Corporate & Commercial Fortnightly Update – 24 October 2013

October, 2013

In the media

Fast food, fitness firms to be audited

In the ACCC’s next round of audits we will be looking at franchises from the takeaway food and health and fitness industries, however our audits will not be restricted to these two sectors. During the last financial year, the ACCC received 740 complaints from people involved in franchising, with more than 100 of them related to misleading conduct and false representations about potential earnings (21 October 2013)

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$2 million penalty for bearings cartel

The Federal Court has made orders by consent against Koyo Australia Pty Ltd ordering it to pay penalties of $2 million following action by the ACCC. The Court found that in 2008 and 2009, Koyo Australia made and gave effect to two separate cartel arrangements (18 October 2013)

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ASIC takes civil action against GE Money

ASIC  have started legal action against consumer credit provider GE Money, seeking financial penalties against the company for making false or misleading representations (17 October 2013)

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Queensland introduces landmark director liability reforms

The Newman Government is implementing significant reforms which will reduce red tape and the burden of liability on directors in Queensland, the Australian Institute of Company Directors said today (17 October 2013)

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Former Wintech Group MD pleads guilty

The former managing director of Wintech Group Limited,  Kim Wong, has pleaded guilty 10 charges including stealing $1.057 million. Mr Wong pleaded guilty to the theft, falsifying Wintech prospectuses and providing false information to the Australian Securities Exchange (14 October 2013)

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In practice and courts

ASIC reports on corporate insolvencies 2012–2013

ASIC have published an annual overview of corporate insolvencies based on statutory reports lodged by external administrators for the 2012–13 financial year. (17 October 2013)

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ASIC have released a consultation paper on financial reporting by stapled securities issuers.

Consultation paper CP 217 Presentation of financial statements by stapled entities (CP 217) seeks feedback on proposals for presenting combined financial information covering these stapled entities. Submissions close 30 November 2013.(11 October 2013)  

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Li v Wu [2013] FCA 1067

CONTRACTS – misleading and deceptive conduct – breach of express and implied terms – equitable compensation – construction of contract – indemnity provisions – member loans – breach of fiduciary  duty  should not be permitted because of a failure by Mr Li to articulate in sufficient time the basis for the claim for compensation – Fair Trading Act 1992 (ACT)

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Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd [2013] VSC 543

EQUITY – Fiduciaries –  Director  of family trust company arranged for the company to borrow money to make superannuation contributions to himself and family – Whether  director  breached fiduciary  duties  – Whether shareholders prospectively assented to transactions – Whether shareholders ratified transactions – Interests of beneficiaries of trust – Liability for knowing receipt – Whether sufficient knowledge – Liability for receipt of trust property as volunteer – Meaning of ‘volunteer’ – Whether superannuation fund provides valuable consideration in exchange for member or employer contributions – Cook v Benson [2003] HCA 36; (2003) 214 CLR 370 applied – Whether plaintiff has unclean hands –  Director  breached fiduciary  duty  but no liability since recipient company had insufficient knowledge and was not a volunteer.

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Cirillo and Registrar of Personal Property Securities [2013] AATA 733

CORPORATIONS – Securities – Personal Property Securities Act 2009 – Amendment demand given seeking removal of registration from Personal Property Securities Register – Registrar refused to register a financing change statement amending registration – Whether reasonable grounds to suspect amendment sought not authorised – Collateral continues to secure debt owed by the applicant – Amendment sought not authorised – Decision under review affirmed.

Personal Property Securities Act 2009 (Cth), ss 178, 180, 181 and 191

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Visa Global Logistics Pty Ltd v Smith & Anor [2013] VCC 1262

Guarantee – Director guaranteed company’s credit application – Ceased to be a director in 2006 – Company failed to pay for goods supplied in 2012 – Plaintiff’s accounts manager aware in 2006 that defendant no longer a director of company – Whether plaintiff entitled to enforce guarantee against former director.

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Woodcroft-Brown v Timbercorp Securities Ltd & Ors [2013] VSCA 284

CORPORATIONS – Appeal – Managed investment scheme – Product disclosure statement – Disclosure of prescribed information by Responsible Entity – Meaning of ‘significant risk’ – Whether a risk ceases to be a ‘significant risk’ if it is capable of being managed – Whether risks that are being managed are required to be disclosed – Whether information contained in Annual Reports and ASX announcements required to be included in the product disclosure statement – Whether directors had knowledge of information about a ‘significant risk’ – Whether non-disclosures relied upon – Appeal dismissed – ss 674, 675, 1013C, 1013D, 1013E, 1013F, 1022B of the Corporations Act 2001 (Cth).

MISLEADING AND DECEPTIVE CONDUCT – claims under s 1041H(1) of the Corporations Act 2001 (Cth) – Considerations relevant to assessing whether representations misleading and deceptive – Whether representations relied upon – Appeal dismissed.

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