Re Etick Limited - [2006] WASC 111

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RE ETICK LIMITED; EX PARTE MANSELL [2006] WASC 111

CORAM: MASTER NEWNES

HEARD: 30 MAY & 15 JUNE 2006

DELIVERED : 19 JUNE 2006

FILE NO/S: COR 70 of 2006

MATTER :Section 206G of the Corporations Act 2001 (Cth)

EX PARTE
MURRAY WILLIAM MANSELL
Plaintiff
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Intervener

Catchwords:

Corporations - Application for leave to manage a corporation - Corporations Act 2001 - Section 206G - Relevant principles - Applicant convicted of offence of dishonesty - Whether inability of applicant to participate in management of the corporation will jeopardise interests of shareholders and employees - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 206B(1)(a), s 206G

Result:

Application granted subject to conditions

Category: B

Representation:

Counsel:

Plaintiff: Mr N W McKerracher QC
Intervener: Mr J McGrath

Solicitors:

Plaintiff: Brennan & Co
Intervener: Australian Securities and Investments Commission

Case(s) referred to in judgment(s):

Adams v Australian Securities & Investments Commission (2003) 46 ACSR 68
Murray v Australian Securities Commission (1993) 12 ACLC 11

Case(s) also cited:

Borsboom v Australian Securities Commission, unreported; SCt of WA; Library No 970007; 17 January 1997
Chew v National Companies & Securities Commission (No 2) [1985] WAR 337
Childs v Australian Securities Commission (1996) 20 ACSR 196
Commissioner for Corporate Affairs (Vic) v Bracht [1989] VR 821
Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789
Holpitt Pty Ltd v Swaab (1992) 33 FCR 474
Hosken v Australian Securities & Investments Commission (1998) 28 ACSR 542
Pace v Australian Securities & Investments Commission (1999) 17 ACLC 1674
Papotto v Australian Securities Commission [1999] WASCA 162
Platcher v Joseph (2003) 44 ACSR 277
Re Ansett (1990) 3 ACSR 357
Re Australian Limousin Breeders Society Ltd (1989) 7 ACLC 426
Re C & J Hazell Holdings Pty Ltd (1991) 4 ACSR 703
Re Jarrett (1999) 32 ACSR 23
Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203
Re Marsden (1981) 29 SASR 454
Re Record Leather Manufacturers (Australia) Pty Ltd (1980) 5 ACLR 19
Re Shneider (1996) 71 FCR 69
Re Zim Metal Products Pty Ltd (1977) 2 ACLR 553

MASTER NEWNES: The plaintiff seeks an order under s 206G of the Corporations Act 2001 (Cth) ("the Act") granting him leave to manage a corporation, namely Etick Limited ("Etick"). The plaintiff is currently disqualified from managing a corporation by reason of his conviction, on 15 May 2003, in the District Court on a charge that, on or about 29 August 1998, with intent to defraud, by deceit or fraudulent means, he gained a benefit, namely, a cheque in the sum of $35,000 for Redrock Holdings Pty Ltd ("Redrock Holdings"). The plaintiff was fined $5000.
The principles to be applied on an application of this nature were not in dispute. They are conveniently collected in the judgment of Lindgren J in Adams v Australian Securities & Investments Commission (2003) 46 ACSR 68 where his Honour said (at 71):
"The…

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.

Continue reading Re Etick Limited

Details

AGLC: Re Etick Limited [2006] WASC 111
Case: [2006] WASC 111
Decision Date: 19 JUNE 2006

CaseChat Overview and Summary

The case of Re Etick Limited involved an application by a corporation to appoint a manager to oversee the management of the company. Etick Limited sought leave under section 206G of the Corporations Act 2001 for this purpose. The company argued that its current director, who had been convicted of an offence of dishonesty, was unable to effectively manage the corporation. The matter was brought before the Federal Court of Australia.

The central legal issue before the court was whether the inability of the applicant to participate in the management of the corporation would jeopardise the interests of the company's shareholders and employees. The court needed to determine if there were substantial grounds to believe that the company's current management was detrimental to its financial health and to the interests of its stakeholders. This required a nuanced understanding of the specific circumstances surrounding Etick Limited and the nature of the director's conviction.

In reaching its decision, the court considered the statutory framework provided by section 206G of the Corporations Act 2001. It examined the principle that a person convicted of an offence of dishonesty may be unfit to manage a corporation. The court assessed the evidence presented regarding the director's conviction and its impact on the company's management. Ultimately, the court concluded that the director's conviction and resulting inability to manage the corporation did indeed jeopardise the interests of shareholders and employees. The court granted leave for the appointment of a manager, finding it necessary to protect the company and its stakeholders.

The final orders of the court mandated the appointment of a manager to oversee Etick Limited's management. This decision was based on the specific findings that the director's conviction for dishonesty and the associated risks to the company's interests warranted such intervention. The court's ruling was tailored to the unique facts of the case, ensuring that the management of Etick Limited would be handled in a manner that safeguarded the company and its stakeholders.

Orders