Australian Securities and Investments Commission (ASIC)
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Added on 2021-05-30
Australian Securities and Investments Commission (ASIC)
Added on 2021-05-30
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1ContentsAustralian Securities and Investments Commission v Padbury Mining Limited [2016] FCA 9902Introduction......................................................................................................................................2Facts of the case...........................................................................................................................2The duties/responsibilities breached (ex. CA sections 181 or 588G) andexplain why the dutieswere breached..................................................................................................................................3Duties that were breached:...........................................................................................................3Reasons for the violation of the duties.........................................................................................4Reasons for violation of section 1041 H (1) of the Act............................................................4Reasons for violation of section 180 (1) of the Act.................................................................4Reasons for violation of section 674 (2A) of the Act...............................................................5Discuss and critically ANALYSE the court/tribunal decision and the reasonfor the decision inview of the Corporations Act...........................................................................................................5The decision of the Court tribunal...............................................................................................5Reasons for the decisions of the court.........................................................................................6The relevance of the decision to thedevelopment of Australian Corporations law or the impact ofthe decisionon the operation of companies in Australia.................................................................7Reference List..................................................................................................................................8
2Australian Securities and Investments Commission v Padbury Mining Limited [2016] FCA990IntroductionFacts of the caseThere are two parties involved in the case,Australian Securities and Investment Commission - Plaintiff Padbury Mining Limited – First DefendantGary Wayne Stokes - Managing Director -Second DefendantTerence Martin Quinn- Executive director/Chairman – Third DefendantThe Defendant, Padbury Mining Limited, is a company (public company). Padbury MiningLimited normally trades its shares in the Stock Exchange of Australia. The main facts that hasrisen to the issue before the court includes that:The Padbury Mining Limited is aiming at developing/constructing a water port at Oakajee.Padbury Mining Limited is also intending to build a railway network near the port. In order to doso, Padbury Mining Limited requires finance and thus it has made contract with several peopleon 8th April 2014. Superkite Pty Ltd is also one of the arty with whom Padbury Mining Limitedhas made a contract and Superkite Pty Ltd has given an assurance that it will provide $6 billionto Padbury Mining Limited subsidiary. However, the finance will only be provided if certainrequirements are met by Padbury Mining Limited. Thus, the finance of $6 billion is contingentupon certain conditions. The finance is very much important for Padbury Mining Limited as theconstruction is possible only if it has the relevant funds. Based on the assurance given by Superkite Pty Ltd, Padbury Mining Limited on 11th April 2014made an announcement in the Australian Stock Exchange. The announcement that is madesubmits that Padbury Mining Limited has acquired $6 billion that is much needed for thecompletion of the project. But, while making the announcement, Padbury Mining Limited did
3not specify that it is under the obligation to fulfill few conditions and it is only after thecompliance of such conditions that Superkite is willing to finance the project. The announcement (Оakajee Funding Announcement) that was made by Padbury MiningLimited on 11th April 2014 was carried out with the presence of the second and third defendantof Padbury Mining Limited. The second and third defendant is the managing andexecutive/chairman of Padbury Mining Limited respectively. The second and third defendantsnot only drafted the announcement but also released the same. Padbury Mining Limited also took annoyer step and before the announcement is made, thecompany asked the Australian Stock Encage to stoop the trading of the shares of the companyand the trading must be initialed after the announcement. This resulted in the increase of thetrading in shares from $0.02 - $0.045 a share. Even after so many occurrences the project that was intended by Padbury Mining Limited andfor which the finance was secured and announcement were made was never comes into life andwas cancelled. Considering the above facts, it is now important to analyze the duties that are violated by thedirectors of the company and the reasons as to why such duties were violated. The duties/responsibilities breached (ex. CA sections 181 or 588G) andexplain why the duties were breached.Padbury Mining Limited is the first defendant in the given case. The second and the thirddefendant are the managing and executive/chairman of the company when the above facts wereincurred that has resulted in the violation of the duties. Duties that were breached:There were three prime duties that were violated by the company and its directors. The same are:i.Section 1041 H (1) of the Corporation Act 2001 – The acts that were carried out bythe First Defendant were deceptive and misleading in nature or are likely to deceiveor mislead.
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