Whitlam v Australian Securities and Investments Commission

The appeal concerned a decision of a primary judge regarding alleged breaches of the *Corporations Act 2001* (Cth) by the appellant, Mr Whitlam. The Australian Securities and Investments Commission (ASIC) had brought proceedings against Mr Whitlam, alleging contraventions of his duties as a director and of section 250A of the *Corporations Act*. The dispute centred on Mr Whitlam's actions concerning a general meeting, specifically his appointment as a proxy for members, his filling out and lodging of a poll paper without signing it, and alterations to draft minutes.

The court was required to determine whether Mr Whitlam had breached his duties as a director under section 180(1) of the *Corporations Act*, and whether he had failed to vote in accordance with section 250A by not signing the poll paper. A further issue was whether the primary judge was obliged to make a declaration of contravention of section 180(1) even if the matter was considered trivial and the proceedings should not have been brought, or if section 1317S permitted relief from such a declaration. The court also considered whether it should formulate and determine bases for findings as to directors' duties when no such allegations had been clearly pleaded by ASIC, raising questions of natural justice and surprise.

The Full Court found in favour of Mr Whitlam on several grounds. It held that he had not breached his duty as a director concerning alterations to draft minutes, nor was he shown to have been motivated by personal gain in supporting a particular resolution, noting he would have received less remuneration if it had passed. Crucially, the court determined that Mr Whitlam had not breached section 250A because he had, in fact, voted, and his failure to sign the poll paper did not result in those proxy votes not being counted. The court also noted that the alleged deliberate conduct was not sufficiently established, as concealment would have been impossible or self-defeating, and the evidence would not meet the standard for criminal charges. Furthermore, the court emphasised that natural justice requires serious misconduct allegations to be precisely formulated, and it was inappropriate for the court to formulate such bases for the first time after extensive hearings.

Consequently, the appeal was allowed with costs, and the cross-appeal was dismissed with costs. The orders of the primary judge were set aside, and the proceedings were dismissed with costs. The application for leave to appeal was also dismissed, with no order as to costs.