ASIC v Managed Investments Ltd & Ors (No. 9) [2016] QSC 109 (09/12122) Douglas J 23/05/2016
Full-text: QSC16-109.pdf
Catchwords
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – where MFSIM was the responsible entity for the managed investment scheme, PIF – where PIF entered into a facility with the Royal Bank of Scotland for borrowing of up to $200 million for PIF’s purposes – where MFSIM as responsible entity for PIF made a payment of $130 million from PIF’s drawn down facility to another company in the MFS Group, MFS Administration – where MFS Administration caused $103 million of the $130 million payment to be paid to Fortress to repay a debt owed by a company in the MFS corporate group – where the $130 million payment was made without approval from the Investment Approval Committee of PIF or the Conflicts and Related Party Committee of MFSIM either before the transaction or at all – where MFSIM as responsible entity for PIF made a payment of $17.5 million from PIF’s drawn down facility to PacFin – where PacFin needed the money to meet its financial commitments to its debenture holders – where the payments were not authorised investments under PIF’s constitution – where it was submitted that the payments were made for no consideration to PIF – where it was submitted that the payments were explicable by a proposal to restructure MYF, a managed investment scheme operated by MFSIM, partly through investments to be made by PIF – where, after the payments were made, documents were prepared purporting to record transactions justifying those payments as having been made for the benefit for PIF – where PIF was said to have received the benefit of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF – where Mr King, Mr White, Mr Hutchings, Mr Anderson and Ms Watts were involved in the relevant conduct – whether MFSIM as responsible entity for PIF contravened the Corporations Act 2001 (Cth) – whether Mr King, Mr White, Mr Hutchings, Mr Anderson and Ms Watts contravened the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGED INVESTMENTS – RESPONSIBLE ENTITY – where Mr White, Mr King and Mr Anderson were submitted to have been involved in causing PIF to transfer away $130 million for no purpose to PIF and no benefit to PIF – where Mr White, Mr Anderson, Mr Hutchings and Ms Watts were submitted to have been involved in causing PIF to transfer away $17.5 million for no purpose to PIF and no benefit to PIF – where Mr White, Mr King, Mr Anderson, Mr Hutchings and Ms Watts were closely and relevantly connected with MFSIM – where Mr White, Mr King, Mr Anderson, Mr Hutchings and Ms Watts were MFSIM’s high managerial agents – where MFSIM was argued to be the victim of the fraud – whether the conduct of the individual defendants is attributable to MFSIM to establish whether it, as responsible entity, contravened the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – where Mr King was no longer director of MFSIM when the relevant transactions occurred – where it was submitted that he had overall responsibility for MFSIM’s operations – where it was submitted that Mr White, an executive director of MFSIM and effectively the CEO of the MFS Group at the relevant time, customarily acted in accordance with his wishes – where it was submitted that Mr King had the capacity to affect significantly the financial standing of MFSIM – whether Mr King was an officer of MFSIM under the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – where Mr Anderson was an officer of MFSIM – where Mr King was found to be an officer of MFSIM – where MFSIM was the responsible entity of a registered scheme – whether Mr Anderson and Mr King were officers of the responsible entity of a registered scheme – whether an officer of an entity that is a responsible entity is an officer of the responsible entity under the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – where it was submitted that no consideration passed to PIF at the time of the $130 million payment to MFS Administration – where it was submitted that consideration passed to PIF for the $130 million payment consisting of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF – where it was submitted that no consideration passed to PIF at the time of the $17.5 million payment to PacFin – where the alleged transactions were not formulated or documented at the time of the payment – where documents were later created purporting to reflect the alleged transactions and investments – whether the alleged transactions provided consideration or reimbursement for the payments from PIF’s funds at the time that the payments were made
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – AUTHORITY, RIGHTS AND POWERS OF OFFICERS OF CORPORATION – AUTHORITY – where it was submitted that consideration flowed to PIF for the $130 million payment consisting of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF – where it was submitted that no consideration passed to PIF at the time of the payment to PacFin – where the relevant transactions exceeded the defendants’ limit on delegated authority to make investments – where there was no MFSIM board approval for the transactions – where the parties to the purported transactions were aware of the absence of actual authority to enter into the transactions – whether the transactions were ineffective as having been made without authority
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – AUTHORITY, RIGHTS AND POWERS OF OFFICERS OF CORPORATION – RATIFICATION AND INDEMNIFICATION – where non–executive directors of MFSIM expressly declined to approve certain transactions – where the board of MFSIM was not informed about the true purpose and nature of certain transactions – whether the responsible entity MFSIM had full knowledge of all of the material circumstances surrounding the transactions – whether the transactions were ratified by the board of MFSIM
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – RELATED PARTY TRANSACTIONS – where MFS controlled both MFSIM and MFS Administration – where MFSIM had an independent board but where Mr King and Mr White, directors of MFS Administration, wielded practical influence over MFSIM’s operations – where MFS Administration controlled PacFin – where PacFin was managed exclusively by MFS Administration – where Mr White and Mr Anderson were directors of MFS Administration and two of the three directors of PacFin – whether MFS Administration and MFSIM were related parties – whether MFSIM’s $130 million payment, to the extent of the $103 million payment, was a financial benefit given by MFSIM, as responsible entity for PIF, out of scheme property to MFS Administration, a related party of MFSIM – whether PacFin and MFSIM were related parties – whether MFSIM’s $17.5 million payment was a financial benefit given by MFSIM, as responsible entity for PIF, out of scheme property to PacFin, a related party of MFSIM
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – DUTIES AND LIABILITIES OF OFFICERS OF CORPORATION – OFFENCES – FALSIFICATION OF RECORDS – where Mr Hutchings, Ms Watts, Mr Anderson and Mr White were submitted to have been involved in creating or assisting in the creation of false documents – where it was submitted that the documents were backdated to reflect transactions as occurring in 2007 that did not in fact occur in that year – where it was submitted that the documents reflected events that simply did not occur – where the alleged transactions recorded in the documents were inconsistent with contemporaneous records, accounts, proposals and decisions of the relevant entities – where it was submitted that documents containing false information were provided to banks, auditors and were reflected in PIF’s half-yearly report – whether there was a failure to record correctly and explain the transactions and financial position of MFSIM – whether MFSIM contravened the Corporations Act 2001 (Cth) – whether Mr White, Mr Anderson and Mr Hutchings contravened the Corporations Act 2001 (Cth) directly – whether Mr White, Mr Anderson, Mr Hutchings and Ms Watts were knowingly involved in MFSIM’s contraventions of the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – DUTIES AND LIABILITIES OF OFFICERS OF CORPORATION – where Mr White, Mr King, Mr Anderson, Mr Hutchings and Ms Watts were closely and relevantly connected with MFSIM – where MFSIM was found to have contravened the Corporations Act 2001 – whether the defendants were knowingly involved in MFSIM’s contraventions of the Corporations Act 2001 (Cth) – whether actual knowledge of the essential facts constituting the contravention must be the only rational inference available in the circumstances surrounding the contravention – whether it would be appropriate to grant relief from liability for Mr White, Mr King, Mr Anderson, Mr Hutchings and Ms Watts’ conduct
Uniform Civil Procedure Rules considered
Rule 149(1)(c) — Statements in pleadings
Rule 154 — Inconsistent allegations or claims in pleadings
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