Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3)
[2013] FCA 984
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984
Citation: Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984 Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CHASTE CORPORATION PTY LTD (DEREGISTERED) ACN 089 837 239, BRADDON RALPH WEBB, ORLAWOOD PTY LTD ACN 059 294 334, PETER CLARENCE FOSTER, SEAN PETRIE ALLEN COUSINS, CONSTANTINE XENOUDAKIS, KEVIN ANTHONY MCMULLAN, ALAN KENNETH COOPER and STEPHEN D'ALTON File number: QUD 252 of 2001 Judge: LOGAN J Date of judgment: 27 September 2013 Catchwords: CONTEMPT OF COURT – alleged failure of fourth respondent to comply with order of the Federal Court of Australia – two charges of contempt of Court – consideration of requisite elements and whether proven beyond reasonable doubt – whether alleged contemptor was knowingly concerned in breach of orders
Held: both charges of contempt of Court proved beyond reasonable doubt, notwithstanding that certain particulars of charge 2 not so proved
Legislation: Evidence Act 1995 (Cth) ss 55, 79,101A, 102, 103, 104, 135, 137, 164, 165, 192
Judiciary Act 1903 (Cth) s 79
Criminal Law (Rehabilitation of Offenders) Act 1986 (Qld)
Evidence Act 1995 (NSW)Cases cited: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 cited
Australian Competition and Consumer Commission v Chaste Corporation [2005] FCA 1212 related
Australian Securities and Investments Commission v Reid (No 1) [2006] FCA 699 followed
Azzopardi v The Queen (2001) 205 CLR 50 followed
Bulejcik v The Queen (1996) 185 CLR 375 applied
Dietrich v The Queen (1992) 177 CLR 292 considered
Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 considered
Neville v The Queen (2004) 145 A Crim R 108 applied
Pitkin v R (1995) 130 ALR 35 considered
R v El-Azzi [2004] NSWCCA 455 considered
R v Foster [2009] 1 Qd R 53 considered
R v Flynn [2008] EWCA Crim 970 considered
R v RPS, unreported, NSWCCA 13 August 1997 considered
Smith v R (2001) 206 CLR 650 considered
RPS v The Queen (2000) 199 CLR 620 cited
Witham v Holloway (1995) 183 CLR 525 followed
Yorke v Lucas (1985) 158 CLR 661 followedDate of hearing: 12 June 2012 - 21 June 2012
24 September 2012 – 5 October 2012Date of last submissions: 26 October 2012 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 254 Counsel for the Applicant: Mr D Kent with Ms K Morgan Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Fourth Respondent: Mr PE Smith with Mr L Burrow Solicitor for the Fourth Respondent: Fisher Dore
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 252 of 2001
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND: CHASTE CORPORATION PTY LTD (DEREGISTERED) ACN 089 837 239
First RespondentBRADDON RALPH WEBB
Second RespondentORLAWOOD PTY LTD ACN 059 294 334
Third RespondentPETER CLARENCE FOSTER
Fourth RespondentSEAN PETRIE ALLEN COUSINS
Fifth RespondentCONSTANTINE XENOUDAKIS
Sixth RespondentKEVIN ANTHONY MCMULLAN
Seventh RespondentALAN KENNETH COOPER
Eighth RespondentSTEPHEN D'ALTON
Ninth Respondent
JUDGE:
LOGAN J
DATE OF ORDER:
27 SEPTEMBER 2013
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The proceeding is adjourned to 10.15 am on Thursday 24 October 2013 for the hearing of submissions as to the form of orders to give effect to the reasons for judgement published today and in respect of penalties and costs.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 252 of 2001
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND: CHASTE CORPORATION PTY LTD (DEREGISTERED) ACN 089 837 239
First RespondentBRADDON RALPH WEBB
Second RespondentORLAWOOD PTY LTD ACN 059 294 334
Third RespondentPETER CLARENCE FOSTER
Fourth RespondentSEAN PETRIE ALLEN COUSINS
Fifth RespondentCONSTANTINE XENOUDAKIS
Sixth RespondentKEVIN ANTHONY MCMULLAN
Seventh RespondentALAN KENNETH COOPER
Eighth RespondentSTEPHEN D'ALTON
Ninth Respondent
JUDGE:
LOGAN J
DATE:
27 SEPTEMBER 2013
PLACE:
BRISBANE
REASONS FOR JUDGMENT
On 2 September 2005, Lander J made the following orders in these proceedings in respect of the fourth respondent, Mr Peter Clarence Foster - Australian Competition and Consumer Commission v Chaste Corporation [2005] FCA 1212:
I declare that:
23.The fourth respondent, having controlled and directed the operations of the first respondent (Chaste), being a corporation engaged in the supply or possible supply in trade or commerce, through distributors (area managers) of a purported weight loss aid named TRIMit, by making on behalf of Chaste, or causing or permitting to be made on behalf of Chaste:
23.1a representation in documents provided to area managers and potential area managers that Chaste would promote TRIMit by extensive national television, radio and magazine campaign with a forecast expenditure of over $1.5 million in the first year of sales and would further provide a national team of marketing, management and advertising experts to assist area managers when in fact and to his knowledge Chaste had no such plans or arrangements in place, had no apparent means of executing them, had not engaged the represented marketing, management and advertising experts, and to the fourth respondent’s knowledge had no financial means to fund the represented expenditure;
23.2representations to area managers that delays in commencement of the said campaign were due to the actions of persons other than Chaste and its officers when in fact and to his knowledge that campaign had not proceeded because it had not been arranged or agreed to by Chaste and Chaste at his direction continually refused to pay deposits or other payments required for aspects of the campaign to proceed;
23.3a representation to area managers and potential area managers that if they wished to discontinue their distribution arrangement with Chaste, Chaste would, upon ninety days notice, repurchase all unsold stock and point of sale material supplied to the area manager and arrange a new area manager for the distribution area when in fact and to his knowledge during the period when Chaste was making the representation, Chaste and the fourth respondent had no intention of making good the representation but wrote correspondence to area managers who sought to terminate their agreements, requiring them to continue to perform their obligations under the agreements, or refusing to refund their deposits in full, until such time as their agreements were re-sold;
23.4 representations that:
23.4.1TRIMit was a thoroughly researched and scientifically tested product;
23.4.2TRIMit’s efficacy as a weight loss product was without question;
23.4.3TRIMit (or an equivalent product) had been successfully launched in the United States and had been scientifically tested at eleven universities;
when in fact and to the knowledge of the fourth respondent TRIMit was a new and unique formulation and none of those matters were true;
23.5 representations that:
23.5.1clinical studies had shown the combination of ingredients in TRIMit were 700% more effective than hydroxycitric acid alone;
23.5.2Chaste had the results of independent research into, scientific testing of, or independent clinical trials of TRIMit (or an equivalent product) which proved it was a quality product, safe to use and effective as a weight loss aid;
when in fact and to the knowledge of the fourth respondent, Chaste did not have such results, and such clinical trials as were conducted for Chaste were conducted without scientifically accepted protocols or design, without scientifically controlled conditions, and largely involved subjects who had an interest in the business of Chaste;
23.6representations that claims made by Chaste as to TRIMit’s potency, use and effectiveness had a scientific basis and Therapeutic Goods Act approval, when in fact and to the knowledge of the fourth respondent, the claims did not have a scientific basis, and such approval as was obtained under the Therapeutic Goods Act did not provide verification of the product’s efficacy;
23.7a representation to area managers and the public that Chaste was a genuine business conducted on an ordinary commercial basis and that the opportunity offered by it to area managers was a genuine business opportunity when:
23.7.1it was the fact that the fourth respondent had extensive involvement in the management and marketing of Chaste which involvement was, at the direction of the fourth respondent, deliberately concealed from the public and area managers;
23.7.2it was the fact that the fourth respondent had convictions in relation to the unlawful sale and promotion of weight loss products, and a reputation as the instigator of dubious and failed schemes for profit for the conduct of businesses promoting and selling or purporting to sell purported slimming or weight loss products, and that Chaste and the fourth respondent were deliberately concealing the involvement of the fourth respondent in Chaste because the public and potential area managers of Chaste would be unlikely to buy its weight loss products or become its distributors if they knew of the involvement of the fourth respondent in Chaste;
23.7.3it was the fact and he knew, but did not inform area managers or the public that it was his intention and the intention of the second respondent as the controllers of Chaste that gross income from sale of distributorships and goods by Chaste would be distributed to, or at the direction of the second and fourth respondents, and Chaste would not retain adequate funds to make good on the representations of future expenditure by Chaste;
23.7.4it was the fact and he knew, but did not inform area managers or the public that gross income from sale of distributorships and goods by Chaste had been distributed to, or at the direction of the second and fourth respondents, and Chaste did not retain adequate funds to make good on representations of future expenditure by Chaste;
23.7.5it was the fact, and the fourth respondent knew, that Chaste was operated by him and others for the purpose of:
23.7.5.1extracting the maximum revenue from area managers and purchase TRIMit only so that Chaste would receive money from those persons;
23.7.5.2inducing persons to become area managers and purchase TRIMit so that Chaste would receive money from those persons;
23.7.5.3distributing the fourth respondent and others the maximum possible gross income of Chaste necessary for Chaste to maintain the appearance in the short term of conducting a genuine business;
23.8representations to potential area managers that Chaste was a good business opportunity, while deliberately not revealing the involvement of the fourth respondent to area managers and potential area managers, and thereby misrepresenting the risks associated with Chaste’s business opportunity’ has, in respect of each representation, been directly knowingly concerned in a corporation engaging in conduct that was misleading and deceptive in contravention of section 52 of the Trade Practices Act 1974 (Cth).
24.The fourth respondent by, between December 1999 and November 2001, knowingly permitting, assisting and authorising a corporation in trade or commerce to enter into agreements for the supply of goods, namely weight loss tablets, together with point of sale material and other related products, under an agreement, one of the terms of which was that area managers to whom the goods were supplied would not sell the said goods at a price less than the price specified from time to time by Chaste, which term was drafted by the fourth respondent, has been directly knowingly concerned in Chaste engaging in the practice of resale price maintenance in contravention of s 48 of the Act.
25.The fourth respondent by, between December 1999 and November 2001, knowingly permitting, assisting and authorising a corporation to use in trade or commerce in relation to goods supplied by that corporation to area managers for resale, the statements:
(a)‘… the company will be solely responsible for fixing, from time to time, the recommended retail price and the price at which the area manager purchases stock’;
(b)‘… it is most important that a regulated price policy be adhered to in the interest of all parties involved.’
(c)‘… we have therefore established the following as the costing structure to be applied in all markets
PROFIT STRUCTURE
TRIMitTMArea Manager Cost $19.50 Profit $10.00 51% Retailer Cost $29.50 Retailer Profit $20.45 70% Recommended Retail $49.95
(d) ‘15. Who determines the price at which I sell my stock?
The company will set the recommended retail price and wholesale price that must be adhered to by all area managers. There must be no discounting or price cutting without the written permission of the company. This ensures everyone is protected from unnecessary price wars.’
(e) ‘Cost to You…
What will TRIMit cost you? Retailer Cost $32.45 Recommended Retail $54.95 Retailer Profit $22.50 PROFIT 70%’
being statements of prices that were likely to be understood by area managers as the prices below which the goods were not to be sold, has been directly knowingly concerned in Chaste engaging in the practice of resale price maintenance in contravention of s 48 of the Trade Practices Act 1974 (Cth).
Orders that:
26.The fourth respondent pay to the Commonwealth of Australia, within 45 days of the date of this order, a penalty of $150,000 in respect of his being knowingly concerned in the conduct of a corporation engaging in the practice of resale price maintenance in contravention of section 48 of the Trade Practices Act 1974 (Cth), as alleged in paragraphs 106 and 113(c) of the statement of claim.
27.The fourth respondent be restrained, for five years from the date of this order, from being directly or indirectly knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind.
28.The fourth respondent be restrained, for five years from the date of this order from being directly or indirectly knowingly concerned in or party to, or aiding, abetting, counselling or procuring, a corporation, which supplies to another person products said to have health, weight loss or cosmetic benefits:
28.1inducing or attempting to induce that other person not to sell those products at a price less than the price specified by that corporation; or
28.2using in relation to those products a statement of price likely to be understood by that other person as a price below which the products are not to be sold.
29.The fourth respondent be restrained for a period of five years from the date of this order from in any manner being knowingly concerned in any corporation in trade or commerce, making, or permitting to be made, any representation as to the nature, quality, fitness for any purpose, testing, history, composition, standard, approval by any person, performance characteristics, uses or benefits of any good or service unless, prior to making the representation:
29.1 he believes the representation to be true and accurate;
29.2the corporation informs the representee in writing of all information of which he is aware that refutes, qualifies or contradicts any part of the representation; and
29.3the corporation provides the representee with a copy of these orders or informs the representee of the existence of these orders and gives the representee the address of the Federal Court website, namely from which a copy of these orders can be obtained.
30.The fourth respondent be restrained for five years from the date of this order from being knowingly concerned in any corporation in trade or commerce making any representation as to the future payment by it of any sum to any person or the future by giving by it of any benefit to any person unless:
30.1he has made all necessary enquiries to satisfy himself that the corporation intends to make the payment or give the benefit and has reasonable grounds to believe it can make the payment or give the benefit; and
30.2he has fully recorded in writing the details of all matters he has relied upon in so satisfying himself (including the source of the information and the time it was obtained) and has retained copies of all documents relied upon.
31.The fourth respondent shall retain the records and copies of documents prepared by or relied on by him pursuant to order 30 above for at least six years from the date of this order and shall produce a complete and true copy of such material to the applicant upon request within seven days of receiving such a request.
32.The fourth respondent pay the applicant’s costs of and incidental to these proceedings as against him, such costs to be taxed if not agreed within 28 days of the date of this order.
The Australian Competition and Consumer Commission (Commission), which secured those orders, alleges that Mr Foster has breached orders 27 and 29. It alleges that the breaches constitute a contempt. The Commission’s statement of charge is as follows:
Charge 1
1In the period from December 2009 to 2 September 2010 you were directly or indirectly knowingly concerned in the promotion or conduct of the business of SensaSlim Australia Pty Limited (SensaSlim) which was a business relating to weight loss and thereby breached order 27 of the orders made by the Honourable Justice Lander of the Federal Court of Australia, dated 2 September 2005 in proceeding number QUD 252 of 2001.
Particulars:
1.1 On 2 September 2005, Justice Lander made an order in the following terms:
“The fourth respondent be restrained, for five years from the date of this order, from being directly or indirectly knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind.”
(Order 27)1.2 SensaSlim conducted a business which involved, amongst other things:
(a)manufacturing and supplying an intra-oral solution administered as a spray marketed and distributed by it as a weight loss aide (SensaSlim Solution);
(b)entering into franchise agreements with distributors (Area Managers) for the supply of the SensaSlim Solution to Area Managers, for resale by them to retailers;
(c)supplying services to Area Managers, including training, marketing and sales support;
(d) the licensing and the promotion of the SensaSlim Solution.
1.3In the period from at least sometime in December 2009 until 2 September 2010, the Fourth Respondent:
(a)prepared some or all, or caused to be prepared, a promotional DVD about SensaSlim and the SensaSlim Solution which was shown to prospective Area Managers;
(b)prepared some or all, or caused to be prepared and approved, and caused to be published newspaper advertisements advertising the opportunity to become an Area Manager for the distribution of the SensaSlim Solution;
(c)prepared some or all, or caused to be prepared and approved, a document entitled “Area Manager Proposal” (Area Manager Proposal) and disclosure documents for provision to prospective Area Managers;
(d)engaged in conversations with prospective Area Managers to encourage entry by them into franchise agreements with SensaSlim for the distribution of the SensaSlim Solution;
(e)engaged in email correspondence with prospective Area Managers regarding the business of SensaSlim, to encourage entry by them into franchise agreements with SensaSlim and sale of the SensaSlim Solution;
(f)prepared some or all, or caused to be prepared and approved, newsletters circulated by email by SensaSlim to potential Area Managers and Area Managers (Newsletters).
(g)controlled and directed the process for engagement by SensaSlim with potential Area Managers, and entry by SensaSlim into franchise agreements with Area Managers.
Charge 2
2In the period from December 2009 to 2 September 2010 you were knowingly concerned in SensaSlim in trade or commerce, making, or permitting to be made, representations as to the particular standard or quality of the SensaSlim Solution, without, prior to making the representation, SensaSlim providing the representee with a copy of the orders made by the Honourable Justice Lander of the Federal Court of Australia dated 2 September 2005 in proceeding number QUD 252 of 2001, or informing the representee of the existence of the orders and giving the representee the address of the Federal Court website, and thereby breached order 29 of those orders.
Particulars:
2.1 On 2 September 2005, Justice Lander made an order in the following terms:
“The fourth respondent be restrained for a period of five years from the date of this order from in any manner being knowingly concerned in any corporation in trade or commerce, making, or permitting to be made, any representation as to the nature, quality, fitness for any purpose, testing, history, composition, standard, approval by any person, performance characteristics, uses or benefits of any good or service unless, prior to making the representation:
29.1 he believes the representation to be true and accurate;
29.2the corporation informs the representee in writing of all information of which he is aware that refutes, qualifies or contradicts any part of the representation; and
29.3the corporation provides the representee with a copy of these orders or informs the representee of the existence of these orders and gives the representee the address of the Federal Court website, namely from which a copy of these orders can be obtained.” (Order 29)
2.2 The particulars in set out in paragraphs 1.2 are repeated.
2.3From about mid March 2010, SensaSlim provided potential Area Managers with the Area Manager Proposal and showed a promotional DVD to those potential Area Managers.
2.4On or about 30 July 2010, SensaSlim circulated a newsletter (Newsletter 5) to potential Area Managers and Area Managers.
2.5On or about 13 August 2010, SensaSlim circulated a newsletter (Newsletter 7) to potential Area Managers and Area Managers.
2.6On or about 20 August 2010, SensaSlim circulated a newsletter (Newsletter 8) to potential Area Managers and Area Managers.
2.7In the Area Manager Proposal (at p 20), the promotional DVD (at 28:03 to 30:54) and Newsletters 5, 7 and 8 SensaSlim represented that the SensaSlim Solution was the subject of a large world wide clinical trial and that the trial established the efficacy of the SensaSlim Solution, being a representation that the SensaSlim Solution was of a particular standard or quality, namely that its efficacy had been established by a large world wide clinical trial.
2.8Area Managers who were provided with the Area Manager Proposal, were shown the promotional DVD or who received Newsletters 5, 7 or 8 were not provided with a copy of the Orders or made aware of the Orders by SensaSlim.
[sic]
The Commission seeks a declaration that Mr Foster is guilty as charged, the imposition of penalties and an order in respect of its costs.
Mr Foster denies each charge of contempt made against him in the statement of charge.
It is common ground that, at all material times, Mr Foster was aware of the terms of orders 27 and 29. There is no doubt on the evidence that a company by the name of SensaSlim Australia Pty Ltd existed in Australia during the period from December 2009 to at least (and after) 2 September 2010. I term that company SensaSlim in these reasons, except where it is necessary to distinguish it from a foreign incorporated, related company, SensaSlim International Limited, in which case I use the terms SensaSlim Australia and SensaSlim International respectively. I also term the product used in the business “SensaSlim”, except where context alone is not sufficient to indicate that the term is being used to refer to the product, in which case I use the term SensaSlim product.
By the time of trial of the charges, SensaSlim was in liquidation.
It is for the Commission to prove that Mr Foster is guilty of contempt as alleged. It was common ground between the parties, a position with which I concur, that the Commission must do so beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525 (Witham v Holloway) at 534.
Each charge alleges that Mr Foster was directly or indirectly knowingly concerned in particular conduct. As to this and as Mason ACJ and Wilson, Deane and Dawson JJ observed in Yorke v Lucas (1985) 158 CLR 661 at 670:
There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention.
Thus, in this case, there can be no question that Mr Foster is guilty of contempt as alleged unless the Commission not only proves beyond reasonable doubt the facts constituting the alleged contempt but also that Mr Foster had knowledge of them. Mr Foster contends that the Commission has failed to prove the elements of the charges made against him.
Before turning to the evidence led in the present case and the facts which I find, it is desirable to make reference to events more distant in time concerning Mr Foster and to their role, if any, in the present case. Why that is so will be apparent from what follows.
In the course of interlocutory proceedings, I disclosed to the parties that, when in practice at the Bar, I had appeared in cases in which Mr Foster was a party; one a bankruptcy proceeding in which I had conducted a public examination of him when briefed for his then trustee in bankruptcy, the other an international extradition matter, proceedings in which culminated in an unsuccessful appeal by Mr Foster to the High Court of Australia in which I appeared for the Minister for Justice and Customs. Mr Foster expressly did not take objection to my hearing the case. The Commission also did not object.
I mention this at the outset because other aspects of Mr Foster’s past, quite apart from the subject of whether he was or was not knowingly concerned in particular conduct as charged, were raised, or sought to be raised, in these proceedings.
I admitted, as part of the Commission’s case and over the objection of Mr Foster, a recording of an interview which he gave to the Australian Broadcasting Corporation’s Ms Monica Attard as a sample of his voice (the Attard interview). Later, in both affidavit and oral evidence, Mr Foster came to admit that he was he was the interviewee in this recording. In the course of that interview Mr Foster made general admissions as to his past crimes and notoriety.
Prior to Mr Foster’s giving evidence, the Commission applied for leave to cross-examine Mr Foster about particular past criminal convictions. A convenient summary of these past convictions was said by the Commission to be found in the Queensland Court of Appeal’s judgment in R v Foster [2009] 1 Qd R 53 (R v Foster).
The Commission’s application was made under s 103 of the Evidence Act 1995 (Cth) (Evidence Act) or, further or alternatively, s 104. The application was made in the alternative because the Commission apprehended that it was moot as to whether the contempt proceeding was civil or criminal in character.
The basis upon which leave was sought was that Mr Foster’s cross-examination of two witnesses called by the Commission, Dr Christopher Waters and Mr David Scott Emerton (also known as Scott Waller) but most especially the latter, had entailed serious imputations as to their character. Mr Foster objected to leave being granted.
In the result, I declined to grant leave to the Commission to cross-examine Mr Foster about the particular past convictions. I gave brief reasons for that ruling at the time and indicated that I would enlarge upon these when delivering final judgment.
Whether s 103 alone or additionally s 104 of the Evidence Act were applicable depended upon whether the present proceeding could be classed as civil or criminal in character. If the latter, then s 104 was additionally applicable and, if the former, then s 103 alone was applicable.
There is a longstanding distinction between civil and criminal contempt but that distinction has been described as of an “unsatisfactory nature”: Witham v Holloway at 531, referring to Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107. Disobedience of a court order is, without more, a civil contempt but is criminal if it involves deliberate defiance of that order: Witham v Holloway at 530. The Commission’s case was cast on the basis that Mr Foster knew the terms of orders 27 and 29 made by Lander J and was knowingly concerned in conduct in breach of those orders. That, in my view, is an allegation of a criminal contempt.
That what is charged is a criminal contempt, which must be proved beyond reasonable doubt, might be thought to suggest that the proceeding is criminal in character. Yet in Witham v Holloway at 534 the High Court observed, “to say that proceedings for contempt are essentially criminal in nature is not to equate them with the trial of a criminal charge”. The High Court pointed to procedural differences, of which the most obvious was that a trial in respect of the latter usually involves trial by jury, whereas that in respect of a contempt charge does not. In Australian Securities and Investments Commission v Reid (No 1) [2006] FCA 699 Lander J noted that the practice and procedure adopted under this Court’s then rules of court in respect of the hearing of a contempt charge was (as it remains) civil rather than criminal. That led his Honour to rule that the respondent, who was without legal representation and indigent, was not entitled to a stay of proceedings based on the principle in Dietrich v The Queen (1992) 177 CLR 292, because that only applied in respect of a criminal proceeding.
In the face of this authority, I considered that I was bound to conclude that the proceeding was, strictly, civil in character. That being so, s 104 of the Evidence Act was not applicable, only s 103. That required a decision to be made as to whether the “credibility rule” (as defined in s 102 of the Evidence Act in respect of “credibility evidence”, as defined in s 101A) should not apply to Mr Foster’s cross-examination in respect of these particular offences on the basis that the evidence could substantially affect the assessment of his credibility. Subsection 103(2) sets out, in a non-exhaustive way, considerations which are relevant in this regard.
Even if there were circumstances warranting the inapplicability of the credibility rule I was invited to exercise a discretion under s 135 or s 137 of the Evidence Act to exclude that evidence. It was correctly conceded on behalf of Mr Foster that s 137 would not apply if the proceeding were not criminal in character. For the reasons given, the proceeding is civil in character such that s 137 of the Evidence Act is not applicable.
As to s 103 and s 104 of the Evidence Act, I was referred by counsel to the judgment of Simpson J in R v El-Azzi [2004] NSWCCA 455 (El-Azzi) at [173] et seq in respect of then like provisions in the Evidence Act 1995 (NSW). It is necessary to add the qualification, “then” because, after El-Azzi was decided, s 103 and s 104 of the Evidence Act were amended to the form in which they took at the time of this trial. Even if s 104 were applicable and, for the reason given, it is not, the later amendment means that care must be taken in the use of what was said of that section in El-Azzi. Care must likewise be taken in relation to the observations made as to s 103.
A derivative of the word “substantial” remains a qualifying feature in s 103(1). Instead of “substantial probative value” the test now is “substantially affect the assessment of the credibility of the witness”. The change might be thought to take up what was said of the former s 103 by Hunt CJ at CL, with whom Gleeson CJ and Hidden J agreed in R v RPS, unreported, NSWCCA, 13 August 1997 (RPS), referred to by Simpson J in El-Azzi at [181]:
Evidence adduced in cross-examination must therefore have substantial probative value in the sense that it could rationally affect the assessment of the credit of the witness. Such an interpretation accords with the intention of the Law Reform Commission. The addition of the word ‘substantial’ nevertheless imposes a limitation upon the common law, when almost anything was allowed upon the issue of credit unless it clearly had no material weight whatsoever upon that issue. That limitation is an important one.
[emphasis in original]
As noted by Simpson J in El-Azzi, RPS was the subject of a successful appeal to the High Court, RPS v The Queen (2000) 199 CLR 620, but on matters unrelated to the question in that case or the present question. As also noted by his Honour, the interpretation of the then s 103 in RPS was endorsed by the Full Court of this Court in Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 at 71-72, per Sackville J, with whom Whitlam and Mansfield JJ agreed.
Also relevant are two further views expressed by Simpson J in El-Azzi. Referring to the question of a grant of leave under s 104(2), Simpson J, at [177], considered that considerations raised by s 135 and s 137 did not fall for separate determination but instead intrude into the question of whether to grant leave under s 104(2) of the Evidence Act. I consider that the same may be said of a decision under s 103(1) as to whether particular credibility evidence should be permitted to be adduced in cross-examination. Apart from the open-ended nature of what is relevant to such a decision, a reason for this arises from an enduringly apt observation which his Honour made, at [178] in relation to s 135, s 137 and s 192 of the Evidence Act:
178A common theme, expressed in slightly different ways and prescribing slightly different tests, runs through s135(a), s137, and s192(2)(b). That theme is unfairness.
The criminal history referred to in R v Foster dated back to 1987. The age of many of the offences noted was such as to raise a question as to whether some were spent or, if otherwise spent, had been revived by reason of the operation of the Criminal Law (Rehabilitation of Offenders) Act 1986 (Qld) (Rehabilitation of Offenders Act), as applied in this proceeding by s 79 of the Judiciary Act 1903 (Cth). Resolving that would have required a considerable investment of time in respect of a hearing where availability of time was at a premium. Further and at a more general level of detail, Mr Foster, as I have mentioned, made no secret of his having a criminal past. Yet further, his admission in that regard was an inherent feature of a proven sample of his voice as contained in the Attard interview. Thus, insofar as the contents of the Attard interview were concerned, those contents fell outside the definition of “credibility evidence” in s 101A of the Evidence Act, because the Attard interview was not relevant only because it affected the assessment of Mr Foster’s credibility. Additionally, that he was at the time of key alleged events bound by orders of this Court and on parole in respect of the offence with which R v Foster was concerned formed part of the defence case that he was not involved but was vulnerable to and had been subjected to a form of blackmail by Mr Emerton.
In these circumstances, it struck me that resolution of whether and to what extent the Rehabilitation of Offenders Act applied so as to permit reference at all to particular convictions would be an “undue” waste of time: s 135(c) of the Evidence Act. Further, evidence as to the detail of the past criminal history was not said by the Commission to be admissible as tendency evidence in its case in chief; it was sought only to lead it in cross-examination as credibility evidence. In the face of what was admitted by Mr Foster in any event, albeit at a general level and its role as so admitted in the defence case, it struck me that to permit cross-examination on the detail of the criminal history would be unfairly prejudicial to him in a case where identity, his knowing concern in the conduct alleged, was a critical issue. In this case, the onus is always on the Commission to prove the contempt and to do so beyond reasonable doubt. Mr Foster is in no way obliged to prove his innocence.
As I remarked at trial in relation to having necessarily been made aware of the detail of the past history as set out in R v Foster for the purposes of making a ruling, there is a necessary discipline involved in this case for a judicial officer performing the function of tribunal of fact and law. The Commission most emphatically does not discharge to the requisite standard the onus which falls on it by showing that Mr Foster has a lengthy criminal history. As I disclosed, I already knew something of Mr Foster’s past from practice. He has a notoriety, which he frankly acknowledged in the Attard interview. I expect that most members of this Court, and the State courts in Queensland for that matter, would, to a greater or lesser extent, be aware of that.
In not objecting to my hearing the case, Mr Foster was not just waiving any issue as to apprehended bias, he was expecting that the serious allegations made against him in this case would be heard and determined with an objective detachment he was entitled to expect from a person exercising the judicial power of the Commonwealth. If I had felt that I could not undertake that task in that way, given my prior knowledge, I should have been duty bound to disqualify myself, even though no objection was taken. I considered when making the ruling at trial, and still do, that permitting cross-examination about the detail of the past convictions would, in the circumstances, not only be an undue waste of time but apt to intrude upon the necessary discipline to which I have referred and thereby be unfairly prejudicial to Mr Foster. The Commission’s forensic interest in testing his own credibility, after a singular assault by him in cross-examination on the credibility of Dr Waters and Mr Emerton, insofar as it was not already served by Mr Foster’s frank admission in the Attard interview, was, I considered, met in a way that was not unfairly prejudicial to him by permitting cross-examination on the subject of his past at the level of abstraction already otherwise found by admission, as opposed to the detail disclosed in R v Foster. It necessarily follows from this that, in reaching my conclusions of fact in this case, I have, very deliberately, excluded that detail from my consideration.
What then of the evidence and my findings in respect of the evidence?
The following findings are based on the evidence of Dr Waters, whose evidence I accept.
Before setting out these findings it is necessary to say something of Dr Waters and why I accept his evidence.
Dr Waters is a dentist. He has practised as a dentist since 2003 and managed his own dental practice on the Gold Coast in Queensland since 2007.
As the events which I relate based on his evidence prove, Dr Waters has not been content just to practise his profession and to derive income accordingly. He sought to enhance his income by investing in a business. This hardly makes him unique amongst the ranks of those practising a learned profession. Sometimes such additional activities prosper; sometimes, in hindsight, all they prove is that it is better just to practise the profession for which one is trained. The latter proved to be Dr Waters’ experience. That is because Dr Waters chose to invest in SensaSlim’s business.
That Dr Waters chose to invest in SensaSlim means that he was not a disinterested observer of the business which SensaSlim came to conduct. He is one of the Commission’s informers as to that business and his, Mr Foster’s (so he says) and others involvement in it. He gave evidence after entering in to a “co-operation agreement” with the Commission whereby, in return for his evidence, he was given a limited immunity from proceedings against him personally. This does not make his evidence inadmissible. Nor does it mean that his evidence cannot be relied upon unless corroborated: s 164 of the Evidence Act. Nor even, because, for reasons already given, this is not a criminal proceeding and because Dr Waters is not a prison informer does it mean that I am bound by s 165 of the Evidence Act to approach his evidence on the basis that it may be unreliable. Nonetheless, Dr Waters is a particular kind of informer. I have approached the assessment of his evidence on the basis that, both because of his investment and involvement in the business, his entry into a co-operation agreement with the Commission and the cessation of a relationship which he had with Mr Foster’s niece, Miss Arabella Foster (Arabella), his evidence may be unreliable. I have therefore assessed his evidence with particular caution.
I have an enduring memory of Dr Waters, assisted by particular notes of his appearance and demeanour which I took in the course of his oral evidence. To observe him in the witness box was to see a slim, youthful looking man, well dressed in a dark blue suit, white shirt and conservative tie. He was softly spoken and possessed, I thought, of a wistful sense of humour relating to his involvement with SensaSlim and the Foster family.
I illustrate that perception of his wistfulness in this way. In the course of a searching cross-examination as to the veracity of his affidavit evidence it was put to him, inter alia, that an account which he gave of a conversation with Mr Foster over a dinner in or about December 2010 was not true. As related by Dr Waters, the tenor of that conversation was directed to the SensaSlim business and to the events of the preceding few months concerning that business. That period was, as will be seen, a period over which the business came to unravel. Dr Waters recalled a conversation to the following effect between him and Mr Foster:
I said:Just take my money, I don’t want it back and leave me alone.
Mr Foster:I think you should stay with the company.
Dr Waters recalled that Mr Foster had then handed him his (Mr Foster’s) telephone so as to speak with (Mrs) Louise Foster (known to Dr Waters as and in fact Mr Foster’s mother). He recalled that she had said to him (inferentially about his no longer having involvement with SensaSlim):
You are definitely not doing that. Things will get better.
When it was put to him that his account of his conversation with Mr Foster was not true, Dr Waters replied, simply and definitely, “It’s true.” In so doing, he smiled, I thought wistfully, the result, so it struck me, of a combination of a very distinct recollection of the event and conversation, his investment and all that had later entailed for him, including his giving evidence in court.
Another way of illustrating that perception is derived from a much earlier exchange in the course of Dr Waters’ cross-examination, when he was being questioned as to the negotiations which led up to his entering in to the co-operation agreement with the Commission. The following exchange occurred:
And you would remember how all of this came about? -- To be honest, I’ve tried to delete most of it from my mind.
All right. So we can’t be sure on parts of your evidence; is that right? -- I’m sure on my evidence.
Dr Waters’ reference to “trying to delete most of it from my mind” was, I thought, a wistful reference not only to a business investment but also to a romance which was no more but which had once meant much to him, his romance with Arabella. Dr Waters indeed proved, I thought, to be “sure of his evidence”. His answers under cross-examination were spontaneously and definitely given.
A yet further way I illustrate that perception is by reference to an excerpt from an email of 23 November 2010 which I find Dr Waters sent to Mr Foster at one of the alias based email addresses used by Mr Foster ([email protected] - William Duffy email address):
[Reference to ordering and going through bank statements and to amounts invested]
To say everything involved has left me feeling badly would be a massive understatement. Still, I don’t blame anyone. Arabella is, as you say, too young, she has no idea nor comprehension of the stress I endured throughout the year. Also the commitment I had made in my head, wallet and heart through this. I am suffering the concomitant amount for the efforts I put in. I know you all wanted the best for me and for that I am truly grateful.
I know you say business is business and relationships are different, but the line was blurred here for me.
I will be OK but truly need space to move on.
…
hope [sic] you’re all well, and happy birthday to luigina from me, give her a big hug and kiss from her wounded grandson and let her know that I am OK. …
To this Mr Foster, the following day and using the William Duffy email address, replied to Dr Waters, stating, amongst other things:
Thanks Chris.
Ok when you get your bank statements can you give me exact dates and exact amounts so I can ensure that everything matches up at both ends.
Also will need you to confirm the funds that you did receive from SensaSlim back ... so we are all aware of how we account for everything to minimise tax.
… I am always available 24/7 to talk or meet so don’t hesitate. … [sic]
It is to be remembered that that exchange occurred about a year before Mr Foster’s arrest in respect of the Commission’s contempt charge and Dr Waters’ entry into the co-operation agreement with the Commission. Dr Waters’ note is not that of a man with bitterness towards anyone in the Foster family, only that of a man dealing with emotional turmoil and with an interest in receiving what he had invested in SensaSlim back and getting on with his life. The reply is not that of a third party named William Duffy, but of a man who understands all of this and is sympathetic to Dr Waters; it is Mr Foster’s reply. As will be seen, there are also reasons other than just Dr Waters’ say so and inferences to be drawn from the contents of emails why the author of emails from the William Duffy email address and other email addresses not comprising a variant of his personal name is nonetheless Mr Foster.
Dr Waters’ investment in and involvement with SensaSlim was a sequel to his involvement with Arabella. He met Arabella through friends and associates on the Gold Coast in or about June 2008. They began a romantic friendship shortly thereafter that meeting. At first, though Dr Waters knew that Arabella’s surname was “Foster”, he did not know that she was related to Mr Foster. Arabella is Mr Foster’s niece, the daughter of his sister, Ms Jill Foster (Jill).
Dr Waters’ romantic friendship with Arabella came to an end in about October 2010. That they were once such friends and are no more is, as I have already observed, another factor to take into account when weighing up Dr Waters’ credibility. In effect, though rather more delicately put in submissions, I was invited on behalf of Mr Foster to conclude that the adage “Hell hath no fury like a woman scorned” was not gender specific either in its application or its accuracy and, in this case, that the scorn was directed by Dr Waters at the Foster family generally and at Mr Foster in particular. I well accept that the adage is not gender specific. I have taken this prospect into account but the contemporaneous and also enduring impression which I had and have of Dr Waters in this regard is, as I have stated, of wistfulness, not animosity.
Further, and as will be seen, Dr Waters’ evidence is not uncorroborated in particular respects. In making the latter observation, I do not just refer to the evidence of Mr Scott Emerton. In examining whether there existed corroboration for any of Dr Waters’ evidence, I have first and foremost sought an answer to that in evidence other than that given by Mr Emerton. That is why the reference to Mr Emerton’s evidence appears in these reasons for judgement only after a survey of other evidence led by the Commission.
The findings then which I make, based on my acceptance of Dr Waters’ evidence, are these. It necessarily follows from them that, to the extent that Mr Foster’s evidence or that of Mr Robert Reichelt, who was also called in the defence case, differs from these findings, I do not accept their evidence.
(a)Dr Waters first met Mr Foster in or about May 2009 at the home at Amalfi Drive at the Isle of Capri on the Gold Coast (Amalfi Drive property) to which Mr Foster had come to reside following his release from prison that year. The Amalfi Drive property was the then residence of Mr Foster’s mother, Mrs Luigina Foster, known as Louise Foster (Louise) and Jill. Arabella then lived in a separate residence at Mermaid Beach. Dr Waters’ first meeting with Mr Foster was brief, little more than an introduction.
(b)Dr Waters had earlier come to know Louise via his relationship with Arabella and then, as a result of that initial social contact, also as a patient in his dental practice. He had also earlier briefly spoken socially with Mr Foster by telephone in late 2008 when Louise had passed him the telephone in the course of a conversation which she was having with her son, inferentially while he was then incarcerated.
(c)Probably in early 2009 and certainly after he had returned from an overseas trip in late 2008 and before May 2009, Dr Waters expressed to Arabella an interest in pursuing a business opportunity and a need for advice. She, in turn, suggested that he should talk with Mr Foster. By that stage Dr Waters knew that Arabella was Mr Foster’s niece. He had also had, by May 2009, several conversations with Louise about the Foster family and various past family business activities.
(d)During the winter of 2009 Dr Waters met Mr Foster for dinner at Michael’s Restaurant at Tedder Avenue, Main Beach on the Gold Coast. Dr Waters cannot now recall how this meeting came about but I infer that it was a sequel to his having mentioned to Arabella his interest in a business opportunity and his need for advice and her suggestion that he ought to talk to Mr Foster. In the course of this dinner Dr Waters put to Mr Foster some of the business ideas which he had. Mr Foster then said words to this effect:
There is only one good industry: diet products. The market is such that even if you take a tiny percentage of the market share, you are made.
Mr Foster then gave Dr Waters a general account of the diet industry, which included his making the statement, “It’s a multi-billion dollar industry.” Mr Foster also said words to this effect to Dr Waters:
I have a product at the moment. It is called SensaSlim. It is a weight loss product. I intend to sell franchises which can on-sell the product to stores and business across Australia. We have conducted a world-wide trial. Here are some materials.
This (or words to this effect) said, Mr Foster then handed to Dr Waters a document entitled, “Intercontinental Research Institute - The SensaSlim Trial” (Ex CW-2 - The Trial Document). The Trial Document purported to be from a Geneva, Switzerland based body called the Intercontinental Research Institute and to contain details of the proposal by the developers of a diet product known as SensaSlim for a worldwide trial of that product before bringing it to market in 2010. It detailed how the product had been discovered and its properties, dosage and delivery method.
(e)Dr Waters made no commitment to invest in SensaSlim at this winter 2009 dinner, stating only that he would, “think about it”.
(f)Over the next few weeks, Dr Waters had a number of conversations with Mr Foster, Arabella and Louise about the SensaSlim business opportunity as related to him at that dinner with Mr Foster. I infer from his detailing some of these conversations that they were variously with either or each of Mr Foster, Arabella and Louise.
(g)One such conversation concerning SensaSlim occurred at Mavis’s Kitchen and Cabins at Mount Warning, New South Wales between mid-June and August 2009, inferentially after the dinner meeting with Mr Foster. Dr Waters went there with Arabella, Mr Foster and a man introduced to Dr Waters as Kevin McMullan. Given that Dr Waters does not expressly mention Arabella in his account of the brief conversation which he had with Mr Foster and Mr McMullan about business issues including SensaSlim, I infer that the introduction of Mr McMullan to Dr Waters was made by Mr Foster rather than by Arabella.
(h)By late August 2009 Louise, Jill and Mr Foster had moved to a large, white house at Norseman Court on the Gold Coast (the Norseman Court house).
(i)Dr Waters is and has been since their high school days a friend of a Mr Michael Boyle. They are close friends. As at the end of 2008, Mr Boyle was a stockbroker working for Macquarie Bank. He later came to work for the investment bank and asset manager, UBS.
(j)In the latter part of 2009, inferentially after the week-end at Mavis’s Kitchen and Cabins and the move to the Norseman Court house, Dr Waters went with Mr Boyle to the Norseman Court house for dinner. By that stage, Dr Waters had mentioned SensaSlim to Mr Boyle but not at any length. I infer that the subject had just occurred in the course of passing conversation between close friends as something which had come to Dr Waters’ attention, nothing more. I also infer, based on the whole of Dr Waters’ evidence, that, at that stage, Dr Waters was on very good terms with Louise and was a welcome guest at the Norseman Court house, considering himself virtually to be family. I likewise infer that this visit was in the nature of a call with a close friend on Louise by someone who was then dating a beloved granddaughter. Accepting as I do Dr Waters’ evidence, I find that Dr Waters did not go to Norseman Court on this occasion for the particular purpose of discussing SensaSlim.
(k)Mr Foster was present on the occasion of this call for dinner at the Norseman Court house by Dr Waters and Mr Boyle. At some stage during the course of the evening, he spoke separately with Dr Waters and Mr Boyle, i.e. only Mr Foster, Dr Waters and Mr Boyle were parties to this conversation. Mr Foster said words to the following effect to them:
I’ve got the rights to represent SensaSlim in Australia. You know, people would give their left arm to buy SensaSlim. They are dying to buy it. But I’d rather work with you. I don’t want to be associated with those people.
You would be buying a 50% share in the Australian arm of SensaSlim. I would retain a 50% share and all profits would be shared between us
Mr Foster then said words to this effect:
I can’t be involved in the business. My reputation is mud so I cannot be connected to a weight-loss product
(l)Mr Foster then gave Dr Waters some further documents:
(i)a document titled “SensaSlim REGIONAL OWNER PROPOSAL – A private offer to obtain exclusive rights for Australia” (Ex CW-3). Attached to the front of the document as handed to him by Mr Foster was a post-it note with the words “Read me First”; and
(ii)a document titled “SensaSlim THE OFFER AND FINANCIAL PROJECTIONS”, (Ex CW-4). Attached to the front of the document as handed to him by Mr Foster was a post-it note with the words “Read me Second”.
When handing Dr Waters these documents, Mr Foster said to him and Mr Boyle words to this effect:
You are smart guys, read it on your own. My figures are accurate. I pride myself on my figures.
The conversation between Mr Foster, Mr Boyle and Dr Waters then turned to the subject of money. As to this, Mr Foster initially said to them: “I want to sell the Australian rights to the SensaSlim business for $1 million”. Later, he said “I’ll sell it for $250,000”. To this Dr Waters replied, “I can probably get that”.
(m)During the course of the evening, a conversation between Dr Waters and Mr Foster to this effect also took place:
Dr Waters said: I’m a bit worried about going into business.
Mr Foster said: Family is everything to me and I wouldn’t do anything to harm my family.
I would never do anything to jeopardise Michael’s reputation or jeopardise my family.
I would never do anything to jeopardise Arabella.
Dr Waters did not expressly place Mr Boyle as present at this particular conversation. Given that Dr Water’s recollection was that Mr Foster’s reference to Mr Boyle [“Michael’s”] was in the third person and the particular reference to Arabella, it seems to me inherently likely that this particular part of the conversation that evening was between Mr Foster and Dr Waters alone.
(n)Neither Dr Waters nor Mr Boyle made any commitment at this dinner to invest in SensaSlim.
(o)Shortly after the dinner and in August 2009, Dr Waters decided that he would invest in SensaSlim. He had a discussion with Mr Foster to the following effect:
Dr Waters said: How do you want me to pay the $250,000?
Mr Foster said: Pay it to a company called “Satori Properties”.
(p)On 11 August 2009, Dr Waters made an initial payment of $20,000. He transferred this money by way of electronic funds transfer to a Satori Properties bank account. Mr Foster provided him with the account details. At or about this time, Dr Waters had a discussion with Mr Foster in which he was informed by Mr Foster that the initial payment was to be used for the setting up of the SensaSlim business by an accounting firm called “Jordans International”.
(q)This discussion was related to a lengthy exchange of emails between Mr Foster (using the William Duffy email address) and Dr Waters commencing on 11 August 2009. In this exchange Mr Foster gave details to Dr Waters of arrangements which he was making for the establishment, with the assistance of Jordans International Limited, an incorporated chartered accounting practice (the same as the “Jordans International” to which Dr Waters referred in recounting conversations with Mr Foster), of a limited liability partnership in the United Kingdom and a structure of companies and of the opening of a business account with Lloyds Bank on the Isle of Man (the latter inferred from the reference to “Douglas, I.OM” in Lloyds email of 12 August 2009 to the William Duffy email address).
(r)There are internal indications in this email exchange that the author of the emails from the William Duffy email address is Mr Foster. In particular in an email of 11 August 2009 to Dr Waters (commencing, “Hello Chris”):
·the email is concludes, “Best, P”, the “P” being unlikely to be a person whose real given name is “William” but not if one’s given name is “Peter”;
·the “PS” reference in the email to keeping “Michael” up to date is a reference to Mr Boyle, which is consistent with Dr Waters’ evidence as to bring Mr Boyle to dinner at Norseman Court and as to the conversation they had there with Mr Foster.
(s)It was Mr Foster who undertook the correspondence with Jordans International and Lloyds Bank using the name William Duffy and the William Duffy email address.
(t)On 31 August 2009 Dr Waters made a payment of $180,000 by way of electronic transfer to the bank account for Satori Properties. He financed this payment by way of a draw down from his home loan.
(u)At the time, Dr Waters’ understanding was that he was purchasing from Mr Foster the right to sell SensaSlim franchisees in Australia.
(v)During September 2009 and in the context of the email exchange he continued to have with Dr Waters and which Mr Foster was in turn conducting with Jordans International and Lloyds Bank using the alias “William Duffy”, Mr Foster said words to the following effect to Dr Waters:
We’re going to set-up SensaSlim International to sell franchises all around the globe. I want to see the international rights to you. We will set up a company in England that will sell the business all around the world.
You are too close to the Foster family name so you have to be an investor only. You can’t be the face of the company in Australia. You can buy the international rights through a trust, and Mike can participate in the Australian business as the face of the Australian business. Money will be paid to the company in England to pay for the Australian arm of SensaSlim.
The customers and trading partners will only do business with the England company.
Mr Foster’s reference to “Mike” in this conversation was a reference to Mr Boyle. Dr Waters also recalls having a conversation to this effect with Mr Foster:
Mr Foster: I own SensaSlim Suisse and we will set up you up with SensaSlim International we will use these companies to sell the distribution rights for SensaSlim internationally.
Dr Waters said: What is the additional cost for the international rights to SensaSlim?
Mr Foster said: The total price is about $360,000.
Inferentially from its contents, this conversation occurred in or about August 2009 at or about the time when Dr Waters’ email exchange with Mr Foster commenced on 11 August 2009 and when Dr Waters made his initial payment.
(w)As a sequel to this conversation and to the email exchange and related setting up of a structure of SensaSlim related companies, an agreement was made between SensaSlim International, signed by Dr Waters and SensaSlim Suisse, signed by Mr Foster for the sale of distribution rights internationally. Under this agreement, the profits of the sale of distribution rights were to be broken down such that Dr Waters interests received 10% and Mr Foster’s interests received 90%.
(x)Dr Waters relayed the various statements made by Mr Foster to him concerning an investment in SensaSlim to Mr Boyle.
(y)Mr Boyle and Dr Waters came to form what Dr Waters at least regarded as a 50/50 “partnership” between themselves with respect to investing in SensaSlim. They had no written agreement between themselves.
(z)From about late 2009 to November 2010 Dr Waters and Mr Foster had numerous discussions about the SensaSlim business in the course of which Mr Foster said words to the following effect to him as to what SensaSlim franchisees paid for a franchise and what they received:
(i)franchisees paid an initial $30,000 for the right to operate a SensaSlim franchise;
(ii)franchisees paid a further $30,000 was to be paid on the launch of the business; and
(iii)at or around the time of the SensaSlim product launch, franchises would be given point of sale material, sales and marketing support, an advertising campaign would be undertaken and a list of retailers they could approach to sell the SensaSlim product.
(aa)Dr Waters did not have a role in the day-to-day operation of SensaSlim. He remained practising as a dentist. His role was that of a passive but interested investor and, via that status and also his relationship with the Foster family, observer of operations. As to the latter, Mr Foster and Arabella kept him regularly updated with what was happening. Dr Waters spoke to Mr Foster a few times a week about the SensaSlim business and what was happening. He also visited the Foster family home at the Norseman Court house about four times a week, often staying overnight. He remained a regular visitor when the Foster family moved in 2010 to another residence. His conversation during these visits to Louise, Jill, Arabella and Mr Foster during these visits was by no means confined to SensaSlim but the affairs of that business invariably came up in conversation.
(bb)The Foster family moved from the Norseman Court house to a house at Witt Avenue Carrara (the Carrara house). [In his affidavit evidence, Dr Waters placed this move in early 2010. In this regard, his recollection was mistaken as evidence as to rental payments in respect of the Norseman Court house introduced via the evidence of its owner, Mr Batley, discloses that Louise continued to pay rent in respect of that house until September 2010 with Mr Batley then having to take steps to remove the Foster family from that house.]
(cc)In the period between September 2009 and November 2010, Dr Waters observed various activities being undertaken in relation to the SensaSlim business at the following locations:
(i)the Norseman Court house (until the Foster family moved from it);
(ii)an apartment in Southport Central which was rented and used for the purposes of the SensaSlim business on and from early 2010; and
(iii)the Carrara house.
(dd)Over this period, he observed the following occurring at one or the other of these locations:
(i)identification of sales areas and creation of related maps;
(ii)preparation of distribution materials for the sales team;
(iii)activities related to the advertising of the business in newspapers; and
(iv)liaison with potential franchisees.
(ee)These activities were directed to the undertaking of a product launch of the SensaSlim product in November 2010.
(ff)The activities commenced at the Norseman Court house in 2009, shortly after Dr Waters made his initial investment in SensaSlim. Initially, the business was conducted from an open area in that house with a number of computers.
(gg)Dr Waters observed Mr Foster working in such activities at the Norseman Court house.
(hh)Arabella worked in the SensaSlim business. She used the alias “Alli Loretti” when working in the business. This was because she did not want people dealing with the business to know that she had any connection with Mr Foster. She performed administrative work and general office duties for SensaSlim, including the copying of maps and liaison with newspapers for the placing of advertisements. She was also responsible for arranging disbursements (e.g. travel costs) for people such as Mr Scott Emerton.
(ii)Mr Emerton was known to Dr Waters as someone who sold franchisees for SensaSlim and who used the name “Scott Waller”.
(jj)Much SensaSlim business related work was transferred from the Norseman Court house to the Southport Central apartment in early 2010 as SensaSlim franchises began selling. Mr Foster remarked to Dr Waters that the work venue was changed “to get the work out of the house”. Nonetheless, some SensaSlim related work did continue to be performed at the Foster family homes at Norseman Court and then when they moved to the Carrara house. There were two houses at these premises: one was a residence and the other was a guest house, which was used for business purposes.
(kk)Just before the launch of the SensaSlim product in November 2010, Dr Waters was at the Carrara house. He observed a lot of SensaSlim related work going on there, for example “franchisee packs” which included copies of documents with the SensaSlim logo being put together.
(ll)During the period between September 2009 and November 2010 Dr Waters observed Mr Foster to undertake the following activities in relation to SensaSlim:
(i)Dictation of the SensaSlim newsletters on a dictaphone at the Norseman Court house. He also observed Arabella typing the newsletters at the Southport Central apartment whilst Mr Foster was dictating the newsletter over Skype from the Norseman Court house. I infer that Dr Waters placed Mr Foster at the Norseman Court house during the Skype transmission because he was well familiar with that location and could see something of it in the background when viewing the Skype transmission. Dr Waters observed that after the selling of SensaSlim franchises commenced in early 2010, newsletters were regularly sent to all the franchisees.
(ii)Mr Foster ordered the payment of, and controlled, the accounts of the SensaSlim business. As between Dr Waters, Mr Boyle and Mr Foster, Mr Foster was the only one who had the details for the main SensaSlim account.
(iii)Mr Foster liaised (on the phone) directly with persons Dr Waters took to be franchisees or potential franchisees. Mr Foster’s practice, as observed by Dr Waters during such conversations, was just to answer as “Peter”, without specifying a last name. Dr Waters took the other parties to the telephone conversations he observed to be franchisees or potential franchisees because of the content of his conversations. For example, he heard Mr Foster saying:
That area has gone but other areas are still available, if you are act quickly you could get another area.
The opinion formed by Dr Waters based on hearing Mr Foster state words to this effect over the telephone does not, of course, prove that the other party to these telephone conversations was a franchisee or potential franchisee. However, it was Dr Waters’ further evidence and I accept that it frequently occurred that he, Mr Foster and, I infer, at least also Louise and Arabella would have dinner “as a family” after Mr Foster finished speaking on the telephone. On such occasions, Dr Waters heard Mr Foster say: “I can’t meet with the franchisees because of my reputation. People wouldn’t invest if they knew I was involved.” Further, Mr Foster also spoke to Dr Waters about the conversations he was having with potential franchisees. Although Dr Waters cannot remember the precise words used by Mr Foster, he recalls (and I find) that Mr Foster made statements to him to the following effect:
I have to speak with them because none of the sales managers could close.
or
We just sold another one.
or
Another franchisee just called.
Based on what Dr Waters heard Mr Foster state on the telephone and the admissions made by Mr Foster to him, I find that, between September 2009 and November 2010, Mr Foster frequently spoke by telephone with potential franchisees from the Norseman Court house and thereafter from the Carrara house.
(mm)Dr Waters’ overall observation of Mr Foster over the period from September 2009 to November 2010 either at the Norseman Court house or the Carrara house was that he “appeared to be in control of everything” and to have a “hand and say in everything that I saw occurring in relation to SensaSlim”. Dr Waters’ observation at each of these places from which the SensaSlim business was conducted was that those working there invariably came to Mr Foster for direction on any issue of significance. All instructions of significance that Dr Waters saw being given at these locations came from Mr Foster.
(nn)Whilst at the Southport Central apartment Dr Waters saw drafts of franchise advertisements which were placed in local papers. He also often saw the advertisements when perusing the local papers. His recollection is that they generally said things like “Want to earn $4000 per week?” but never mentioned the SensaSlim name and that there was then simply a phone number to call.
(oo)Based on Dr Waters’ observations, I find that the SensaSlim business was controlled by Mr Foster.
(pp)Persons involved in the SensaSlim business to Dr Waters’ observation, apart from Mr Foster and Arabella, were:
(i)Louise - but only as a source of strategic advice to her son, not in the day-to-day operations of SensaSlim;
(ii)Leea Kenny - on and from about September 2009. Ms Kenny used the name “Layla” when dealing with people in relation to the SensaSlim business. Ms Kenny also used a false surname but Dr Waters cannot now recall what it was. Ms Kenny had the same role as Arabella: administration and general office duties.
(iii)Scott Emerton. Dr Waters was introduced to Mr Emerton by Mr Foster at a lunch at the Norseman Court house early in 2010. He was introduced as the “head of sales”. The attendees at this lunch were Louise, Arabella, Mr Emerton, his wife Vikki Emerton, Mr Foster, Dr Waters and Mr Boyle. The purpose of the meeting was a general introduction for Dr Waters and Mr Boyle. As I have mentioned, Dr Waters knew that Mr Emerton used the alias “Scott Waller”.
(iv)Kevin McMullan. Mr McMullan was involved in the setting up of the SensaSlim franchise network prior to the launch. His main job was the allocation of franchises into areas and related preparation of franchise area maps. He worked at the Norseman Court house from about September 2009.
(v)Norm Covich. Mr Covich was a SensaSlim franchisee who ran errands for Mr Foster and worked around the Norseman Court house doing things like cleaning windows.
(vi)Adam Adams. Dr Waters was introduced to Mr Adams by Mr Foster at a breakfast at a local café called “D-Lish” in 2009. Thereafter, he observed that Mr Foster and Mr Adams began to socialise on a regular basis. He saw Mr Adams come to the Norseman Court house regularly in around late 2009, Mr Foster said to Dr Waters: “I’m giving Mr Adams advice with respect to a business he has in relation to the selling of food called ‘Direct Gourmet’”. Dr Waters often saw Mr Adams wearing a shirt on which appeared the words “Direct Gourmet” at the Norseman Court house. Mr Adams became the operations manager of SensaSlim. Dr Waters observed that he dealt with franchisee issues. After that initial meeting, Dr Waters’ observations of Mr Adams were confined to the Norseman Court house. He did not see Mr Adams working in the Southport Central Apartment which was set up as an office for SensaSlim.
(qq)In or about late September 2009, while Dr Waters was at the Norseman Court house, Mr Foster handed him a document which Dr Waters, not inaccurately, described as a “To-Do list” (Ex CW-5) for certain of the people referred to above. When so doing, Mr Foster said words to the following effect:
Things are progressing and are going well.
This is what we are up to in the business. Have a look.
Mr Foster did not run through the items of the To-Do list with Dr Waters at the time. The list assigns tasks to various persons naming them by abbreviation or alias. Dr Waters gave an explanation, which I accept, of these. Thus, on the “To Do List”:
(i)“IMOM” means Mr Foster. [Based on general discussions (to which I infer Dr Waters and members of the Foster family, including Mr Foster were parties) at the Norseman Court house, Dr Waters understood “IMOM” to mean “International Man of Mischief”. He also knew that Mr Foster referred to himself as the “International Man of Mischief” on his website Further, apart from receiving emails from Mr Foster via the William Duffy email address, Dr Waters also received emails from him via the sender address [email protected].
(ii)LA means Layla (Leea Kenny).
(iii) Allie means Arabella Foster.
(iv)Joseph means Kevin McMullan.
(v)CWMB means Dr Waters and Mr Boyle.
Dr Waters did not note at the time when Mr Foster handed him the list that he had been assigned tasks on it.
(rr)Yet another email address used by Mr Foster to correspond with Dr Waters was [email protected] (Peter O’Brien email address).
(ss)William Duffy and Peter O’Brien are not just alias names used by Mr Foster. Dr Waters knew persons of that name to be friends of the Foster family.
(tt)Dr Waters met Mr O’Brien at the Amalfi Drive house before Mr Foster was released from jail. He understood Mr O’Brien to be an old friend of the family. Early 2010, Mr Foster said to Dr Waters: “Mr Peter O’Brien is one of the directors of SensaSlim”. Based on his observations and understanding of the SensaSlim business, Mr O’Brien did not seem to Dr Waters to have any day-to-day control of the business and or to play any active role. I find he had no such roles. His was a name used as an alias by Mr Foster for email correspondence and in telephone conversations which he conducted on behalf of SensaSlim. The shared given name “Peter” was also of advantage to Mr Foster in relation to this alias.
(uu)Dr Waters knew Mr Duffy as a friend of Louise. Dr Waters observed that Mr Duffy came to the Norseman Court house for general discussions. He never saw him do anything in relation to the SensaSlim business. I find that he did not. The name “William Duffy” (or Bill Duffy) and the William Duffy email address was just another alias of convenience for Mr Foster.
(vv)There are many examples in evidence of Mr Foster’s use of the alias William Duffy email address and the Peter O’Brien email address.
(ww)As to the William Duffy email address, I have already referred to those exchanged with Dr Waters concerning Mr Foster’s dealings, also using that email address, with Jordans International and Lloyds Bank. Another example of Mr Foster using this email address is in his email correspondence dated 13 October 2009 with Harvest Pharma when requesting a copy of their TGA (Therapeutic Goods Administration) approval (Ex CW-1 Series 1 page 71/74).
(xx)Mr Foster at times used the Peter O’Brien email address to communicate with Dr Waters (Examples of this are found in the emails at Ex CW-1 Series 2 pages 8-9/12 and Series 3 pages 19-21/40);
(yy)Apart from exchanging email correspondence with Mr Foster, Dr Waters, as his telephone records disclose, had frequent telephone and text dealings with Mr Foster.
These findings cover a period beyond that specified in the statement of charge. The SensaSlim related events in the period specified in the charge and findings or inferences to be made or drawn as to Mr Foster’s knowledge of those events must necessarily be seen in the context of how those events and any involvement of Mr Foster in them came to unfold before that period and their sequel after that period.
The payments of $20,000 and $180,000 respectively made by Dr Waters on 11 and 31 August 2009 to, as he recalled it, Satori Properties were, as evidence in the form of Westpac bank statements exhibited to an affidavit of the commission’s Mr Smith disclosed, credited to an account at that bank’s Bundall, Queensland branch in the name of William Duffy trading as Satori Properties. The bank’s postal address for this account was in the name of William Duffy at PO Box 6932 Gold Coast Mail Centre.
On and from mid-2010, Dr Waters became increasingly concerned about the SensaSlim business. Initially, this was a sequel to an inspection of the accounts of SensaSlim by Dr Waters and Mr Boyle and to their noting in this inspection of inflows and outflows from the main SensaSlim account.
During the winter of 2010 Mr Boyle and Dr Waters had a meeting with Mr Foster. Arabella was also present. Although Dr Waters could not recall the specific words used, he recalled (and I find) that during this conversation either Mr Boyle or he said to Mr Foster “KMB is concerned about the accounts. They need to do the quarterly BAS but don’t have any proper accounts” [KMB was a firm of accountants engaged by Mr Boyle after he became an investor in August 2009 for the purpose of managing the accounts of SensaSlim and preparing taxation and regulatory returns.] In response, Mr Foster “flew off the handle” (Dr Waters’ description, the accuracy of which I accept), yelling at Mr Boyle and Dr Waters words to this effect:
You’re attacking my integrity.
It doesn’t matter – we’re doing things my way.
It is under control. Don’t question what I’m doing. Leave it to me. It is my business.
This behaviour by Mr Foster had, I thought, an uncanny resemblance to behaviours of Mr Foster related by Mr Emerton when he came to question Mr Foster’s business method and by Mr Evans in relation to the possibility that persons might attend the product launch before payment in full for a franchise.
Also in mid-2010, inferentially at the same meeting, Mr Boyle said to Mr Foster: “The reference to UBS needs to be removed”. Mr Foster said: “Yes we’ll amend the document”.
Following this meeting, Mr Boyle expressed to Dr Waters that he wanted to get out of the SensaSlim business.
On a number of occasions, in or around September 2010, Dr Waters had a conversation with Mr Foster about Mr Emerton to the following effect:
Dr Waters said: What are you doing about Emerton?
Mr Foster said: Emerton is a crook and a lowlife. He is just extorting Mike.
I’ll get my friends from Melbourne involved.
I infer that the reference to “Mike” in this conversation was a reference by Mr Foster to Mr Boyle.
In or around September or October 2010 but after this conversation, Dr Waters met a Mr Mick Gatto and a Mr John Khoury at the Carrara house. Mr Foster later stated to Dr Waters words to the following effect, “The problem has been dealt with. Scott will leave Mike alone.”
Dr Waters was copied in to various emails which passed between Mr Boyle and Mr Foster (via the Peter O’Brien email address) in or about October 2010 on the subject of Mr Boyle’s withdrawal from investment and involvement with SensaSlim. He was thus aware, as was Mr Foster, of an increasing concern on the part of Mr Boyle as to a conflict of interest between his principal employment with UBS and his involvement with SensaSlim and a related desire on his part to divest himself of any interest in SensaSlim.
Also in or about October 2010, Dr Waters’ romantic friendship with Arabella ended. Inferentially, the concerns that Dr Waters by then had about the SensaSlim business and Mr Foster’s involvement in it and the fact that Arabella worked in that business contributed to his break up with Arabella.
On 10 November 2010, Dr Waters wrote to Mr Foster to advise him that he wanted nothing more to do with SensaSlim. He forwarded this email to Mr Boyle. A product launch of the SensaSlim product was due to occur later in November 2010.
In November 2010, prior to the launch, Dr Waters and Mr Boyle together went to the Carrara house to discuss Mr Boyle’s resignation from SensaSlim with Mr Foster. Mr Foster was there, together with Louise and a man introduced to Dr Waters as Richard Cooper. In the course of the conversation which followed, words to this effect were said:
Mr Boyle said: “I need to resign from the company”.
Mr Foster said: Hang in there. We’ll transfer the shares after the launch. We really need you for the launch. You can do what you want after that.
Just before the launch in November 2010, Dr Waters had a further conversation with Mr Foster in which words to the following effect were said:
Dr Waters said: I’ve broken up with Arabella. Given what has happened recently, I want out of the business.
Mr Foster said: Relationships are relationships and business is business.
This was the last conversation which Dr Waters and Mr Foster had before the launch about Dr Waters ceasing involvement with SensaSlim.
Though they had no further conversation on the subject before the launch, Dr Waters did send Mr Foster (at the William Duffy email address) the email of 23 November 2010 which I have set out above.
Dr Waters did not attend the SensaSlim product launch.
In December 2010, Dr Waters came to have the conversation over dinner with Mr Foster which I have set out above during the course of which he also had a brief telephone conversation with Louise.
At some point in December 2010, Mr Foster caused Dr Waters to be refunded about $200,000. Dr Waters came in 2011 to engage in email correspondence with Mr Cooper and Mr Reichelt about the placement of funds in off-shore accounts.
In or around mid-2011 and as a sequel to Mr Boyle’s informing him that he was to be the subject of what Mr Boyle put to him as a “section 155 examination” by the Commission, Dr Waters came to have a telephone conversation with Mr Foster in which the latter said words to this effect to him:
Tell him he is not to mention my name.
This isn’t child’s play; people will go missing.
Leave it with me.
What then of other evidence led by the Commission?
Linda-Jane Stainstreet came to work as a sales manager (and also a franchise area manager) for SensaSlim, that is SensaSlim Australia Pty Ltd, in the SensaSlim business from early May 2010 to November 2010. She is a middle-aged woman who holds a tertiary qualification in medical laboratory technology.
Over the decade prior to her taking up her position with SensaSlim, Ms Stainstreet followed a variety of employments - “sustainability assessor” for the Commonwealth government, sole trader in a distribution business and real estate agent. I found Ms Stainstreet to be a credible witness.
In particular, I thought that Ms Stainstreet’s confirmation in oral evidence that the voice on the Attard interview was one and the same as the voice of the “Peter O’Brien” with whom she had had frequent telephone contact while employed in the SensaSlim business was given definitely, frankly and honestly. Her evidence in this regard is relevant. It could rationally affect the existence of a fact in issue in these proceedings namely, whether or not Mr Foster was knowingly concerned as charged. Relevance is, first and foremost, the test, for it governs admissibility: s 55 of the Evidence Act; Smith v R (2001) 206 CLR 650 at [6]. This evidence is a species of voice recognition evidence and, in the circumstances of this case, is admissible: Bulejcik v The Queen (1996) 185 CLR 375 at 381-382; Neville v The Queen (2004) 145 A Crim R 108. It is evidence from a participant in material conversations as to what was, as heard and recollected, the voice of another participant in those conversations.
Ms Stainstreet’s opinion as to the identity of the other participant’s voice was not based on either training or study but rather gained by experience, the product of the frequent telephone contact mentioned. In the six month period from May to November 2010 when she ceased sales manager duty, Ms Stainstreet was in regular contact with the person she took to be “Peter O’Brien”. She spoke to that person at least twice a day, and for at least 5 to 10 minutes in each instance. Her recollection is that the “Peter O’Brien” to whom she spoke was interested to know what leads she had and what she thought of the people she had met and that he was very pleasant to talk to. That frequency of contact gave her a form of specialised knowledge of the “Peter O’Brien voice”.
There is a general risk with Ms Stainstreet’s evidence not just from her employment in the SensaSlim business but also from the fact that she came to sell SensaSlim franchises to her two best friends that it may not be reliable.
Further, there are risks that she has just come, because of Mr Foster’s notoriety, or because no other voice sample was offered to her, to associate the voice on the Attard interview with the “Peter O’Brien voice” which she frequently heard on the telephone. This type of evidence does call for careful scrutiny even where, as here, there is apparent certainty of identification in a witness’s evidence: Pitkin v R (1995) 130 ALR 35.
I have taken such risks into account in deciding to accept her evidence. Based on her evidence, I find that the person with whom she frequently spoke on the telephone and who was known to her as Peter O’Brien was in fact Mr Foster.
Ms Stainstreet related (and I find) that she came to invest and be employed in the SensaSlim business as a result of sighting an advertisement in The Courier Mail in April 2010. That advertisement canvassed interest in earning $4,000 per week amongst the over-50’s. In all likelihood, this advertisement was of the same kind that Dr Waters related seeing at the Southport Central apartment. The advertisement named a “Scott Waller” as a contact, specifying a mobile telephone number.
On 29 April 2010, having made an appointment by telephoning the nominated mobile telephone number, Ms Stainstreet met two men at a serviced apartment at Spring Hill. One of the men introduced himself to her as “Scott Waller”, the National Sales Manager of SensaSlim. The man who introduced himself to Ms Stainstreet was “Scott Waller” was, on the evidence, Mr Emerton. He, in turn, introduced the other man to her as Brendan Roach, a person starting out with SensaSlim. At the apartment, Ms Stainstreet was shown a SensaSlim promotional DVD, which ran for about 40 minutes. Messrs Emerton/Waller and Roach left the room while she watched this. When the DVD finished Mr Emerton/Waller returned to the room. He gave and then spoke to a number of documents which he handed to Ms Stainstreet:
(a)a letter from KMB Business Advisers of 16 April 2010, generically addressed, “To whom it may concern” concerning the SensaSlim business in which, inter alios, it was stated that the business had been started by Michael Boyle in November 2009;
(b)a letter from Robinson Legal (a firm of Sydney solicitors) of 24 March 2010, also generically addressed, “To whom it may concern” and also concerning the SensaSlim business. In that letter it was stated, inter alios, that the firm were the solicitors for SensaSlim Australia and that:
(i)the firm held on file a copy of a distribution agreement between that company and SensaSlim International Limited (SensaSlim International) giving SensaSlim Australia exclusive distribution rights in Australia for 20 years commencing on 16 November 2009;
(ii)the firm also held on file a copy of a letter from SensaSlim International of 19 March 2010 confirming that SensaSlim Australia had placed an order for 1.5 million units of the SensaSlim product for the first year with the initial order being for 500,000 units of that product;
(iii)the firm held instructions that SensaSlim Australia was registered with the Therapeutic Goods Administration (TGA) and that the manufacturer for the SensaSlim product is “Good Manufacturing Compliant and is a licensed factory approved by the TGA;
(iv)SensaSlim Australia had filed an application with IP Australia for the registration of the trade mark “SENSASLIM”.
(c)an Area Manager Proposal;
(d)a Disclosure Statement;
(e)a “Frequently Asked Questions” explanatory document; and
(f)copy of the Franchising Code of Conduct.
The Area Manager Proposal represented (pages 19 and 20) that:
(a)SensaSlim had elected in late 2007 to conduct the world’s largest clinical trial before bringing the SensaSlim product to market in 2010; and
(b)as a result of this trial, the SensaSlim product, is unquestionably the most effective weight loss product available in the world today”.
The SensaSlim promotional DVD as shown to Ms Stainstreet (and other prospective franchisees, as related below) contains like representations. As represented both in the Area Manager Proposal and in the promotional DVD, the SensaSlim product was an orally delivered spray to be administered before meals which controlled appetite and led to weight loss.
In the course of speaking to the documents described above Mr Emerton/Waller made particular reference to Mr Boyle and to the position which he also held with UBS. It was Ms Stainstreet’s later experience that Mr Boyle was “hardly involved in the business of SensaSlim at all”. Rather, based upon her observations in the roles which she came to assume as a sales consultant and franchisee, the “key players” in the day-to-day running of SensaSlim were Adam Adams, “Peter O’Brien”, and two administrative employees, Layla and Allie. Inferentially, based on Dr Waters’ evidence and that of Ms Stainstreet, the Layla to whom Ms Stainstreet refers was Ms Kenny and the “Allie” to whom she refers was Arabella. It is a highly improbable coincidence that there would have been two other such persons so named working in the SensaSlim business.
As to the person known to her as “Peter O’Brien”, Mr Emerton/Waller informed Ms Stainstreet towards the conclusion of the meeting on 29 April 2010 and after she had expressed interest in becoming a franchisee that he would get “Peter O’Brien” to telephone her so that she could discuss that subject further with him. Thereafter, Ms Stainstreet had a separate conversation with Mr Roach which it is not necessary to set out in detail. Suffice it to say, he canvassed with her the prospect of her additionally assuming a sales manager role in respect of the SensaSlim business.
That same evening, Ms Stainstreet received a call from a man who identified himself to her as Peter O’Brien. Based on her evidence, I find that it was Mr Foster, assuming the pseudonym “Peter O’Brien” who telephoned her. That finding also accords with Dr Waters’ description of roles undertaken by Mr Foster, as well as the use by Mr Foster in email correspondence with him of that name. It also accords, as will be seen, with the evidence given by Mr Emerton as to an approach to the selling of franchises adopted by him and by Mr Foster.
In the course of the telephone conversation on the evening of 29 April 2010, Mr Foster, using the pseudonym “Peter O’Brien”, claimed to be a director of SensaSlim. He and Ms Stainstreet had a general conservation about SensaSlim. Mr Foster said to her words to this effect:
“I’ve never been as excited about anything as I am about this opportunity.”
and
“This is all about giving back, it’s an opportunity to make a difference.”
During the conversation, an exchange in words to this effect occurred:
Mr Foster (as O’Brien) said: “What do you think of Brendan?”[Inferentially, a reference to Mr Roach]
Ms Stainstreet said: “He seems quite able”.
Also during this telephone conversation, Mr Foster said to Ms Stainstreet words to the effect: “I’d like to offer you a franchise and also a position as a sales manager”. To this she replied: “Thank you, I’ll take you up on both.” By that stage, she knew about the commission structure from reading the disclosure documents.
Overall, the impact of this telephone conversation on Ms Stainstreet was that she found the person known to her as Peter O’Brien to be “a very engaging person” with whom she “felt an instant rapport”. Her conversation with Mr Foster (O’Brien) confirmed a decision to which she was already inclined as a result of her dealings with Messrs Emerton/Waller and Roach earlier in the day, which was to invest in the SensaSlim business.
As a result of the conversations which she had with Mr Emerton/Waller and, by telephone, with Mr Foster on 29 April 2010 (and she cannot recall who of them it was mentioned the matter), Ms Stainstreet’s then understanding was that the SensaSlim product would be launched around 19 July 2010.
On 1 May 2010, Ms Stainstreet signed a SensaSlim Franchise Area Manager Agreement and paid a deposit. In so doing, she relied on the representations in the Area Manager Proposal, the Disclosure Document and the Frequently Asked Questions document, as well as representations separately made to her on 29 April 2010 by Mr Emerton/Waller and Mr Foster (O’Brien) respectively.
On 5 May 2010 and as a result of the separate offer of a sales manager position put to her by Mr Foster (as O’Brien) on the evening of 29 April 2010 (after it had initially been raised with her earlier that day by Mr Roach), Ms Stainstreet returned to the same serviced apartment in which she had met Messrs Emerton/Waller and Roach for training. There she met Mr Emerton/Waller. He demonstrated for her a couple of presentations to prospective customers and provided her with a list of “leads” (names and contact details of people who had expressed interest following seeing the same kind of newspaper advertisement in the paper to which she had responded) He also provided her with a complete sales manual to guide her in her presentations. Mr Emerton/Waller’s instruction also included (and this sales manual also specified) the direction that potential franchisees were to be provided with the like documents to those given to Ms Stainstreet on 29 April 2010 as well as the following further documents:
(a)Retail Business Opportunities for Franchised Area document (Ms Stainstreet was instructed by Mr Emerton/Waller that potential franchisees were to be shown this at the presentation but only to get to keep a copy if they had signed up);
(b)Price and Potency Document.
Also on 5 May 2010 Ms Stainstreet received an email from Mr Foster, using the alias Peter O’Brien and the Peter O’Brien email address. Attached to this email were maps and a summary of retail outlets for Cairns and Townsville. In the email, Mr Foster wished her luck and concluded, “Let me know if I can help with any of your clients - I am only ever a phone call away.” Neither the timing nor the content of this email was, I find, coincidental. Mr Foster was, inferentially, well aware that Ms Stainstreet was being trained by Mr Emerton/Waller that day to the end of being about to embark upon SensaSlim franchise sales duty. Following her training on 5 May 2010 and her receipt of the email from Mr Foster, Ms Stainstreet began to travel extensively selling franchises on behalf of SensaSlim.
Employment arrangements with SensaSlim in relation to Ms Stainstreet’s sales manager position with the company came to be formalised by way of a proposal put to her by Mr Boyle by an email to her of 6 June 2010 (copied by him to the Peter O’Brien email address, and thus to Mr Foster) and then by way of an email from Mr Foster, using the Peter O’Brien alias and email address of 8 June 2010.
On 1 July 2010 Mr Foster, using the Peter O’Brien email address, sent by email to Mr Emerton for his editing and revision a draft of the first SensaSlim newsletter. Mr Emerton also recalled in his evidence (and I accept) that there were occasions when he called Mr Foster so as to arrange for him to call a prospective franchisee and that Mr Foster responded to him in words to this effect, “I can’t speak with them now; I’m too busy; I’ve got to get this newsletter out.” Mr Emerton was unable to be specific as to when such occasions arose.
Taken in conjunction with Dr Waters’ evidence on the subject of Sensaslim newsletters, I do not doubt that Mr Foster was involved in the drafting or settling of more than just the first SensaSlim newsletter. That finding is sufficient for the particular 1.3(f) in charge 1 but it does not show that the Commission has proved beyond reasonable doubt that Mr Foster was knowingly concerned in the circulation of SensaSlim Newsletters 5, 7 and 8 as particularised in paragraphs 2.4, 2.5 and 2.6 under charge 2. The evidence as to Mr Foster’s involvement in the production and circulation of newsletters does not descend to that degree of particularity. The evidence discloses that the newsletters were circulated to franchisees using a generic SensaSlim email address rather than, for example, via the Peter O’Brien email address. Thus, while there is neither doubt on the evidence that the newsletters were circulated to franchisees, nor that the content of these newsletters contained a representation, that the efficacy of the Sensaslim product had been established by a large worldwide clinical trial, Mr Foster’s knowing involvement in the making of that representation by the circulation of those particular newsletters is not established. I have expressly considered whether or not I ought to regard these particulars as necessarily established by inference. I do not consider that the evidence permits the drawing of an inference to the degree of particularity of knowing involvement on his part in respect of those nominated newsletters. To this extent, I am not satisfied that all of the particulars given under charge 2 are proved beyond reasonable doubt. I consider later in these reasons for judgment the ramifications of that particular failure of proof in respect of charge 2.
Another feature of Mr Foster’s management and control of SensaSlim’s business, related by Mr Emerton, was a concern that those responding to canvassing advertisements not be made aware that the business was operated from the Gold Coast. It was to this end that the registered office of SensaSlim was in Sydney at a serviced office. It was for a like reason that the information pack for prospective franchisees included a letter from a Sydney based firm of solicitors.
Mr Emerton received no instruction from Mr Foster to draw to the attention of prospective franchisees or to those whom he signed up the existence of the order made by Lander J in this proceeding or where a copy of those orders could be obtained nor did he ever draw that order or where it could be obtained to the attention of any such person.
Mr Emerton’s wife, Vicki also gave affidavit and oral evidence. In that evidence she gave a substantially similar account to that of her husband as to the course of the initial meetings in late 2009 and early 2010 between Mr Foster, her husband and her. She also corroborated her husband’s receipt and editing of the first draft of the SensaSlim newsletter. I found her a credible witness, a finding which expressly includes my impressions of her under cross-examination.
The evidence given by Mr Foster and Mr Reichelt attested to a quite different situation in relation to the management and control of SensaSlim. I found neither of them to be a credible witness. I remind myself that such a finding does not at all prove the Commission’s case, much less prove it beyond reasonable doubt. The onus of proof remains on the Commission and it must still discharge that onus by the proof of the charges beyond reasonable doubt. All that discounting the evidence given by Messrs Foster and Reichelt (and, for that matter and as explained above, Dr Morrison), does is to require that the Commission’s evidence satisfy me that the charges have been proved beyond reasonable doubt.
Mr Foster’s account was that, after his release from jail in May 2009, he worked on his autobiography during the course of 2009 and 2010. For about 8 or 9 months after his release, that work constituted, he said, his full time job. Towards the end of 2009 Mr Foster said that he was contacted by Mr Adams, a friend of an ex-girlfriend of his. The contact occurred, Mr Foster said, because Mr Adams wanted advice from him about the marketing in the United Kingdom of a microwavable food product under the name “Direct Gourmet” to be manufactured in Australia and exported to the United Kingdom. Accepting as I do Dr Waters’ evidence, I do accept, as related above, that Mr Adams also had an association with a business unrelated to SensaSlim known as “Direct Gourmet” and that Mr Foster did provide advice to Mr Adams in relation to that business. It is just that this conclusion does not cause to me doubt that Mr Foster was knowingly concerned in the conduct of SensaSlim’s business.
Mr Foster related that he was aware that Mr Reichelt, a longstanding (about 30 years) friend of his, who was then resident in the United Kingdom, owned a business which manufactured pies and exported them for sale in the United Kingdom. The query made of him by Mr Adams prompted Mr Foster, so he stated, to get in touch with Mr Reichelt and apprise him of Mr Adams product. In turn, this led Mr Reichelt, some time later, so Mr Foster related, to put to him (Mr Foster) that they “were seeking an agent in Australia for the SensaSlim product”. Mr Foster said that, on internet searches, he found “100s” of blogs from January 2008 to July 2008 as to a worldwide trial of this product. He confessed in his evidence that he knew that he could not be involved in the product because of this Court’s order and that he told Mr Reichelt this when he reverted to him. He stated that he suggested to Mr Reichelt that “Billy Tracey” and Mr Ryan might wish to be involved.
Later, according to Mr Foster, Arabella’s then boyfriend, Dr Waters asked him for advice about a safety product on which he and Michael Boyle were working. Mr Foster stated that he informed Dr Waters that there was no money in safety products and that the only products which made money were diet and beauty products. He stated that he then mentioned to Dr Waters Mr Reichelt’s SensaSlim product and that Dr Waters expressed interest in this.
Mr Foster was adamant that he did not become involved in SensaSlim. Rather, he stated that he “continued with the Direct Gourmet issue” and agreed to become a consultant to CPG in the United Kingdom with respect to all of that company’s food products. CPG, he explained, was a company owned by Mr Reichelt and his partner (i.e. business partner), Mr Richard Cooper. He stated that he sought approval from his parole supervisors for such an appointment. Documents from his probation and parole supervisor confirm that such approval was sought by him. Mr Foster stated that CPG “also was involved with Sensaslim International which licensed SensaSlim Australia” so he had some knowledge of “what SensaSlim was doing but I deliberately did not involve myself with SensaSlim”.
Mr Foster stated that, in 2010, CPD “wanted to buy a resort in NSW’ and that, because his parole officers were “very concerned about my being involved in real estate” he ended up quitting CPD in early 2011. Instead, he stated, he “decided to sit on the beach” until his parole expired.
Mr Foster stated that Mr Reichelt and Mr Cooper came to Australia in late 2010 and that he had dealings with them in relation to Direct Gourmet.
Mr Foster stated that he had met Mr Emerton in December 2009 in company with Mr Ryan. The purpose of the meeting, so Mr Foster stated, was that, “Scott had a scheme with an EFTPOS machine which could be sold to retailers”. Inferentially, if Mr Foster’s evidence is to be believed, they discussed that scheme, for Mr Foster also stated that he told Messrs Emerton and Ryan that he did not think it was a very good scheme and “That was the end of that”. Mr Foster later gave in evidence a convoluted account of Dr Waters coming to him in about October 2010 “in tears” so as to tell him that Mr Emerton had had a bad falling out with Peter O’Brien, was claiming to be owed $140,000 and that, if not paid, would go to “A Current Affair” and state that he (Mr Foster) owned SensaSlim. He related conversations with Messrs Duffy and O’Brien in 2011 and emails from Mr Emerton in relation to further demands for payment by Mr Emerton. Mr Foster comprehensively addressed and denied in oral and affidavit evidence the evidence given by Mr Emerton.
In the face of the contact which he admitted having with Mr Emerton in January 2009 in respect of an unrelated product I found Mr Foster’s account of the background to Mr Emerton’s threat to go to “A Current Affair” and later to the Commission fanciful. The conclusion which I reached in relation to this was that here, too, Mr Foster was dissembling. Because it was convenient so to do when dealing with other evidence on a particular topic, I have highlighted above other examples of what I concluded was dissembling on his part in the course of his evidence. That was my overall impression of his evidence, both given by affidavit and orally.
That dissembling extended to the explanation which he gave as to internet connections at the Norseman Court house being able to be used by others because “there was an unsecure wireless connection at the house”. Mr Foster mentioned that there were many visitors to the Norseman Court house, conveniently, I find, then mentioning in particular Mr McMullan, Mr O’Brien, Mr Adams and Mr Duffy. He also mentioned that Arabella and “Liana” (inferentially, Liana Emberg) worked for SensaSlim. He stated that, “People used smart phones, iPads and computers all the time.” I found this explanation contrived and not credible. I reached the same conclusion in relation to an explanation which he gave as to the Carrara house - it was “previously wired to an extraordinary degree because the occupant had some sort of contract with the Australian military” and “There was no password on the system”.
It was convenient to detail Mr Foster’s account and my findings as to the production of the SensaSlim DVD when relating Mr Frare’s and Mr Woolley’s evidence. I should additionally record that Mr Frare did concede that there had been a need to reshoot scenes in the DVD because of the death during the course of production of the narrator, a Mr Thornton. He had not mentioned this in his evidence in chief. I thought that his recollection of this was quite genuinely prompted in cross-examination. It did not cause me to discount Mr Frare as a credible witness.
At the time when Mr Reichelt gave his evidence, he was under sentence of imprisonment in the United Kingdom for an offence unrelated to SensaSlim. That sentence included periods of day release. It was during one of these that Mr Reichelt gave, via video link from the United Kingdom, the oral portion of his evidence. It was a necessary and unavoidable feature of my case management of the proceeding pre-trial, as well as undertaking the trial itself, that I became aware that Mr Reichelt was under sentence of imprisonment. As with Mr Foster, I considered that it was a necessary discipline to put that awareness to one side when assessing Mr Reichelt’s credibility and I have done so.
Mr Reichelt was once a solicitor practising in Australia. In the course of his practice here he came to know Louise and her son, Mr Foster. In 1992, Mr Reichelt moved to the United Kingdom. Between 1992 and 2003, his main business there was acting as a consultant for a law firm based on The Strand and, in that capacity, acting as an agent for Australian companies which wished to do business in the United Kingdom. In 2006, in partnership with another Australian lawyer who had moved to the United Kingdom, Mr Richard Cooper, Mr Reichelt established (caused to be incorporated) CPG. CPG provided marketing and agency services to clients many of whom were contacts which Mr Reichelt had made during his earlier consultancy work.
All of this background evidence I accept.
Mr Reichelt related that, in 2009, “we” (inferentially intended to be a reference to CPG) were contacted via an accountant and asked to act as a consultant to SensaSlim International, which he stated was a subsidiary of SensaSlim Suisse. SensaSlim International, he stated, had been set up by the firm “Jordans”.
Mr Reichelt stated that, in late 2009 or early 2010, he and Mr Cooper (inferentially CPG) were contracted to assist SensaSlim Suisse in seeking investors to buy the rights in various countries to sell its diet product. As a result and knowing that Mr Foster had been involved with diet products in the past he came to contact Mr Foster only to be told by him that he was prohibited from engaging in the diet industry in Australia. Mr Reichelt further stated that Mr Foster had said to him that he would refer the investment to friends or contacts which he had who might be interested. In this fashion, Mr Duffy came to get in contact with him and then, through Mr Duffy, Mr Boyle and Dr Waters.
He stated that the instructions to CPG came via Jordans, the accountant and via discussions with and emails from Mr William Duffy and Mr Peter O’Brien. Mr Duffy, he stated, he had met in Australia previously. Mr O’Brien, he stated, he had not met before and did not meet until a visit to Australia in 2010. Mr Reichelt deposed to “frequent communication” mainly with Messrs Duffy and O’Brien but also occasionally with Mr Boyle and Dr Waters in relation to SensaSlim.
Mr Reichelt stated that Mr Foster was not involved in SensaSlim to his knowledge. As to Mr Foster, Mr Reichelt related a discussion which he had with him in late 2009 or early 2010 about taking up a consultancy assisting CPG by finding further clients in Australia who would wish to use its services in relation to the facilitation of product export to the United Kingdom.
Mr Reichelt deposed that Mr and Mr Cooper had attended, at the request of Messrs Adams and O’Brien, the SensaSlim product launch on the Gold Coast in, as he recalled, about December 2010. He placed Dr Waters at that product launch. In this I find he was mistaken. I prefer Dr Waters’ evidence that he did not attend that launch. Dr Waters is the more reliable historian as to the operations of SensaSlim and, in particular, Mr Foster’s involvement in its business. His account is substantially corroborated by that of Mr Emerton. I have related above other evidence which points inexorably to a conclusion that Mr Foster was involved in the SensaSlim business.
Mr Reichelt admitted to being a party to a telephone conversation about New Zealand rights to the SensaSlim product in the terms Mr Coffey (although he did not in evidence recall Mr Coffey by name as a party to that telephone conversation). He listened to a DVD containing an audio file of the recording made by Mr Coffey. Mr Reichelt expressed the belief that it was Mr O’Brien’s voice on the recording on the basis of his having spoken with Mr O’Brien both in Australia (at the launch) and by telephone from the United Kingdom.
Mr Reichelt’s explanation as to how he came to contact Mr Foster was, I thought, contrived. Once again, I prefer Dr Waters’ evidence. Overall, Mr Reichelt’s evidence as to a lack of involvement by Mr Foster was at odds with what I consider to be an overwhelming case derived from the evidence led by the Commission, to which I have referred above, that Mr Foster was involved, and deeply involved at that, in SensaSlim’s business. Quite apart from the evidence given by Dr Waters and Mr Emerton, Mr Reichelt’s evidence as to Mr Foster’s having no involvement is at odds with that of Messrs Hansen, Frare and Woolley. Of course, it might be that Mr Reichelt could not have known of this type of involvement by Mr Foster, because Mr Reichelt was in the United Kingdom. Mr Reichelt was though a party to the conversation with Mr Coffey. His opinion that it was Mr O’Brien’s voice does not cause me to doubt the opinion given by Dr Storey-White as to the identity of the “MS2 voice” on the recording. It is that opinion which is consistent with the whole of the evidence, not that of Mr Reichelt. Mr Reichelt’s opinion that the voice was not that of Mr Foster is not to be relied upon.
I accept that Mr Reichelt did have dealings with Dr Waters. I do so because this is corroborated by Dr Waters. However, the nature and extent of those dealings was as stated by Dr Waters, not Mr Reichelt.
Drawing this disparate account of the evidence and of related findings together, I conclude that the Commission has proved, beyond reasonable doubt the following in respect of charge 1:
(a)The Court (Lander J) did make an order in these proceedings on 2 September 2005 as alleged.
(b)Mr Foster was aware of the terms of that order in the period from December 2009 to 2 September 2010 (“the material period”).
(c)During the material period, SensaSlim conducted a business relating to weight loss.
(d)During the material period, that business involved, amongst other things:
(i)The manufacture and supply to franchisees for placement in retail outlets in an allotted franchise area of an orally administered spray promoted as a weight loss aide.
(ii)The entering into franchise agreements with franchisees for the distribution for reward by them to retailers in their allotted franchise area of that product - the SensaSlim product.
(iii)The SensaSlim business also involved, in terms of the agreements made with Area Managers, the supply of services to those managers such as training, marketing and sales support.
(iv)Again in terms of such agreements, that business also entailed the granting of a licence to the Area Manager, within an allotted franchise area, of the right to distribute the SensaSlim product and use its logo and its trade mark, “Nothing tastes as good as slim feels”.
(e)During the material period, Mr Foster, by the editing and supply of a script and some raw footage, prepared some of, and by the commissioning of Messrs Frare and Woolley on behalf of SensaSlim, caused to be prepared, the SensaSlim promotional DVD.
(f)During the material period, Mr Foster prepared some at least and approved some at least and by necessary inference flowing from the evidence of Dr Waters and Mr Emerton caused to be published newspaper advertisements which, though they did not state the same in terms, advertised what was in fact an opportunity to become a franchised Area Manager for the distribution of the SensaSlim product.
(g)During the material period, Mr Foster prepared some at least of the Area Manager Proposal and, inferentially, also prepared or caused to be prepared the related documents for disclosure to prospective franchisees. He did this in consultation with Mr Emerton.
(h)During the material period and under the alias “Peter O’Brien”, Mr Foster engaged in conversations by telephone with prospective area managers so as to encourage them to enter into franchise agreements with SensaSlim for the distribution of its product.
(i)During the material period, Mr Foster, using the alias email addresses mentioned above, engaged in email correspondence with prospective franchisees regrading SensaSlim’s business to encourage them to enter into franchise agreements.
(j)During the material period, Mr Foster prepared, in consultation with Mr Emerton, some at least of the newsletters distributed to Area Managers. He was undoubtedly involved in the preparation of other newsletters than the first but it is not possible on the evidence to conclude with the preparation of which particular later newsletters he was involved.
(k)During the material period, Mr Foster controlled and directed the process for engagement by Sensaslim with potential Area Managers and the entry by SensaSlim of franchise arrangements with Area Managers. This control and direction is directly proved via the evidence of Mr Emerton and Ms Stainstreet.
I therefore find charge 1 proved. Mr Foster was directly knowingly concerned in the conduct of this business of SensaSlim.
As to charge 2, I conclude that the Commission has proved, beyond reasonable doubt, that, in the material period, Mr Foster was knowingly concerned in SensaSlim, in trade or commerce, making representations as to a particular standard or quality of the SensaSlim product without, prior to the making of that representation, SensaSlim providing the representee with a copy of the order made by the Court on 2 September 2005, or informing the representee of the existence of those orders and giving the representee the address of the court’s website.
The evidence establishes, to the requisite standard, that the Court (Lander J) on 2 September 2005 made the order alleged in charge 2 and that Mr Foster was aware of the terms of that order during the material period.
As to other particulars given in respect of charge 2, the evidence establishes, beyond reasonable doubt, that, during the material period:
(a)SensaSlim conducted the business as alleged and found proved in respect of charge 1.
(b)From about mid-March 2010, SensaSlim provided prospective Area Managers with the Area Manager Proposal and showed those prospective managers the SensaSlim promotional DVD.
(c)In that promotional DVD there is a representation that the SensaSlim product was the subject of a large world-wide clinical trial and that the trial established the efficacy of the SensaSlim product for weight loss purposes. That representation was a representation that the Sensaslim product was of a particular standard or quality namely, that its efficacy had been established by a world-wide clinical trial.
(d)Those prospective Area Managers who were provided with the Area Manager Proposal and who were shown the promotional DVD were not provided with a copy of the Court’s orders of 2 September 2005 or made aware of those orders.
It follows that my further conclusion is that those particulars given in paragraphs 2.4, 2.5, 2.6 and, to the extent that they refer to Newsletters 5, 7 and 8, those given in paragraphs 2.7 and 2.8, are not proved to the requisite standard. This does not mean that Mr Foster must be found not guilty in respect of charge 2. Rather, it means that the charge is proved only to the extent otherwise particularised in that charge.
Given Mr Foster’s intimate involvement in the formulation of the Area Manager Proposal, to the extent of highlighting those parts to be read out and those which could be omitted from reading out to prospective Area Managers, his intimate involvement in the content of the DVD and his knowledge of the terms of the Court’s orders of 2 September 2005, I am also satisfied that the omission of any reference to those orders in the Area Manager Proposal or in the DVD or in instructions otherwise given to sales staff was a deliberate decision on Mr Foster’s part. That deliberate omission was but part of a deliberate course of conduct on Mr Foster’s part, evidenced by his assumption in telephone conversation and emails of aliases, to conceal his involvement in Sensaslim’s business from the outside world in general and prospective Area Managers in particular.
If only to highlight that the submission has not been overlooked, I record that, in reaching my conclusion that the charges are, to the extent indicated, proved, I have not, as I was invited to do on the part of the Commission, drawn any adverse inference on the basis that, for example, William Duffy and Arabella did not give evidence. For any such inference to be drawn, the evidence of such witnesses, the facts in respect of which such witnesses might give evidence must be additional to those already given in evidence by those witnesses who were called: Azzopardi v The Queen (2001) 205 CLR 50 at [64] (emphasis in original). As was there stated by Gaudron, Gummow, Kirby and Hayne JJ:
Mere contradiction would not be evidence of any additional fact. In an accusatorial trial, an accused is not required to explain or contradict matters which are already the subject of evidence at trial. These matters must be assessed by the jury against the requisite standard of proof, without regard to the fact that the accused did not give evidence.
[Emphasis in original]
I have judged Mr Foster on the basis of all of the evidence which was led, not that which was not. Further, it was never for Mr Foster to prove his innocence. It bears repetition that it was always for the Commission to prove the charges made against him and to do so beyond reasonable doubt. Mr Foster was not obliged to give evidence himself or to call any other evidence. As it happens, evidence was led on behalf of the Defence, including from Mr Foster himself. Also as it happens, I did not find the evidence given by Messrs Foster, Reichelt or Ryan credible and neither did that given by Dr Morrison cause me to reject the probative value of the opinions expressed by Dr Storey-White. As I have stated, these conclusions did not prove the Commission’s case. Rather, on the whole of the evidence and for the reasons given above, I am satisfied that the Commission has, to the extent indicated, proved beyond reasonable doubt the charges which it brought.
The charges being, to the extent indicated, proved, it will be necessary to hear from the parties as to the form of orders which ought to be made to give effect to these reasons for judgement and in respect of penalties and costs. I propose to fix 24 October 2013 as the date for the hearing of such submissions and to make related, consequential directions. It may also be necessary to receive submissions today as to what variation, if any, should be made, pending a further hearing in respect of these issues, to the existing order governing Mr Foster’s present release from custody.
I certify that the preceding two hundred and fifty-four (254) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate:
Dated: 27 September 2013
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