Holmes Institute HA3021: ASIC v Padbury Mining Case Report
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Report
AI Summary
This report provides a comprehensive analysis of the Corporations Law case ASIC v Padbury Mining Limited [2016] FCA 990. The case revolves around the violation of directors' duties under the Corporations Act 2001 (Cth) by Gary Stokes and Terence Quinn, who were found liable for making a misleading announcement to the ASX regarding a secured funding of $6 billion. The report examines the background of the case, the specific sections of the Corporations Act violated (Sections 180(1), 674(2A), and 1041H), and the court's judgment, which imposed penalties and disqualifications on the directors. Furthermore, the report highlights the relevance of the case in emphasizing the importance of directors' responsibilities in ensuring accurate and transparent communication with the ASX and upholding the interests of the company and its stakeholders. The conclusion reinforces the significance of adhering to directors' duties to avoid legal consequences, providing a valuable lesson for directors in Australia.

Corporations Law
ASIC v Padbury Mining Limited [2016] FCA 990
ASIC v Padbury Mining Limited [2016] FCA 990
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Directors duties are mandatory to be
followed to make sure that directors did not
face legal consequences in Australia.
These duties are given under the
Corporations Act 2001 (Cth) (“CA”).
In the case of ASIC v Padbury Mining Limited,
the court found directors guilty for violating
their duties.
Introduction
followed to make sure that directors did not
face legal consequences in Australia.
These duties are given under the
Corporations Act 2001 (Cth) (“CA”).
In the case of ASIC v Padbury Mining Limited,
the court found directors guilty for violating
their duties.
Introduction

Padbury Mining Limited (“Padbury”) was listed
on the ASX and it made an announcement on
April 11, 2014.
It claimed that a funding to $6 billion to
develop a deep water port in Oakajee is
“successfully secured” by the organisation.
The share prices of the company hiked after
this news; they went from $0.02 to $0.045
per shares (Levy, 2016).
Background of the Case
on the ASX and it made an announcement on
April 11, 2014.
It claimed that a funding to $6 billion to
develop a deep water port in Oakajee is
“successfully secured” by the organisation.
The share prices of the company hiked after
this news; they went from $0.02 to $0.045
per shares (Levy, 2016).
Background of the Case
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The news was announced on 9:40 am and at 2:15 pm, the
ASIC put the shares at trading halt by suspending its trade.
It was held that the company did not provided details
regarding the party that has issued the funding to the
enterprise.
Shares remained in the trading halt till April 29, 2014 when
the company announced that the news was false and it
has not secured any funding (O’Leary, 2016).
A lawsuit was filed against that Gary Stokes (Managing
Director) and Terence Quinn (Chairman) who were acting
as directors of the company.
Background of the Case
ASIC put the shares at trading halt by suspending its trade.
It was held that the company did not provided details
regarding the party that has issued the funding to the
enterprise.
Shares remained in the trading halt till April 29, 2014 when
the company announced that the news was false and it
has not secured any funding (O’Leary, 2016).
A lawsuit was filed against that Gary Stokes (Managing
Director) and Terence Quinn (Chairman) who were acting
as directors of the company.
Background of the Case
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Section 180 (1) and 674 (2A) were violated by
directors in this case.
Section 180 (1) provides that directors are
expected to maintain “care and diligence” up to a
degree that is expected from a person operating
in their position.
Subsection 2 of this act provides that this degree
of care is expected from them when they take
business judgements (Covington, 2016).
Violation of Director Duties
directors in this case.
Section 180 (1) provides that directors are
expected to maintain “care and diligence” up to a
degree that is expected from a person operating
in their position.
Subsection 2 of this act provides that this degree
of care is expected from them when they take
business judgements (Covington, 2016).
Violation of Director Duties

Section 674 (1) provides provisions regarding
mandatory and continuous disclosures which are
necessary to be made by directors and companies when
they are listed on the ASX.
Section 674 (2A) provides that civil liability can be
imposed on directors that did not comply with the
provisions given under section 674 (1) (Addison and
Chew, 2011).
Section 1041H provides that misleading or deceptive
announcement should not be made to the ASX by
directors or else they could face penalties.
Violation of Director Duties
mandatory and continuous disclosures which are
necessary to be made by directors and companies when
they are listed on the ASX.
Section 674 (2A) provides that civil liability can be
imposed on directors that did not comply with the
provisions given under section 674 (1) (Addison and
Chew, 2011).
Section 1041H provides that misleading or deceptive
announcement should not be made to the ASX by
directors or else they could face penalties.
Violation of Director Duties
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The court held that Stokes and Quinn are
liable for violating their duties.
They authorised the misleading and deceptive
announcement that was made by the
company to the ASX regarding securing $6
billion.
The directors were held liable under section
1041H for making misleading and deceptive
announcement (ASIC, 2016).
Judgement of the Court
liable for violating their duties.
They authorised the misleading and deceptive
announcement that was made by the
company to the ASX regarding securing $6
billion.
The directors were held liable under section
1041H for making misleading and deceptive
announcement (ASIC, 2016).
Judgement of the Court
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Judge Siopis held that duties given under section
180 (1) and 674 (2A) are violated by directors.
They did not maintained a reasonable standard of
care and they authorised the false announcement.
A penalty of $25 thousand was imposed on each
director along with a penalty of $200,000 paid for
the expenses incurred by the ASIC (ASIC, 2016).
Both directors were disqualified for a period of
three years as well.
Judgement of the Court
180 (1) and 674 (2A) are violated by directors.
They did not maintained a reasonable standard of
care and they authorised the false announcement.
A penalty of $25 thousand was imposed on each
director along with a penalty of $200,000 paid for
the expenses incurred by the ASIC (ASIC, 2016).
Both directors were disqualified for a period of
three years as well.
Judgement of the Court

This case is relevant since it highlights the role of
directors in relating to announcements made by
companies.
The court provided its judgement based on
Commonwealth of Australia v Director, Fair Work
Building Industry Inspectorate [2015] HCA 46 case
by stating that consent given by directors for order
can lead to civil penalties (Waye, 2018).
The directors are expected to maintain a standard
while making announcement to the ASX.
Relevance of the Case
directors in relating to announcements made by
companies.
The court provided its judgement based on
Commonwealth of Australia v Director, Fair Work
Building Industry Inspectorate [2015] HCA 46 case
by stating that consent given by directors for order
can lead to civil penalties (Waye, 2018).
The directors are expected to maintain a standard
while making announcement to the ASX.
Relevance of the Case
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This case highlights that directors are bound to act
as a reasonable person while discharging their duties
or else they could face legal consequences.
They should ensure that the interest of the company
is not harmed by their actions and they should
prioritise its interest along with the benefit of its
stakeholders.
This case sets an example for the high standard
which is expect from directors to make sure that they
did not violate their duties (Hogan-Doran, 2019).
Relevance of the Case
as a reasonable person while discharging their duties
or else they could face legal consequences.
They should ensure that the interest of the company
is not harmed by their actions and they should
prioritise its interest along with the benefit of its
stakeholders.
This case sets an example for the high standard
which is expect from directors to make sure that they
did not violate their duties (Hogan-Doran, 2019).
Relevance of the Case
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To conclude, directors are expected to maintain
a high standard while making announcements
to avoid facing legal consequences.
In this case, both directors violated their duties
under section 180 (1) and 674 (2A) based on
which they face legal penalties.
This case sets a good example for directors in
Australia to make sure that they comply with
their duties.
Conclusion
a high standard while making announcements
to avoid facing legal consequences.
In this case, both directors violated their duties
under section 180 (1) and 674 (2A) based on
which they face legal penalties.
This case sets a good example for directors in
Australia to make sure that they comply with
their duties.
Conclusion

Addison, A. and Chew, L.J. (2011) Continuous Disclosure - What Duties do Directors Have?. [Online] Available at:
http://www.mondaq.com/australia/x/155592/Directors+Officers+Executives+Shareholders/
Continuous+Disclosure+What+Duties+do+Directors+Have [Accessed on May 28, 2019].
ASIC v Padbury Mining Limited [2016] FCA 990
ASIC. (2016) Padbury Mining directors banned for three years due to 'Oakajee Funding Secured' announcement . [Online]
Available at: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2016-releases/16-263mr-padbury-mining-directors-
banned-for-three-years-due-to-oakajee-funding-secured-announcement/ [Accessed on May 28, 2019].
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Corporations Act 2001 (Cth)
Covington, C. (2016) Section 180(1) of the Corporations Act: a backdoor means of prosecuting company directors for corporate
contraventions of environmental law?. [Online] Available at:
http://www.mondaq.com/australia/x/549746/Directors+Officers/Section+1801+of+the+Corporations+Act+a+backdoor+means
+of+prosecuting+company+directors+for+corporate+contraventions+of+environmental+law [Accessed on May 28, 2019].
Hogan-Doran, D. (2019) Chartered secretary: Minutes of directors' meetings: Minimising the risk. Governance Directions, 71(1),
p.18.
Levy, R. (2016) Implications of Padbury’s Misleading ASX Announcement. [Online] Available at:
https://www.herbertsmithfreehills.com/lang-ko/latest-thinking/implications-of-padbury%E2%80%99s-misleading-asx-
announcement [Accessed on May 28, 2019].
O'Leary, T. (2016) ASIC information sheet 214: A work in progress?. Australian Resources and Energy Law Journal, 35(2), p.93.
Waye, R. (2018) Penalties increased under Australian Consumer Law. Bulletin (Law Society of South Australia), 40(9), p.12.
References
http://www.mondaq.com/australia/x/155592/Directors+Officers+Executives+Shareholders/
Continuous+Disclosure+What+Duties+do+Directors+Have [Accessed on May 28, 2019].
ASIC v Padbury Mining Limited [2016] FCA 990
ASIC. (2016) Padbury Mining directors banned for three years due to 'Oakajee Funding Secured' announcement . [Online]
Available at: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2016-releases/16-263mr-padbury-mining-directors-
banned-for-three-years-due-to-oakajee-funding-secured-announcement/ [Accessed on May 28, 2019].
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Corporations Act 2001 (Cth)
Covington, C. (2016) Section 180(1) of the Corporations Act: a backdoor means of prosecuting company directors for corporate
contraventions of environmental law?. [Online] Available at:
http://www.mondaq.com/australia/x/549746/Directors+Officers/Section+1801+of+the+Corporations+Act+a+backdoor+means
+of+prosecuting+company+directors+for+corporate+contraventions+of+environmental+law [Accessed on May 28, 2019].
Hogan-Doran, D. (2019) Chartered secretary: Minutes of directors' meetings: Minimising the risk. Governance Directions, 71(1),
p.18.
Levy, R. (2016) Implications of Padbury’s Misleading ASX Announcement. [Online] Available at:
https://www.herbertsmithfreehills.com/lang-ko/latest-thinking/implications-of-padbury%E2%80%99s-misleading-asx-
announcement [Accessed on May 28, 2019].
O'Leary, T. (2016) ASIC information sheet 214: A work in progress?. Australian Resources and Energy Law Journal, 35(2), p.93.
Waye, R. (2018) Penalties increased under Australian Consumer Law. Bulletin (Law Society of South Australia), 40(9), p.12.
References
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