A judge has dismissed an appeal by former Linchpin Capital Group director Peter Daly against a $150,000 penalty for breaching his duties as a director.
In January 2024, Daly – along with Ian Williams, Paul Raftery and Paul Nielsen – was found in April 2023 to have breached his duties as officers of a responsible entity of a registered managed investment scheme and did not act in the best interests of members.
Endeavour was the responsible entity of a registered managed investment scheme called the Investport Income Opportunity Fund. Linchpin operated an unregistered managed investment scheme, which was also called the Investport Income Opportunity Fund. Both funds were placed into liquidation in 2019.
Daly, who was the sole director to contest ASIC’s case, was ordered to pay a $150,000 penalty and be banned from managing corporations for five years. At the time, Justice Elizabeth Cheeseman specifically noted Daly demonstrated a “lack of remorse or contrition”.
The following month, Daly filed an appeal against the judgment and a Federal Court hearing was held on 15–16 August.
Daly proposed that he was not an officer of Endeavour, that he did not contravene section 601FD(1) of the Corporations Act regarding improper use of a position as an officer, and that the penalty was excessive. He sought a lesser penalty of $40,000 and a disqualification of three years rather than five.
In a subsequent judgment on 24 September, Justice Shaun McElwaine dismissed Daly’s appeal and ordered him to pay the respondent’s cost of the appeal. This was because Daly could not demonstrate an error in the exercise of discretion regarding either the disqualification from managing corporations or the penalty orders.
“No error of that kind has been raised by Mr Daly. Mr Daly makes a generalised complaint that the penalty is excessive and unfair. However, the penalty and period of disqualification ordered by the primary judge are well within the range of reasonable decisions, and one cannot infer any misapplication of principle from that outcome.”
He also criticised Daly for querying the judge’s findings regarding “improper use” as an officer of a responsible entity where Daly applied for and obtained loans using funds sourced from the registered scheme.
“Mr Daly’s contention is a carping criticism. It is so obvious that it need not have been expressly stated that Mr Daly was seeking to gain an advantage for himself, namely a loan of money to alleviate his personal financial difficulties. Indeed, Mr Daly’s counsel acknowledged that that was the reason for the loans.”
In a statement, ASIC deputy chair Sarah Court said the outcome should “act as a reminder to directors of responsible entities that operate managed investment schemes that they must act in the best interests of members”.
The case has now been closed.
