The Full Federal Court has today dismissed an appeal against orders that Mr James Cruickshank, Blue Star Helium’s (formerly Antares Energy and Big Star Energy) former CEO, be disqualified from managing corporations for four years and pay a $40,000 pecuniary penalty.
The Full Court rejected all six grounds of appeal, finding no error in the primary judge’s reasoning and her acceptance of ASIC’s expert evidence.
ASIC Deputy Chair Sarah Court said ‘ASIC took on this case because of the importance of continuous disclosure to the integrity of Australia’s financial markets. Today's decision is an important reminder that directors of public companies are expected to ensure compliance with continuous disclosure laws and can face penalties if they are found to be keeping information from the market.’
In dismissing the appeal, the Full Court stated that ‘the primary judge’s reasons provided a logical and reasoned basis for the conclusion that Mr Cruickshank failed to exercise the degree of care and diligence that a reasonable person in his position would have exercised in considering whether the Company was required to disclose the Purchaser Identity Information or the Cumulative Information to the ASX.’
The Purchaser identity Information and the Cumulative Information means:
- Wade Energy was the purchaser under the relevant sale agreements,
- Blue Star Helium had not, prior to 15 September 2015, independently verified or otherwise determined the capacity of Wade Energy to complete the purchase of two assets, and
- Mr Cruickshank had been informed by Wade Energy that it had not yet received all funding approvals necessary to complete the purchase of one of the assets.
Mr Cruickshank was ordered to pay ASIC’s costs of the appeal.
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Background
On 9 October 2020, the Federal Court found Blue Star Helium contravened the Corporations Act by failing to notify the ASX of the following information (20-238MR):
- Wade Energy was the purchaser under the relevant sale agreements,
- Blue Star Helium had not, prior to 15 September 2015, independently verified or otherwise determined the capacity of Wade Energy to complete the purchases, and
- Blue Star Helium had been informed by Wade Energy that it had not yet received all funding approvals necessary to complete the purchase of the Big Star Asset.
The Honourable Justice Banks-Smith also found Mr Cruickshank failed to exercise the degree of care and diligence that a reasonable person in his position would have exercised in considering whether information in his possession as a director needed to be disclosed to the ASX.
On 16 December 2021, Mr Cruickshank was disqualified from managing corporations for four years and ordered to pay a $40,000 pecuniary penalty (21-356MR).
Editor's note 1:
Mr Cruickshank has filed an application with the High Court of Australia for special leave to appeal the decision of the Full Court of the Federal Court of Australia given on 5 August 2020, which affirmed the decision of Banks-Smith J given on 9 October 2020.
Editor's note 2:
On 17 November 2022, the High Court of Australia dismissed with costs Mr Cruickshank’s application for special leave to appeal the decision of the Full Court of the Federal Court of Australia on 5 August 2020, which affirmed the decision of Banks-Smith J on 9 October 2020.