The Queensland Court of Appeals has upheld a 2016 judgement against four former fund officers who were found to have contravened the Corporations Act.
In 2016, ASIC took Craig White, Guy Hutchings, Marilyn Watts and Michael King to court alleging that in their roles at MFS Investment Management Limited [also known as Octaviar], they had misappropriated funds.
ASIC alleged that MFS, the responsible entity of the Premium Income Fund (PIF), had misappropriated $147.5 million of funds held by PIF to pay debts owed by other entities in the MFS group.
False documents were created and some backdated to justify the use of the funds until the group’s collapse in 2008, where they still had debts of $2.5 billion.
The 2016 judgement found that the four managers had collectively committed 217 contraventions of the act and had breached their duties as officers of MFS to act honestly and in the best interests of PIF members.
In June 2017, the four appealed the decision of the court at first instance and it was only recently that the court of appeal upheld the original decision.
Mr White, Mr Hutchings and Ms Watts were ordered to pay ASIC’s costs of their appeals.
In a separate appeal brought by Mr King, the court partially allowed the appeal finding that Mr King had not contravened the act as an ‘officer’ of MFS at the relevant time.
The Court of Appeals found his contraventions were limited to his being knowingly concerned in MFS’s contravention by the misapplication of $140 million of PIF’s money.
The court has given further directions to Mr King and ASIC in relation to the finalisation of his appeal.
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