Australian Securities and Investments Commission v Vocation Limited (In Liquidation) (No 2)

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judge: NICHOLAS J
• Judgment Date: 01 November 2019
• Neutral Citation: [2019] FCA 1783
• Date: 01 November 2019

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Vocation Limited

(In Liquidation) (No 2) [2019] FCA 1783

File number:	NSD 1679 of 2016
Judge:	NICHOLAS J
Date of judgment:	1 November 2019
Catchwords:	CORPORATIONS – Non-Executive Chairman of listed public company found to have contravened s 180(1) of the Corporations Act 2001 (Cth) (the Act) – where no suggestion that he acted dishonestly or for an improper purpose or for personal gain – whether relief should be granted under s 1317S and s 1318 of the Act – consideration of matters relevant to such relief – seriousness of contravention and potential consequences – reasonableness of reliance on management and legal advice – good character and distinguished public service – relief under s 1317S and s 1318 declined ; CORPORATIONS – Chief Executive Officer, Chief Financial Officer and Non-Executive Chairman of listed public company found to have contravened s 180(1) of the Act – where none shown to have acted dishonestly, for an improper purpose or for personal gain – whether each should be disqualified from managing corporations and, if so, for what period – whether pecuniary penalties should also be imposed – consideration of relevant factors – seriousness of contraventions and potential consequences – specific and general deterrence – application of totality principle and parity principle – disqualification orders made against the Chief Executive Officer, Chief Financial Officer and Non-Executive Chairman for periods of six, three and two years respectively – pecuniary penalties also imposed on Chief Executive Officer, Chief Financial Officer and Non-Executive Chairman of $70,000, $30,000 and $25,000 respectively
Legislation:	Corporations Act 2001 (Cth) ss 180(1), 674(2), 1041H, 1317S and 1318 Federal Court of Australia Act 1976 (Cth) s 43
Cases cited:	Australian Competition and Consumer Commission v Rural Press Ltd [2001] ATPR ¶41-833 Australian Securities and Investments Commission v Flugge (No 2) (2017) 342 ALR 478 Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 Australian Securities and Investments Commission v Vocation Limited (In Liquidation) [2019] FCA 807 Gray v Richards (No 2) (2014) 89 ALJR 113 Mill v R (1988) 166 CLR 59 Morley v Australian Securities and Investments Commission (No 2); Shafron v Australian Securities and Investments Commission (No 2) (2011) 83 ACSR 620 Postiglione v The Queen (1997) 189 CLR 295 R v Tiddy [1969] SASR 575 Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler and Others (2002) 42 ACSR 80
Date of hearing:	31 July 2019
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Category:	Catchwords
Number of paragraphs:	91
Counsel for the Plaintiff:	Mr J Halley SC with Ms J Davidson
Counsel for the Second Defendant:	Mr DB Studdy SC with Mr SA Lawrance
Solicitor for the Second Defendant:	Gilbert + Tobin
Counsel for the Third Defendant:	Mr M Pesman SC with Mr JM Wheeldon
Solicitor for the Third Defendant:	Baker & McKenzie
Counsel for the Fourth Defendant:	Ms E Holmes
Solicitor for the Fourth Defendant:	Clyde & Co

ORDERS

		NSD 1679 of 2016
BETWEEN:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff
AND:	VOCATION LIMITED (IN LIQUIDATION) ACN 166 631 330 First Defendant ; MARK EDWARD HUTCHINSON Second Defendant ; JOHN SYDNEY DAWKINS Third Defendant ; MANVINDER GRÉWAL Fourth Defendant

JUDGE:	NICHOLAS J
DATE OF ORDER:	1 November 2019

THE COURT DECLARES THAT:

1. Pursuant to section 1317E(l) of the Corporations Act 2001 (Cth), the second defendant contravened sub-section 180(1) of the Act in that he failed to discharge his duties to the first defendant (“Vocation”) with the degree of care and diligence that a reasonable person would exercise, if he or she were the Group Chief Executive Officer and Managing Director of a corporation in Vocation's circumstances and occupied the office held by the second defendant, and had the same responsibilities within the corporation, in causing or otherwise permitting Vocation to contravene:

(a) sub-section 1041H(l) of the Act in making each of the following representations, in an announcement to the ASX on 25 August 2014:

(i) the No Suspension Representation, as defined in paragraph 7a of the Consolidated Concise Statement;

(ii) the Reasonable Grounds Representation, as defined in paragraph 7b of the Consolidated Concise Statement;

(iii) the Continuing Representation, as defined in paragraph 7c of the Consolidated Concise Statement;

(b) sub-section 1041H(l) of the Act in making each of the following representations in a Due Diligence Questionnaire signed by him and provided to UBS on 10 September 2014 in its capacity as the underwriter of an approximately $74 million placement by Vocation to institutional investors:

(i) the School Leavers Representation, as defined in paragraph 14a of the Consolidated Concise Statement;

(ii) the Offsetting Representation, as defined in paragraph 14b of the Consolidated Concise Statement;

(iii) the Expedited Payment Representation, as defined in paragraph 14c of the Consolidated Concise Statement;

(c) sub-section 674(2) of the Act by not notifying the ASX of the existence of the Withholding and Suspension Information, as defined and particularised in paragraph 11 of the Consolidated Concise Statement, in the period between 28 August and 18 September 2014.

2. Pursuant to section 1317E(l) of the Corporations Act 2001 (Cth), the third defendant contravened sub-section 180(1) of the Act in that he failed to discharge his duties to the first defendant (“Vocation”) with the degree of care and diligence that a reasonable person would exercise, if he or she were a nonexecutive director and Chair of the Board of a corporation in Vocation’s circumstances and occupied the office held by the third defendant, and had the same responsibilities within the corporation, in causing or otherwise permitting Vocation to contravene sub-section 674(2) of the Act by not notifying the ASX of the existence of the Withholding and Suspension Information, as defined and particularised in paragraph 11 of the Consolidated Concise Statement, in the period between 28 August and 18 September 2014.

3. Pursuant to section 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant contravened sub-section 180(1) of the Act in that he failed to discharge his duties to the first defendant (“Vocation”) with the degree of care and diligence that a reasonable person would...