The Federal Court has dismissed ASIC’s case against Paul Ryan, a director of Dixon Advisory & Superannuation Services.
The case was based on alleged breaches of his duties as a director, with ASIC asserting that Ryan acted improperly by favouring the interests of Dixon Advisory’s holding company, E&P Operations, over Dixon Advisory’s creditors as it neared insolvency.
ASIC argued that Ryan, who held positions on both Dixon Advisory and its holding company, E&P Operations, made decisions that prioritised the holding company’s benefit.
“We took this case because directors have responsibilities under the law to act in the best interests of their company, and this includes considering the interests of creditors when the company is facing insolvency,” ASIC deputy chair Sarah Court (pictured above) said.
Although the court ruled in favour of Ryan, Court said that ASIC remains committed to enforcing compliance among directors.
“ASIC remains committed to taking enforcement action where appropriate and expects directors to meet their governance obligations, including where they serve on the boards of multiple companies in a corporate group,” she said.
ASIC is currently reviewing the court’s decision.
Dixon Advisory, which offered financial advice services, had been subject to scrutiny and legal proceedings due to investment recommendations related to the US Masters Residential Property Fund (URF).
These issues led to several actions, including a Federal Court decision requiring Dixon Advisory to pay more than $7 million in penalties and legal costs.
In January 2022, Dixon Advisory's board appointed voluntary administrators, and in April 2022, ASIC suspended its Australian financial services license, later canceling it in 2023.
In December 2022, a deed of company arrangement was approved by Dixon Advisory’s creditors, involving a payment of more than $17m from E&P Operations to Dixon Advisory, less certain adjustments.
ASIC filed civil proceedings in August 2023 against Paul Ryan for alleged breaches of director duties, citing the need for directors to prioritize creditor interests as companies approach insolvency. Following the court’s dismissal of this case, ASIC is assessing the next steps in light of the judgment.
See the ASIC media release here. For information on other ASIC actions against directors, click here and here.
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