Court highlights importance of training in wake of housing corporation collapse

MR1617-08

The Federal Court in Canberra has made orders against three former directors of the Southside Housing Aboriginal Corporation. The orders were made in civil penalty proceedings commenced by the Registrar of Indigenous Corporations, Mr Anthony Beven, in March 2015.

Mr Fred Monaghan and Ms Teresa Monaghan have been banned from managing Aboriginal and Torres Strait Islander corporations for five years and ordered to pay a pecuniary penalty to the Commonwealth of $38,500 each. They were also ordered to pay the Registrar’s costs, which can only be enforced with the leave of the court. Mr and Ms Monaghan consented to the orders.

The third former director, Ms Kim Peters, has been banned from managing Aboriginal and Torres Strait Islander corporations for six months.

Southside Housing was established in 1995 to provide affordable housing for Aboriginal and Torres Strait Islander people in Canberra. It owned and managed seven properties funded by the Commonwealth Government. The corporation was placed into special administration by the Registrar in December 2013 after an examination revealed most tenants were not paying rent, the corporation had large outstanding debts, two of the corporation’s houses were unfit for human habitation and the others required substantial repairs.

All three former directors were found to have breached their duties by not ensuring the corporation kept adequate books and records. Mr and Ms Monaghan were also found to have improperly used their positions and failed to exercise due care and diligence in the management of the corporation and its houses. However Ms Peters was found to have taken a number of steps and actions to try to address the problems confronting the corporation and therefore no further findings of breaches of her duties were made against her.

In 2015 the special administrator transferred the management of Southside Housing’s houses to the ACT Government.

In his reasons for judgment, Justice Griffiths said:

‘… these proceedings vividly highlight the need for there to be appropriate training for people who are directors or officers … none of the [former directors] had the appropriate knowledge, experience or understanding of their roles and responsibilities as directors ...’

The Registrar offers a range of free corporate governance training workshops and courses for directors and members of corporations. In 2015–16 training was provided to 865 people from 208 corporations, and in 2014–15 to 886 participants from 169 corporations. The Registrar offered training to the former directors of Southside Housing but it was not taken up.

‘This case highlights the importance of having the right skills on the board of a corporation, particularly when it is managing publicly funded assets or complex operations,’ said Mr Beven. ‘My office offers a range of services, in addition to free corporate governance training, to build the capacity of directors and corporations.’

The Registrar has partnered with the Business Council of Australia to create a free online directory of independent directors offering their professional skills and experience to corporations. Corporations can also access free legal assistance from some of Australia’s top legal firms through LawHelp, another free service developed by the Registrar.

Background

For more about the special administration see the Registrar’s media releases of 23 January 2015 (MR1415‑19) and 18 December 2013 (MR1314‑21). For more on the civil penalty proceedings see the Registrar’s media release of 30 March 2015 (MR1415‑27).

Media contact
Patricia Gibson
(02) 6146 4743
ORIC MR1617-08
21 September 2016