A Federal Court judge yesterday blasted the conduct of the directors of troubled West Australian property group Westpoint.
Justice French, in Federal Court of Western Australian, ordered the seizure of properties, motor vehicles, maritime vessels owned in Australia and overseas by Westpoint directors.
He also seized the passports of Norm Carey, Richard Beck, John Dixon and Graeme Rundle until October.
The Australian Securities and Investment Commission had sought to have receivers appointed to the assets of all four directors and their associated companies.
In handing down his judgement and granting ASIC’s request, Justice French found “evidence of wide spread and serious misconduct in operation of affairs of group”.
“In my opinion, ASIC has demonstrated that it is necessary and desirable, within the meaning of s 1323(1) that the Court make orders to protect potential claimants against the defendants in respect of liabilities which may be imposed upon them for contraventions of the Corporations Act and other statutes and for breach of common law and fiduciary duties,” Justice French said.
“In my opinion, the misconduct indicated by the evidence is wideranging and serious,” he added.
“The precise locus of responsibility for that misconduct and the identification of any liabilities which may arise will require further careful investigation and in the meantime the protection of any assets that may be available to satisfy such liabilities.
“Although the appointment of receivers is a drastic step, I am satisfied that in the serious circumstances of this case, it is justified. I do not think that the necessary protection can be achieved by way of freezing orders or the acceptance of undertakings.”
Justice French also made “travel restraint orders which are sought and the general orders authorising ASIC to give notice of the orders to relevant authorities, banks, building societies and financial institutions.
“The appointment of the receivers will be limited in time rather than open-ended. I will limit their appointment in the first instance to a term of six months which may be extended upon application.
“The power of the receivers in respect of the property of the defendants will extend, as requested by ASIC, to the identification, preservation and securing of individual property for the benefit of potential creditors. It will not however extend to the ‘collecting’ of property.”
Justice French added that the evidence placed before the Court in support of the application was extensive and detailed and was not the subject of any substantial challenge.
“It is indicative of serious misconduct in the affairs of the companies and the very real possibility that there have been a number of there are aspects of the evidence suggestive of a ruthless disregard by the Westpoint Group’s controllers of the interests of investors and other creditors in the way in which funds invested and assets of companies within the Group have been dealt with.
“Other aspects of the evidence, particularly emerging from examination of the former directors of the Mezzanine Companies, are indicative of a degree of carelessness and indifference on their part to their duties as directors.
Justice French concluded that the evidence before him made it necessary and desirable, to protect the interests of investors and creditors of companies in the Group, that receivers be appointed to the property of each of the defendants.
By Ted McDonnell, Acting Managing Editor
