BlueInc founder Russell Howden, whose businesses were found to have engaged in “unconscionable conduct” when selling life and funeral insurance, has filed a notice of appeal to the Federal Court. 

Last month the Federal Court imposed penalties of $13.5 million on Select AFSL, BlueInc Services and Insurance Marketing Services in a case brought by the Australian Securities and Investments Commission (ASIC). 

The businesses engaged in conflicted remuneration practices, such as giving sales agents trips to Las Vegas and Hawaii to drive up sales. 

Justice Wendy Abraham in her ruling also imposed a penalty of $100,000 on Mr Howden, the former MD and sole director of Select and BlueInc, for breaching his directors’ duties and he will be disqualified from managing corporations for five years. 

Mr Howden has appealed against the declarations made as well as the disqualification order, the pecuniary order and the costs order. ASIC had provided to Mr Howden’s solicitors in March an estimate of its recoverable costs in the order of $2.3 million to 3.1 million. 

Justice Scott Goodman made a judgment this month dismissing Mr Howden’s interlocutory applications with costs. The costs of the application is being reserved until the outcome of the appeal is known. 

Justice Goodman says he is satisfied the matters raised in the appeal – that the primary judge erred in determining that the incentives were conflicted remuneration – “are arguable”. 

In dismissing Mr Howden’s application for a stay of disqualification order, requiring payment of pecuniary penalty and costs order pending appeal, Justice Goodman in his judgment says he is not convinced by the submissions made. 

In relation to the disqualification order submissions were made suggesting Mr Howden would suffer irremediable prejudice if the disqualification order was not stayed. 

“I do not accept these submissions,” Justice Goodman says, adding “the detriment that Mr Howden may suffer is a matter not to be afforded too much weight, in contrast to the significant weight to be afforded to the protective nature of the disqualification order”. 

Click here for more from the judgment.