Block Earner's legal advice takes on central role in ASIC appeal
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The news: Block Earner's legal advice from law firm Gilbert + Tobin has become a point of contention in the Australian Securities and Investments Commission's appeal of a court decision linked to the company.
Federal Court of Australia Judge David O'Callaghan — who is presiding over the ASIC appeal alongside Judges Wendy Abraham and Catherine Button — said the focus on legal advice "seems to me an unnecessary diversion".
But barrister Jeremy Giles SC, who appeared on behalf of ASIC, said the legal advice was central to the original judgment by Judge Ian Jackman. The regulator is now appealing the original judgment after Block Earner was relieved from paying a penalty for breaches of the Corporations Act.
The numbers: ASIC's initial lawsuit against Block Earner included a proposed penalty of $350,000.
The context: Jackman found in his initial judgment that Block Earner contravened the Corporations Act by offering a (since closed) fixed yield product without a financial services licence. However, Jackman didn't impose a penalty on the company for reasons including an inference that the company relied on Gilbert + Tobin's legal advice in forming a view there was no identified risk that its crypto product would breach any laws or regulations.
In the appeal hearing today, Giles argued Jackman's reasons returned consistently "to legal advice from a reputable law firm. Reliance which wasn't proved", adding that the three-judge full court panel couldn't know what lawyers were told by the company.
"His Honour didn't have any of the reasonable underlying material to draw that conclusion", Giles said.
Abraham, Button and O'Callaghan have reserved their decision in the case.
