LAWFUEL – Australian Law News – The High Court of Australia yesterday dismissed proceedings commenced by former officers of CTC Resources NL (CTC), Mr William Forge, Mr Jozsef Endresz, Mr Allan Endresz and Ms Dawn Endresz. This decision upholds findings in August 2002 that the officers had contravened the directors’ duties and related party provisions of the Corporations Law of New South Wales.
The decision follows proceedings commenced by ASIC in April 2001 against the former officers of the Albury-based company under the Corporations Law. These proceedings concerned conduct that occurred in 1998.
The Corporations Law was repealed and replaced by the Corporations Act 2001 on 15 July 2001.
In August 2003, Acting Justice Foster of the Supreme Court of NSW found that Mr Forge, Messrs Endresz and Ms Endresz had contravened the directors’ duties and related party provisions of the Corporations Law and imposed various penalties.
This finding was subsequently appealed by the former directors of CTC in the NSW Court of Appeal. The Court upheld the findings of Acting Justice Foster but remitted the matter back to the Supreme Court of NSW for a separate hearing regarding penalty.
In March 2005, the former directors of CTC commenced High Court proceedings.
Issues were raised in the High Court regarding the validity of transitional provisions contained in the Corporations Act 2001 and the validity of appointments of judges as acting judges of the Supreme Court.
The High Court held unanimously that the transitional provisions were effective and did not invalidate the decision of Acting Justice Foster.
The High Court held by a 6-1 majority that the legislation providing for the appointment of acting judges was valid.
ASIC will now take steps to bring on the separate hearing regarding penalty.
On 28 August 2002, Acting Justice Foster of the Supreme Court of New South Wales found that Mr William Forge, Mr Jozsef Endresz, and Ms Dawn Endresz, as directors of CTC, and Mr Allan Endresz, as an officer of CTC, contravened the directors’ duties and related party provisions of the Corporations Law.
The contraventions involved CTC, an Albury-based public company, paying management fees of $2,245,833 to Kamanga Holdings Pty Ltd (Kamanga) and $270,833 to Bisoya Pty Ltd (Bisoya), and making loans of $500,000 to Kamanga and $75,000 to Bisoya.
CTC was formerly Emu Hill Goldmines NL, a listed public company. CTC was delisted on 18 December 1990, and had approximately 1200 shareholders.
Mr William Forge, Mr Jozsef Endresz and Ms Dawn Endresz were banned from being involved in the management of a company for eight years, and ordered to pay a fine of $245,000 each.
Mr Allan Endresz was banned for 16 years and ordered to pay a fine of $200,000.
Following the decision of Acting Justice Foster, ASIC issued bankruptcy notices against Mr William Forge, Mr Jozsef Endresz, Mr Allan Endresz and Ms Dawn Endresz.
The parties subsequently appealed the decision of Justice Foster, made an application for a stay of the decision and applied for an order setting aside the bankruptcy notices.
On 4 November 2002, the application for a stay was dismissed.
On 11 March 2003, the Federal Magistrates Court set the bankruptcy notices aside.
In August 2003, the appeal against the decision of Justice Foster was heard.
On 28 November 2003, the Federal Court upheld an appeal by ASIC against the decision of the Federal Magistrates Court to set aside the bankruptcy notices.
On 7 December 2004 the NSW Court of Appeal dismissed the appeal of the parties against the findings that they had contravened various provisions of the Corporations Law, and, in doing so, dismissed 21 grounds of appeal.
The NSW Court of Appeal upheld the 22nd ground of appeal that there should have been a separate hearing on penalty, and ordered that the matter be remitted to a single judge for a hearing on penalty.
The NSW Court of Appeal ordered that the appellants pay three quarters of the costs of the appeal to ASIC, which are additional to the costs payable to ASIC regarding the original proceedings.