Update on Australian Property Custodian Holdings Ltd (ACN 095 474 436) (In Liquidation) (Receivers and Managers Appointed)(Controllers Appointed) in its capacity as responsible entity for The Prime Retirement and Aged Care Property Trust (ARSN 097 514 746)
Updated 10 December 2013
Following reports and concerns regarding the collapse of Australian Property Custodian Holdings Ltd (ACN 095 474 436) (In Liquidation) (Receivers and Managers Appointed) (Controllers Appointed)(APCHL) and The Prime Retirement and Aged Care Property Trust (ARSN 097 514 746) (the Prime Trust) ASIC commenced an investigation into the conduct of the responsible entity, APCHL and the management of the Prime Trust.
ASIC proceedings against directors and APCHL
On 21 August 2012, ASIC commenced civil penalty proceedings in the Federal Court of Australia to disqualify five former directors of APCHL from managing corporations.
ASIC will also ask the Court to impose pecuniary penalties on each director.
The six defendants to ASIC’s action are:
Mr William Lionel Lewski, a former director and company secretary
Mr Mark Frederick Butler, a former director
Mr Kim Jaques, a former director
Mr Michael Richard Lewis Wooldridge, a former non-executive director; and
Mr Peter Clarke, a former director.
ASIC is also seeking declarations that APCHL breached its duties under the Corporations Act 2001 in exercising its powers and carrying out its duties as the responsible entity of Prime Trust.
ASIC alleges, amongst other things, that APCHL and its directors failed to act in the best interests of the members of the Prime Trust by:
purporting to amend the Prime Trust constitution to provide for the payment to APCHL of a fee in the event that the units in the Prime Trust were listed on the Australian Securities Exchange (ASX); and
by directing APCHL to pay a listing fee of approximately $33 million out of scheme assets.
Central to ASIC’s action is the duty of officers of responsible entities to act in the best interests of the members of the scheme and to refrain from making improper use of their position as an officer to cause detriment to the members of the scheme.
ASIC is seeking declarations that the directors, in their capacity as officers of APCHL (as the responsible entity of Prime Trust) breached their duties owed to members of Prime Trust.
A mediation which was held on 26 March 2013 did not result in any settlement of the proceeding. ASIC has provided discovery of documents in the proceeding, and has filed and served affidavits of witnesses.
The Court made an order that the trial take place in two stages, commencing on 1 May 2013:
the "liability" stage, where the court will consider the question of whether any of the defendants committed any of the alleged contraventions; and
if required, an "exoneration and penalty" stage, where the Court will consider questions of excuse or exoneration, and the question of any penalty to be imposed. If any "exoneration and penalty" stage is required, it will take place in September 2013.
Current status of ASIC's proceedings
The liability stage of the trial was conducted from 1 May 2013 to 27 May 2013 before his Honour Justice Murphy and judgment was reserved. Judgment will be delivered on Thursday 12 December 2013.
If his Honour finds in favour of ASIC on liability, the matter will proceed to the exoneration and penalty phase. Dates for the hearing of this phase have not been set down by the Court.
Liquidation and Receivership of APCHL
At the second meeting of creditors held on 23 November 2011, the creditors of APCHL voted to place the company and Prime Trust into liquidation. Stirling Horne and Mr Petr Vrsecky of Lawler Draper Dillon were appointed liquidators.
On 5 March 2012, the liquidators commenced proceedings in the Supreme Court of Victoria in relation to the payment of a listing fee in the amount of $32,939,947 by APCHL in its capacity as responsible entity of the Prime Trust to entities associated with William Lewski in 2008 (the Listing Fee Proceeding). One of the receivers and managers of APCHL has now taken over conduct of the Listing Fee Proceeding from the liquidators. The defendants to the Listing Fee Proceeding include several former directors of APCHL, associated entities of William Lewski and advisors of APCHL (including Madgwicks). ASIC is monitoring this proceeding.
On 18 March 2013, one of the receivers and managers of APCHL commenced proceedings on behalf of APCHL in the Supreme Court of Victoria in relation to dealings in the management rights of Prime Trust (the Management Rights Proceeding). The defendants to the Management Rights Proceeding include several former directors of APCHL, associated entities of William Lewski and advisors of APCHL (including Madgwicks).
Public examinations of relevant parties connected with APCHL were conducted by one of the receivers and managers of APCHL in the Supreme Court of Victoria on 22 to 24 August 2011 and on 16 to 31 October 2012.
Information to assist investors
Investors in the Prime Trust seeking information about the affairs of APCHL and the Prime Trust should contact the liquidators directly.
The liquidators have posted information in relation to the administration and liquidation of APCHL and the Prime Trust at www.lawlerdd.com.au. The offices of Lawler Draper Dillon are situated at level 12, 440 Collins Street, Melbourne Victoria, 3000.
As APCHL is currently in liquidation, it is the role of the liquidators to investigate and report to creditors about the company's affairs, realise the company's assets, enquire into the failure of the company and possible offences by people involved with the company and report them to ASIC and to distribute proceeds of any realisation of the company's assets in accordance with the priorities under the Corporations Act 2001. ASIC will monitor the liquidation process but will generally not become involved in matters of commercial judgement by a liquidator.
ASIC's guide on the process of liquidation may also assist investors and is accessible at: Information Sheet 45 Liquidation: a guide for creditors (INFO 45). Investors can also access additional information at www.asic.gov.au/insolvency-investors.