Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq)
[2015] FCA 342
•14 April 2015
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) [2015] FCA 342
Citation: Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) [2015] FCA 342 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v ACTIVESUPER PTY LTD (IN LIQUIDATION) ACN 125 423 574 AND ORS File number: VID 426 of 2012 Judge: WHITE J Date of judgment: 14 April 2015 Catchwords: CORPORATIONS – contraventions of Corporations Act 2001 (Cth) – elements of primary contraventions – attribution of knowledge and/or conduct to other defendants – s 726 (offering securities in a non-existent company) – s 727 (offering securities without disclosure document) – whether offering in Australia of shares in companies incorporated in British Virgin Islands requires disclosure – s 911A(1) (unlicensed provision of financial services) – whether offering of advice and services in relation to Self-Managed Superannuation Funds and investment by those SMSFs was authorised – s 1041H(1) and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (misleading or deceptive conduct) – whether statements in prospectuses as to the use to which monies invested in the BVI companies would be put were misleading
CORPORATIONS – accessorial liability – whether persons “knowingly concerned” in contraventions of Corporations Act – establishing actual knowledge by inference – whether accessory to s 727 contravention must know that offers required disclosure – whether accessory to s 1041H contravention must know that representations were false or misleading – attribution of knowledge and/or conduct to other defendants
CORPORATIONS – accessorial liability – whether findings of accessorial liability open with respect to contraventions of ss 727 and 911A – whether declarations and injunctions may be granted when persons knowingly concerned in contraventions are not deemed to be contravenors themselves
EVIDENCE – admissibility of transcripts of examinations conducted pursuant to s 19 of the ASIC Act – application of hearsay provisions in Evidence Act 1995 (Cth) to tender of transcripts – whether reliance on transcript precluded by ss 68(3) and 76(1)(a) of the ASIC Act – whether proceedings for injunctions under ss 1101B(1) and 1324(1) of the Corporations Act enliven privileges against self-incrimination and self-exposure to penalty – effect of s 1349 of Corporations Act
EVIDENCE – admissibility of unauthenticated documents
PRACTICE AND PROCEDURE – pleadings – effect of r 16.07 of Federal Court Rules 2011 (Cth) – purpose of pleadings
Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12BB, 12DA, 12GD(1), 19, 68(3), 76, 77
Banking Act 1959 (Cth)
Corporations Act 2001 (Cth) ss 18-21, 79, 92, 583, 700, 706, 708, 708AA, 726, 727, 761A, 761C, 766A, 766B, 766C, 769C, 911A, 911B, 911D, 992A, 1041H, 1101B(1), 1317J(4), 1324, 1332, 1349
Evidence Act 1995 (Cth) ss 48(1), 58, 59, 62-64, 81, 82, 140
Federal Court Act 1976 (Cth) s 21
Federal Court Rules 2011 (Cth) r 16.07
Superannuation Industry (Supervision) Act 1993 (Cth) ss 10, 19Cases cited: Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1
Airpeak Pty Ltd v Jetstream Aircraft Ltd (1997) 73 FCR 161
Ashbury v Reid [1961] WAR 49
Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) [2012] FCA 1355; (2012) 207 FCR 448
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 2) [2001] FCA 1861
Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 95 FCR 302
Australian Competition and Consumer Commission v Kaye [2004] FCA 1363
Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378
Australian Competition and Consumer Commission v Pauls Ltd [2002] FCA 1586
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 1) [2012] FCA 1519
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234
Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253
Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd (No 2) [2005] NSWSC 267; (2005) 53 ACSR 305
Australian Securities and Investments Commission v Axis International Management Pty Ltd (No 5) [2011] FCA 60; (2011) 81 ASCR 631
Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc [2009] QSC 58; (2009) 71 ACSR 1
Australian Securities and Investments Commission v Edwards [2004] QSC 344; (2004) 22 ACLC 1469
Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 2) [2009] FCA 424; (2009) 176 FCR 529
Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd [2007] FCA 1868; (2007) 164 FCR 487
Australian Securities and Investments Commission v Kippe (1996) 67 FCR 499
Australian Securities and Investments Commission v Manito Pty Ltd [2005] FCA 386; (2005) 53 ACSR 56
Australian Securities and Investments Commission v Mauer‑Swisse Securities Ltd [2002] NSWSC 741; (2002) 42 ACSR 605
Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373
Australian Securities and Investments Commission v Monarch FX Group Pty Ltd, in the matter of Monarch FX Group Pty Ltd [2014] FCA 1387
Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211
Australian Securities and Investments Commission v Oxford Investments (Tasmania) Pty Ltd [2008] FCA 980; (2008) 169 FCR 522
Australian Securities and Investments Commissionv Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561
Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd [2006] VSC 192; (2006) 57 ACSR 553
Australian Securities and Investments Commission v Stone Assets Management Pty Ltd [2012] FCA 630; (2012) 205 FCR 120
Australian Securities and Investments Commission v Storm Financial Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2011] FCA 858
Australian Securities and Investments Commission v Vines [2003] NSWSC 995; (2003) 48 ACSR 282
Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Bateman v Evans (1964) 108 Sol Jo 522
Beach Petroleum NL v Johnson (1993) 43 FCR 1
Briginshaw v Briginshaw (1938) 60 CLR 336
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233; (2010) 77 ACSR 410
Clifford v Vegas Enterprises Pty Ltd [2011] FCAFC 135
Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1
Cullen v Wills (1991) 31 FCR 19
Daw v Toyworld (NSW) Pty Ltd [2001] NSWCA 25; (2001) 21 NSWCCR 389
Emwest Products Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2002] FCA 61; (2002) 117 FCR 588
Forge v Australian Securities and Investments Commission [2004] NSWCA 448; (2004) 213 ALR 574
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Fubilan Catering Services Ltd v Compass Group (Australia) Pty Ltd [2008] FCAFC 53
Giorgianni v The Queen (1985) 156 CLR 473
Global Sportsman Pty Ltd v Mirror Newspapers (1984) 2 FCR 82
Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435
Hamilton v Whitehead (1988) 166 CLR 121
In the matter of Vault Market Pty Ltd [2014] NSWSC 1641
Jones v Dunkel (1959) 101 CLR 298
Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361
Lee v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 305
Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357
National Australia Bank Ltd v Rusu [1999] NSWSC 539; (1999) 47 NSWLR 309
O’Grady v Northern Queensland Co Ltd (1990) 169 CLR 356
O’Meara v Dominican Fathers [2003] ACTSC 24; (2003) 153 ACTR 1
Official Trustee in Bankruptcy v Mitchell (1992) 38 FCR 364
Pereira v Director of Public Prosecutions (1988) 82 ALR 217
Potter v Fair Work Ombudsman [2014] FCA 187
R v Nifadopoulos (1988) 36 A Crim R 137
R v Tannous (1987) 10 NSWLR 303
Rafferty v Madgwicks [2012] FCAFC 37; (2012) 203 FCR 1
Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2012] NSWSC 1276
Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106
Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129
Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681
Roumanus v Orchard Holdings (NSW) Pty Ltd [2012] FCA 775; (2012) 90 ACSR 677
Smith v Jenner [1968] Crim LR 99
Tesco Supermarkets Ltd v Nattras [1972] AC 153
The Zamora (No 2) [1921] 1 AC 801
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89
Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) 83 ALR 299
Trade Practices Commission v Milreis Pty Ltd (No 2) (1978) 32 FLR 234
Travelex Ltd v Commissioner of Taxation [2010] HCA 33; (2010) 241 CLR 510
Triangle Cables (Aust) Pty Ltd v Czuchwicki [2012] FCA 718
Wilson v Dobra (1955) 57 WALR 95
Yorke v Lucas (1985) 158 CLR 661
Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; (2012) 293 ALR 537Date of hearing: 14-18, 21-25, and 28 October 2013 and 2-4 December 2013 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 651 Counsel for the Applicant: Mr N O’Bryan SC with Ms C Van Proctor and Mr D Hochstrasser Solicitors for the Applicant: Australian Securities and Investments Commission Counsel for the First and Third Defendants: Mr M Tauschek Solicitors for the First and Third Defendant: Atanaskovic Hartnell Lawyers Counsel for the Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, and Eighteenth Defendants: The Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, and Eighteenth Defendants did not appear Counsel for the Fourteenth and Fifteenth Defendants: Mr N Kirby Solicitors for the Fourteenth and Fifteenth Defendants: Clamenz Evans Ellis Lawyers Counsel for the Sixteenth Defendant: Mr A W Smith Solicitors for the Sixteenth Defendant: Ross & Daniels Lawyers Counsel for the Seventeenth Defendant: The Seventeenth Defendant appeared in person
Table of Corrections 27 May 2015 In paragraph 644 “ActiveSuper, Royale and Mr Gibson” has been replaced with “the ActiveSuper defendants, SPG, WPO and Cayco”.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 426 of 2012
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
ApplicantAND: ACTIVESUPER PTY LTD (IN LIQUIDATION) ACN 125 423 574 AND OTHERS NAMED IN THE SCHEDULE
Defendants
JUDGE:
WHITE J
DATE OF ORDER:
14 APRIL 2015
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.The Applicant is to file and serve, by 24 April 2015, minutes of the orders to be made to give effect to these reasons and findings, together with a short outline (no more than five pages) of the submissions it will make on the period of the injunctions and on question of costs.
2.Any party intending to contest the appropriateness of the orders proposed by ASIC is to file and serve, by 1 May 2015, minutes of the orders which that party will contend are appropriate to give effect to these reasons and findings, together with a short outline (no more than five pages) of the submissions to be made in support of those minutes.
3.The matter be adjourned to 10.00am in Brisbane on 8 May 2015 for submissions as to the form of the orders, costs, the oral application of the 14th and 15th Defendants for the discharge of the interlocutory orders made on 3 December 2012, and any other matter necessary to give effect to the Court’s findings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 426 of 2012
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
ApplicantAND: ACTIVESUPER PTY LTD (IN LIQUIDATION)
ACN 125 423 574 AND OTHERS NAMED IN THE SCHEDULE
Defendants
JUDGE:
WHITE J
DATE:
14 APRIL 2015
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
Overview
[1]
ASIC’s Claims
[17]
The Defendants in the Trial
[32]
The Evidence
[47]
Transcripts of the s 19 examinations
[55]
Evidence admissible against some defendants only
[86]
Standard of proof
[87]
Authenticity of documents
[88]
Factual Background
[99]
ActiveSuper
[100]
Royale
[106]
MOGS
[122]
Craig Gore
[131]
The US Realty Memorandum
[137]
Loan Agreement between the LLCs and MOGS
[149]
The BVI Scheme
[156]
The Issues in the Trial
[205]
Section 726: Offering securities in a non-existent company
[206]
Were there offers of securities?
[212]
Were the offers for securities in a non-existent company?
[216]
Did ActiveSuper and Mr Burrows make the offers?
[221]
Did Pt 6D.2 require disclosure?
[242]
Conclusion
[247]
Section 727: Offering securities without a disclosure document
[248]
Contraventions of s 727(1)
[251]
Did the PPMs of SPG and WPO contain an offer of securities and/or application forms?
[257]
Did the first four defendants and the BVI defendants make the offers or distribute application forms?
[263]
Did the SPG and WPO offers require disclosure?
[285]
Was a disclosure document lodged with ASIC?
[289]
Contravention of s 727(2)
[290]
Conclusion
[292]
Section 911A: Unlicensed provision of financial services
[293]
Contraventions of s 911A by the ActiveSuper defendants with respect to SMSFs
[310]
Contraventions of s 911A by the ActiveSuper defendants with respect to the BVI Scheme
[325]
Contraventions of s 911A by SPG, WPO and Cayco
[333]
Misleading or deceptive conduct and the US Realty Memorandum
[345]
Misleading or deceptive conduct and the SPG and WPO PPMs
[359]
Representations as to investment in real estate
[364]
No investments in real estate
[379]
No reasonable grounds for representation that funds would be invested in real estate
[381]
The representation by omission as to past use of invested funds
[387]
The Accessory Claims
[395]
Involvement as an accessory: General principles
[397]
Are accessory claims available in respect of ss 727 and 911A?
[412]
The elements of being knowingly concerned in a contravention of s 727(1)
[427]
The elements of being knowingly concerned in a contravention of s 727(2)
[452]
The elements of being knowingly concerned in a contravention of s 911A
[454]
The elements of being knowingly concerned in contraventions of s 1041H and s 12DA
[456]
Further findings of fact regarding the accessory claims
[458]
Being knowingly concerned in the contraventions of s 727(1)
[532]
Mr Gore
[532]
Mr Adamson
[542]
Ms Gore
[547]
Mr Stonehouse
[551]
MOGS
[555]
Mr George
[568]
Being knowingly concerned in the contraventions of s 727(2)
[572]
Being knowingly concerned in the contraventions s 911A(1)
[573]
Knowing concern in the contraventions of s 1041H(1) and s 12DA
[599]
Remedies
[615]
Declarations
[615]
Injunctions
[620]
Winding up of the LLCs and SPG, WPO and Cayco
[630]
Dissolving the interlocutory injunctions made on 3 December 2012
[639]
Summary
[641]
Overview
These proceedings concern alleged contraventions by some defendants of the Corporations Act 2001 (Cth) (the Corporations Act) and of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and the alleged involvement as accessories of other defendants in those contraventions.
The alleged contraventions arise from the circumstances in which numerous Australian investors with relatively modest amounts of superannuation were induced to establish self‑managed superannuation funds (SMSFs) and to use their superannuation funds for investment in property in the United States of America and in companies incorporated in the British Virgin Islands (BVI). Most of the invested monies were not used for the purposes contemplated by the investors and have been substantially, if not wholly, lost.
Between at least May 2010 and March 2012, the first defendant (ActiveSuper) and the second defendant (to which I will refer as “Royale”, this being an abbreviation of its former name), induced or assisted a number of persons to establish SMSFs. Commencing in at least late 2010, Royale distributed to a number of these SMSFs an “investment opportunity” set out in a document entitled “US Deals Invest Now” (described in the proceedings as the “US Realty Memorandum”). This “opportunity” involved the SMSFs acquiring shares in a yet to be formed American company which would purchase “distressed” real estate in the United States with a view to profit at the end of a five year period.
At material times, the third defendant, Mr Burrows, controlled ActiveSuper. Mr Burrows also exercised considerable control over Royale, although much of its day to day activities were carried out by the fourth defendant, Mr Gibson. For convenience, I will refer to ActiveSuper, Royale, Mr Burrows and Mr Gibson as “the ActiveSuper defendants” without thereby implying any pre‑judgment of the relationship between them.
Approximately 187 SMSF investors acted on the offer and paid in aggregate about $3.1 million to ActiveSuper for investment pursuant to the US Realty Memorandum. ActiveSuper transferred approximately $1.4 million of this sum to bank accounts held by US companies of which it was the shareholder. Of that sum, approximately $455,000 was applied to the purchase of 14 properties in Arizona. These were the only amounts expended on the purchase of properties in the United States. The purchasers of the Arizonan properties were the fifth to eighth defendants (collectively, the LLCs). Mr Burrows was the manager of each of the LLCs.
None of the SMSF investors was issued a share in a LLC, or for that matter in any other company acquiring “distressed” real estate in the United States.
On or about 19 October 2011, the LLCs entered into a loan agreement with the twelfth defendant, MOGS Pty Ltd (MOGS) for an amount of $1 million (later increased to $1.47 million). However, ultimately approximately $2.15 million of the aggregate sum of $3.1 million invested by the SMSFs pursuant to the US Realty Memorandum was paid, directly or indirectly, to MOGS, to the seventeenth defendant (Mr Gore) or to persons and entities nominated by them. MOGS is an Australian company and was not engaged at all in acquisition of “distressed” real estate in the United States.
About one year later, on 13 November 2012, the 14 properties in Arizona were sold, but there has been no accounting of the proceeds to ActiveSuper or to the Australian investors. The amounts invested in the Arizonan properties appear to have been wholly lost.
In late 2011, two companies were established in the BVI. These were the ninth defendant, Syndicated Property Group Ltd (SPG), which was formerly known as Syndicated Property Group Arizona Ltd, and the tenth defendant, Worldwide Property Opportunities Ltd (WPO). The eleventh defendant, Cayco Management Ltd (Cayco), was incorporated in January 2012 in the Cayman Islands. Mr Gore was the driving force behind the establishment of SPG, WPO and Cayco. Several of the personal defendants were also involved in the establishment of SPG, WPO and Cayco.
SPG and WPO were established as funds to be marketed in particular to the SMSF clients of ActiveSuper and Royale, ostensibly for the principal purpose of investment in real estate. Each of SPG and WPO issued a document entitled “Private Placement Memorandum” (PPM) which was in the nature of a prospectus for the issue of shares. Cayco was established to act as an investment manager of the funds raised.
Between about March and May 2012, investment in SPG and WPO was marketed to members of the Australian public and, in particular, by Mr Burrows and Mr Gibson to the SMSF clients of ActiveSuper and Royale. Between 14 March 2012 and 23 April 2012, ActiveSuper received some 53 subscriptions for investments pursuant to the SPG PPM. Acting on those subscriptions, ActiveSuper caused a total of approximately $1,020,000 to be transferred from the bank accounts of the subscribing SMSFs to its own account and then transferred those funds to SPG and/or WPO.
Between March 2012 and June 2012, ActiveSuper and/or Royale received 69 subscriptions for a total of approximately $1.38 million pursuant to the WPO PPM. These monies were paid to SPG and/or WPO.
However, the monies received pursuant to the SPG and WPO PPMs were not invested in real estate. Instead, they were advanced, directly or indirectly, to Cayco; to MOGS; to its directors, Graeme Stonehouse (fourteenth defendant) and Marina Gore (fifteenth defendant); to Mark Adamson (sixteenth defendant), Craig Gore (seventeenth defendant), and Jeffrey George (thirteenth defendant) (collectively “the MOGS defendants”); to persons associated with them; and were also used to meet a variety of expenses. With the possible exception of the advances to MOGS, this usage of the funds was not contemplated by the PPMs.
Mr Adamson is a lawyer now working in the Gold Coast office of Clamenz Evans Ellis Lawyers. He established the Gold Coast office of Evans Ellis Lawyers in February 2011 and, in the course of his employment there, performed considerable work for MOGS. From about August 2011, Mr Adamson’s salary and that of his secretary, as well as the overheads of the Gold Coast office of Evans Ellis (which were in the same premises as the offices of MOGS), were paid directly by MOGS. For much of the period relevant in this case Mr Adamson was also a director of MOGS and at the time of the trial he was still a director of Cayco.
Mr Gore, the husband of Marina Gore, worked as a consultant to MOGS. Mr George is a friend of Mr Gore and also one of his creditors. In his examination by ASIC under s 19 of the ASIC Act, Mr Gore described Mr George as a person who “used to run my aircraft”, who “buys and sells aeroplanes”, but who did not know “a lot” about the finance world.
It seems that most, if not all, of the amounts invested by the SMSF funds pursuant to the PPMs have been lost. An order for the winding up of MOGS was made during the trial and provisional liquidators had previously been appointed to SPG, WPO, Cayco and to the LLCs.
ASIC’s Claims
ASIC alleges a number of contraventions of the Corporations Act and the ASIC Act and seeks declaratory and injunctive relief.
The contraventions alleged by ASIC relate to three broad categories of conduct. First, contraventions in relation to the establishment of the SMSFs; secondly, in relation to funds raised from SMSF investors pursuant to the US Realty Memorandum; and, thirdly, in relation to investments by the SMSFs in SPG and WPO.
ASIC alleges, first, that the ActiveSuper defendants contravened s 726 of the Corporations Act by offering to Australian investors shares in a non-existent US company when the offers would otherwise have required disclosure to the investors under Part 6D.2 of the Corporations Act.
Secondly, ASIC alleges that the ActiveSuper defendants, SPG, WPO and Cayco contravened s 727(1) and (2) of the Corporations Act by offering shares, or by distributing application forms for the offer of shares, in the SPG PPM and WPO PPM, when the offers required disclosure to investors under Part 6.2 of the Corporations Act, and no disclosure documents had been lodged with ASIC.
Thirdly, ASIC alleges that the ActiveSuper defendants, SPG, WPO and Cayco provided financial services when, at relevant times, none of them held an appropriate Australian Financial Services Licence (AFSL) covering the provision of those services, and thereby contravened s 911A(1) of the Corporations Act. The conduct alleged by ASIC for this purpose is:
(i)the making of offers or distributing application forms for the offer of shares in SPG and WPO;
(ii)the provision of financial product advice by making recommendations intended to influence persons making decisions in relation to superannuation interests (or which could reasonably be regarded as being intended to have such an influence) to acquire an interest in a superannuation interest, namely a SMSF, within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act);
(iii)the dealing in financial products by arranging for persons to acquire interests in superannuation interests within the meaning of the SIS Act; and
(iv)the dealing in financial products by arranging for persons to acquire an interest in deposit and payment products (namely, a Macquarie Cash Management Account or Macquarie Cash Management Trust Account).
Fourthly, ASIC alleges that Mr Burrows and Mr Gibson contravened s 911B(1)(b)(iii) of the Corporations Act by providing financial product advice and by dealing in financial products without holding an AFSL authorising the provision of those services. The relevant conduct is said to have been the making of recommendations intended to influence persons in making a decision in relation to superannuation interests (or which could reasonably be regarded as being intended to have such an influence) to acquire an interest in a SMSF. The conduct said to amount to dealing in financial products was the arranging for clients to acquire an interest in a SMSF within the meaning of the SIS Act.
Fifthly, ASIC alleges that Mr Burrows and Mr Gibson contravened s 992A(1) of the Corporations Act by offering financial products, namely, an interest in a SMSF, for issue in the course of, or because of, an unsolicited meeting with another person, without offering that person an opportunity to register on a “No Contact/No Call” register.
Sixthly, ASIC alleges that Mr Burrows and Mr Gibson engaged in misleading or deceptive conduct in contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act by stating to persons that, if they obtained a SMSF with their assistance, those persons would, or alternatively, could, achieve “safe and secure” “fantastic returns” of between 20% and 25% per annum.
For reasons to be mentioned shortly, it is not necessary to address the fourth, fifth and sixth allegations in these reasons.
Seventhly, ASIC alleges that the ActiveSuper defendants engaged in misleading or deceptive conduct in contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act. The conduct relied upon for this allegation is the dissemination of the US Realty Memorandum containing false representations that:
(i)returns of between 20 and 25 per cent per annum would be paid to investors;
(ii)the superannuation monies from the SMSFs would be applied to purchase shares in a private limited liability company to be formed and registered in Arizona, would be applied for the purposes of purchasing foreclosed residential property as part of an investment portfolio; and would be “quarantined in an Australian based trust account” until such time as the Arizonan company was capitalised;
(iii)SPG was currently contracted to handle property purchases for US Deals Ltd in New Zealand;
(iv)the Manager of the US company was Australian Property Investment Management Arizona Ltd (APIMA), a duly formed company in the State of Arizona.
These representations were described as “the US Realty Representations” and were also alleged to have been made in the course of “cold calls” to potential investors.
Eighthly, ASIC alleges that the ActiveSuper defendants, SPG, WPO and Cayco engaged in misleading or deceptive conduct in contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act by representing that monies invested under the SPG and WPO PPMs would be invested in real estate and by withholding from the investors details concerning the application of monies previously invested under the PPMs, in particular, by withholding information that those monies had not been used by WPO or SPG to purchase property.
ASIC alleges that each of the MOGS defendants was, directly or indirectly, knowingly concerned in the contraventions of ss 727(1), 727(2), 911A(1) and 1041H of the Corporations Act, and s 12DA of the ASIC Act, and seeks declarations to that effect. In the case of s 1041H and s 12DA, ASIC’s allegation is that the MOGS defendants were knowingly concerned in only the third of the contraventions alleged against the primary defendants, namely, the contraventions relating to SPG and WPO.
In addition, ASIC seeks injunctions pursuant to ss 1101B(1) and 1324(1) of the Corporations Act restraining all defendants from engaging in businesses concerning financial products, financial services and superannuation interests, as well as engaging in other identified activities.
The Fourth Further Amended Originating Process indicated that ASIC also sought a declaration of accessorial liability by the MOGS defendants in the alleged contraventions of s 726 by the ActiveSuper defendants. However, ASIC did not pursue this claim. ASIC made no claim for monetary relief, nor for the imposition of pecuniary penalties.
Finally, ASIC seeks orders for the winding up of the LLCs, MOGS, SPG, WPO and Cayco.
The Defendants in the Trial
The defendants who participated actively in the trial were Mr Stonehouse, Ms Gore, Mr Adamson and Mr Gore. All but Mr Gore had legal representation.
Mr Gore did have legal representation at various times during the interlocutory stages of the proceedings. In addition, Mr Gore had access to legal advice during the course of the trial. At the conclusion of the evidence by the other parties, Mr Gore informed the Court that he had been speaking to Mr Darren Eliau of the firm of Clamenz Evans Ellis and to Mr Ian Erskine QC. I granted Mr Gore a short adjournment in order that he may speak to Mr Erskine before announcing his decision as to whether to give or call evidence. I also observed during the trial that there appeared at times to be a degree of cooperation and collaboration between Mr Gore, on the one hand, and those instructing Mr Kirby, who appeared for Mr Stonehouse and Ms Gore.
The circumstances of the remaining defendants are as follows.
ActiveSuper and Mr Burrows reached agreement with ASIC shortly before the commencement of the trial on 14 October 2013 as to the declarations and injunctions to be made in respect of the allegations against them. In Mr Burrows’ case, the agreement also contained his consent to an order disqualifying him from managing a corporation for a period of 10 years. ASIC accepted that the making of the proposed consent orders would satisfy its claims against ActiveSuper and Mr Burrows.
Although declarations can be made by consent (Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378), the Court does need to be satisfied of some threshold matters. In that circumstance, and with the consent of ASIC, ActiveSuper and Mr Burrows, I deferred consideration of the proposed consent orders in the anticipation that the parties would rely on the evidence in the trial for the orders. I excused ActiveSuper and Mr Burrows from participation in the trial.
During the interlocutory stages of this matter, Royale and Mr Gibson (its current sole director) were represented by solicitors and counsel. However, on 19 September 2013, the solicitors filed a notice of termination of their retainer. There was no appearance by these defendants at the trial. Mr Gibson’s mother attended at the commencement of the trial and provided some evidence of his medical condition. ASIC accepted that Mr Gibson’s medical condition meant that it was not practical for him to participate in the trial and sought the adjournment of the trial of its claims against Royale and Mr Gibson. I acceded to that application and adjourned the trial of the action against Royale and Mr Gibson to a date to be fixed. Those defendants then took no part in the trial. That circumstance, together with the proposed consent orders involving ActiveSuper and Mr Burrows, explains why it is unnecessary to consider the fourth, fifth and sixth contraventions alleged by ASIC.
In the trial against the remaining defendants, the Court received a considerable amount of evidence relating to the activities of Royale and Mr Gibson. It will be necessary to make findings about those activities in order to determine the claims made by ASIC against the other defendants, including the claims of accessorial liability. That is unavoidable, even though Royale and Mr Gibson have not yet been heard.
The LLCs, SPG, WPO and Cayco did not participate at all in the proceedings. They did not file an appearance and did not attend at any of the interlocutory hearings. On 14 November 2012, Dodds-Streeton J appointed provisional liquidators to each of the LLCs (Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 1) [2012] FCA 1519) and, on 3 December 2012, Marshall J appointed provisional liquidators to each of SPG, WPO and Cayco. There was no attendance at the trial by the provisional liquidators. They had previously indicated that they did not intend to participate.
The firm of Clamenz Evans Ellis Lawyers entered an appearance on behalf of MOGS, Mr Stonehouse and Ms Gore on 10 December 2012, and filed a defence on their behalf on 14 March 2013. However, on 19 March 2013, Gordon J appointed a provisional liquidator to MOGS (Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234) and Clamenz Evans Ellis then ceased acting for it. MOGS has not taken any part in the proceedings since 19 March and its provisional liquidators did not attend at the trial. Clamenz Evans Ellis continued to act for Mr Stonehouse and Ms Gore and instructed Mr Kirby as their counsel in the trial.
There is an eighteenth defendant, Mash Investments Pty Ltd, but ASIC indicated that it no longer sought any orders with respect to Mash. It did not participate in the trial.
Mr George, the thirteenth defendant, is a citizen of the USA. He is a director of SPG, WPO and Cayco. Mr George filed a conditional appearance and an interlocutory process seeking to have the service of the proceedings on him set aside. However, Mr George did not pursue that application. By letter of 30 March 2013, Forbes Hare, a firm of lawyers in the BVI who identified themselves as the “BVI Counsel of [SPG, WPO and Cayco] of which Mr George is a director” informed the Court that he did not intend to take any further part in the proceedings. Three days later, Complete Legal Solutions, a firm of practitioners in New South Wales, wrote to the Court on Mr George’s behalf saying that he did not intend to take any further part in the proceedings. Mr George did not appear at the trial.
At the commencement of the second day of the trial, Mr Smith, counsel for Mr Adamson (the sixteenth defendant), informed the Court that ASIC and Mr Adamson had reached agreement on orders by way of declarations and injunctions which would satisfy ASIC’s claims against Mr Adamson. Those parties proposed that declarations by consent be made that Mr Adamson had, between 13 March 2012 and 23 April 2012, and between 27 March 2012 and 12 June 2012, been knowingly concerned in the contraventions by identified defendants of ss 727(1) and (2) of the Corporations Act, knowingly concerned in the contraventions by identified defendants of s 911A(1) of the Corporations Act, and knowingly concerned in the misleading and deceptive conduct contraventions of certain defendants.
There is a question as to whether the Corporations Act contemplates accessorial liability in relation to breaches of ss 727 and 911A, to which I will return. That question bears upon the appropriateness of the first three consent declarations proposed between ASIC and Mr Adamson, as well as on the first six declarations proposed by ASIC and Mr Burrows.
When informing the Court of the proposed consent orders, Mr Smith indicated that, despite the agreement involving Mr Adamson, he would continue to participate in the trial. This was with the intention of satisfying the Court that the consent declarations could be made on the basis that Mr Adamson’s culpability arose from his having chosen not to ask pertinent questions in order not to know the answer. Again, there is an issue, to which it will be necessary to return, as to whether wilful blindness of this kind is sufficient for accessorial liability.
For the same reasons as given earlier in relation to ActiveSuper and Mr Burrows, I deferred consideration of the proposed consent orders involving Mr Adamson until I had heard the evidence in the trial.
The Evidence
The Court received evidence from 21 witnesses. The evidence-in-chief of all but one of these witnesses was provided by way of affidavit. Six of the witnesses who had provided affidavits were required to attend for cross-examination. In addition, the Court received a large amount of documentary evidence.
A number of the affidavits of the ASIC witnesses had been filed progressively during the interlocutory stages of the proceedings and not as consolidated witness statements. Because of this, on 25 July 2013, Gordon J ordered ASIC to file and serve a document which identified with precision the paragraphs of each affidavit and the exhibits upon which it intended to rely in the trial. ASIC filed this document on 2 August 2013 (the Precision Document) and it became Exhibit P4. It was the paragraphs and exhibits identified in the Precision Document which were regarded as the evidence in the trial.
Although Mr Stonehouse, Ms Gore and Mr Gore had filed and served affidavits containing their proposed evidence-in-chief and each was present during the trial, they did not give evidence. Mr Adamson was the only one of the “active” defendants to give evidence.
Subject to two principal qualifications, I regarded the evidence of most of the witnesses who attended for cross-examination as being generally reliable.
An exception is Mr Chant. He was employed by MOGS from about September-October 2011 until about February 2012 when he commenced working for Royale. Mr Chant has a Bachelor of Business (Accountancy) degree and a Graduate Diploma in Applied Finance and Investment and is a member of the Institute of Chartered Accountants in Australia. He said that he had been in business for many years and that, from about 2003, had been the chief operating officer and chief financial officer of a business called “Sports Alive”. Mr Chant was involved at a number of stages in the implementation of a scheme (referred to by ASIC as “the BVI Scheme”) which was at the heart of the allegations against the MOGS defendants. His evidence was marked by a remarkable cavilling, caginess, and unwillingness to commit to having had knowledge at relevant times of matters relating to the transactions in which he was involved. On many occasions, he required straightforward questions to be repeated before he would answer them. This was quite inconsistent with the competence suggested by his qualifications and work experience. It often seemed that Mr Chant played for time in which to consider a question. On occasion, he was disinclined to admit what was obvious. It was evident that Mr Chant sought to portray himself as a passive participant in the implementation of the BVI scheme when it is obvious that he had played an active role. I considered that much of Mr Chant’s evidence was unsatisfactory and have taken the view that considerable care is necessary before acting on those parts which are not supported by other witnesses or by contemporaneous documents.
Mr Adamson was cross-examined extensively. I considered that in many respects his evidence was a genuine attempt to assist the Court and to be truthful. However, it was also apparent that Mr Adamson has ruminated extensively on his involvement in the events at issue on this trial. He has come to recognise the unlawfulness of aspects of his conduct and shortcomings in other aspects. The former was reflected in his consent to the making of declarations of his accessorial liability in relation to several of the contraventions alleged against the primary defendants. It was evident that Mr Adamson is now embarrassed by much of his conduct at relevant times. Nevertheless, and with due respect to Mr Adamson, I considered that on several topics he sought to minimise his own involvement and knowledge of critical matters. Some parts of his evidence were self-serving in nature. This may have reflected a retrospective rationalisation of his conduct. I accept that that rationalisation may, in part, have been unconscious but the effect is that while I accept that much of Mr Adamson’s evidence is reliable, caution is required in relation to several aspects, and there is some of his evidence which I do not accept at all.
I will refer to other aspects of the evidence in the course of my later findings.
I mention that the substance of this section of the reasons (as well as of some other sections) was prepared at and around the time at which the Court heard the final submissions and is supported by my contemporaneous notes.
Transcripts of the s 19 examinations
ASIC tendered the transcripts of examinations of several of the defendants which it had undertaken pursuant to s 19 of the ASIC Act. Initially, ASIC sought the tender under s 76(1) of the ASIC Act. However, it acknowledged that evidence admitted under s 76(1) is evidence only against the examinee and not against any co-defendant.
As ASIC also wished the s 19 transcripts to be evidence in the proceeding more generally, it sought to rely in addition on s 77 of the ASIC Act. Section 77 provides that, when direct evidence by an examinee of a matter would be admissible in a proceeding, a statement made by the examinee at a s 19 examination tending to establish that matter is admissible in the proceeding as evidence of that matter, providing that certain conditions are satisfied. Put generally, the examinee must be unable or unavailable in a practical sense to give evidence or otherwise be called by the tendering party if required by another party to the proceeding to do so.
ASIC may have had difficulties in establishing the unavailability or inability of Mr Burrows and possibly Mr Gibson to give evidence. Further, although ASIC said that it was prepared itself to call Mr Stonehouse, Ms Gore, Mr Adamson and Mr Gore, this may have had the consequence that it would be precluded from cross-examining them. ASIC then abandoned the proposed tender under s 77, but persisted with its tender under s 76.
Mr Kirby, counsel for Mr Stonehouse and Ms Gore, opposed the tender of the transcripts of their respective examinations. I allowed the tender and said that I would give reasons for doing so as part of these reasons. My reasons for allowing the tender were as follows.
Section 76 of the ASIC Act provides:
(1)A statement that a person makes at an examination of the person is admissible in evidence against the person in a proceeding unless:
(a)because of subsection 68(3), the statement is not admissible in evidence against the person in the proceeding; or
(b)the statement is not relevant to the proceeding and the person objects to the admission of evidence of the statement; or
(c)the statement is qualified or explained by some other statement made at the examination, evidence of the other statement is not tendered in the proceeding and the person objects to the admission of evidence of the first‑mentioned statement; or
(d)the statement discloses matter in respect of which the person could claim legal professional privilege in the proceeding if this subsection did not apply in relation to the statement, and the person objects to the admission of evidence of the statement.
(2)Subsection (1) applies in relation to a proceeding against a person even if it is heard together with a proceeding against another person.
(3)Where a written record of an examination of a person is signed by the person under subsection 24(2) or authenticated in any other prescribed manner, the record is, in a proceeding, prima facie evidence of the statements it records, but nothing in this Part limits or affects the admissibility in the proceeding of other evidence of statements made at the examination.
The word “statement” used in s 76 of the ASIC Act is defined in s 5, in relation to an examination, to include a question asked, an answer given, and any other comment or remark made, at the examination. This means that the evidence made admissible by s 76 is not confined only to the answers of a witness.
Initially, Mr Kirby submitted, referring to s 76(3), that the statements made by Mr Stonehouse and Ms Gore in their respective s 19 examinations were not admissible against them because neither had signed the transcript and there had not been any prescription of alternative means by which a written record of an examination could be authenticated. Later, he withdrew his objection on that basis.
I took the view that the absence of signatures by Mr Stonehouse and Ms Gore on their respective examination transcripts did not preclude their reception into evidence. Section 76(3) provides one means by which evidence of statements made by a person at a s 19 examination may be adduced before a court, but it is not the only means. Sections 76 to 79 inclusive do not constitute an exhaustive code relating to the admission into evidence of statements made in s 19 examinations: Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 2) [2009] FCA 424; (2009) 176 FCR 529 at [11]. So much is, in any event, made plain by s 83 and by the concluding clause in s 76(3) itself.
Section 76(3) is to be understood as providing a practical means by which evidence of statements made in a s 19 examination, which is made admissible by subs (1), may be adduced. It is a recognition that the provision of a transcript will often be a convenient means of placing that evidence before a court. This being the effect of s 76(3), it would be a mistake to construe it as confining or limiting the means by which evidence of statements made at s 19 examinations may be adduced.
Ordinarily, evidence by a witness of the statements made by an examinee in the course of a s 19 examination would be hearsay. But the hearsay rule in s 59 of the Evidence Act 1995 (Cth) (Evidence Act) is subject to exceptions. Sections 62 to 64 of the Evidence Act permit first hand hearsay if the maker of the statements had personal knowledge of the asserted facts. Further, the effect of ss 81 and 82 is that the hearsay rule does not apply to evidence of an admission if the evidence is given by a person who saw or heard the admission being made.
The transcripts of the s 19 examinations were no doubt prepared pursuant to a process put in place by ASIC for the recording and transcription of examinations, such that the recorder or transcriber is in a position to give first hand evidence of what was said at the examinations. ASIC did not call the transcriber. However, each of the subject examinations was conducted by Mr Childs, albeit with the assistance of other officers. He is a Senior Investigator employed by ASIC and gave evidence in the trial. Mr Childs heard what was said by each examinee. He too is in a position to give first hand hearsay evidence of what was said.
Mr Childs deposed to the correctness of each transcript and his evidence about that was not challenged. There is no reason why a witness who is satisfied as to the accuracy of a transcript as a record of what was said at an examination cannot give evidence, by reference to the transcript, of what was said by an examinee: Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd [2006] VSC 192; (2006) 57 ACSR 553 at [93]. That is what Mr Childs has done. I considered, therefore, that Mr Childs’ evidence provided a proper means of proof of the statements made by the individual defendants, independently of s 76(3).
The view of s 76 which I have adopted is, on my understanding, consistent with that adopted by Gilmour J in Fortescue Metals at [43].
Mr Kirby’s substantive argument in opposition to ASIC’s reliance on the evidence of Mr Stonehouse and Ms Gore at their respective s 19 examinations, was based on s 76(1)(a) of the ASIC Act. That subsection incorporates by reference s 68(3) of the ASIC Act, which precludes from admission into evidence in a criminal proceeding or in a proceeding for the imposition of a penalty, statements made at a s 19 examination for which claims for the privilege against self‑incrimination or the privilege against self‑exposure to a penalty were made. Mr Kirby submitted that the present proceeding was one for the imposition of penalties with the consequence that the statements made by Mr Stonehouse and Ms Gore after claiming one or other of these privileges could not be admitted.
As noted earlier, ASIC seeks by way of relief declaration as to the contraventions of the defendants and injunctions. The injunctions are sought pursuant to ss 1101B(1) and 1324(1) of the Corporations Act, restraining each of the defendants, whether by themselves or by others, from carrying on a business concerning financial products or financial services, from providing financial product advice or from dealing in financial products within the meaning of s 761A of the Corporations Act and from carrying on any business related to or concerning superannuation interests within the meaning of the SIS Act. Mr Kirby submitted that a relief of this kind meant that the proceedings were properly characterised as proceedings for the imposition of a penalty. He relied on Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 in which the High Court held that proceedings seeking the disqualification, pursuant to s 206E of the Corporations Act, of Mr Rich from managing corporations on the ground that he had contravened the Corporations Act were proceedings for the imposition of a penalty such as to attract the privilege against self‑exposure to a penalty. The plurality said:
[37]If a disqualification order is made, the person against whom the order is made ceases to be a director, alternate director, or a secretary of a company, unless given permission under s 206F or s 206G of the 2001 Act to manage the corporation concerned. The order for disqualification thus causes the person against whom it is made to forfeit any office then held in a corporation and forbids that person from holding office in a corporation for the duration of the disqualification order. Those consequences, whether taken separately or in combination, when inflicted on account of a defendant's wrongdoing, are penalties. That the penalty is not exacted in the form of a money payment does not deny that conclusion. As the authorities referred to earlier in these reasons reveal, equity's concern with penalties was never confined to pecuniary penalties. If exposure to loss of office or exposure to dismissal from a police force is exposure to penalty, exposure to a disqualification order is exposure to a penalty.
(Emphasis in the original and citations omitted)
The Court also held that the decision of the Court in Australian Securities and Investments Commission v Kippe (1996) 67 FCR 499 should be overruled. In Kippe the Full Court had held that proceedings seeking a banning order under the former ss 829 and 830 of the Corporations Law were not provisions for the imposition of a penalty for the purposes of s 68(3).
The reasons of the plurality in Rich demonstrate how equity’s acceptance that a penalty may be more than a monetary exaction has been adopted by the common law. The consequence is that detriments of diverse kinds have come to be regarded as penalties, thereby enlivening the application of the privileges against self‑incrimination and self‑exposure to penalties. It is pertinent, however, that the Court did not regard the possible imposition of a detriment of any kind at all in consequence of a contravention of an enactment as constituting a penalty.
The plurality rejected the notion that the characterisation of a court order as a penalty or otherwise could be determined by reference to the purpose for which it is imposed, saying at [34]:
The question is how the general principles of the privileges against exposure to penalties and forfeiture find application in the particular circumstances of these proceedings. That inquiry is not assisted by examining why the orders sought in the proceedings might be made or what purposes might be achieved by their making. Rather, attention must be focused upon the nature of the orders that are sought.
(Emphasis added)
It is pertinent, in my opinion, that the plurality referred to “the nature” of the order and not to its effect. The two concepts are not synonymous. The effect of an order may inform its nature but the character of an order is to be determined by reference to considerations extending beyond the effect it would have in the circumstances of a particular case.
In the case of s 1324, the order is referred to as an “injunction”. Although the Court’s power is statutory in origin, the order which is authorised has some similarities with the equitable remedy. The order may be issued to restrain actual or proposed conduct or even in respect of past conduct, when this may have a deterrent effect on other potential contravenors: Australian Securities and Investments Commission v Storm Financial Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2011] FCA 858 at [49]. The exercise of the Court’s power under s 1324 does not require proof of an actual contravention of the Corporations Act. Although there is some authority to the contrary (Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128 at 137), other authority establishes that the injunction may be issued on the application of ASIC or of a person whose interests are affected by the conduct, so that it is not only a regulator’s remedy: Airpeak Pty Ltd v Jetstream Aircraft Ltd (1997) 73 FCR 161 at 166‑7. These factors suggest that an injunction under s 1324 is intended to be remedial in character. The remedial nature of an order under s 1324(1) is reinforced by subs (10) which authorises an order for the payment of damages in addition to, or in substitution for, an injunction.
An order under s 1101B is not styled as an “injunction”. The section does (subject to one qualification) require the Court to be satisfied that a contravention of a statutory provision of an identified class has occurred and restricts the persons who may apply for the order. There is a sense in which a s 1101B order is more closely aligned with the enforcement of the Corporations Act rather than providing a remedy in the nature of a civil remedy. However, the examples of the kinds of orders that may be made contained in subs (4), which include orders restraining persons from carrying on a business or engaging in classes of action in relation to financial products or financial services, seem more remedial than punitive in character.
The orders sought in this case would have the effect of restraining the defendants from engaging in the identified activities. They are not in the nature of positive orders of disqualification or of prohibition, although it may be accepted that the difference in effect between such orders and orders by way of negative restraint may be a matter of degree only.
These considerations point against proceedings which include claims for orders under s 1101B(1) and s 1324 as being proceedings for the imposition of a penalty.
Following the decision of the High Court in Rich, s 1349 of the Corporations Act was enacted so as to limit the availability of claims of privilege against self‑incrimination or self‑exposure to penalty. Of relevance presently is s 1349(4):
(4)Paragraph 597(12A)(d) of this Act, and paragraph 68(3)(b) of the ASIC Act, do not apply to a proceeding for the imposition of a penalty by way of:
(a) a disqualification under Part 2D.6 of this Act; or
(b) a declaration under section 853C of this Act; or
(c) a suspension or cancellation under section 915B of this Act; or
(d) a suspension or cancellation under section 915C of this Act; or
(e) a banning order under section 920A of this Act; or
(f) an order under section 921A of this Act; or
(g)a cancellation or suspension under Division 3 of Part 9.2 of this Act; or
(h)a requirement to give an undertaking under paragraph 1292(9)(b) or (c) of this Act; or
(i)a cancellation or suspension under Division 2 of Part 9.2A of this Act; or
(j) an order under section 12GLD of the ASIC Act.
Paragraph 597(12A)(d) is a counterpart to s 68(3)(c) of the ASIC Act.
Section 1349(4) has the effect that proceedings for orders of the identified kinds, which would be characterised as proceedings for the imposition of a penalty, are not subject to s 68(3)(b). On one view, it could be said that the absence of references in subs (4) to an order pursuant to s 1101B(1) and to an injunction pursuant to s 1324(1) indicates that proceedings for those kinds of orders, although proceedings for the imposition of a penalty, are still subject to s 68(3). I take the opposite view. In my opinion, a legislative intention can be inferred from the omission of inclusion in s 1349(4) of orders and injunctions pursuant to s 1101B(1) and s 1324 respectively that proceedings in which those orders are sought are not to be regarded as proceedings for the imposition of a penalty. If it were otherwise, one would have expected that they too would have been included in the s 1349(4) list because, on that basis, it is difficult to identify a sound reason for their exclusion. In this respect, the proper reach and application of s 597(12A)(d) and its counterpart in the ASIC Act (s 68(3)(b)) is informed by s 1349(4) and its history.
One cannot exclude altogether the possibility that the legislature had overlooked s 1101B(1) and s 1324 or had misunderstood their effect. However, given that the evident intention was to overturn the effect of the decision in Rich, one would not readily give effect to such a view.
I observe that in Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd [2007] FCA 1868; (2007) 164 FCR 487 at [18], Finkelstein J held that s 68(3) of the ASIC Act was inapplicable to proceedings in which ASIC sought only declarations and injunctions.
For these reasons I ruled that s 68(3) of the ASIC Act did not preclude reliance by ASIC on the evidence given by Mr Stonehouse and Ms Gore in their s 19 examinations.
As noted earlier, the evidence of the statements made by each defendant in the s 19 examination is admissible only against that defendant.
Since preparing these reasons, my attention has been drawn to two decisions. First, the decision in In the matter of Vault Market Pty Ltd [2014] NSWSC 1641 in which Brereton J at [83] made some comparison between s 206E and s 1101B of the Corporations Act:
[83]… The functions of the two sections are not entirely analogous: s 206E operates, in a manner broadly similar to the power to disqualify holders of a motor vehicle driver’s licence, to protect the public both directly (while the disqualification operates) and indirectly (as a deterrent). The context and content of s 1101B indicates that its purpose is protective and remedial, rather than deterrent, in nature. While acknowledging that the example in s 1101B(4)(a), which refers to “an order restraining a person from carrying on a business … in relation to financial products or financial services, if the person has persistently contravened, or is continuing to contravene“ a provision of Ch 7, is but an example and is expressed to be “without limiting subs (1)“ — which empowers the court to make such order or orders as it thinks fit — I would nonetheless treat it as an illustration of what Parliament had in mind, and be influenced by its terms to think that what was contemplated was an injunction to restrain misconduct that was ongoing, or to remove the risk of future misconduct when such a risk was suggested by a history of persistent past misconduct.
I regard that passage as consistent with my understanding of the effect of s 1101B(1).
The second is Australian Securities and Investments Commission v Monarch FX Group Pty Ltd, in the matter of Monarch FX Group Pty Ltd [2014] FCA 1387, delivered on 17 December 2014, in which Gordon J took the view, opposite to my own, that s 68(3)(b) did preclude the admission into evidence of a s 19 transcript in circumstances such as the present. I have considered whether, in the light of the decision in Monarch, the hearing in this matter should be re‑opened so as to give the parties the opportunity to make further submission on the topic. I have decided against that course, essentially for two reasons. As will be seen, I have relied very little on the s 19 transcripts and I think it undesirable that judgment in this matter be further prolonged.
Evidence admissible against some defendants only
There was other evidence adduced at trial which was not admissible against all defendants. I proceeded on the basis that if the evidence was admissible against at least one defendant it would be received and that the parties should address in their final submissions the use to which the evidence received could be put. I note that this approach is consistent with that taken by Austin J in Australian Securities and Investments Commission v Vines [2003] NSWSC 995; (2003) 48 ACSR 282.
Standard of proof
By reason of s 1332 of the Corporations Act, ASIC has to establish its case on the balance of probabilities. Much of the evidence on which ASIC relied was of a circumstantial kind. The parties were agreed that in determining the appropriate inferences, the Court should have regard to the seriousness of ASIC’s allegations and the gravity of the consequences for the respondents: Briginshaw v Briginshaw (1938) 60 CLR 336 at 362. Section 140 of the Evidence Act requires this in any event. I accept also that, on those matters on which ASIC carries the onus for proof, it will not be sufficient if the evidence on which it relies gives rise to conflicting inferences of equal degrees of probability: Australian Competition and Consumer Commission v Pauls Ltd [2002] FCA 1586 at [99].
Authenticity of documents
During Mr Adamson’s cross‑examination, an issue arose as to the requirement for proof of the authenticity of a document before it could be tendered. Mr O’Bryan SC for ASIC cross‑examined Mr Adamson by reference to a document which appeared on its face to be an email from Mr Gore to Mr Burrows on Wednesday, 14 December 2011 by which Mr Gore sought an urgent advance of funds. Mr Adamson was not shown on the document to have been a recipient of the email. Mr O’Bryan SC tendered the document. Mr Smith for Mr Adamson objected to the tender on the basis that the authenticity of the document had not been established through Mr Adamson. The submission was, in effect, that proof of authenticity was a pre‑condition for the admission of a document into evidence.
Mr Kirby had earlier made a similar objection in relation to a different document but, for reasons which need not be mentioned presently, it was not necessary for the Court to determine that objection. Nevertheless, it was evident that an objection of the same kind as those made by Mr Smith and Mr Kirby was likely in relation to further documents.
I overruled Mr Smith’s objections for brief reasons which I gave at the time and said that I would provide further reasons later. I provide the following brief reasons.
Section 48(1) of the Evidence Act provides (relevantly):
(1)A party may adduce evidence of the contents of a document in question by tendering the document in question or by any one or more of the following methods:
…
(b) tendering a document that:
(i) is or purports to be a copy of the document in question; and
(ii)has been produced, or purports to have been produced, by a device that reproduces the contents of documents;
…
(e) tendering a document that:
(i)forms part of the records of or kept by a business (whether or not the business is still in existence); and
(ii)is or purports to be a copy of, or an extract from or a summary of, the document in question, or is or purports to be a copy of such an extract or summary;
…
Section 58 permits the Court to examine a document the relevance of which is in question and to draw inferences from the document as to its authenticity. It provides:
58 Inferences as to relevance
(1)If a question arises as to the relevance of a document or thing, the court may examine it and may draw any reasonable inference from it, including an inference as to its authenticity or identity.
(2)Subsection (1) does not limit the matters from which inferences may properly be drawn.
Mr Smith and Mr Kirby relied upon the consideration of these provisions and of s 51 by Bryson J in National Australia Bank Ltd v Rusu [1999] NSWSC 539; (1999) 47 NSWLR 309, at [26]‑[27]:
[26]Section 51 does not abolish or in any way affect the need to prove that a document tendered is the document which it purports to be, and subs 48(1) does not authorise the adduction of evidence merely by tendering a document in the absence of any evidence establishing what the document is. Subsection 48(1) is not an enactment to the effect that documents are to be received in evidence on the basis of what appears on their own face. Subsection 48(1) prescribes the means of adducing evidence of the contents of documents, and leaves untouched the need to establish that a document is what it purports to be; it does not mean that documents prove themselves, as if judicial notice must be taken of them.
[27]If subs 48(1) meant that all that had to be done to establish the authenticity of a document was to tender it, it would dispense with the need to prove the authenticity of a document and put the Court entirely in the hands of whatever a document which a party chose to tender purported to be, subject to whatever opportunity another party had of overcoming its apparent effect. I would regard an enactment to that effect as absurd, and I would look for other constructions; however I do not think that subs 48(1) has that effect.
Earlier, at [17] Bryson J had held that before a business record or any other document is admitted into evidence, it was necessary that there should be an evidentiary basis for finding that it was what it purported to be because documents are not ordinarily taken to prove themselves.
However, the correctness of this aspect of the decision in Rusu has been doubted in some decisions: O’Meara v Dominican Fathers [2003] ACTSC 24; (2003) 153 ACTR 1 at [85]; Lee v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 305 at [25]. In Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) [2012] FCA 1355; (2012) 207 FCR 448, Perram J held at [94]‑[104] that the decision was plainly wrong and declined to follow it. Perram J gave detailed reasons for that conclusion with which I respectfully agree. It is not necessary to repeat that reasoning presently.
Perram J noted that the New South Wales Court of Appeal in Daw v Toyworld (NSW) Pty Ltd [2001] NSWCA 25; (2001) 21 NSWCCR 389 at [46] had cited Rusu with apparent approval. He considered, however, that the reference to Rusu in Daw v Toyworld was an obiter dictum and so not binding on him. Mr Smith and Mr Kirby submitted that Perram J had been mistaken in that respect and should have regarded himself as bound by the principle stated in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492 that:
[U]niformity of decision in the interpretation of uniform national legislation … is a sufficiently important consideration to require that an intermediate appellate court – and all the more so a single judge – should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless convinced that that interpretation is plainly wrong.
In Daw v Toyworld, the Court of Appeal gave two separate reasons for rejecting a ground of appeal, one of which was of the approach in Rusu. On my understanding, each of the two reasons seems to have been sufficient by itself for the rejection of the ground so that in that sense neither was, of itself, essential for the Court’s decision. In that sense, the approval of the Court of Appeal can be said to be obiter.
However, even if that view be incorrect, Perram J did conclude that Rusu was plainly wrong and, although not referring expressly to Marlborough Gold Mines, did have regard to the underlying principle: at [99]. In these circumstances, I am not satisfied that the reasons of Perram J in Air New Zealand miscarried in a way which makes it inappropriate now to adopt the same reasoning.
For these reasons, I permitted the tender of the document which became Exhibit P76.
Factual Background
In this section of the reasons, I set out some factual background to the issues which arise for the Court’s determination. Some of this section involves findings of fact on material which was not contested, and some findings on disputed evidence.
ActiveSuper
ActiveSuper was incorporated in May 2007. After Mr Burrows’ former wife resigned as director in May 2011, he continued as its sole director. Mr Burrows is also its sole shareholder so that, at material times, it was his company.
The principal business of ActiveSuper, at least until the events in issue in this case, appears to have been the establishment and administration of SMSFs for clients. By his defence, Mr Burrows admitted that, at material times, he and ActiveSuper had:
(a)promoted ActiveSuper as being in the business of providing superannuation administration services to SMSFs, including by providing a range of administration, compliance and reporting duties to trustees of SMSFs;
(b)received and processed completed application forms for the establishment of SMSFs, including forms received from Royale;
(c)assisted with the establishment of Macquarie Bank Deposit Accounts for newly established SMSFs (Macquarie Accounts) and obtained debit authorities permitting him to act on the Macquarie Accounts;
(d)assisted with the rolling over of funds from existing superannuation accounts to the Macquarie Accounts;
(e)assisted with the registration of trustee companies for SMSFs with ASIC and the lodgement of details with the Australian Taxation Office.
By its defence, ActiveSuper admitted (a), (b) and (e) of these allegations but not (c) and (d). It did, however, admit that it had received Macquarie Account forms from clients in the course of providing administration services. ActiveSuper charged an establishment fee for SMSFs of either $1,350 or $1,950 as well as an annual administration fee of $1,650.
ASIC’s evidence indicates that between 24 May 2010 and 28 October 2011, some 320 persons established SMSFs as a result of the activities of the ActiveSuper defendants.There is also evidence that another 116 persons established SMSFs after 21 October 2011.
Until about March 2012, ActiveSuper’s business premises were on Hope Island. ActiveSuper then moved to Southport. Apart from Mr Burrows, ActiveSuper had one other employee. It has never held an AFSL, nor has it been an authorised representative of the holder of such a licence.
An order for the winding up of ActiveSuper was made on 4 July 2014. On 13 August 2014, the Court ordered that the claims against ActiveSuper proceed in respect of the claims for the declaratory relief, and that no further steps be taken thereafter with the leave of the Court.
Royale
Royale was established on 24 May 2010. Initially, Mr Burrows and Mr Gibson held equal shares but since 6 June 2012, Mr Gibson has been the sole shareholder. Mr Burrows was the sole director until 21 March 2011 when he resigned his directorship. Since then Mr Gibson has been Royale’s sole director.
Although Mr Burrows ceased as a shareholder and director of Royale on 6 June 2012, he continued to be the sole signatory on the Royale bank account. ASIC’s case is that, at the times relevant in this litigation, Mr Burrows exercised effective control of Royale and that its function was to generate business for ActiveSuper.
Between 15 April 2011 and 21 October 2011, Royale and Mr Gibson were each a Corporate Authorised Representative (CAR) of Romad Financial Services Pty Ltd (Romad) which was the holder of an AFSL. They resigned as a CAR of Romad on or about 21 October 2011, following the commencement of an ASIC investigation of Romad. Royale (but not Mr Gibson) became a CAR of Spring Financial Group Pty Ltd (Spring Financial) on or about 25 October 2011. Mr Gore was instrumental in Spring Financial appointing Royale as a CAR.
Royale conducted its business from the same premises as did ActiveSuper, initially on Hope Island and later at Southport.
Royale’s business involved principally the promotion of the establishment of SMSFs, the marketing of services associated with the establishment of SMSFs, the marketing of certain investments, and the provision of advice to potential investors concerning those investments. It commenced these activities shortly after its incorporation in May 2010. Its principal method involved cold calling by telemarketing.
Mr Harden was an employee of Royale until June 2012. Mr Harden said that he had commenced as an employee of Royale in October 2009 but, given that it was not incorporated until May 2010, he must be mistaken about that. Initially, Mr Harden was employed as a telemarketer himself but later he became a manager of other telemarketers. At the peak of its operations in June 2010, Royale employed six telemarketers in addition to Mr Harden as manager.
Although Mr Harden was mistaken about the times at which some events occurred, I regarded his evidence as generally reliable and accept it. He described Royale’s method of operation. The telemarketers were given “leads” by Mr Gibson. These were names and telephone numbers together with some indication of the connection between the persons named and Mr Gibson. The telemarketers would telephone the “leads” with a view to arranging appointments between them and Royale’s “sales people” to discuss the establishment of a SMSF and “membership” of Royale. The number of calls Mr Harden made each day varied between 100 and 350, depending on the number who were interested.
The telemarketers used a script given to them by Mr Gibson. These scripts underwent a continuing process of development and revision. A script which Mr Harden identified as having been used in November 2011 was tendered.
According to the script, the telemarketer commenced with a suggestion to the recipient that they had spoken some 8-12 months previously in relation to superannuation. Mr Harden acknowledged that that suggestion was usually false and that the calls were true “cold” calls.
The telemarketer indicated that he or she was calling from Royale and described Royale’s current members as having achieved “fantastic returns” in the last financial year. The telemarketer would then elicit some brief and general information about the recipient’s superannuation arrangement, and inform them that “the number 1 industry super fund” had provided a return of only 2.9 per cent over the previous three years. The telemarketer offered the recipient the prospect of a “free online super comparison” and asked if they would like to have a call back from a consultant. If the recipient answered in the affirmative, the telemarketer then obtained some further detail and indicated that someone from Royale would contact them over the next few days to arrange a consultation.
The witnesses, Toye, Bolton, de Saxe, Osborne, Stagoll, Irwin and Kingdon (who, with the witnesses Mewis and Singer, I will refer to as the “SMSF witnesses”) each deposed to receiving a cold call of this kind from a telemarketer. Ms Singer and Mr Mewis were referred to Royale by acquaintances.
Several, but not all, of the SMSF witnesses expressed interest in being contacted by a consultant regarding their superannuation arrangements. Shortly afterwards, all (apart from Ms Singer, Mr Mewis and Mr Kingdon) received a telephone call from Mr Gibson. This included some who had not expressed any interest to the telemarketer. The content of the conversations described by the SMSF witnesses varied, but nevertheless had much in common. Mr Gibson spoke of the benefits of establishing an SMSF fund, comparing the superior returns said to have been achieved by Royale clients compared with those being achieved by most superannuation funds. In some cases, he referred the SMSF witness to the Royale website which contained an example of the performance of one client’s SMSF. In some cases, Mr Gibson telephoned the SMSF witness more than once. It is very apparent from the evidence of these witnesses that Mr Gibson set out to persuade them to establish an SMSF.
When the SMSF witness agreed to do so, Mr Gibson (or others on his behalf) sent them a package of material, including an application form. That form described itself as “Royale Capital ActiveSuper Application Form” and referred throughout to “Royale Capital ActiveSuper”. The application form required applicants to indicate the name of their existing superannuation fund or funds and to provide their membership number(s) in that fund. It asked applicants to identify the amount in their existing funds which they wished to roll over into their new SMSF. The application form included an authority from applicants for the establishment of a bank account in the SMSF name and an authority to “Royale Capital ActiveSuper” to deduct fees and costs from that account. Mr Gibson informed the applicant that Royale would charge $5,900 for the establishment of the SMSF and that this amount would be deducted from the SMSF bank account once established. In addition, SMSF investors were to be charged the annual administration fee by ActiveSuper to which I referred earlier.
Royale provided the investors with instructions for the establishment of a share trading account with BBY Ltd and the form of application to Macquarie Bank for the establishment of the Macquarie Accounts. Applicants were requested to return the completed form to “Royale Capital ActiveSuper”. Royale and/or ActiveSuper then established the SMSF for the applicant. Having done that, Royale then sent to the SMSFs a series of documents including the SMSF trust deed, establishment minutes, tax file number advice, the Australian Taxation Office acknowledgement of registration of superannuation fund, roll over benefit statements and a Macquarie Bank welcome letter, deposit/cheque book.
It is reasonable on the evidence to infer, and I do infer, that Mr Gibson engaged in the conduct described by the SMSF witnesses in relation to each of the SMSF investors who, following a call from a telemarketer, established an SMSF fund through Royale and ActiveSuper and who subsequently made investments pursuant to the US Realty Memorandum, the SPG PPM or the WPO PPM.
Mr Harden said that Mr Burrows was “for all intents and purposes ... the boss of Royale Capital” and gave instances of how this was manifest in the daily operations of Royale. I will refer to this evidence later.
MOGS
MOGS, which was incorporated on 7 April 2009, was engaged in property development, in particular, the sale of house and land packages to investors. Its shareholders after June 2011 were Mr Adamson, Mascard Pty Ltd (a company associated with Mr Stonehouse), MAC Enterprises (Aust) Pty Ltd (a company associated with Ms Gore) and a Mr and Mrs Anseline. Mr Stonehouse and Ms Gore were its initial directors. Mr Adamson became an additional director on 23 May 2011 and continued as such until 23 April 2012.
MOGS initially conducted its business from offices at Paradise Point (Qld) but in about September 2011 moved to premises at Gaven (Qld) at which Mr Adamson also had offices. It used the name “Realestatestock.com.au” to describe itself and its business .
Mr Gore and Mr Cullen did not reach any agreement at the meeting but a series of phone calls and emails occurred over the following days. By an email to Mr Gore on 24 October 2011, Mr Cullen proposed the sale of a subsidiary, Spring Equities (with the licence attached to it) for $50,000 and the appointment of the purchaser as a CAR of Spring Financial Group to cover the period until the sale was settled. Mr Cullen proposed a fee of $25,000 for the interim CAR. Mr Cullen told Mr Gore that Spring Equities held an AFSL for “personal and general advice for equities; derivatives; managed funds; margin lending; and cash deposit products”.
Shortly afterwards, Mr Cullen sent to Mr Adamson a copy of an earlier email to Mr Gore, Mr Burrows and Mr Gibson attaching a draft of the proposed interim CAR for Royale. Mr Adamson, while in the United States, was involved in some of the drafting of the terms of the interim CAR. Copies of the draft interim CAR were also sent to Mr Gore. Mr Cullen also said (and I accept) that on 24 October 2011 he had a conference call with Mr Burrows, Mr Gibson, Mr Gore and Mr Adamson in which the appointment by Spring Financial of Royale as a CAR was discussed. I accept that evidence.
Ultimately, a CAR between Spring Financial Group and Royale was executed. The CAR bears the date 25 October 2011 but there is some evidence that it may not have been finally executed until 27 October 2011. As noted earlier, the CAR authorised Royale to provide only “general financial product advice” for a limited range of financial products.
On 24 October 2011, Mr Adamson sent an email to Mr Gibson (copied to Mr Burrows and Mr Gore) setting out the terms of a letter which he suggested should be sent to ASIC in relation to the termination of the Romad CAR. The letter suggested by Mr Adamson included the following:
… I will take steps to arrange for another Licence to be put in place in order that I comply with my obligations under the Corporations Act and financial services law generally.
I also observe that emails from Mr Gibson in relation to the negotiation of the share sale agreement for Spring Equities addressed, or copied, to Mr Adamson (and also copied to Mr Gore) contained a general advice disclaimer in the following terms:
Royale Capital Pty Ltd [Royale] is a corporate authorised representative [CAR] 403658 of Spring Financial Group Pty Ltd (AFSL 391655) [Spring FG] and is authorised to provide general financial product advice to retail and wholesale clients. Any advice provided by Royale is of a general nature and has been prepared without taking into account your objectives, financial situation or needs …
I recognise that it is easy for the eye to pass over a disclaimer of this type in an email. However, the very subject of the email correspondence concerned arrangements for a CAR for Royale. That makes it more likely that Mr Adamson and Mr Gore read the disclaimer and were reminded thereby that Royale was authorised to provide general financial product advice only.
In these circumstances, it can be concluded that Mr Gore and Mr Adamson knew the nature of Royale’s CAR. In the case of Mr Adamson, that inference arises in particular from his involvement in the termination of the ROMAD CAR and in obtaining and settling the terms of the interim CAR with Spring Financial Group. In the case of Mr Gore, it arises in particular from the circumstance that he was a recipient of drafts of the interim CAR, knew of its importance to MOGS and from the circumstances outlined above. The inference can be drawn with more confidence having regard to his failure to give evidence: Jones v Dunkel at 308.
The inference that Mr Gore knew that there were limitations on Royale’s CAR is strengthened by an exchange of emails between Mr Cullen and him on 3 and 4 January 2012, in which Mr Cullen expressed concerns that Royale and Mr Gibson were exceeding the authority granted by the interim CAR. In the first email on 3 January, Mr Cullen gave Mr Gore a link to an article on Aussie Stock Forums relating to Royale and Mr Gibson and said:
I don’t put a lot of credence in ASF but this does not look good. These guys are supposed to be offering an SMSF set‑up and admin service, not spruiking investment returns.
I’m about to email a please explain to Justin because I can’t afford any backlash on our AFSL from this sort of thing if any of this is correct. Which for now I will assume it is not – but will need validation from Justin.
Mr Gore responded by an email three minutes later saying:
Mate what are you talking about. We discussed this in detail. Talk later.
Mr Cullen responded:
What I was told was that they set up SMSFs and then referred clients to their other service providers mate. … I’m worried about claimed recent sales activity whereby the people posting suggest that they are being told of 25% pa returns from share market trading and supposedly being given records of trades etc.
On 4 January, Mr Gore sent an email to Mr Cullen with the following content:
I tried to call you yesterday afternoon as requested in your email. We should talk today and resolve a direction. If your view is there are concerns as to the capacity of Royale acting in the capacity as a AFSL holder, then we should also discus (sic) that.
The evidence did not indicate whether there was some further discussion between Mr Cullen and Mr Gore. It does indicate that there were exchanges between Mr Cullen and Mr Gibson.
I regard the above exchange of emails as significant as Mr Cullen was reminding Mr Gore that there were limitations on the scope of the interim CAR.
Ultimately, Spring Financial Group cancelled its CAR agreement with Royale on 12 June 2012 because of its concerns about the activities of Royale. At about the same time, XOTNUC Pty Ltd acquired the shares in Spring Equities.
Mr Adamson deposed to being concerned about the conduct of Mr Burrows and Mr Gibson by early May 2012. Those concerns related in particular to whether their activities were authorised under an AFSL. Mr Adamson said that he received assurances from both Mr Burrows and Mr Gibson that they were complying with the terms of the licence. It is difficult to understand how Mr Adamson could have accepted those assurances at face value.
The involvement of Mr Adamson and Mr Gore in Royale’s obtaining of an interim CAR from Spring Financial Group as outlined above warrants the finding that they each had actual knowledge that, after 25 October 2011, none of the primary contravenors held an AFSL, or an authority under an AFSL, entitling them to carry on their activities in relation to investment by SMSF investors in SPG or WPO. Mr Gore and Mr Adamson may not have appreciated the full significance of what they had been told about the nature of the interim CAR granted by Spring Financial Group. Indeed, given the response on 23 October when they were told that Royale may have no CAR at all, it seems likely that they would have taken further action if they did appreciate the effect of the CAR. My finding however is that they did know the nature and extent of the interim CAR even if they were not fully alert as to its significance.
For the reasons given earlier, the knowledge of Mr Gore can be attributed to MOGS. Mr Adamson resigned as a director of MOGS on 23 April 2012. At least until that date, his knowledge too can be attributed to MOGS. Despite that resignation, his continuing central role in MOGS’ affairs after April 2012 warrants an attribution of his knowledge to MOGS after that date also.
Mr George’s failure to deny the allegation in [80] of 2FASC means that he is taken to have admitted knowing, at relevant times, that the primary contravenors had engaged in the provision of financial services without authority under an AFSL.
However, the evidence does not justify findings that Ms Gore and Mr Stonehouse had knowledge of the limitations on the authority of the primary contravenors under an AFSL. Mr Adamson denied that he had discussed the question with Ms Gore and Mr Stonehouse. ASIC submitted that it could inferred from the knowledge of Ms Gore and Mr Stonehouse of suspicious circumstances and their failure to make enquiry that they had knowledge. ASIC did not however identify the suspicious circumstances relating to an AFSL in respect of which these defendants were said to have refrained deliberately from making further enquiry. Further, the ASIC submission seemed to contemplate a form of constructive rather than actual knowledge.
ASIC also submitted that the failure of Ms Gore and Mr Stonehouse to give evidence enabled a Jones v Dunkel inference to be drawn. However, such an inference cannot be used to make good an absence of evidence: Australian Competition and Consumer Commission v Kaye [2004] FCA 1363 at [189]. That is this case.
For these reasons, I am satisfied that ASIC has established accessorial involvement by Mr Gore, Mr Adamson, Mr George and MOGS in the contraventions by the ActiveSuper defendants of s 911A(1) but not accessorial involvement by Ms Gore and Mr Stonehouse.
Knowing concern in the contraventions of s 1041H(1) and s 12DA
As noted earlier, ASIC must establish that each of the MOGS defendants knew that the primary contravenors had represented in the PPMs of SPG and WPO that monies invested by Australian SMSF investors pursuant to the respective PPMs would be used for the purchase by SPG and WPO of property, and that the primary contravenors did not have reasonable grounds for those representations.
Rule 16.07 of the Federal Court Rules has the effect of deeming Mr George to have admitted the knowledge on which ASIC relied in its case against him.
The factual findings made earlier make it plain that Mr Gore and Mr Adamson had the requisite knowledge. Both had detailed knowledge of the content of the PPMs, both knew that it was intended all along that the monies subscribed by SMSF investors would be provided to MOGS and used by it as it chose, and that the monies would not be invested in real estate. I note again in this context Mr Gore’s insistence that the monies raised pursuant to the PPMs should come to MOGS as soon as practical.
An illustration of Mr Adamson’s knowledge is evident in his involvement in the diversion of funds raised pursuant to the SPG PPM to Mr Gordon Johnson in discharge of MOGS’ liability to him under an irrevocable authority. Another illustration is that Mr Adamson knew that Cayco was entitled only to a performance fee under the relevant investment management agreement. Despite knowing this, Mr Adamson caused $100,000 to be paid to Cayco on 30 March 2012 at Mr Gore’s instruction, without knowing the purpose of the payment. I also note that Mr Adamson was unable to explain why $80,000 was paid by WPO to Cayco on 18 April 2012 and why Cayco paid $10,000 to “Executive Aircraft Charter”.
It is appropriate to record, in fairness to Mr Adamson, that he did make a number of admissions concerning his culpability in relation to the BVI Scheme. He acknowledged that he had not made enquiries as to the monies which were paid into the Cayco bank account; that he had chosen to be a director of Cayco in name only; that he should have made enquiries as to the day to day affairs of Cayco’s business; that he should have known the circumstances in which Cayco received money; that he had chosen not to ask about it despite being aware of the potential significance of the matters; that he had chosen not to understand properly all the matters relating to the day to day affairs of MOGS; that he had made that choice at the time he was a director of MOGS; that he should have satisfied himself that the recipients of the PPMs in SPG and WPO satisfied the sophisticated investor criterion; that he had not discharged his duties as a director appropriately; and that one of the reasons he had chosen not to ask questions was because he did not wish to know the answers.
It seemed to me that the manner in which that evidence was given reflected in part Mr Adamson’s retrospective critique of his own conduct rather than being evidence of his state of mind in the latter part of 2011 and the first part of 2012. Nevertheless, these were significant admissions and it is to Mr Adamson’s credit that he made them, as well as having reached agreement with ASIC as to orders resolving the claim made against him. I indicate however, my satisfaction that ASIC has established actual knowledge by Mr Adamson and not some lesser form of imputed or constructive knowledge.
I am also satisfied that Ms Gore had the requisite knowledge. She had been actively involved in the preparation and finalisation of the PPMs, and the development of the Cayco website on which the PPMs were published. Ms Gore knew that the monies raised pursuant to the PPMs were being advanced to MOGS and disbursed at its discretion. She gave some of the directions with respect to that disbursal. A very strong inference arises from the evidence that Ms Gore knew at relevant times that the monies were not to be invested in real estate. Amongst other things, Ms Gore had executed in December 2011 loan agreements relating to the provision of funds to MOGS. Ms Gore was also a signatory to the loan agreements entered into on 10 May 2012 providing for the advance of monies to MOGS.
The inference that Ms Gore had the relevant knowledge can be drawn with even more confidence by reason of the Jones v Dunkel inference arising from her failure to give evidence.
The claim against Mr Stonehouse is more problematic. Mr Stonehouse did not have the same involvement as the other MOGS defendants in the preparation of the PPMs. Although he was provided with some drafts of the WPO PPM, this was at a relatively early stage of its development: 14 October 2011, being the first draft of the Information Memorandum which became the WPO PPM; 21 October 2011, being a revision of the same Information Memorandum; 27 October 2011, in relation to the Information Memorandum for WPO; and 12 December 2011, when, in an email attaching the “final version” of the prospectus for the WWPDIO Fund, Mr Gore said that “if this is not issued this week no further funds will flow”.
There is, however, no evidence that Mr Stonehouse was ever provided with a copy of the draft or final version of the SPG PPM. It may be reasonable to infer that Mr Stonehouse obtained knowledge in a general way regarding SPG, its Fund and its PPM, but in my view there is not a proper basis on which to find that he had actual knowledge of the representation in it upon which ASIC relies. This means that the claim of his being knowingly concerned in the application representation contained in the SPG PPM is not established.
If the content of the WPO PPM was relevantly the same, or substantially the same as the drafts of the Information Memorandums for the WPO fund provided to Mr Stonehouse, there might a basis for concluding that he had continuing knowledge. However, the overall tenor of the draft Information Memoranda is, in my view, significantly different from the final WPO PPM. In particular, the initial drafts made it much more obvious that the WPO would be engaged in financing activities rather than direct investment. It cannot, in my opinion, be reasonably concluded that the initial draft Information Memoranda provided to Mr Stonehouse contained the representation as to the use of the monies upon which ASIC relied.
I am satisfied that Mr Stonehouse must have had, at the least, a general knowledge of what was involved in the BVI Scheme and, in particular, in relation to SPG and WPO. As his memo of 13 December 2011 indicated, MOGS was expending substantial sums in the pursuit of the BVI Scheme, so much so that Mr Stonehouse was concerned that it may put at risk MOGS own underlying business. It can be inferred that he was reassured by the reports made from time to time, whether at Board meetings or more informally. It can also be inferred that Mr Stonehouse would not readily have been willing to sign the loan agreements and guarantees on 10 May 2012 without some understanding of the elements of the underlying scheme. However, to my mind, the inferences arising from those circumstances are not sufficient to warrant a conclusion that he knew that the PPMs contained the representation upon which ASIC relies. Jones v Dunkel cannot be relied upon to make good this shortcoming, as it does not justify the drawing of an inference which is not otherwise available on the evidence.
ASIC also submitted in relation to Mr Stonehouse that he can be taken to have had knowledge of “suspicious circumstances”, so that his failure to make further enquiry evidenced knowledge. ASIC did not, however, identify the particular “suspicious circumstances” upon which it relied for the inference that Mr Stonehouse had actual knowledge of the impugned representation in the PPMs.
For these reasons, I consider that ASIC has not established that Mr Stonehouse was knowingly concerned as an accessory in the contraventions of s 1041H and s 12DA.
For the reasons given earlier, the knowledge of Mr Gore, Mr Adamson and Ms Gore can be attributed to MOGS. It too had the requisite knowledge and therefore was knowingly concerned in the contraventions of s 1041H and s 12DA by the primary contravenors.
Accordingly, ASIC has established that Mr Gore, Mr Adamson, Ms Gore, Mr George and MOGS were knowingly concerned in the contraventions of s 1041H and s 12DA.
Remedies
Declarations
ASIC seeks declarations by the Court as to the contraventions and accessory involvements found proved.
The Court’s power to grant declarations under s 21 of the FC Act is discretionary: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 97‑9.
The Court may grant declarations by consent: Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 at [30]. Ordinarily, the Court will grant declarations to which the parties consent if they are within the Court’s jurisdiction to make and are otherwise unobjectionable: Trade Practices Commission v Milreis Pty Ltd (No 2) (1978) 32 FLR 234 at 243. The Court must however be satisfied that the questions are real and not hypothetical, that the applicant has a real interest in obtaining the declarations, and that there is a proper contradictor: Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437‑8.
In this case, the Court has received a substantial body of evidence regarding the conduct of ActiveSuper, Mr Burrows and Mr Adamson who consent to declarations and injunctions. It is plain that the threshold conditions for the grant of declarations concerning them are established.
In my opinion, it is appropriate for the declarations sought by ASIC to be made in respect of those defendants found to have committed the contraventions or to have been involved in them. This was a significant trial with substantial evidence. That circumstance, and ASIC’s status as regulator, makes it appropriate for there to be declarations giving effect to the Court’s findings. Those declarations will serve to indicate the Court’s findings, its disapproval of the contravening conduct and will provide some measure of vindication to those who have suffered detriments by reason of that conduct. These declarations should be substantially in the form agreed between ASIC, ActiveSuper, Mr Burrows and Mr Adamson and in relation to the remaining defendants should be substantially in the form proposed by ASIC.
Injunctions
In relation to the injunctions sought by ASIC, I proceed on the basis that the Court’s power under s 1324 of the Corporations Act is not confined by s 1108B(1): Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106 at [90]‑[91]. As previously noted, s 1324 authorises the issue of an injunction against both contravenors and those who are accessories.
Section 1323 of the Corporations Act also vests wide powers in the Court with which to protect the interests of those within the defined class of “aggrieved person”: Cullen v Wills (1991) 31 FCR 19 at 27.
The principles relating to the exercise of the discretion under s 1324 are settled. In Australian Securities and Investments Commission v Mauer‑Swisse Securities Ltd [2002] NSWSC 741; (2002) 42 ACSR 605, Palmer J set out several of the applicable principles at [36]:
(a)the jurisdiction which the Court exercises under s 1324 is statutory, and not the Court’s traditional equity jurisdiction;
(b)the Court is not to be confined by the considerations which would be applicable if it was exercising its traditional equity jurisdiction;
(c)the Court should consider whether the injunction will have some utility or will serve some purpose within the contemplation of the Corporations Act, and that is so whether the application is for a permanent injunction under subs (1) or an interim injunction under subs (4);
(d)when the application is made by ASIC rather than a private litigant, the Court is likely to give greater weight to the question of whether the injunction will serve a purpose within the contemplation of the Corporations Act.
The Court may grant a permanent injunction even when a winding up order has already been made against a corporate defendant: Stone Assets Management at [48]‑[49]. Like the making of a declaration, the grant of an injunction under s 1324 may serve to mark the Court’s disapproval of the defendant’s conduct and operate as a deterrent to others: Australian Securities and Investments Commission v Storm Financial Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2011] FCA 858 at [49]; Re Idylic Solutions [2013] NSWSC 106 at [66], [69].
In the light of the findings as to their contraventions and involvement and the consent of ActiveSuper, Mr Burrows and Mr Adamson to injunctions, I am satisfied that it is appropriate for the injunctions which those defendants have agreed with ASIC to be issued.
I am also satisfied that it is appropriate for the injunctions to be issued against the LLCs and SPG, WPO and Cayco. The same considerations indicate that an injunction is appropriate in the case of MOGS. As noted, provisional liquidators have been appointed to each and I will make orders for their winding up. The grant of injunctions in their case will not cause any prejudice and will demonstrate the Court’s disapproval of their conduct and have a deterrent effect.
The injunctions sought by ASIC are appropriate in the case of Mr Gore. On my findings, Mr Gore has been involved in serious contraventions of each of ss 727(1) and (2), 911A(1), 1041H(1) of the Corporations Act and s 12DA of the ASIC Act. The consequences of Mr Gore’s conduct are serious as the superannuation savings of a large number of SMSF investors, including those with limited savings, appear to have been wholly lost. ASIC has calculated that more than $1.7 million of the investors’ savings were paid for the apparent benefit of Mr Gore. Mr Gore’s conduct continued over several months and involved the promotion and development of a scheme designed intentionally to avoid the application of Australian law. I am satisfied that there is a very real risk that left unrestrained, Mr Gore will engage in like activity in the future, especially as there was no recognition by him of the wrongfulness of his conduct during the course of the trial. The Court should do what it can to protect investors from such conduct.
The considerations just mentioned in relation to Mr Gore apply to a large extent in the case of Ms Gore. She too was a significant participant in the establishment and development of the BVI Scheme and was a personal beneficiary of it. Her involvement in the contraventions of ss 727(1) and (2) and 1041H of the Corporations Act and s 12DA of the ASIC Act has had detrimental effects on SMSF investors of a similar kind to those of her husband. I consider that, if unrestrained, there is a real chance that Ms Gore may engage in similar forms of activity in the future.
Injunctions are also appropriate in the case of Mr George. He too played a significant role in the development and implementation of the BVI Scheme. There is evidence, about which it is unnecessary to reach a final conclusion, suggesting that Mr George was involved in the sale of the Arizonan properties owned by the LLCs and the putting of the proceeds of those sales beyond the reach of the provisional liquidators. It is also evident that Mr George was prepared to act in many respects at the direction of Mr Gore. This is an additional consideration indicating the appropriateness of injunctions against him.
The parties did not make submissions about the period during which the injunctions should operate. I will give them an opportunity to do so.
Winding up of the LLCs and SPG, WPO and Cayco
As already noted, provisional liquidators have been appointed to each of these companies. ASIC seeks orders for their winding up.
Each of SPG, WPO and Cayco is a foreign company as defined in s 9 of the Corporations Act. Section 583 of the Corporations Act provides for the winding up of certain foreign companies. Section 583 provides, relevantly:
583 Winding up Part 5.7 bodies
Subject to this Part, a Part 5.7 body may be wound up under this Chapter and this Chapter applies accordingly to a Part 5.7 body with such adaptations as are necessary, including the following adaptations:
(a)the principal place of business of a Part 5.7 body in this jurisdiction is taken, for all the purposes of the winding up, to be the registered office of the Part 5.7 body;
…
(c) the circumstances in which a Part 5.7 body may be wound up are as follows:
(i)if the Part 5.7 body is unable to pay its debts, has been dissolved or deregistered, has ceased to carry on business in this jurisdiction or has a place of business in this jurisdiction only for the purpose of winding up its affairs;
(ii)if the Court is of opinion that it is just and equitable that the Part 5.7 body should be wound up;
(iii)if ASIC has stated in a report prepared under Division 1 of Part 3 of the ASIC Act that, in its opinion:
(A)the Part 5.7 body cannot pay its debts and should be wound up; or
(B)it is in the interests of the public, of the members, or of the creditors, that the Part 5.7 body should be wound up;
…
A “Part 5.7 body” to which s 583 refers is defined in s 9 of the Corporations Act to mean (relevantly):
(a)…
(b)a registrable body that is a foreign company and:
(i)is not registered under Division 2 of Part 5B.2; or
(ii)is not registered under that Division but carries on business in Australia; or
(c)…
The LLCs, SPG, WPO and Cayco were conducting businesses in Australia and so come within para (b)(ii) of this definition: Australian Securities and Investments Commission v Edwards [2004] QSC 344; (2004) 22 ACLC 1469 at [33]‑[34], [38].
The evidence of Mr Lewis, one of the provisional liquidators of the LLCs, that they were insolvent by 3 December 2012 was not contested. Having regard to the insolvency of MOGS and the MUT, it is improbable that the LLCs will ever recover the amounts owed to them by MOGS.
Mr Lewis’ evidence also indicates that each of SPG, WPO and Cayco is insolvent. That evidence was not challenged.
ASIC also relied on the “just and equitable” ground contained in s 583(c)(ii) of the Corporations Act for the winding up of the LLCs and SPG, WPO and Cayco. ASIC relies upon the following matters:
(a)the involuntary removal of Mr Burrows as a director of SPG and WPO on 17 August 2012, apparently at the instigation of Mr George;
(b)the sale of the properties in Arizona only a matter of days before a hearing in this Court at which ASIC sought orders restraining the defendants from dealing with the properties and after notice had been given to the defendants of the orders sought by ASIC;
(c)the difficulties which the provisional liquidators have had in obtaining information from Mr George regarding the sale of the properties;
(d)their omission of the LLCs, SPG and WPO to maintain proper accounting records of the financial transactions in which they engaged;
(e)the making of large loans to MOGS for purposes not in accordance with the US Realty Memorandum;
(f)the appointment of Cayco as “investment manager” by SPG and WPO despite Mr George, one of Cayco’s directors, also being a director of SPG and Cayco’s other director (Mr Adamson) also being a director of the beneficiary of the funds (MOGS);
(g)the disbursal of the funds by Cayco in a manner which was inconsistent with its interests and obligations.
In the circumstances, I accept ASIC’s submission that the winding up of the LLCs, SPG, WPO and Cayco is appropriate because the Court cannot have confidence in their proper management and in order to provide some measure of protection to investors.
The orders for the winding up of the LLCs, SPG, WPO and Cayco will be made.
Dissolving the interlocutory injunctions made on 3 December 2012
At the conclusion of the submissions, Mr Kirby made an oral application on behalf of Mr Stonehouse and Ms Gore for the discharge of interlocutory injunctions made by Marshall J on 3 December 2012. In broad terms, those injunctions related to the defendants’ ability to deal with funds, the defendants’ ability to deal with property purchased with SMSF funds, the disposal of books and records, the making of offers of securities, the engagement in financial services, and securing the defendants’ passports. The interlocutory injunctions have since been varied in some respects which it is not presently necessarily to outline.
It is appropriate for the interlocutory injunctions to be reviewed in the light of these reasons and the orders which the Court will make in due course. For that reason, I will not address the oral application of Mr Stonehouse and Ms Gore in these reasons.
Summary
I have found that ActiveSuper and Mr Burrows contravened s 726(1) of the Corporations Act.
I have found that ActiveSuper, Royale, Mr Burrows, Mr Gibson, SPG, WPO and Cayco contravened s 727(1) and (2) of the Corporations Act and that MOGS, Mr George, Ms Gore, Mr Adamson and Mr Gore were knowingly concerned in those contraventions.
I have found that ActiveSuper, Royale, Mr Burrows, Mr Gibson, SPG, WPO and Cayco contravened s 911A of the Corporations Act and that MOGS, Mr George, Mr Adamson and Mr Gore were knowingly concerned in those contraventions.
I have found that the ActiveSuper defendants, SPG, WPO and Cayco contravened s 1041H(1) of the Corporations Act and s 12DA(1) of the ASIC Act in the representations as to the uses to which monies subscribed pursuant to the SPG and WPO PPMs would be put and that all of the MOGS defendants, other than Mr Stonehouse, were knowingly concerned in those contraventions. I have found that ASIC has not established its claims of misleading or deceptive conduct by silence or omission.
I have found that each of the LLCs, SPG, WPO and Cayco should be wound up.
I have found that ASIC has not established any of its claims against Mr Stonehouse and that it has not established that Ms Gore was knowingly concerned in the contraventions of s 911A.
It has been necessary to make some findings in respect of the conduct of Royale and Mr Gibson despite their absence from the trial because that conduct was, in part, conduct on which ASIC relied for its case against ActiveSuper and Mr Burrows and for its claims concerning accessorial involvement by the MOGS defendants. However, as ASIC’s claims against Royale and Mr Gibson were adjourned because of Mr Gibson’s illness, judgment is not to be entered against those defendants. I will adjourn consideration of ASIC’s claims against Royale and Mr Gibson to a date to be fixed.
The actions against the corporate entities ordered to be wound up or subject to provisional liquidation, were ordered to proceed to the point of entry of judgment only. I will hear submissions as to any further orders to be made with respect to those defendants.
I am satisfied that declarations as to the contraventions and accessorial involvement of the remaining defendants (other than Mr Stonehouse) should be made and that the injunctions sought by ASIC pursuant to s 1324(1) of the Corporations Act should be made, again, other than against Mr Stonehouse. I will hear from the parties as to the periods of restraint and as to the precise terms of the injunctions.
ASIC is directed to file and serve by 24 April 2015 minutes of the orders to be made to give effect to these reasons and findings, together with a short outline (no more than five pages) of the submissions it will make on the period of the injunctions and on the question of costs. Any party intending to contest the appropriateness of the orders proposed by ASIC is to file and serve by 1 May 2015 minutes of the orders which that party will contend are appropriate to give effect to these reasons, together with a short outline of the submissions (no more than five pages) to be made in support of those minutes.
The matter is adjourned to 10.00am in Brisbane on 8 May 2015 for submissions as to the form of the orders, costs, the oral application of the 14th and 15th defendants for the discharge of the interlocutory orders made on 3 December 2012, and any other matter necessary to give effect to the Court’s findings.
I certify that the preceding six hundred and fifty-one (651) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate:
Dated: 14 April 2015
Schedule
Defendants:
Second Defendant: ACN 143 832 053 PTY LTD (ACN 143 832 053)
Third Defendant: JASON GRANT BURROWS
Fourth Defendant: JUSTIN LUKE GIBSON
Fifth Defendant: U.S. REALTY INVESTMENTS #1, LLC (L-1666059-6)
Sixth Defendant: U.S. REALTY INVESTMENTS #2, LLC (L-1666058-5)
Seventh Defendant: U.S. REALTY INVESTMENTS #3, LLC (L-1668734-4)
Eighth Defendant: U.S. REALTY INVESTMENTS #4, LLC (L-1668736-6)
Ninth Defendant: SYNDICATED PROPERTY GROUP LTD
Tenth Defendant: WORLDWIDE PROPERTY OPPORTUNITIES LTD
Eleventh Defendant: CAYCO MANAGEMENT
Twelfth Defendant: MOGS PTY LTD
Thirteenth Defendant: JEFFREY GEORGE
Fourteenth Defendant: GRAEME STONEHOUSE
Fifteenth Defendant: MARINA GORE
Sixteenth Defendant: MARK GORDON ADAMSON
Seventeenth Defendant: CRAIG KIRRIN GORE
Eighteenth Defendant: MASH INVESTMENTS PTY LTD (ACN 149 597 384)
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