Directors of failed Prime Trust, Bill Lewski, Peter Clarke, Kim Jacques and Michael Wooldridge, have succeeded in having their ASIC-backed court convictions overturned.
Prime Trust collapsed in 2010 with $560 million lost for 8,000 mum and dad investors. At the time, Prime Trust was the country’s third largest village operator with close to 50 big properties. Lewski was the driver of its rapid growth through acquisition.
The Federal Court Judge Bernard Murphy applied fines and bans on the directors following rulings in 2013 and 2014. They appealed in 2015.
The Full Court of the Federal Court last week said “The trial judge should not have concluded any of the directors contravened the Act as alleged by ASIC.”
ASIC’s hunt over directors responsibilities relates specifically to a $33 million success fee paid to Lewski when Prime Trust floated on the stock exchange. Lewski also did well from the management rights for their villages which the board gave to Lewski for free and he then on-sold to Babcock & Brown for $60 million.
The ASIC case was made more complicated by the fact that the $33 million fee was made at a board meeting on 19 July, 2006. This was six years and one month before ASIC launched its case on 21 August 2012 – meaning beyond the six-year statute of limitations.
ASIC pointed out that at the August 2006 board meeting the Lodgement Resolution was approved by the board, starting the clock. The directors say the actual decision was made the month before.
Justice Middleton pointed out that the decision could have been changed when the Lodgement Resolution was placed at the August board meeting and therefore it was still alive.
He is quoted as saying: “Everything was wrong with the July resolution, on His Honour’s findings. You had to do something to stop it. Blind Freddy could have seen it's wrong”.
The Full Court last week applied the letter of the law to the benefit of the directors.
