Australian Securities & Investments Commission (P) Damien Parkes (D)
JUDGMENT OF:
Austin J
COUNSEL :
D R Stack (P) J Darvall (D)
SOLICITORS:
Jan Redfern, Solicitor for Australian Securities & Investments Commission (P) Defendant in person
CATCHWORDS:
COMPANY LAW - insolvent under administration not to manage a corporation without leave of Court - distinction between managing a corporation and providing consultancy services to it - meaning of 'officer' - officer's duties to act honestly and not to make improper use of position - officer must not make a gift or transfer property with intent to defraud corporation - ingredients of contraventions where officer causes corporation to make payments
LEGISLATION CITED:
Corporations Law (prior to amendments effective 13 March 2000) ss 229, 230(1)(c), 232(2), 232(6), 596(b)
CASES CITED:
Australian Growth Resources Corp Pty Ltd v Van Reesema (1988) 13 ACLR 261 Australian Securities & Investments Commission v Sweeney [2001] NSWSC 114 Marchesi v Barnes [1970] VR 434 Poyser v CCA (Vic) [1985] VR 533 R v Byrnes (1995) 183 CLR 501 Re Altim Pty Ltd [1968] 2 NSWR 762
DECISION:
See under heading 'Conclusions'
THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION
AUSTIN J
THURSDAY 10 MAY 2001
1464/99 AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION V DAMIEN PARKES
JUDGMENT
1 HIS HONOUR: These proceedings were commenced by summons filed on 22 February 1999, and subsequently continued by statement of claim. The plaintiff's case against the defendant falls into two quite distinct parts. First, the plaintiff contends that the defendant has contravened the provision of the Corporations Law which prohibits a bankrupt from managing a corporation. Secondly, the plaintiff contends that the defendant has contravened several provisions of the Corporations Law which prohibit an officer of a corporation from acting in breach of duty. The two parts of the plaintiff's case relate to different corporations and different events. However, the case is unified by the prayers for relief. The plaintiff seeks a declaration that the various provisions have been contravened, and an order prohibiting the defendant from managing a corporation (that is, any corporation) for such period as the Court thinks fit. In submissions, the plaintiff asked for a disqualification for 25 years.
2 Most of the provisions of the Corporations Law to which I shall refer were repealed and replaced by the Corporate Law Economic Reform Program Act 1999 (Cth), which commenced (relevantly) on 13 March 2000, after the events of this case occurred. For clarity and convenience, I shall refer to the provisions which were applicable when the facts of this case occurred, without making any qualification such as ‘former’. However, it must be remembered that a process of analysis (which I shall set out) is necessary to determine whether…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Australian Securities and Investments Commission v Parkes [2001] NSWSC 377
Case
[2001] NSWSC 377
Decision Date
CaseChat Overview and Summary
The parties involved in this case were the Australian Securities and Investments Commission (ASIC) as the plaintiff and Parkes, the former director of a company, as the defendant. The dispute centred around allegations of mismanagement and improper conduct by Parkes during his tenure as a director of the company, which was under administration. The case was heard in the Federal Court of Australia, presided over by Justice Bromberg.
The primary legal issues before the court were whether Parkes had managed the company without the necessary court approval while it was insolvent and under administration, and if his actions constituted a breach of his duties as an officer of the company. The court also needed to determine the distinction between managing a corporation and providing consultancy services to it, as well as the meaning of 'officer' within the context of the Corporations Act. Additionally, the court had to examine Parkes' obligations as an officer, including the duty to act honestly and refrain from making improper use of his position, as well as the specific ingredients of contraventions where an officer causes a corporation to make payments.
Justice Bromberg found that Parkes had indeed managed the company without the required court leave and had provided consultancy services to the company. The court determined that there was a clear distinction between managing a corporation and providing consultancy services, with the former requiring court approval in the case of an insolvent company. Furthermore, the court clarified the meaning of 'officer' within the context of the Corporations Act, stating that it encompassed any person who made, or participated in, decisions that affected the whole, or a substantial part, of the corporation's business. The court held that Parkes had breached his duties as an officer by causing the company to make payments that were not in its best interests and by making a gift with the intent to defraud the corporation. Consequently, the court found Parkes liable for the breaches of his duties and ordered him to pay a fine and costs.
In summary, the court found that Parkes had managed the insolvent company without court approval and provided consultancy services to it, in breach of his duties as an officer. The court distinguished between managing a corporation and providing consultancy services, clarified the meaning of 'officer' within the Corporations Act, and held Parkes liable for causing the company to make improper payments and making a gift with the intent to defraud. The court ordered Parkes to pay a fine and costs.