Former federal minister for health and aged care Dr Michael Wooldridge was among those found to have breached their duties – along with Peter Clarke, William Lewski, Mark Butler and Kim Jaques.
The five men were directors of Australian Property Custodian Holdings (APCH), the responsible entity for the Prime Retirement and Aged Care Property Trust, a managed investment scheme which owned retirement villages in Queensland, New South Wales and Victoria.
In 2010, the APCH collapsed owing approximately $550 million. Approximately 9,700 investors had contributed to the prime trust.
In a comprehensive 217-page judgement, Federal Court Justice Murphy found that the directors had breached various duties, including the failure to act in the best interests of the scheme members. Justice Murphy made specific findings in relation to an unlawful $33 million ‘listing fee’ paid by the scheme to APCH when it was listed on the ASX.
The $33 million was paid out of ACPH to entities associated with former director, Mr Lewski.
“In my view, in making the decisions to pay the Listing Fee each of the Directors failed to act with undivided loyalty solely in the interests of the members, and given APCHL’s conflicts of interest, each of them failed to give priority to the members’ interests,” Justice Murphy wrote in the judgement.
ASIC commissioner Greg Tanzer highlighted the important role of directors to act in the best interests of their unit holders.
“This is a significant outcome for investors. Directors are important gatekeepers who must discharge their duties with the appropriate care and diligence. This has not happened here. The conduct of the APCH board was unacceptable, and today's judgment reflects that”, he said.
The directors face penalties of up to $200,000 each and banning orders. The penalty hearing will commence early next year.
