been misguided in the extent to which he sought to sell the separation proposal. But in doing so there was no conflict between his personal interest and that of JHIL. He did not take advantage of his position to make a secret profit. He did not misappropriate the company’s assets for himself. Like the non-executive directors in approving the Draft ASX Announcement, Mr Macdonald may have believed it was in the best interests of JHIL to be as emphatic as he could in selling the separation proposal. The evidence did not establish that Mr Macdonald acted for an improper or collateral purpose. Objectively judged, Mr Macdonald was overzealous, but he was overzealous in the interests of JHIL.
296 In the absence of an improper purpose, Section 181(1) was not engaged.
297 It was submitted that I had not made a finding of dishonesty with respect to Mr Macdonald. But I had with respect to the ASX Slides, the Edinburgh Representations and the London Representations. | 234 |
nsw_caselaw:549ff7443004262463c68ec8:235 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 298 In Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1 at 165-166 [748], Giles JA said that provided procedural fairness was afforded, there was no error in characterising a director’s conduct as dishonest in deciding whether a pecuniary penalty or a period of disqualification should be ordered: | 235 |
nsw_caselaw:549ff7443004262463c68ec8:236 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “Section 1317G gives a discretion as to making a pecuniary penalty order, see “may” at its commencement and calls for an assessment of whether the contravention is serious. Sections 206C and 206E require that the court be satisfied “that the disqualification is justified”, and provide that the court may have regard to “the person’s conduct in relation to the management, business or property of any corporation” and “any other matters that the Court considers appropriate”. For both pecuniary penalty and disqualification the task is normative, and the nature of the conduct of the person found to have contravened the civil penalty provision is relevant. That a director fails to exercise care and diligence through neglectful inattention is one thing; it is another thing if a director fails to exercise due care and diligence with knowledge that he is acting wrongly, contrary to the interests of the company, and in his own interests. Provided procedural fairness is afforded, there is no error in | 236 |
nsw_caselaw:549ff7443004262463c68ec8:237 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | characterising the director’s conduct as dishonest, if it fairly bears that characterisation, when it comes to deciding whether a pecuniary penalty should be imposed and if so in what amount, or to deciding whether disqualification is justified and if so for what period. It would be nonsense if that could not be done.” | 237 |
nsw_caselaw:549ff7443004262463c68ec8:238 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 299 I do not regard his Honour’s remarks as confined to the combination of elements in that case. In this case Mr Macdonald failed to exercise due care and diligence with knowledge that he was acting wrongly when he approved the release of the ASX Slides and made the Edinburgh Representations and the London Representations. | 238 |
nsw_caselaw:549ff7443004262463c68ec8:239 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 300 In rejecting ASIC’s claim that Mr Macdonald was in contravention of Section 181(1) in making the Edinburgh Representations and the London Representations and in authorising the release of the UK Slides, or failing to prevent their release, I said that for the reasons discussed with respect to the Press Conference Statements I was not satisfied that Mr Macdonald acted in bad faith and for an improper purpose. They are the requirements for a contravention of Section 181(1). But that does not exclude a finding of dishonesty. Mr Macdonald may have thought he was acting in the best interests of JHINV when he dishonestly made the representations and hence he may not have acted for an improper purpose.
301 There have been multiple contraventions of Section 180(1) by Mr Macdonald. | 239 |
nsw_caselaw:549ff7443004262463c68ec8:240 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 302 In Mill v The Queen (1988) 166 CLR 59 at 63, the High Court approved a statement in a text book describing the totality principle as requiring a sentencer who had passed a series of sentences each properly calculated in relation to the offence for which it was imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate was just and appropriate.
303 The High Court referred to Mill in Pearce v The Queen [1998] HCA 57 (1998) 194 CLR 610 in stating at 624 [45] that a judge sentencing an offender for more than one offence must fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well as questions of totality. | 240 |
nsw_caselaw:549ff7443004262463c68ec8:241 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 304 In Vines 63 ACSR at 509 [19] Spigelman CJ having cited the passage from Pearce said that directly analogous considerations apply in the context of the imposition of civil penalties in a case where there have been multiple contraventions.
305 Cumulation is an accumulative punishment that commences at the expiration of another punishment. A concurrent sentence is a sentence that is served at the same time as another sentence.
306 Because each case will depend on its own facts little assistance with respect to an appropriate penalty is gained by the consideration of sentences in other cases. | 241 |
nsw_caselaw:549ff7443004262463c68ec8:242 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 307 Some of Mr Macdonald’s contraventions exhibit some of the features that Santow J extracted in 42 ACSR at 99 [56 (xiv)] from cases with periods of disqualification from 7 – 12 years. They exhibited serious incompetence and irresponsibility. In some, Mr Macdonald engaged in a deliberate course of conduct, albeit not to enrich himself at others’ expense. He continued knowing and wilful contravention of the law and disregard for legal obligations. He also exhibited a lack of contrition but I have indicated my placing little store on this aspect of the matter.
308 Mr Macdonald and his family have suffered greatly as a result of the publicity associated with the special commission of inquiry conducted by the Honourable David Jackson AM QC (Special Commission) and these proceedings. | 242 |
nsw_caselaw:549ff7443004262463c68ec8:243 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 309 The impressive testimonials of him suggest that Mr Macdonald is a fit person to manage a company. He had an unblemished record prior to the incidents in question. The testimonials do not, however, exclude the need for some personal deterrence. There was persistence in making false representations that the Foundation was fully funded.
310 The degree of seriousness of Mr Macdonald’s contraventions is high although his propensity to engage in similar conduct in the future is low. They all involved denying the market accurate information either by publishing misleading information or by withholding material information. Since a properly informed market depends on accurate and timely information, Mr Macdonald’s failures were serious. When a market is misled, the share price of the misinformant is affected by a false assumption. Depending on the effect on the share price, a vendor may sell at too low a price: a purchaser may pay too much. Misinformation causes potential harm to the public. | 243 |
nsw_caselaw:549ff7443004262463c68ec8:244 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 311 Against the need to protect the public it is necessary to balance personal hardship and in this case I accept that the personal hurt that the attendant publicity has caused is significant.
312 The breaches are serious and general deterrence must also be taken into account. In my view a period of disqualification is in order. | 244 |
nsw_caselaw:549ff7443004262463c68ec8:245 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 313 Before taking the totality principle into account, ASIC seeks a disqualification in the range from 4 – 7 years for each of the contraventions in declarations 2 and 3, the internal failures to advise of the over emphatic language and the failure to advise of the limitations of the PwC and Access Economics reviews. ASIC seeks a disqualification in the range from 5 – 8 years for the contraventions in declarations 1 and 4 – 7, the misleading announcements to the public. In respect of the contravention in declaration 8, the failure to consider whether the DOCI Information should be disclosed, ASIC seeks a disqualification in the range from 4 – 7 years. With respect to the deliberate representations in declarations 9 – 11, ASIC seeks a disqualification in the range from 8 – 12 years. Applying the totality principle, ASIC submitted that a disqualification in the range from 12 – 16 years was appropriate. | 245 |
nsw_caselaw:549ff7443004262463c68ec8:246 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 314 Mr Macdonald submitted that a disqualification period of 5 – 7 years was appropriate. If there were 9 contraventions (Mr Macdonald submitted that duplication arose with respect to some further declarations) there should be imposed a 9 month disqualification with respect to each leading to a 6.75 year disqualification brought back to the range he submitted was appropriate under the totality principle.
315 I reject that approach. 9 months is too short and the submission attributes equal delinquency to each contravention.
316 I also reject ASIC’s submission that the failure to consider whether the DOCI Information needed to be disclosed should be treated as of the same seriousness as the internal failures to advise on over emphatic language and limited expert reviews. In my view the failure to consider disclosure of the DOCI Information was at least as reprehensible as the misleading disclosures to the ASX and the public. | 246 |
nsw_caselaw:549ff7443004262463c68ec8:247 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 317 With respect to the contraventions in declarations 2 and 3 I would impose a disqualification of 5 years. With respect to the contraventions in declarations 1 and 4 – 8 I would impose a disqualification of 7 years. With respect to the contraventions in declarations 9 – 11 I would impose a disqualification of 10 years. With some of these impositions I would regard it as appropriate that they be served concurrently. Applying the totality principle, I will make a disqualification order against Mr Macdonald for 15 years. | 247 |
nsw_caselaw:549ff7443004262463c68ec8:248 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 4.2 Disqualification and Mr Shafron
318 Mr Shafron’s contraventions in declarations 1 and 2 were of the internal failures to advise of the over emphatic language in the Draft ASX Announcement and the failure to advise of the limitations of the PwC and Access Economics reviews. His contravention in declaration 3 was the failure to consider whether the DOCI Information should be disclosed.
319 In Postiglione v The Queen (1996-1997) 189 CLR 295 it was held that the parity principle of sentencing requires that there should not be a marked disparity between sentences imposed on co-offenders which gives rise to a justifiable sense of grievance. | 248 |
nsw_caselaw:549ff7443004262463c68ec8:249 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 320 In Lowe v The Queen (1984) 154 CLR 606 at 609 Gibbs CJ said it was obviously desirable that persons who have been parties to the commission of the same offence should, if other things are equal, receive the same sentence. But other things are not always equal and such matters as the age, background, previous criminal history and general character of the offender, and the part which he or she played in the commission of the offence, have to be taken into account.
321 As Finkelstein J said in Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169 at 180 [40]: | 249 |
nsw_caselaw:549ff7443004262463c68ec8:250 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “Next there is the parity principle. The principle is that “[w]here other things are equal persons concerned in the same crime should receive the same punishment; and where other things are not equal a due discrimination should be made”: R v Tiddy (1969) SASR 575 at 577. The principle requires little explanation. Consistency in punishment is an attribute of a rational and fair system of justice.”
322 Other things being equal, there must be, as Austin J said in Vines 58 ACSR at 316 [45], a persuasive rationale for any difference in the disqualification periods for each of the defendants.
323 Mr Shafron gave no evidence and read no testimonial evidence. There is, therefore, no third party evidence of his fitness to manage a company and no evidence for it not being necessary to consider personal deterrence. | 250 |
nsw_caselaw:549ff7443004262463c68ec8:251 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 324 It was submitted that Mr Shafron’s contraventions were related to his conduct as general counsel and as a legal adviser and demonstrated no deficiency in the management of a corporation. The contraventions were of inadequate legal advice rather than company management.
325 That puts Mr Shafron in the same position as Mr Macdonald who through testimonials established his fitness to manage a company.
326 Mr Shafron is in his late forties. It was submitted he should not be debarred from managing a corporation for the better part of the prime of his professional life.
327 It was submitted that general deterrence was satisfied by the making of the declarations of contravention, that Mr Shafron’s reputation and standing had been seriously adversely affected by the high level of publicity surrounding the Special Commission, these proceedings and the Court’s findings.
328 Mr Macdonald also suffered from the publicity surrounding the Special Commission and these proceedings and the Court’s findings. | 251 |
nsw_caselaw:549ff7443004262463c68ec8:252 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 329 I do not regard these matters as sufficient to justify a discriminatory order of disqualification of Mr Shafron. Mr Shafron’s personal position is not greatly different from that of Mr Macdonald and their delinquency was essentially the same. Each had a duty to warn the board of JHIL of the over emphatic language of the Draft ASX Announcement and the limited nature of the PwC and Access Economics reviews. Each had a duty to ensure that JHIL gave consideration to the disclosure of the DOCI Information.
330 ASIC seeks a disqualification order against Mr Shafron in the range of 7 – 9 years. | 252 |
nsw_caselaw:549ff7443004262463c68ec8:253 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 331 I would impose the same periods of disqualification on Mr Shafron as I did with respect to Mr Macdonald. I would impose a disqualification of 5 years with respect to each of the contraventions in declarations 1 and 2. I would impose a disqualification of 7 years with respect to the contravention in declaration 3. Whether I treat the disqualifications as concurrent or discount them under the totality principle as consecutive disqualifications, I will make a disqualification order against Mr Shafron for 7 years. | 253 |
nsw_caselaw:549ff7443004262463c68ec8:254 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 4.3 Disqualification and Mr Morley
332 Mr Morley was guilty of one contravention of Section 180(1) in failing to advise the 15 February 2001 Meeting of the limitations in the reviews of the Cashflow Model by PwC and Access Economics.
333 ASIC submits that his period of disqualification should be in the range of 5 – 7 years.
334 It was submitted on Mr Morley’s behalf that Section 206E did not apply to him because Mr Morley had committed but one contravention and the section required two.
335 ASIC does not now seek disqualification orders under Section 206E against the non-executive directors as only one contravention was established against them. They and Mr Morley may be subject to disqualification orders under Section 206C.
336 I prefer to confine the disqualification orders against Mr Macdonald and Mr Shafron to Section 206C for the sake of uniformity. | 254 |
nsw_caselaw:549ff7443004262463c68ec8:255 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 337 The testimonial evidence tendered on Mr Morley’s behalf establishes his competence as a director in highly complimentary terms. The need for personal deterrence in his case is low. But that does not establish a need for a discriminatory order as against the disqualification I imposed on Mr Macdonald because the need for personal deterrence arose with respect to Mr Macdonald’s deliberate breaches and not with respect to the breach of which Mr Morley is convicted.
338 Mr Morley expressed contrition. But I have said that I place little store on this element.
339 Mr Morley has also been affected by the allegations the subject of these proceedings having being first ventilated in the Special Commission. His prospects of holding directorships or senior management positions is severely limited. | 255 |
nsw_caselaw:549ff7443004262463c68ec8:256 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 340 I do not regard these factors as sufficiently different from those that apply to Mr Macdonald to justify a discriminatory order against Mr Morley. I will make a disqualification order against Mr Morley for 5 years. The totality principle does not apply to his single contravention. | 256 |
nsw_caselaw:549ff7443004262463c68ec8:257 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 4.4 Disqualification and Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O’Brien, Mr Terry and Mr Willcox
341 Each of Mr Brown, Ms Hellicar, Mr O’Brien, Mr Terry and Mr Willcox contravened Section 180(1) in voting in favour of the Draft ASX Announcement. Mr Gillfillan and Mr Koffel contravened that provision in failing to request a copy.
342 In relation to these contraventions ASIC seeks disqualification orders of 5 years with respect to each of them.
343 Each of the non-executive directors tendered testimonials by persons of impressive stature who swore to their good character and competence. As indicated in Macdonald (No 11) each of the non-executive directors is highly qualified. They have had impressive careers as directors of public companies. Their testimonials speak glowingly of their ability. They establish the care, skill and competence they have displayed in roles at the executive or non-executive level. | 257 |
nsw_caselaw:549ff7443004262463c68ec8:258 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 344 The need for personal deterrence is low. The testimonial evidence is strongly in favour of their general honesty and probity. The testimonials also establish the fitness of each of the non-executive directors to manage a company.
345 But considerations of general deterrence and retribution remain and I do not regard these factors as differentiating the contravention by Mr Macdonald to such an extent that a discriminatory order should be made with respect to any of the non-executive directors.
346 Like the other individual defendants each has been affected adversely by the publicity associated with the Special Commission and with these proceedings. And the personal hurt to them and their families must be weighed in the balance. And so it was in relation to Mr Macdonald, Mr Shafron and Mr Morley. | 258 |
nsw_caselaw:549ff7443004262463c68ec8:259 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 347 The adverse publicity of the proceedings caused the subsequent resignations of Ms Hellicar and Mr Willcox from their board positions. I do not regard those facts, however, as sufficiently differentiating their position from that of Mr Macdonald to warrant discriminatory orders.
348 It was submitted on behalf of Mr O’Brien that his delinquency was less than the other non-executive directors because he had only attended three board meetings prior to the 15 February 2001 Meeting.
349 I do not regard that as demonstrating a need for a discriminatory order in his case. The task of approving the Draft ASX Announcement did not require the benefit of background material made available to other directors. It was a question of determining whether the language used in the Draft ASX Announcement was inappropriate. | 259 |
nsw_caselaw:549ff7443004262463c68ec8:260 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 350 It was submitted that if the Court concluded that a non-executive director was a fit and proper person to manage a corporation then, having regard to the matters set out in Section 206C, the Court should conclude that a disqualification order would not be justified.
351 I reject that submission. It does not automatically follow that a finding of fitness to manage a corporation means that the Court cannot be satisfied that disqualification is justified. In this case each of the non-executive directors breached Section 180(1). That fact might call for disqualification for personal deterrence, after all the contravention occurred, for general deterrence or for retribution notwithstanding the fitness of the person to manage a corporation. | 260 |
nsw_caselaw:549ff7443004262463c68ec8:261 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 352 It was submitted that the Court might backdate a disqualification order. Austin J did so in Vines 58 ACSR at 336 [125] on the basis that it had taken a very long time to reach the point when orders could be made. Those considerations do not apply in the present case. With the full cooperation of all concerned, the penalty hearing was completed in 45 days and the hearing on exoneration, penalties and costs was heard in one day.
353 I imposed a disqualification period of 7 years on Mr Macdonald’s contravention in approving the Draft ASX Announcement. But I discounted that and the other disqualification periods imposed upon him under the totality principle.
354 In the case of the non-executive directors, I will discount the 7 year period and make a disqualification order against each of Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O’Brien, Mr Terry and Mr Willcox of 5 years. | 261 |
nsw_caselaw:549ff7443004262463c68ec8:262 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 5 Pecuniary penalty
355 ASIC seeks pecuniary penalty orders against all the defendants with the exception of JHIL.
356 Section 1317G(1) of the Corporations Act (Section 1317G(1)) is in the following terms:
“(1) A Court may order a person to pay the Commonwealth a pecuniary penalty of up to $200,000 if:
(a) 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.” | 262 |
nsw_caselaw:549ff7443004262463c68ec8:263 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 357 A “corporation/scheme civil penalty provision” is defined in s 1317DA of the Corporations Act as a provision to which reference is made in Section 1317E(1) with exceptions irrelevant for present purposes. Section 180(1) is a corporation/scheme civil penalty provision. Section 1317G(1) presupposes a range of contraventions of Section 180(1) of which only the serious or materially prejudicial engage the provision.
358 For the purposes of this provision, each of the contraventions with respect to which I will make a declaration is serious. By the impugned statements and the failure to disclose the DOCI Information, the public was misled. The public was led to believe there were sufficient funds in the Foundation to meet all legitimate present and future asbestos claims. That was not so. That is a serious matter. The market was acting on a false premise.
359 The purpose of a pecuniary penalty is punishment as well as personal and general deterrence. | 263 |
nsw_caselaw:549ff7443004262463c68ec8:264 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 360 In ASC v Donovan (1998) 28 ACSR 583 at 608 Cooper J said that the purpose of a pecuniary penalty was to punish, but principally imposition of a pecuniary penalty is to act as a personal deterrent and a deterrent to the general public against a repetition of like conduct. His Honour went on to say that if compliance with the appropriate standards of commercial conduct in the management of corporations by deterrence is the object, any penalty should be no greater than is necessary to achieve this objective.
361 Santow J said much the same thing in Adler 42 ACSR at 114 [125]:
“It is well established that the principal purpose of a pecuniary penalty is to act as a personal deterrent and a deterrent to the general public against a repetition of like conduct.”
362 Both passages were cited with approval by French J in Chemeq 234 ALR at 532 [91]. | 264 |
nsw_caselaw:549ff7443004262463c68ec8:265 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 363 In Beekink 238 ALR at 607 [115] the Court referring to Adler and Donovan reiterated that the principal purpose of a pecuniary penalty is to act as a personal and general deterrent against the repetition of like conduct. It should be no greater than is necessary in order to achieve this objective.
364 In Adler 42 ACSR at 114-116 [126] Santow J derived a number of propositions from the authorities:
“(i) the pecuniary penalty has a punitive character, but it is principally a personal and general deterrent to prevent the corporate structure from being used in a manner contrary to commercial standards. The penalty should be no greater than is necessary to achieve this object. | 265 |
nsw_caselaw:549ff7443004262463c68ec8:266 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) to determine whether compensation is to be paid and in what amount it is necessary to consider the prospect of the respondent paying such compensation and the hardship to the defendant from such payment. Compensation has been ordered for an amount less than that lost even though there was little prospect of any of it being recovered.
(iii) the capacity of the defendant to pay is a relevant consideration in determining a pecuniary penalty.
(iv) in assessing a pecuniary penalty it is important to consider the consequences of an associated disqualification order for the defendant. If the making of such an order has significant consequences, they may operate as a factor in favour of a lesser penalty. Where the disqualification order does not have significant consequences for the defendant, the prohibition order is likely to be only marginally relevant. | 266 |
nsw_caselaw:549ff7443004262463c68ec8:267 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (v) it is important to assess whether the order will prejudice the rehabilitation of the defendant.
(vi) the size of the penalty is a question of discretion. The circumstances of one case should not dictate the size of the penalty on another case.
(vii) in Australian Securities Commission v Forem-Freeway civil compensation of $200,000 was ordered. This amount was lower than the losses to the company concerned. This amount was ordered, even though it was highly unlikely that the amount would ever be paid as the respondent was bankrupt. In this case it was held that precision in the amount was therefore unnecessary.
(viii) a fine was not ordered in Forem-Freeway . However the ASC was given liberty to apply at a later stage in relation to this matter. The court held that the personal hardship to the respondent, the unintended punitive consequences of the other orders and the lack of capacity to pay, justified such order. | 267 |
nsw_caselaw:549ff7443004262463c68ec8:268 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ix) factors leading to the order of a penalty in the range of $20,000–$40,000 included:
• defendant was aware of impropriety of actions;
• no intention to deprive company permanently of funds;
• amounts in question not large;
• no deliberate falsification of accounts;
• cases classed as being serious misconduct, but not worst cases.
(x) relevant factors leading to the court to order the lower range penalties in the range of $4000–$5000 included:
• remorse and contrition shown;
• efforts to repay misappropriated funds;
• acted upon the advice of professionals;
• did not contest the proceedings, or sought to have costs in proceedings;
• tended to not involve dishonesty, but negligence or carelessness; | 268 |