The Federal Court has dismissed ASIC's case against Paul Ryan, director of Dixon Advisory & Superannuation Services Pty Limited, for alleged breaches of directors’ duties.

ASIC alleged Mr Ryan breached his duties as a director by his involvement in decisions made at a time when Dixon Advisory was approaching insolvency. ASIC alleged those decisions were to the advantage of Dixon Advisory’s holding company, E&P Operations Pty Ltd (of which Mr Ryan was a director), and he failed to properly consider the interests of Dixon Advisory’s creditors.

ASIC Deputy Chair Sarah Court said, ‘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 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.’ 

ASIC is considering the judgment.

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Judgment

Background

Both Dixon Advisory and E&P Operations were wholly owned subsidiaries of E&P Financial Group Limited.

Dixon Advisory previously held an Australian Financial Services licence and operated a financial advice business focused on providing financial advice, investment advice, portfolio management and superannuation administration services to retail clients.

In the period from 2020, Dixon Advisory faced claims arising from the provision of financial advice to clients who were advised to invest in the US Masters Residential Property Fund (URF) and URF-related products, which were issued and operated by related companies to Dixon Advisory. These included:

• a proceeding issued by ASIC in the Federal Court which resulted in orders for Dixon Advisory to pay a $7.2 million penalty and $1 million towards ASIC’s costs (22-256MR)
• complaints made to the Australian Financial Complaints Authority, and
• three court proceedings in the Federal Court, including two class action proceedings.

On 19 January 2022, after Dixon Advisory amended its Constitution and entered into the Deed with E&P Operations, the directors of Dixon Advisory resolved to appoint voluntary administrators to DASS.

On 8 April 2022, the AFS licence held by DASS was suspended by ASIC and subsequently cancelled, effective 5 April 2023 (22-094MR).

On 16 December 2022, a deed of company arrangement (DOCA) was passed by Dixon Advisory’s creditors, which among other things required E&P Operations to pay an amount of $17,662,489 to Dixon Advisory less a settlement adjustment for expenses incurred by E&P Operations during the administration period.  Further details regarding the DOCA can be found on the administrators’ website.

On 4 August 2023, ASIC began civil proceedings in the Federal Court against Paul Ryan, director of Dixon Advisory & Superannuation Services Pty Limited, for alleged breaches of directors’ duties (23-208MR).