Australian Securities and Investments Commission v Hobbs

In the case of Australian Securities and Investments Commission v Hobbs, the Australian Securities and Investments Commission (ASIC) brought proceedings against several defendants, including Hobbs, for various breaches of the Corporations Act 2001. ASIC alleged that the defendants acted as de facto or shadow directors of various corporations and breached their duties as officers, including the duty of care and diligence, the duty to act in good faith and for a proper purpose, and the duty not to make improper use of their position. ASIC also claimed that the defendants engaged in misleading and deceptive conduct and false statements, and that the businesses operated by the defendants required a financial services licence and managed investment scheme registration, which were not obtained.

The court was required to decide whether the defendants acted as de facto or shadow directors, whether they breached their duties as officers, whether the illegal acts were within the scope of agency, whether the businesses required a financial services licence and managed investment scheme registration, and whether the defendants engaged in misleading and deceptive conduct and false statements. The court also needed to consider whether Jones v Dunkel inferences could be drawn where a defendant failed to call a particular witness in a civil penalty proceeding.

The court found that the defendants were de facto or shadow directors of the impugned corporations and breached their duties as officers. The court held that the duty of care and diligence required the defendants to be actively involved in the management of the corporations, and that they failed to discharge this duty by not monitoring the activities of the corporations. The court also found that the illegal acts were within the scope of agency, and that the businesses required a financial services licence and managed investment scheme registration. Additionally, the court held that the defendants engaged in misleading and deceptive conduct and false statements by providing information that was likely to lead recipients into error, despite contemporaneous disclaimers. The court further found that Jones v Dunkel inferences could be drawn where a defendant failed to call a particular witness in a civil penalty proceeding.

The court ordered the defendants to pay civil penalties, costs, and to be disqualified from managing corporations. The court also made declarations that the defendants breached their duties as officers, engaged in misleading and deceptive conduct and false statements, and that the businesses required a financial services licence and managed investment scheme registration.