Australian Securities Commission v Donovan, John Phillip & Anor [1998] FCA 986

FEDERAL COURT OF AUSTRALIA CORPORATIONS - directors' duties - duty of care and diligence contained in s232(4) of the Corporations Law - whether breach of duty - whether prohibition from managing corporation should be imposed - considerations for imposing prohibition - whether contravention "serious" - whether civil pecuniary penalty ought to be imposed. Corporations Law s232(4), s1317EA Federal Court Rules Daniels v Anderson [1995] 37 NSWLR 438 - Appl Francis v United Jersey Bank 432 A 2d 814 (NJ 1981); 37 NSWLR - Cons Re Property Force Consultancy Pty Ltd (In Liq) [1997] 1 Qd R 300 - Appl Vrisakis v Australian Securities Commission (1993) 9 WAR 395 - Appl Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743 - Appl Nicholas v Corporate Affairs Commission (1987) 5 ACLC 258 - Cons Friend v Corporate Affairs Commission (1989) 7 ACLC 106 - Cons Re Civica Investments Ltd [1983] BCLC 456 - Appl Cullen v Corporate Affairs Commission (1989) 7 ACLC 117 - Appl Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 17,882 - Cons NW Frozen Foods v Australian Competition and Consumer Commission (1996) 71 FCR 285 (FC) - Appl AUSTRALIAN SECURITIES COMMISSION v JOHN PHILLIP DONOVAN AND JULIA GWENDOLIN DONOVAN No QG 3006 of 1997 COOPER J BRISBANE 20 AUGUST 1998

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QG3006 of 1997

BETWEEN: australian securities commission

Applicant

AND: john phillip donovan

First Respondent

julia gwendolin donovan

Second Respondent

JUDGE: COOPER J

DATE OF ORDER: 20 August 1998

WHERE MADE: BRISBANE

THE COURT DECLARES THAT :-

1. By causing or permitting the Good Life Company and Friends Pty Ltd to continue between November 1995 and October 1996 to sell growerships and quota to Kefir growers in the absence of any market and in disregard of contrary expert advice, the respondents have contravened section 232(4) of the Corporations Law in relation to the said corporation.