The Federal Court has dismissed a case brought by ASIC, rejecting claims that Keith Cohen, former director of Freedom Group, and Robert Oayda, the firm’s former Quality Assurance Manager, contravened conflicted remuneration laws. The court also found Cohen did not breach his directors’ duties.
Before being placed into external administration in February 2020 and later deregistered, Freedom Insurance sold life, trauma, and funeral insurance products, among others.
The court heard in July 2023 that based on in-house legal advice, Cohen believed conflicted remuneration rules did not apply to sales incentives. He subsequently offered telesales staff prizes such as holidays to Bali and a Vespa scooter during the 2017–2018 period.
ASIC alleged these incentives contravened the Corporations Act and sought declaratory and injunctive relief, disqualification orders, and pecuniary penalties against Cohen and Oayda. Cohen and Oayda rejected the claims.
Judgment
In the judgment, released 16 October 2025, Justice Goodman found ASIC failed to prove that Cohen or Oayda breached section 180(1) of the Corporations Act, which requires directors to exercise due care and diligence.
Justice Goodman said Cohen was entitled to rely on the company’s general counsel and financial services lawyer, Malcolm McCool, to ensure compliance.
…ASIC has not established that the prizes were conflicted remuneration…
The court rejected ASIC’s argument that Cohen “micro-managed” the business, finding it was reasonable for him to rely on senior executives to oversee regulatory matters. The conflicted remuneration provisions, the judge said, were “not readily understood” and highly technical.
“I have reached the conclusion that ASIC has not established that the prizes were conflicted remuneration,” said Justice Goodman.
“There is a considerable degree of complexity, as is illustrated by the permutations in the case as framed by ASIC in this proceeding…Mr Cohen was not a lawyer and cannot have been expected to have anything but a high-level understanding of those provisions.”
The court found that any potential risk of harm from the incentive schemes was not reasonably foreseeable to a person in Cohen’s position, particularly as McCool had believed the rules did not apply. Any risks, it added, were outweighed by the commercial benefits the programs produced through increased policy sales.
ASIC’s case was dismissed, and the court said Cohen could apply for costs.
Royal Commission
According to Vol 2 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, a Freedom Insurance telemarketer sold a funeral, accidental death, and accidental injury policy to a young man with Down Syndrome.
His father, Bruce Stewart, told the Commission his son didn’t understand what he bought and that the policies were later cancelled after he repeatedly contacted the company by phone and email.
