The High Court has allowed in part an appeal against a decision of the Full Federal Court regarding civil penalty proceedings by the Australian Securities & Investments Commission (“ASIC”) against five directors of a failed aged care and retirement trust, concerning whether they breached their duties when they amended the trust’s constitution. It was held that the Full Federal Court erred when it held that certain amendments had “interim validity” unless and until they were set aside, and that the directors had been entitled to act in accordance with their honest belief the amendments were valid. Consequently, the directors had breached various provisions of the Corporations Act 2001 (Cth) to take reasonable care, to be loyal to members of the trust, to not use their position improperly, and to comply with the legal requirements for amendment. However the Full Federal Court was correct to conclude the directors were not “involved in” a contravention of s 208 of the Corporations Act.
The High Court granted special leave in five new cases this month, one on the papers and four at Friday’s oral hearings. That brings the total up to 35 grants for the year, the same number as in 2014, and hence equal to the lowest annual number of grants in the past decade.
The five new cases that the Court will hear in (roughly) the first third of next year are: Continue reading