Offences for Failure to Comply With Statutory Duties By Guarantor

Interview

If the Australian Securities and Investments Commission (‘ASIC’) think you may have committed this offence, they will ask you to come in for an interview. It is important to speak to a lawyer before attending, as you will need to understand how the responses you give may impact you. ASIC investigators are experienced examiners, and the purpose of the interview is for them to obtain information which will be useful to their investigation. We can assist you to prepare for that event, by assessing whether or not you should provide answers, or whether you should provide a no comment interview. Each case must be determined on its own set of circumstances.

Our lawyers can offer you expert advice, and representation at the interview.

Pleading Not Guilty

We have expert lawyers that can advise you about what the state of the evidence is in your case, and whether the prosecution can make out the charges against you. In order to determine that, we work closely with you to see whether there can be a challenge to any element of the offence such as, whether they can prove the manner and timing of the notice given to the trustee.

We will work with you to systematically work through the evidence and give you the best advice about how to proceed.

Pleading Guilty

We can assist you in negotiating the best possible outcome with the prosecution. We rely on our experience in these matters to be able to advise you on the best way to present your case to the Court in order to secure the lowest possible penalty. That will include taking detailed instructions from you about what happened, and why it happened, together with gathering material to tender to the Court.

Which court will the case be heard in?

This charge is generally heard in the Magistrates Court.

Examples of Offences for Failure to Comply With Statutory Duties By Guarantor

• You are a guarantor. You fail to update your financial records, and when the trustee asks to look at your financial records, you refuse to give them access.

What is the legal definition of Offences for Failure to Comply With Statutory Duties By Guarantor?

The guarantor commits an offence if it intentionally or recklessly contravenes paragraph 283CB(b) or section 283CC.

Legislation

The legislation for this offence can be found on section 283CE of Corporations Act 2001 No. 50, 2001.

Elements of the offence

To prove this charge, the Prosecution must show that:

1. The guarantor intentionally or recklessly breached its duty to:
   1. Conduct its business in a proper and efficient manner
   2. Make all of its financial and other records available for inspection, or
   3. Inform the trustee about any security interest.

Did the guarantor intentionally or recklessly breach their duty?
“Guarantor” means a body that has guaranteed, or has agreed to guarantee, the repayment of any money deposited or lent to the borrower.¹ To be liable for an offence under this section, they must intentionally or recklessly breach their duty – it is not sufficient if they inadvertently breach their duty.

The prosecution will usually seek to rely on circumstantial evidence to show intent or recklessness.

Did the guarantor fail to conduct its business in a proper and efficient manner?
The prosecution must show that the guarantor intentionally or recklessly breached their duty to conduct their business in a proper and efficient manner. ‘Proper’ and ‘efficient’ have their ordinary meaning, and assessing whether a breach has occurred will require looking at all the surrounding circumstances.

Did the guarantor fail to make all of its financial and other records available for inspection?
Alternatively, the prosecution must show that the guarantor intentionally or recklessly breached their duty to make all their financial and other records available for inspection by:

1. The trustee; or
2. An officer or employee of the trustee authorised by the trustee to carry out the inspection; or
3. A registered company auditor appointed by the trustee to carry out the inspection;

…and give them any information, explanations or other assistance that they require about matters relating to those records.²

Did the guarantor fail to inform the trustee about any security interest?
Alternatively, the prosecution must show that the guarantor intentionally or recklessly breached their duty to inform the trustee about any security interest. ‘Security interest’ has the meaning given by Section 51A. It means a security interest under the Personal Property Security Act 2009; or a charge, lien or pledge.³

“Can they prove you recklessly or intentionally breached your duty as guarantor?”

Defences

Defences to this charge can include a factual dispute or a lack of intent, as well as the concept of beyond reasonable doubt. Deciding on whether to plead guilty or not has consequences for you and should be made after proper discussion with a criminal lawyer.

Questions in cases like this

• Are you a guarantor?
• Did you intentionally or recklessly breach your duty?
• Did you fail to make your records available upon inspection?
• Did you fail to conduct your business in a proper and efficient manner?
• Did you inform the trustee about a security interest?

Maximum penalty for section 283CE of the Corporations Act 2001

Offences for failure to comply with statutory duties by a guarantor (s283CE of the Corporations Act 2001) carry a gaol term but is generally in itself not that serious.

According to Schedule 3 of the Corporations Act 2001, the maximum penalty of this offence is 25 penalty units (about $4000) or imprisonment for 6 months, or both.

Other important resources

• Corporations Act 2001
• Personal Property Security Act

_{[1] Corporations Act 2001 Section 9.
[2] Corporations Act 2001 Section 283CB.
[3] Corporations Act 2001 Section 51A.}