In Australian Securities and Investments Commission v GetSwift Limited (Penalty Hearing) [2023] FCA 100 Lee J comments
To adapt the famous remark of Ted Heath, GetSwift Limited (in liq) (GetSwift), and those primarily responsible for its wrongful conduct, could be described as representing the unacceptable face of start-up capitalism.
GetSwift was a public “early stage technology company” that generated operating losses in every year of its existence. Notwithstanding this, from an issue price of 20 cents in December 2016, within a year, its share price had risen to well over $4, prior to a trading halt announcement. It raised a total of $104,000,000 from investors in two placements. It became a market darling because it adopted an unlawful public‑relations‑driven approach to corporate disclosure instigated and driven by those wielding power within the company.
This eventually became apparent. Three days after the publication of an article in January 2018 in the Australian Financial Review entitled “ GetSwift : Too Fast For its Own Good” (cogently explaining that GetSwift had failed to update the market about losing materially significant contracts), Get Swift Logistics Pty Ltd (Get Swift Logistics) (a wholly owned subsidiary) transferred $72,000,000 to a bank account held by GetSwift , Inc (another wholly owned subsidiary incorporated in the United States). On 22 August 2018, following the commencement of an investigation by the Australian Securities and Investments Commission (ASIC) in February 2018, Get Swift Logistics transferred an additional $8,500,000 to an offshore bank account held by GetSwift, Inc., bringing the total funds transferred to $80,500,000. These transactions were unexplained by any evidence before me.
More remarkably, well after the balloon had gone up, the share price had plummeted, a class action had been started, and at around the same time the evidence concluded in the liability phase of the ASIC regulatory case before me, GetSwift sought to re-domicile to Canada. GetSwift convinced another judge of this Court to allow it to do so, partly on the basis of an undertaking that GetSwift Technologies Limited (GetSwift Technologies) would not take any steps to wind up GetSwift and would indemnify GetSwift in relation to penalties imposed in this case or in relation to an adverse judgment in the class action. ASIC did not pre-emptively make an application to me to restrain the removal of GetSwift from Australia when the highly unusual course was proposed during the pendency of the regulatory proceeding (although it is fair to record it did oppose the scheme approval in the separate proceeding).
The undertaking was not worth the paper it was written on. GetSwift Technologies (as GetSwift ’s only member) resolved in July 2022 to place GetSwift into voluntary liquidation. The absence of any likely return means the class action brought by shareholders (Webb v GetSwift Limited & Anor, NSD 580 of 2018) has now settled with no recovery by those who suffered loss by reason of GetSwift ’s breaches. In approving settlement of the class action on 2 February 2023, Murphy J observed that GetSwift’s “own misconduct has now brought it to its knees” and that its actions represented a “scandalous episode of corporate misconduct”. One can only agree with his Honour’s observations.
What is the response of the people responsible for this dreadful state of affairs?
Mr Bane Hunter, the former executive chairman and chief executive officer, and principal instigator of the wrongdoing of GetSwift , has not returned to Australia to defend his position and did not appear at the penalty hearing. His lieutenant, Mr Joel Macdonald, after initially appearing at a case management hearing, has also not turned up to defend himself. He also signed the resolution winding up GetSwift .
After putting ASIC to proof in every aspect of its intricate case and requiring expenditure of vast public resources, neither Mr Hunter nor Mr Macdonald have shown the slightest degree of remorse or contrition, nor have they made any acknowledgment they behaved improperly. Additionally, ASIC has been unable to explore where all the money raised from investors went.
It is against this singular background that I am required to consider the civil penalty to be paid by the liquidated malefactor, Messrs Hunter and Macdonald and by Mr Brett Eagle (a solicitor who remains in Australia and who has, by contrast, engaged with the penalty case). I am also required to consider whether each of the individuals should be disqualified from managing corporations in the future and, if so, for how long. I have already said enough to make it obvious that this is an unusual civil penalty case, which has no ready analogue.
My mercifully unreported liability judgment in this matter (Australian Securities and Investments Commission v GetSwift Limited (Liability Hearing) [2021] FCA 1384 (Liability Judgment)) was 2,618 paragraphs long. As I then explained, its size was the result of the case advanced by the ASIC being vast in scope, involving the need to wade doggedly through a prodigious documentary case and make innumerable findings. These reasons assume familiarity with the findings relevant to each the contraveners, and adopt the definition of terms in the Liability Judgment.
Lee further comments
... I observed (at [13]) that Mr Hunter displayed a management style that owed little to the influence of the late Dale Carnegie. I further noted that he was demanding, forceful and regularly brusque to the point of rudeness. Upon re-reading the evidence and reflecting on my findings, including after listening to the evidence of Mr Eagle, and in the absence of any explanation by Mr Hunter, I would go further: Mr Hunter was not only a bully, but also someone who had a laser-like focus on making money for himself and Mr Macdonald. If that involved breaking the law regulating financial markets, or exposing GetSwift to third party liability, that was of little concern to him. ...
