Five former directors of the responsible entity for Prime Trust, including former Federal Minister for Health and Aged Care Dr Michael Wooldridge, have been found liable for breaching their duties as company officers.
The five men – Wooldridge, Peter Clarke (former chair of Victoria's Urban Renewal Authority), William Lionel Lewski, Mark Frederick Butler and Kim Jaques – were all former directors of Australian Property Custodian Holdings Ltd (APCHL).
APCHL was the responsible entity for the Prime Retirement and Aged Care Property Trust which was operated as a managed investment scheme which owned retirement villages in Queensland, NSW and Victoria before collapsing in 2010 owing investors approximately $550 million.
The ruling was made in the Federal Court in Melbourne yesterday after the Australian Securities and Investments Commission (ASIC) sought a declaration that APCHL breached its duties in exercising its powers and carrying out its duties as the responsible entity of Prime Trust, and that APCHL and its directors failed to act in the best interests of the members.
ASIC is also seeking court pecuniary penalties from the court and orders banning the five former directors from managing companies, with the penalty hearing to begin in early 2014.
Justice Murphy of the Federal Court found that each of the directors had breached various duties, including the responsibility to act in the best interests of scheme members, and that APCHL had breached similar duties under the Corporations Act 2001 (the Corporations Act).
It was also found that amendments to the constitution of Prime Trust were not permitted to be made without approval of a special resolution of the unit holder, and the directors breached the law in paying a 'listing fee' to APCHL as a result of it becoming listed on the ASX.
