Adler v Australian Securities and Investments Commission

The appeal concerned alleged contraventions of various provisions of the Corporations Act 2001 (Cth) by Mr Adler and Mr Williams, and the consequential orders for compensation, pecuniary penalties, and disqualification from managing corporations. The Australian Securities and Investments Commission (ASIC) was the respondent. The dispute centred on a payment of money by Adler Corporation to a related party, which ASIC alleged constituted a contravention of sections 208 and 260A of the Act, as well as director's duties under sections 180, 181, 182, and 183.

The court was required to determine whether the trial judge erred in finding that Mr Adler and Mr Williams had contravened the civil penalty provisions of the Act. Specifically, the court considered whether the payment of money to a related party, whether as a loan or held on trust, constituted a financial benefit given otherwise than on reasonable arm's length terms, and whether the company giving financial assistance for the acquisition of its shares suffered material prejudice. The court also examined the extent of knowledge required for involvement in such contraventions and the admissibility and weight of opinion evidence regarding the propriety of the transactions and the existence of material prejudice. Furthermore, the court considered the availability of *Jones v Dunkel* inferences in civil penalty proceedings and the application of rules of prosecutorial fairness. Finally, the court reviewed the trial judge's findings on causation of loss to the company and the calculation of compensation and pecuniary penalties.

The court affirmed the trial judge's findings that Mr Adler and Mr Williams had contravened sections 208 and 260A of the Act, finding no error in the determination that the financial benefit was not on reasonable arm's length terms and that the company suffered material prejudice. The court also upheld the findings of contraventions of sections 180, 181, and 182, but varied the declarations to exclude section 183. The court found that *Jones v Dunkel* inferences were available and that the trial judge had not erred in their application, nor in dismissing submissions regarding prosecutorial fairness. The court also found no error in the trial judge's findings on causation of loss and the calculation of compensation, although it adjusted the specific interest rate for calculating loss. The court affirmed the trial judge's orders for pecuniary penalties and disqualifications, holding that disqualification orders cannot be made distributively and must apply to the management of all corporations.

The appeals were allowed in part, with declarations and orders varied to reflect the exclusion of section 183 and to recalculate compensation based on the court's reasons. The appeals were otherwise dismissed, and the appellants were ordered to pay the respondent's costs.