Being appointed a director of company carries a significant degree of responsibility and duties are imposed on the director under the Corporations Act 2001 (Cth) the Act) including personal liabilities for unpaid taxes which may result in the issue of a director’s penalty notice.  However, a director must consent to act as a director and completion and execution of the relevant appointment documents will be lodged with the Australian Securities and Investments Commission.   Where a director has not been validly appointed or did not consent to be appointed as a director, this can have significant ramifications if a director’s penalty notice is served upon the director.

In the recent Supreme Court decision of Re Dream Harvest Pty Ltd (in liq) [2026] VSC 426 (30 June 2026) (Dream Harvest), Ms Kwon successfully established that she had not consented to the appointment to act as a director and she had not participated in the affairs of Dream Harvest or made any decisions concerning its financial affairs or the conduct of its business.

There are several relevant facts which resulted in Ms Kwon being entitled to the declarations which she sought (but an order for costs was declined):

• The trial was undefended as the Deputy Commissioner of Taxation (DCT) neither consented to the declarations sought by the director;
• The director’s evidence was unchallenged which was essentially concerning her role as an employee with M.N. Simpson Investments Pty Ltd whilst living and working in Australia on a temporary visa;
• Three witnesses gave evidence that Ms Kwon was only an employee and she never acted or was held out as being a person in a position of authority.
• Dream Harvest operated a farm labour hire business and Ms Kwon was never a shareholder;
• On 25 March 2022, Dream Harvest’s accountants, With Accounting, lodged a Form 484 with ASIC which appointed Ms Kwon as a director and the secretary and removed Mr Roh as a director. However, Ms Kwon gave evidence that she did not sign the Form 484 (it had an electronic signature and not a wet ink signature) and the address was Mr Roh’s residential address.  With Accounting did not hold a consent from Ms Kwon and refused to speak to her when she attempted to make enquiries. Her evidence was that the Form 484 was lodged without her consent;
• Ms Kwon also gave evidence that there was no change to her wage, duties and tasks and she did not receive director’s fees;
• On 19 March 2024, the ATO issued a director penalty notice (DPN) upon Ms Kwon seeking $1.5million;
• On 26 June 2024, Dream Harvest was placed into liquidation;
• Ms Kwon notified ASIC that she did not consent to act as a director of Dream Harvest;
• On 18 October 2024, the DCT issued proceedings in the County Court against Ms Kwon for recovery of the amounts under the DPN and a settlement was reached;
• On 9 December 2024, ASIC removed Ms Kwon as a director from the register;

The relevant issues which arose in these two cases can be highlighted as follows:

1. The appointment of Ms Kwon as a director was invalid as section 201D of the Act requires the consent of Ms Kwon and ASIC’s investigations had disclosed that no consent existed.  The absence of consent goes to the substance and validity of the appointment, not to its procedural regularity.
2. Ms Kwon did not perform functions or make decisions of the kind that characterise the position of a director. Including the fact that she was paid a fixed hourly rate (and no director’s fees); her duties did not change and she performed administrative tasks; she was not involved in financial or management decisions; and three witnesses confirmed she was an employee only.
3. As a result of the facts and conduct, Ms Kwon did not act in the position as a director within the meaning of section 9AC(1)(b)(i) of the Act;
4. Ms Kwon also became aware of fraudulent conduct and reported this information to police and a tip-off form with the ATO and notified ASIS that she did not consent to be a director.  This conduct was consistent with someone who was not acting as a director.
5. Accordingly, the declarations sought by Ms Kwon were made by the Court.
6. Ms Kwon sought costs against the DCT however, the DCT did not participate in the proceeding and only appeared to assist the Court – instead, there were no orders as to costs made between Ms Kwon and the DCT.

This case is an important reminder to accountants, business owners and others who may be providing advice or acting for companies or personnel involved with the company regarding preparation of documents and lodgement of Form 484 documents with ASIC.  Ensuring that the relevant person has consented to the appointment is mandatory and evidence of that consent must be kept as a record.  Significant ramifications can occur if individuals are on the ASIC record as directors (or former directors) but they did not consent to act in that role.  The service of DPN’s on a person who is recorded as a director can result in the DCT seeking to recover unpaid taxes.    insolvency practitioners (and others who act as trustees of a Trust) to be mindful of conduct throughout court proceedings, the orders which are being sought, what claims are being pursued and whether there is sufficient evidence to substantiate certain claims by the final hearing. The exposure could be significant to the individual person concerned and this case demonstrates that court orders can dal with the invalid appointment but this may result in substantial costs to the person who is required to issue court proceedings to deal with actions arising from an appointment to which he or she did not consent.