‘Draconian’: Tasmanian Supreme Court rejects bid to penalise former Gunns chief John Gay in proceeds

The Commonwealth Director of Public Prosecutions has lost a precedent-setting bid to penalise convicted inside trader John Gay the full $3 million gross proceeds of his share sale.

Tasmanian Supreme Court Justice Stephen Estcourt on Monday rejected a “single minded pursuit of a draconian outcome” in the case against the former chairman of bankrupt timber company Gunns Limited.

Mr Estcourt ordered further argument in the case, as the DPP seeks to penalise Mr Gay beyond a $50,000 fine imposed over the 2009 sale of the shares when he held price sensitive information, in the form of a monthly management report.

In Mr Gay’s 2012 trial, the crown alleged his sale of Gunns shares netted $798,000, but trial judge David Porter said he was unable to determine the amount

Australian Securities and Investment Commission chairman Greg Medcraft told a Senate Committee last year that “the whole country” was disappointed with the original penalty.

The DPP moved in the Supreme Court last month to seek $3.095 million from Mr Gay for the gross sale from trading the shares – or more than three times the estimated loss he avoided.

Mr Estcourt said in his judgement that he readily accepted the object of the Proceeds of Crimes Act was to punish and deter.

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Andrew Darby, Fairfax