Federal Court finds former Quintis boss did not mislead over supply deal with Swiss giant

The Federal Court has found Frank Wilson, the former boss of collapsed sandalwood scheme manager and grower Quintis, didn’t breach his duties as director regarding a failed supply agreement.

The Federal Court has found Frank Cullity Wilson, the former managing director of collapsed sandalwood scheme manager and grower Quintis, did not breach his duties as director regarding disclosure of the termination of key contracts.

ASIC deputy chair Sarah Court said the corporate regulator pursued the case because it was concerned that information was not properly disclosed to the Quintis board or to the market, impacting investors and their confidence in Australia’s financial markets.

“We will continue to work to ensure the integrity of Australia’s continuous disclosure regime,” Ms Court said.

ASIC is carefully reviewing the judgement handed down on Tuesday.

Quintis was engaged in the business of the cultivation, sale, distribution, management and ownership of plantations of sandalwood trees with many of those trees owned by investors through various investment schemes which Quintis managed, and from which it earned management and performance fees.

At one point, Quintis grabbed the headlines by signing up former cricketing great Adam Gilchrist and F1 racing driver Daniel Ricciardo as ‘Quintis ambassadors’.

The long-running court case and entanglement with ASIC had its genesis in May 2017 when Quintis released an announcement to the ASX disclosing that potentially lucrative supply agreements with Swiss dermatology giant Galderma had been terminated and that the termination had taken effect on January 1, 2017.

The announcement stated that the directors of Quintis had been advised of the termination on May 9, 2017 and were previously unaware. The Quintis share price dropped nearly 44 per cent on opening for trading after the announcement was released.

ASIC had claimed that Mr Wilson failed to tell the board of directors of Quintis that certain material agreements were going to be terminated, and then that they had been terminated. ASIC also alleged in its court case that Mr Wilson had failed to ensure that Quintis did not mislead the market about the termination of the agreements.

These alleged failures are said to have exposed Quintis to various adverse consequences, including a risk of breaching continuous disclosure requirements. ASIC alleged that, in this way, Mr Wilson failed to exercise his powers and discharge his duties with the requisite degree of care.

Quintis shares were later voluntarily suspended from official quotation on May 15, 2017 and have not traded since. On January 20, 2018, Quintis was placed into voluntary administration.