Cruickshank v Australian Securities and Investments Commission

• Jurisdiction: Australia Federal only
• Court: Full Federal Court (Australia)
• Judgment Date: 05 August 2022
• Neutral Citation: [2022] FCAFC 128
• Date: 05 August 2022

FEDERAL COURT OF AUSTRALIA

Cruickshank v Australian Securities and Investments Commission [2022] FCAFC 128

Appeal from:	Australian Securities and Investments Commission v Big Star Energy Limited (No 3) [2020] FCA 1442; 148 ACSR 334; 389 ALR 17 Australian Securities and Investments Commission v Blue Star Helium Limited (No 4) [2021] FCA 1578; 158 ACSR 196
File number:	WAD 25 of 2022
Judgment of:	ALLSOP CJ, JACKSON AND ANDERSON JJ
Date of judgment:	5 August 2022
Catchwords:	CORPORATIONS – appeal from the decision of the liability judgment and the orders and declarations made in the penalty judgment – continuous disclosure obligations pursuant to s 674(2A) of Corporations Act 2001 (Cth) – whether information not disclosed was material to relevant investors pursuant to s 677 – whether a reasonable person would expect the information, were it generally available, to have a material effect on the price or value of the Company’s shares for the purposes of s 674(2)(c)(ii) and s 677 of the Act – whether the relevant information satisfies the conditions in s 674(2)(b) and (c) of the Act – whether appellant contravened s 180 of the Act by failing to exercise care and diligence in causing or permitting the company to contravene s 674(2A) of the Act –disqualification order pursuant to s 206C of the Act – whether disqualification order was justified – appeal dismissed
Legislation:	Corporations Act 2001 (Cth) ss 180, 206C, 674, 677
Cases cited:	Australian Securities and Investments Commission v Adler [2002] NSWSC 483; 42 ACSR 80 Australian Securities and Investments Commission v Citrofresh International Ltd (No 3) (2010) 268 ALR 303; [2010] FCA 292 Australian Securities and Investments Commission v Flugge (No 2) (2017) 342 ALR 478; [2017] VSC 117 Australian Securities and Investments Commission v Forex Capital Trading Pty Ltd [2021] FCA 570 Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430; [2011] FCA 1003 Australian Securities and Investments Commission v Helou (No 2) [2020] FCA 1650 Australian Securities and Investments Commission v Macdonald (No 12) (2009) 259 ALR 116; [2009] NSWSC 714 Australian Securities and Investments Commission v Soust (No 2) (2010) 76 ACSR 1; [2010] FCA 388 Australian Securities and Investments Commission v Vocation Ltd (In liq) [2019] FCA 807; 136 ACSR 339; 371 ALR 155 Australian Securities and Investments Commission v Big Star Energy Limited (No 3) [2020] FCA 1442; 148 ACSR; 389 ALR 17 Australian Securities and Investments Commission v Bluestar Helium Limited (No 4) [2021] FCA 1578; 158 ACSR 196 Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 5) [2009] FCA 1586; 264 ALR 201; 76 ACSR 506 Australian Securities and Investments Commission v GetSwift Ltd [2021] FCA 1384 Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 Gillfillan v Australian Securities and Investments Commission (2012) 92 ACSR 460; [2012] NSWCA 370 Grant-Taylor v Babcock & Brown Limited (in liq) [2016] FCAFC 60; 330 ALR 642; 113 ACSR 362; 245 FCR 402 James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332 Jubilee Mines NL v Riley (2009) 40 WAR 299 Morley v Australian Securities and Investments Commission (No 2) (2011) 83 ACSR 620; [2011] NSWCA 110 Re Idylic Solutions Pty Ltd; ASIC v Hobbs (2013) 93 ACSR 421; [2013] NSWSC 106
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	149
Date of hearing:	9 May 2022
Counsel for the Appellant:	Mr SM Davies SC with Mr C Chenu and Mr AJC Mossop
Solicitor for the Appellant:	DLA Piper Australia
Counsel for the First Respondent:	Dr O Bigos QC with Mr M Sherman
Solicitor for the First Respondent:	Australian Securities and Investments Commission
Counsel for the Second Respondent:	The Second Respondent did not appear

ORDERS

		WAD 25 of 2022
BETWEEN:	JAMES ANDREW CRUICKSHANK Appellant
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Respondent ; BLUE STAR HELIUM LIMITED ACN 009 230 835 Second Respondent

order made by:	ALLSOP, JACKSON AND ANDERSON JJ
DATE OF ORDER:	5 August 2022

THE COURT ORDERS THAT:

1. The appeal be dismissed with costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1 The appellant (Mr Cruickshank) appeals from the decision of the primary judge in Australian Securities and Investments Commission v Big Star Energy Limited (No 3) [2020] FCA 1442; 148 ACSR 334; 389 ALR 17 delivered on 9 October 2020 (Liability Judgment) and the orders and declarations made in Australian Securities and Investments Commission v Bluestar Helium Limited (No 4) [2021] FCA 1578; 158 ACSR 196, delivered on 16 December 2021 (Penalty Judgment).

2 The first respondent to this appeal (ASIC) commenced this proceeding at first instance, against the second respondent, Blue Star Helium Limited (Company) and Mr Cruickshank. At first instance, ASIC alleged that the Company contravened s 674(2) of the Corporations Act 2001 (Cth) (Act) due to its failure to comply with its continuous disclosure obligations in relation to statements made to the Australian Securities Exchange Limited (ASX) with respect to the proposed sale of its oil and gas interests in the Permian Basin of Texas, in the United States of America to Wade Energy Corporation (Wade Energy). ASIC sought declarations against the Company in respect of each alleged contravention.

3 In addition, ASIC claimed that Mr Cruickshank contravened:

(a) s 674(2A) of the Act in that he was involved in the Company's contraventions of s 674(2) of the Act; and

(b) s 180(1) of the Act in that he failed to discharge his duties to the Company with the degree of care and diligence required.

4 ASIC sought declarations of contravention against Mr Cruickshank, disqualification orders and orders for pecuniary penalties to be paid by Mr Cruickshank in respect of each alleged contravention.

5 The primary judge in the Liability Judgment found that the Company had contravened its continuous disclosure obligations under s 674 of the Act and as a consequence, Mr Cruickshank contravened his duty of care and diligence to the Company under s 180 of the Act. The primary judge rejected ASIC’s claim that Mr Cruickshank was, by his acts or omissions, directly or indirectly, knowingly concerned in the Company’s contravention of the continuous disclosure obligations under s 674(2) of the Act.

RELEVANT FACTS

6 It is convenient to refer to the primary judge’s summary of facts from the Liability Judgment, which were not disputed on appeal (headings omitted):

[1] Over the course of a week in September 2015, the first defendant, a company listed on the Australian Stock Exchange (ASX) and then known as Antares Energy Limited (Antares), announced to the...