Most Read Contributor in Australia, September 2016
The Federal Court has now issued its penalty judgment in the
high-profile Prime Trust/ Australian Property Custodian Holdings
Ltd (APCHL) case. This follows the decision on liability late last
year in which it subjected boardroom decision making processes to
The breach of duty concerned a decision by the APCHL board in
2006 to amend the constitution of the Prime Trust to introduce or
amend fees payable to the APCHL, which was owned by entities
associated with Mr Lewski, one of the directors.
The director who did not disclose a conflict of interest and
did not abstain from voting on the relevant resolution, Mr Lewski
was disqualified for 15 years and fined $230,000. ASIC had sought a
The chairman of the flawed meetings Dr Michael Wooldridge was
disqualified for two years, three months and fined $20,000.
Two other directors who participated were disqualified for four
years and fined $20,000 each.
The most recently appointed director, where the meeting in
question was his first meeting, Mr Clarke, was not disqualified but
The directors have until 23 December 2014 to appeal, so the
story may continue into 2015.
The liability decision focussed on boardroom behaviour and
requires that it is possible to see from the board minutes:
"that each member, by a process of voting, actively
supports the proposition before the meeting or actively opposes
that proposition; or that the member refrains from both support and
opposition. And it is the responsibility of an individual member to
take steps to ensure that his or her will is expressed in one of
For the ASIC media release in this penalty decision, please
here or go to the ASIC Prime Trust page
This penalty decision reinforces the need for clear decision
making and record keeping in the boardroom.
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We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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