When a director is not a director: the Dream Harvest case

In a recent case, the Supreme Court of Victoria declared that someone registered on the ASIC search as a director, Ji Hyon Kwon, had never validly consented to her appointment as director and secretary of Dream Harvest Pty Ltd (in liquidation).

The Court also found that she had never acted as a director.

The case provides helpful insight into when someone is deemed not to be a director, despite appearing as one on the ASIC register.

The facts

• Ms Kwon is a South Korean citizen whose right to remain in Australia depended on a visa sponsored by a company controlled by Matthew Simpson. She earned approximately $1,000 per week, had no savings and no family in Australia, and was entirely dependent on her employment with Mr Simpson and his associate, Sangyub (Jeff) Roh.
• Dream Harvest Pty Ltd operated a farm labour hire business. Mr Roh, Mr Simpson and Youjoon Kim were its shareholders. Ms Kwon was never a shareholder and was never involved in its financial or management decisions. Her job was purely administrative.
• In 2021, Mr Roh asked Ms Kwon to become a director. She declined. Despite this, in March 2022 the company’s accountants lodged a form with ASIC purporting to appoint her as director and secretary. The form bore only a typed name, not a wet ink signature, and was lodged without any consultation with Ms Kwon. She never provided a signed consent.
• Following the purported appointment, nothing changed. Her role, duties and wages remained the same. She received no director’s fees or other benefit. Mr Roh and Mr Simpson retained effective control and directed her to ignore contact from the ATO.
• In February 2024, Mr Simpson directed Ms Kwon to sign an ANZ bank authority form. This was the only time she had ever attended a bank for Dream Harvest. Shortly after, both men fled Australia. Ms Kwon reported the fraud to police and cooperated with the ATO.
• In March 2024, the Deputy Commissioner of Taxation issued director penalty notices against Ms Kwon for approximately $1.5 million.

The issue of consent

A director has significant responsibilities. The Court confirmed that the status of director cannot be imposed on any person without their consent. No signed consent was produced.

In this case, Ms Kwon had expressly declined the directorship when first proposed. Her duties never changed, she derived no benefit from the purported appointment, and three independent witnesses confirmed she was always treated as an employee.

The Court also confirmed that subsequent conduct cannot retrospectively supply a consent that did not exist at the time of the purported appointment.

The appointment was declared void and of no effect.

Lessons

This case is a reminder that being listed on the ASIC register as a director does not, by itself, make a person a director.

A registration without genuine consent can expose a vulnerable person to substantial financial liability, as occurred in this case.

The decision is also a reminder of the importance of accountants and advisers obtaining proper written consents before lodging documents with ASIC. Director appointments carry serious legal and financial consequences. The paperwork is not a box-ticking exercise.

Catherine Ballantyne, the Litigation Practice Group Leader at Hunt & Hunt, is experienced in advising directors.

She can be contacted at [email protected] or +61 3 8602 9227.