ASIC fights back as Bill Lewski appeals 15-year Prime Trust ban
• THE AUSTRALIAN
• MAY 26, 2015 12:00
Margin Call Columnist
A 15-year ban slapped on the founder of failed retirement village group Prime Trust, Bill Lewski, over a $33 million fee he reaped at investors’ expense should be overturned because the corporate regulator took action too late, a court has heard.
Mr Lewski and other directors of Australian Property Custodian Holdings (APCH), which ran Prime Trust before it collapsed in 2010 owing investors $550m, are challenging bans from corporate life and findings they breached their duties handed down by the Federal Court in December.
Other directors represented at a Full Court hearing in Melbourne yesterday included former health minister Michael Wooldridge, who was banned for two years and three months, and Victorian Liberal Party figure Peter Clarke, who was not banned but fined $20,000.
Mr Clarke was the only director to attend in person yesterday, sitting at the back of the courtroom in the public gallery.
The Australian Securities & Investments Commission, which originally asked for a life ban on Mr Lewski, has cross-appealed, arguing the penalties are too light.
At issue is a ruling by Federal Court judge Bernard Murphy in which he found the directors breached their duties by approving the lodgement with ASIC of a change to the constitution that allowed Prime Trust to pay the fee.
The lodgement resolution was passed at a meeting on August 22, 2006 — more than a month after a July 19 meeting at which directors approved the actual change to the constitution.
ASIC launched its lawsuit against the directors on August 21, 2012, meaning that it could not attack the conduct of directors at the earlier meeting because it fell outside a six-year statute of ¬limitations.
Yesterday, Mr Lewski’s barrister, former national security legislation monitor Bret Walker, SC, said the lodgement resolution was “supererogatory, superfluous, unnecessary” because the company already had board consent to file the paperwork with ASIC.
He said the directors did not make a decision at the time, but merely completed a decision actually made on July 19.
However, Mr Walker’s argument drew heavy fire from a panel of three judges: John Middleton, Andrew Greenwood and Lindsay Foster. Justice Middleton raised Justice Murphy’s finding that “Blind Freddy’’ would have recognised there was a conflict of interest that required careful consideration.
“Everything was wrong with the July resolution, on His Honour’s findings,” Justice Middleton said. “You had to do something to stop it. Blind Freddy could have seen it’s wrong.”
Mr Walker conceded there was an “abundance of merit” against his client regarding the July 19 meeting, which was why it was important to consider the statute of limitations.
He said directors had advice from law firm Madgwicks that paying the fee was “permissible”.
“No dishonesty is imputed to us for not having seen it was rubbish, if it was rubbish,” he said.
The appeal, which is set to run until Thursday, is the latest legal fallout from a collapse that has been occupying the courts for three years. In September last year, the Victorian Supreme Court said time had run out for a separate claim against Mr Lewski and others over management rights over the villages, which were transferred to one of his companies for nothing and then sold to Lend Lease for $60m.
However, APCH liquidator Stirling Horne refiled the lawsuit in December as a claim in equity, where the time limit does not apply.