This case clarifies the obligation of directors to ensure that they exercise their powers and discharge their duties with the degree of care and diligence a reasonable person would. In this case the directors were providing inappropriate financial advice to financially vulnerable investors.
The court held that the directors, Mr and Mrs Cassimatis, breached their duties as directors and prejudiced their company, Storm Financial, by establishing and maintaining a system by which inappropriate investment advice was given to vulnerable people.
The Cassimatis’ refused to accept the seriousness of their misconduct, demonstrating a lack of insight and contrition. Consequently, the court ruled that they needed to be punished severely to ensure they did not reoffend. Both Mr and Mrs Cassimatis were fined $70,000 each on the basis that: the misconduct continued over a lengthy period of time, was entirely initiated by them and executed under their supervision.
Further, the court ordered that each respondent be disqualified from managing corporations for a period of seven years. It considered it necessary and appropriate that the public be protected from exposure to the consequences of any reasonably likely future contraventions by the respondents. The court would have decided on a longer disqualification period if the misconduct had occurred closer to the trial date, but since there was 12 years between the misconduct and the trial, it held that a longer period would be unfair.