Solicitor Liable For Facilitating Unlawful "Phoenix" Activity: Professional Advisors Beware!

"When advice is given by a solicitor to carry out an improper activity and the solicitor does all the work involved in carrying it out apart from signing documents, it seems to me that there can be no question as to liability."

The decision of Windeyer AJ in ASIC v Somerville & Ors [2009] NSWSC 934 illustrates the potential for exposure of legal, accounting and other professional advisors to liability if they facilitate improper corporate conduct, and serves as a warning for those who overstep the legitimate boundaries when providing legal or financial advice.

On 8 September 2009, the New South Wales Supreme Court found solicitor Timothy Donald Somerville liable for aiding and abetting directors of certain companies to contravene their directors' duties by engaging in 'phoenix' activity.