Australian Securities and Investments Commission v Cassimatis (No 8) [2016] FCA 1023

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Cassimatis (No 8) [2016] FCA 1023 File number: QUD 574 of 2010

Judge: EDELMAN J

Date of judgment: 26 August 2016

Catchwords: CORPORATIONS – whether directors can be liable for contravention of s 180(1) of the Corporations Act 2001 (Cth) where they are the only shareholders of a solvent company – nature and history of duty in s 180(1) – whether duty is a private duty owed only to corporation or whether it is also a public duty – circumstances in which directors can be liable for corporation's breach of Corporations Act – "stepping stone" approach to liability of directors CORPORATIONS – whether provision of financial advice by corporation contravened s 945A and s 1041E of the Corporations Act – elements which must be proved for a criminal offence by breach of s 945A or s 1041E of the Corporations Act – meaning of "subject matter of the advice" in s 945A – meaning of "likely to induce" in s 1041E – relevance of the absence of evidence of any actual inducement CORPORATIONS – meaning of a "retail client" – whether investments by jointly advised clients can be aggregated for purposes of determining whether they are retail clients CORPORATIONS – s 1317S of the Corporations Act – whether conduct of directors was honest and "ought fairly to be excused" – history and meaning of the expression "ought fairly to be excused"

Legislation: Acts Interpretation Act 1901 (Cth) s 13 Companies Act 1981 (Cth) ss 229(2), 535 Corporate Law Economic Reform Program Act 1999 (Cth) s 180 Corporate Law Reform Act 1992 (Cth) s 11 Corporations Act 1989 (Cth) Corporations Act 2001 (Cth) Chs 2, 7; Divs 2, 3; Pts 7.5, 7.7, 7.9; ss 79, 179, 179(1), 180, 180(1), 180(2), 185, 206C, 206E, 206E(1), 206E(1)(a)(i), 588M, 588W, 727, 734, 761A, 761G, 761G(7), 761G(7)(a), 761G(10), 761GA, 763A(1)(a), 764A(1)(j), 766A(1)(a), 766B, 766B(1), 766B(3), 766B(4), 911A, 911B, 912A, 912A(1)(a), 912A(1)(c) 915C, 915C(1)(a), 916A, 916B, 916F, 920A, 920C(1), 941D, 944A, 944A(b), 945A, 945A(1), 945A(1)(a), 945A(1)(b), 945A(1)(c), 952E, 952G, 961M, 1012H, 1017G, 1021FA, 1021FB, 1021NB, 1021NC, 1041B, 1041E, 1041E(1),1041E(1)(a), 1041E(1)(b), 1041E(1)(c), 1041E(2), 1101B(1)(a)(i), 1308A, 1311, 1316HB, 1317E(1), 1317G, 1317GA, 1317H, 1317HA, 1317S, 1317S(1), 1317S(1)(a), 1317S(2), 1317S(3), 1324(1), 1324(6), 1318 Corporations Law (Cth) ss 232, 232(4), 232(6B), 1317DA, 1317DB, 1317EA(3), 1317EB, 1317FA, 1317JA, 1318 Evidence Act 1995 (Cth) ss 140(1), 140(2) Financial Services Reform Act 2001 (Cth) Financial Transaction Reports Act 1988 (Cth) s 31(1) Trade Practices Act 1974 (Cth) s 52 Criminal Code 1995 (Cth) Ch 2; Divs 4, 5, 6; ss 2.1, 3.1, 3.2, 4.1, 5.1, 5.2, 5.3, 5.4, 5.4(4), 5.6(1), 5.6(2) Corporations Regulations 2001 (Cth) regs 7.1.17B, 7.1.18, 7.1.18(1), 7.1.18(3), 7.1.18(3)(a), 7.1.18(5), 7.1.19, 7.1.19(1), 7.1.19(3)(b), 7.1.19(5), 7.1.19(7), 7.1.19(8) Explanatory Memorandum, Companies Bill (Cth) 1981 Explanatory Memorandum, Corporate Law Economic Reform Program Bill (Cth) 1998 Explanatory Memorandum, Corporate Law Reform Bill (Cth) 1992 Explanatory Memorandum, Corporations Amendment (Further Future of Financial Advice Measures) Bill (Cth) 2011 Explanatory Memorandum, Corporations Bill (Cth) 1988 Explanatory Memorandum, Corporations Bill (Cth) 2001 Explanatory Memorandum, Financial Services Reform Bill (Cth) 2001 Companies and Securities Law Review Committee, Company Directors and Officers: Indemnification, Relief and Insurance, Discussion Paper No 9, April 1989 Companies Act 1936 (NSW) s 361 Companies Act 1896 (Vic) s 116(2) Companies Act 1910 (Vic) s 288 Companies Act 1915 (Vic) s 288 Companies Act 1928 (Vic) s 288 Companies Act 1958 (Vic) ss 107, 107(1), 107(3), 107(4), 144(6), 254 Companies Act 1961 (Vic) ss 124, 124(1) Companies (South Australia) Code 1961 (SA) ss 229(2), 229(4) Companies (Western Australia) Code 1961 (WA) s 229(2) Victoria, Parliamentary Debates, Legislative Assembly, 10 November 1910, 2197 Victoria, Parliamentary Debates, Legislative Assembly, 30 November 1910, 3754 Victoria, Parliamentary Debates, Legislative Assembly, 4 August 1910, 479 Victoria, Parliamentary Debates, Legislative Assembly, 9 September 1958, 331 Canada Business Corporations Act 1977 ss 122(1)(a), 122(1)(b), 122(2) Companies (Consolidation) Act 1908 (UK) s 215 Companies Act 1900 (UK) Companies Act 1907 (UK) s 32 Judicial Trustees Act 1896 (UK) ss 3, 3(1)(a) United Kingdom, Parliamentary Debates, House of Commons, 21 August 1907, vol CLXXXI Fourth Series, 892 Board of Trade, United Kingdom, Report of the Departmental Committee Appointed by the Board of Trade to Inquire What Amendments Are Necessary in the Acts Relating to Stock Companies Incorporated with Limited Liability under the Companies Acts, 1862 to 1890, Command Paper 7779 Loreburn Report (1906) Cd 3052: Report of the Company Law Amendment Committee, London, HMSO, 1906, 5 [16(3)] Blackstone W, Commentaries on the Laws of England, Vol 3 (Clarendon Press, Oxford, 1765) Cross R and Harris J, Precedent in English Law (4th ed, Clarendon Press, Oxford, 1991) Edmunds R and Lowry J, "Excuses" in P Birks and Pretto A (eds), Breach of Trust (Hart Publishing, 2002) Getzler J, "Duty of Care" in Birks P and Pretto A (eds), Breach of Trust (Hart Publishing, Oxford, 2002) Heydon JD, "Are the Duties of Company Directors to Exercise Care and Skill Fiduciary?" in Degeling S and Edelman J (eds), Equity in Commercial Law (Thomson, Sydney, 2006) Heydon JD, "Directors' Duties and the Company's Interests" in Finn PD (ed), Equity and Commercial Relationships (Law Book Company, Sydney, 1987) Heydon JD, "Equity and Statute" in Turner PG (ed), Equity and Administration (Cambridge University Press, Cambridge, 2016) Edmunds R and Lowry J, "The Continuing Value of Relief for Directors' Breach of Duty" (2003) 66 MLR 195 Handford P, "Intentional Negligence: A Contradiction in Terms?" 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