ASIC sued Star’s board a year ago. The case will be heard in 2025

A spokesperson for the regulator said on Tuesday that it could still be ready for trial in early 2024 – an indication that it would agree to the case being moved to another judge.

“ASIC advised the court at the case management hearing on 16 August 2023 that it was ready to proceed to trial in 2024, and noted the importance of matters involving individual defendants progressing through the court system as quickly as possible,” the spokesperson said.

Another case on Justice Lee’s docket – the $7 billion case against insurer IAG over policies issued to collapsed financier Greensill Capital – faces even longer delays. It commenced in October 2021, but now might not be heard until after the ASIC case in 2025.

Justice Lee told the multiple parties in the Greensill case at a directions hearing on October 24 that he had 88 matters in his docket, some of which he hoped would settle before trial. “I’ve got no time next year for hearing anything other than what’s already allocated, and I’m already booked up well into 2025.”

Federal Court delays

The issue of delay in the Federal Court emerged again this year when Justice Ian Jackman criticising colleague Kathleen Farrell after she failed to deliver a judgment after almost three years. Justice Jackman picked up the case and decided it in three weeks.

Justice Stephen Rares also criticised the “lamentably slow” pace of litigation in Australia when he retired from the court last month, noting that Sam Bankman-Fried was being tried in the United States less than a year after the collapse of the cryptocurrency exchange FTX.

In its 2022-23 annual report, the court said it expected most cases to be finalised within 18 months of filing, “with only particularly large and/or difficult cases requiring more time”.

ASIC tried to expedite the Star suit on August 16, when barrister James Arnott, SC, suggested a timetable that would keep the case on track for a trial in February 2024.

Justice Lee replied: “I think I’ve got some bad news for you. One of the reasons why I listed this tentatively or gave those tentative days [in February 2024] was because I was unsure of what my commitments would be at that time.”

Mr Arnott said ASIC would agree to a delay between the prosecution case and the defence, but Justice Lee said he was “conscious of the fact that dealing with a whole series of very fashionable counsel and getting a date which is convenient to everyone, is difficult”.

In a statement provided after questions from The Australian Financial Review, the court said Justice Lee’s order on September 14, which set down the trial for six weeks at the start of 2025, followed an “express request by the parties”.

However, this only came after Justice Lee advised the parties on September 11 that his first available hearing date was February 10, 2025.

The court’s statement noted barristers had accepted other briefs after being told on August 26 that the case would not proceed in February 2024.

The statement added that the parties had asked: “If His Honour’s availability changes, such that the matter could be heard in 2024, the parties would be grateful if they could please be informed accordingly.”

The court’s statement said it made sense that the Star directors’ case come after litigation by AUSTRAC against the Star group over breaches of money laundering and counter-terrorism financing laws.

That case had been set down for hearing in March 2024, but the dates were abandoned after the parties could not agree on key issues, such as a statement of agreed facts. The matter will return to court on December 18.

Justice Lee joined the court in 2017 after being a highly regarded silk who specialised in class actions and other commercial disputes.

He is now a National Coordinating Judge in the Federal Court’s Commercial and Corporations National Practice Area, and of the court’s defamation work. Heis regarded as one of the more efficient members of the court, when it comes to getting through cases and delivering judgments.

At his swearing-in ceremony, then-attorney-general George Brandis said Lee “eloquently demonstrates that the legal tradition in Australia still retains a degree of thespian flair”.

Mr Brandis said he would not be surprised if Lee’s judgments “developed something of a cult following, at least among aficionados of the idiosyncratically erudite; not a small constituency in the legal profession”.

Run of high-profile cases

“Your Honour’s courtroom advocacy complements what your peers describe as a glorious sense of humour and a legendary aptitude for after-dinner speeches.”

Justice Lee has been able to show off those qualities in a run of cases that have attracted media attention over the past two years. They include Clive Palmer’s defamation battle with former WA premier Mark McGowan, and other libel cases such as former army commando Heston Russell v ABC and Elaine Stead (of Blue Sky Financial) v the Financial Review. He also presided over the class action related to the demise of technology company GetSwift.

In the AUSTRAC proceedings – the regulator is suing multiple casinos – Justice Lee lashed the regulator for the time it took to bring on the case.

“The Congress of Vienna [in 1814-15, after the Napoleonic wars] took nine months to talk about the future of Europe, you’ve had 12 months to talk about admissions ... It’s in the public interests that these proceedings be determined and be determined with alacrity.”

Other matters currently on Justice Lee’s docket include employee class actions against KFC and McDonald’s, and cases about COVID-19 business interruption, Qantas ground workers and Westpac directors.

The allocation of cases is usually a consultative process that involves Chief Justice Debbie Mortimer, the co-ordinating judges in a practice area, and the court’s registrar and CEO Sia Lagos.

The court’s website says the “general principle underlying the individual docket system is that a case is allocated to the docket of a particular judge at or about the time of filing with the intention that, subject to any necessary reallocation, it will remain with that judge for case management and disposition”.

In its statement to the Financial Review, the court said the Greensill case had been allocated to Justice Lee’s docket “for case management, not for final hearing”.

At a directions hearing on October 24, Justice Lee flagged moving the Greensill case to another judge after US financier White Oak complained about the delays.

Julian Sexton, SC, for White Oak, said: “We’re now two years down the track after we started our proceedings, and we’re not getting any closer to a hearing.”

Justice Lee: “Well, you are getting closer.”

Mr Sexton: “Very, very slowly, your Honour.”

Lee told Mr Sexton his default position was “to try to get matters on as quickly as I humanly can” before explaining that he had 88 matters in his docket and that he was “booked up well into 2025″.

“I want to get this to a certain stage where it’s ready for trial … and if my diary looks the same way as it looks now, then it may need to be dealt with by another judge, but we will see.”

Landmark case for boards

The Star suit is being closely watched because ASIC is seeking to push the boundaries on what knowledge of wrongdoing is required for a director to be in breach of their duties of good faith and due diligence.

Mr O’Neill, Mr Bekier and directors Katie Lahey, Richard Sheppard, Gerard Bradley, Sally Pitkin, Zlatko Todorcevski and current chairman Ben Heap – are all being sued along with executives Ms Martin, Greg Hawkins (former chief casino officer) and Harry Theodore (former chief financial officer), for breaches of the duty to act in the best interests of shareholders under section 180 of the Corporations Act.

ASIC’s case is that the 11 directors and officers failed to “sufficiently focus” on the risks of money laundering and criminal ties. The outcome will likely turn on how far directors and their advisers must go to reach that standard.

The defendants have all denied they breached any directors’ duties.

Professor Pamela Hanrahan, of the UNSW, said past cases on breaches of directors’ duties had involved individuals who did not respond to a “red flag”.

“In this one, ASIC is saying the whole of the Star board had a collective responsibility for the events that occurred. That’s a significant development.”

It is also the first case in which ASIC has alleged that non-executive directors, including its legal counsel, were equally to blame for something the directors did not do.