The judge hearing a case brought by the Australian Securities and Investments Commission against executives of the failed Prime Trust nursing home empire may be asked to step aside from the case because she previously acted against the group's founder.
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ASIC is seeking to ban from corporate life directors of the company that ran the trust, including the head of the Victorian government's urban renewal authority and Liberal Party stalwart Peter Clarke, and former Federal health minister Michael Woodridge, the brother of Victorian Minister for Community Services Mary Wooldridge.
Adding to the issues confronting Federal Court judge Michelle Gordon this morning, the ASIC case makes many of the same allegations as a lawsuit being run in the Supreme Court by the receivers of the company, Australian Property Custodian Holdings (APCH).
In 2006, when she was a barrister, Justice Gordon acted for ASIC in a series of civil cases the watchdog brought against another nursing home group, Primelife, over allegedly unregistered managed investment schemes.
Three of the 37 cases involved allegations against Prime Trust's founder, Bill Lewski, the Federal Court heard this morning.
"Your honour acted for the plaintiff (ASIC) against Mr Lewski in these proceedings," counsel for Mr Lewski, Peter Bick, QC, told the court. "We wish to investigate these matters further."
Justice Gordon said that another Federal Court judge would hear the case if she recused herself. "The mere fact that someone has acted for one party may not be determinative," she said.
Mr Lewski is at the centre of both cases because they revolve around a $33 million "listing fee", paid to him following the float of the trust on the ASX in 2007.
ASIC alleges the directors of APCH at the time, including Mr Clarke, Dr Wooldridge and Mr Lewski, breached their duties as directors by approving the fee.
Addressing a bar table packed with senior counsel, juniors and solicitors, Justice Gordon said the issue of which court should hear the two cases should be resolved as quickly as possible.
"Parties are spending a lot of money flitting between courts, which is unfortunate," she said. "This has got to end. Someone's got to make a decision about who's going to hear the matter."
She adjourned the directions hearing to Friday morning.
