Australian Securities and Investments Commission v Lewski

The High Court of Australia considered appeals from the Full Court of the Federal Court of Australia concerning alleged contraventions of the Corporations Act 2001 (Cth) by directors of a responsible entity for a managed investment scheme. The Australian Securities and Investments Commission (ASIC) alleged that the directors, including Mr Lewski and others, contravened their duties by amending the scheme's constitution to introduce new fees payable to the responsible entity, and by authorising payments of these fees. The dispute centred on whether these amendments and payments were valid and whether the directors had breached their statutory and common law duties.

The legal issues before the High Court included whether the amendments to the scheme's constitution adversely affected members' rights, whether the Full Court erred in holding the amendments valid from the time of lodgement until set aside, and whether the directors were absolved of liability due to an honest belief that the constitution had been validly amended. The Court also considered whether the directors were involved in contraventions of section 208 of the Corporations Act relating to financial benefits to related parties.

The High Court allowed the appeals in part, restoring most of the declarations made by the primary judge. The Court reasoned that the amendments to the constitution did adversely affect members' rights and that the directors had failed to properly consider the implications of these amendments. The Court found that the directors' honest belief that the constitution was validly amended did not necessarily absolve them of liability, particularly where that belief was not reasonably held or where the amendments themselves were invalid. The Court also addressed the directors' involvement in contraventions of section 208, with specific considerations for Mr Clarke's role.

Consequently, the High Court set aside certain orders of the Full Court and remitted the matter for determination of penalty and disqualification orders. The Court ordered that the primary judge's declarations, with specific exceptions relating to Mr Clarke and certain contraventions of section 208, be reinstated. The matter was remitted to the Full Court for further determination of penalties, disqualification periods, and costs.