The judgment was delivered on Wednesday morning, with Justice O’Callaghan dismissing ASIC’s case and ordering that it pay Ryan’s costs.

ASIC alleged that 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, and by failing to properly consider the interests of Dixon Advisory’s creditors. He was also a director of E&P Operations.

ASIC deputy chair Sarah Court said at the time: “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.

“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’s allegations against Ryan included that he was involved in:

• Amending the constitution of Dixon Advisory on 22 December 2021 to expressly authorise its directors to act in the interest of E&P Operations.
• Executing a deed of acknowledgement of debt (Deed) on 24 December 2021 between Dixon Advisory and E&P Operations to the advantage of E&P Operations and to the detriment of Dixon Advisory.

The corporate regulator further alleged 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.
• The deed imposed conditions which adversely affected Dixon Advisory’s right to recover this $19 million debt.

Both Dixon Advisory and E&P Operations were wholly owned subsidiaries of E&P Financial Group Limited.

In delivering his judgment, Justice O’Callaghan agreed that from at least July 2021, Dixon Advisory was “facing a real and not remote, risk of insolvency and that risk increased throughout the period to January 2022”.

However, on all other matters, Justice O’Callaghan declined to find in favour of ASIC, including that $19 million in assets of Dixon Advisory & Superannuation Services (DASS) was impaired, for the benefit of EPO, and with no quid pro quo in favour of DASS.

“As I understand it, in the context of generally accepted accounting principles, the word ’impaired’ means, or can mean, that the value of an asset has decreased. ASIC did not seek any finding by reference to any accounting standard. In the absence of any evidence from ASIC about it, and in circumstances where the relevance of the finding about ’impairment’ to the issues in this case was never explained, I need not say anything further about the point,” he said in the judgment.

“Further, ASIC’s written closing made no mention of the ’and with no quid pro quo in favour of DASS’ sought to be added to the finding.”

Relating to ASIC’s claim that Ryan did not consider the interests of DASS’ creditors, or alternatively, give due consideration to the interests of DASS’ creditors, the judge dismissed the claim as reading “more like a submission than a proposed finding of fact”.

On a number of points, Justice O’Callaghan also dismissed the regulator’s concerns that Ryan’s evidence should be treated “cautiously”, saying there was “no sufficient basis to disbelieve Mr Ryan’s sworn evidence”.

“If it matters, I also find that Mr Ryan, as he in substance deposed, relied on [former E&P Financial CEO and managing director Peter Anderson’s] experience and expertise in relation to how to deal with corporate insolvency and the information that he provided to Mr Ryan on his plans to deal with the various claims against DASS,” Justice O’Callaghan said.

“I similarly find that Mr Ryan relied on the corporate insolvency and restructuring expertise of McGrathNicol, as he deposed, ’to provide [him] with guidance as to how to proceed towards a potential voluntary administration of DASS’.

“That is, for reasons I have already explained, sufficient to dispose of the proceeding and to dismiss it. As I have said, ASIC conducted the proceeding on the basis that if it could not persuade me on the decisional issues, it would fail, as it has. It follows that ASIC has not made out its case that Mr Ryan, in his capacity as a director of DASS, contravened ss 180, 181(1)(a) or 182 as alleged.”