This article is from the Australian Property Journal archive
ASIC has commenced civil penalty proceedings in the federal court against Paul Ryan, director of Dixon Advisory & Superannuation Services Pty Limited, for alleged breaches of directors’ duties in conflict with the best interests of creditors, who included thousands of financial advice clients who had invested in the ASX-listed US Masters Residential Property Fund.
The fund was created as a vehicle to invest in US properties and is the subject of a protracted hunt for a new responsible entity.
ASIC alleges Ryan breached his duties as a director by his involvement in decisions ASIC alleges were to the advantage of Dixon Advisory’s holding company, E&P Operations Pty Ltd, and by failing to properly consider the interests of Dixon Advisory’s creditors.
Ryan was also a director of E&P Operations.
“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,” said ASIC deputy chair Sarah Court.
“The creditors included thousands of financial advice clients who had invested in the US Masters Residential Property Fund and financial products operated by entities related to Dixon Advisory. These creditors suffered significant losses.”
ASIC alleges that Ryan was involved in amending the constitution of Dixon Advisory in late 2021 to expressly authorise its directors to act in the interest of E&P Operations; and executing a deed of acknowledgement of debt in the days following between Dixon Advisory and E&P Operations to the advantage of E&P Operations and to the detriment of Dixon Advisory.
ASIC further alleges that at the time the deed was entered, E&P Operations owed Dixon Advisory over $19 million, Dixon Advisory was approaching insolvency and therefore its directors were obligated to consider the interests of creditors, and the deed imposed conditions that adversely affected Dixon Advisory’s right to recover the $19 million debt.
URF was established by Dixon Advisory, which was penalised $7.2 million by the Federal Court of Victoria in September for failing to act in their clients’ best interest.
