Australian Securities and Investments Commission v Axis International Management Pty Ltd (No 5)

[2011] FCA 60

FEDERAL COURT OF AUSTRALIA

Australian Securities & Investments Commission v Axis International Management Pty Ltd (No 5) [2011] FCA 60

Citation:

Australian Securities & Investments Commission v Axis International Management Pty Ltd (No 5) [2011] FCA 60

Parties:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v AXIS INTERNATIONAL MANAGEMENT PTY LTD (ACN 075 799 772), FIREPOWER INVESTMENTS PTE LTD, OWSTON NOMINEES NO 2 PTY LTD (ACN 001 769 099), SATTVIC PTY LTD (ACN 114 153 954), SEASWAN HOLDINGS PTY LTD (ACN 059 000 538), QUENTIN PHILLIP O'DOHERTY WARD, TIMOTHY FRANCIS JOHNSTON and GREEN TRITON LTD

File number:

WAD 157 of 2008

Judge:

GILMOUR J

Date of judgment:

8 February 2011

Catchwords:

CORPORATIONS - contraventions of s 727 Corporations Act 2001 (Cth) – whether failure to make required disclosures when making offers for sale of securities and/or distributing application forms for offers to sell securities – whether relevant purpose under s 707(3) and (4) established – whether s 727 confined to persons who control shares or those with capacity to effect a binding agreement – whether knowledge that disclosure required is a necessary element of contravention of s 727(1)

Legislation:

Corporations Act 2001 (Cth) ss 8, 21, 129, 176, 700(1), (2), (3) 707(3), (4), (5), 708, 708A, 710, 713, 715, 717, 719(1), 727(1), (2), 728 1324B, 1337B Part 6D.2, Chapter 6D
Federal Court of Australia Act 1976 (Cth)
Judiciary Act 1903 (Cth) s 39B
Australian Securities and Investments Commission Act 2001 (Cth) ss 76, 77
Trade Practices Act 1974 (Cth) ss 80, 80A, 80C, 80D, Part IV

Cases cited:

Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596
A-G (NSW) v Australian Fixed Trusts Ltd [1974] 1 NSWLR 110
Australian Competition and Consumer Commission v Goldy Motors Pty Ltd [2000] FCA 1885
Australian Competition and Consumer Commission v IMB Group [1999] FCA 313
Australian Competition and Consumer Commission v On Clinic Australia (1996) 35 IPR 635
Australian Competition and Consumer Commission v Ozdirect Online Brands Pty Ltd [2009] FCA 1604
Australian Competition and Consumer Commission v Real Estate Institute of WA Inc (1999) 95 FCR 114

Australian Competition and Consumer Commission v Target Australia [2001] ATPR 41–840

Australian Securities & Investments Commission v Australian Investors Forum Pty Ltd (No 2) (2005) 53 ACSR 305
Australian Securities & Investments Commission v Fortescue Metals Group Ltd (No 2) (2009) 176 FCR 529
Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc (2009) ACSR 1
Maddocks v DJE Constructions Pty Ltd (1982) 148 CLR 104
Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1
News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1993) 41 FCR 89

Date of hearing:

15, 18, 22 October 2010

Place:

Perth

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

294

Counsel for the Plaintiff:

Mr M Pearce (SC) with Ms W E Gillan

Solicitor for the Plaintiff:

Blake Dawson Waldron

Counsel for the First & Sixth Defendants:

Mr T M Clavey with Ms S J Nims

Solicitor for the First & Sixth Defendants

Clavey Legal

Counsel for the Fifth Defendant:

Mr G Hill (appeared with leave)

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 157 of 2008

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff

AND:

AXIS INTERNATIONAL MANAGEMENT PTY LTD
(ACN 075 799 772)
First Defendant

FIREPOWER INVESTMENTS PTE LTD
Second Defendant

OWSTON NOMINEES NO 2 PTY LTD (ACN 001 769 099)
Third Defendant

SATTVIC PTY LTD (ACN 114 153 954)
Fourth Defendant

SEASWAN HOLDINGS PTY LTD (ACN 059 000 538)
Fifth Defendant

QUENTIN PHILLIP O'DOHERTY WARD
Sixth Defendant

TIMOTHY FRANCIS JOHNSTON
Seventh Defendant

GREEN TRITON LTD
Eighth Defendant

JUDGE:	GILMOUR J
DATE OF ORDER:	8 FEBRUARY 2011
WHERE MADE:	PERTH

THE COURT DECLARES THAT:

(1)On each of the occasions specified in Part A of the Schedule hereto, the first defendant, Axis International Management Pty Limited, contravened s 727(1) of the Corporations Act 2001 (Cth) by distributing an application form for an offer for the sale of shares in Firepower Holdings Group Limited.

(2)On each of the occasions specified in Part B of the Schedule hereto, the third defendant, Owston Nominees No 2 Pty Ltd, contravened s 727(1) of the Act by making an offer for the sale of shares in Firepower Holdings Group Limited;

(3)On each of the occasions specified in paragraphs 1, 2, 5, 9, 10, 12, 13, 14, and 15 of Part A of the Schedule hereto, the sixth defendant, Quentin Phillip O'Doherty Ward, contravened s 727(1) of the Corporations Act by distributing an application form for an offer for the sale of shares in Firepower Holdings Group Limited.

AND THE COURT ORDERS THAT:

(1)The application against the fifth defendant be and is dismissed.

(2)The plaintiff pay the costs of the fifth defendant to be taxed if not agreed.

(3)The fifth defendant pay the plaintiff its costs thrown away by reason of the adjournment on 18 October 2010.

(4)The further hearing of the proceeding concerning disqualification orders sought under s 206E of the Corporations Act against the sixth and seventh defendants is adjourned to a date to be fixed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

SCHEDULE

A.Paragraphs 1 and 3 of declarations – contraventions by first defendant (Axis International Management Pty Limited) and sixth defendant (Quentin Phillip O'Doherty Ward)

1.Application form provided on or about 21 September 2005 to Geoffrey Ronald Allan for the sale of shares in Firepower Holdings Group Limited by Green Triton Limited.

2.Application form provided on or about 5 April 2006 to Geoffrey Ronald Allan for the sale of shares in Firepower Holdings Group Limited by the second defendant.

3.Application form provided on or about 3 October 2005 to Carol Ann Ashworth for the sale of shares in Firepower Holdings Group Limited by Green Triton Limited.

4.Application form provided on or about 3 May 2006 to Carol Ann Ashworth for the sale of shares in Firepower Holdings Group Limited by the second defendant.

5.Application form provided on or about 17 May 2006 to Carol Ann Ashworth for the sale of shares in Firepower Holdings Group Limited by the second defendant. 

6.Application form provided on or about 1 February 2006 to Ronald Robin Baird for the sale of shares in Firepower Holdings Group Limited by the third defendant.

7.Application form provided on or about 4 May 2006 to Ronald Robin Baird for the sale of shares in Firepower Holdings Group Limited by the second defendant.

8.Application form provided on or about 3 April 2006 to Shannon Carter for the sale of shares in Firepower Holdings Group Limited by the second defendant.

9.Application form provided on or about 22 November 2005 to Angela Jones for the sale of shares in Firepower Holdings Group Limited by the third defendant.

10.Application form provided on or about 22 November 2005 to Angela Jones and Penny Buchan for the sale of shares in Firepower Holdings Group Limited by the third defendant.

11.Application form provided on or about 5 October 2005 to Nicholas Joseph Furlan and Camelia Furlan for the sale of shares in Firepower Holdings Group Limited by Green Triton Limited.

12.Application form provided in or about December 2005 to Nicholas Joseph Furlan and Camelia Furlan for the sale of shares in Firepower Holdings Group Limited by the third defendant.

13.Application form provided on or about 9 September 2005 to Darryl John Edmondson and Ludmilla Elizabeth Edmondson for the sale of shares in Firepower Holdings Group Limited by Green Triton Limited.

14.Application form provided on or about 28 April 2006 to Darryl John Edmondson and Ludmilla Elizabeth Edmondson for the sale of shares in Firepower Holdings Group Limited by the second defendant.

15.Application form provided on or about 29 November 2005 to Ronald Geoffrey Nottle and Marilyn Agnes Nottle for the sale of shares in Firepower Holdings Group Limited by the third defendant.

B.Paragraph 2 of declarations – contraventions by third defendant (Owston Nominees No 2 Pty Limited)

16.Offers made on or about 24 January 2006 and 1 February 2006 for the sale to Pejean Pty Ltd of 300,000 shares in Firepower Holdings Group Limited.

17.Offers made in or about November 2005 and on or about 22 November 2005 for:

(a)the sale to Angela Jones of 10,000 shares in Firepower Holdings Group Limited; and

(b)the sale to Angela Jones and Penny Buchan as trustees of the A Jones Superannuation fund of 40,000 shares in Firepower Holdings Group Limited.

18.Offer made on or about 22 December 2005 for the sale to Angela Jones and Penny Buchan as trustees of the P Buchan Superannuation Fund of 20,000 shares in Firepower Holdings Group Limited.

19.Offer made in or about December 2005 for the sale to Nicholas Joseph Furlan and Camelia Furlan as trustees for the Furlan Superannuation Fund of 60,000 shares in Firepower Holdings Group Limited.

20.Offers made in or about November 2005 and on or about 29 November 2005 for the sale to Ronald Geoffrey Nottle and Marilyn Agnes Nottle as trustees of the RG & MA Nottle Superannuation Fund of 50,000 shares in Firepower Holdings Group Limited.

21.Offers made in or about September 2005 by Timothy Lyndhurst D'Emden for the sale to Adam John Schilling of A$52,500 worth of shares in Firepower Holdings Group Limited or more, in lots of A$52,500, at A$0.35 per share.

ANNEXURE A

[Defendant's letterhead,
showing defendant's full name and the address of its registered office
All type to be 10pt Arial]

[Name]

[Address]

Dear [Name]

Your shares in Firepower Holdings Group Limited

On [date(s) of sale(s)] we sold you shares in Firepower Holdings Group Limited (Firepower). 

Some offers for sale of Firepower shares broke the law

The Federal Court of Australia has ruled that, on certain occasions when we offered to sell shares in Firepower, we broke the law, because we had not lodged a prospectus with the Australian Securities and Investments Commission (ASIC).

In some circumstances, Australian laws require that, when offers to sell shares are made, a prospectus or similar document needs to come with the offers.[1]  Sometimes this requirement does not apply, for example when the sales are to “sophisticated investors” who (it appears from an accountant’s certificate) have net assets of at least $2,500,000 or gross income for each of the last two financial years of at least $250,000.[2]

[1]See sections 707 and 727 of the Corporations Act 2001 (Cth).

[2]See section 708(8) of the Corporations Act 2001 (Cth).

Where a prospectus must come with share offers then (subject to some limitations) the law requires it to contain all the information that investors would reasonably require to make an informed assessment of:

•the rights and liabilities attaching to the shares that are being offered; and

•the assets and liabilities, financial position and performance, profits and losses and prospects of the company that issued the shares.

The court has confirmed that at least [number] times, we offered the shares for sale without a prospectus being lodged in circumstances where the prospectus requirement did apply.  That means we broke the law when we made those offers. 
You may have rights to claim money

The court has confirmed those breaches of the law in an order that it made on [date].  At the same time, the court ordered us to write to you in the terms of this letter.  If the share offer(s) we made to you broke the law (something the court has not yet been asked to decide), you may have a right to make a legal claim against us for damages, or for a refund of the money you paid us.[3]  That raises legal issues, and you should get legal advice on them.

[3]See ASIC v Karl Suleman Enterprizes [ 2003] NSWSC 400. 

If you have any questions about this letter, please direct them to your lawyer or other professional adviser, rather than to us or ASIC.

Yours sincerely

[Signature of proper officer]

on behalf of [Name of defendant]

ANNEXURE B

Notice to shareholders in
Firepower Holdings Group Limited

The Federal Court of Australia has ruled that certain offers to sell shares in Firepower Holdings Group Limited (Firepower) were in breach of the Corporations Act 2001.

That Act prohibits offers for the sale of shares within one year of the original issue of the shares unless a prospectus is lodged with the Australian Securities and Investments Commission (ASIC) or unless certain exemptions apply.  For example, an exemption applies if offers are to “sophisticated investors” who (it appears from an accountant’s certificate) have net assets of at least $2,500,000 or gross income for each of the last two financial years of at least $250,000. 

The court has found that on several occasions, [name defendants] offered shares for sale where no prospectus had been lodged with ASIC and none of the exemptions applied. 

Persons who bought shares in Firepower before [date] may wish to take legal advice on whether any exemptions applied in their case, and if not whether they have a right to seek damages or a refund of the money they paid for the shares.

TABLE OF CONTENTS

INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[1]
RELIEF SOUGHT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[13]
BACKGROUND........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[19]
THE STATUTORY PROVISIONS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[34]
Disclosure required........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[34]
Offer........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[46]
Purpose under section 707(3)........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[48]
Distributing application forms........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[50]
Exemptions to disclosure requirement........ ........ ........ ........ ........ ........ ........ ........ ........	[51]
Summary........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[53]
THE EVIDENCE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[54]
The affidavit evidence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[54]
Section 19 examinations........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[55]
Evidence on exemptions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[63]
THE 21 OFFERS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[65]
Allans – first purchase of shares (145,000 shares owned by Green Triton........ ......	[68]
Allans – second purchase of shares (75,000 shares owned by Firepower Investments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[75]
Ashworths – first purchase of shares (145,000 shares owned by Green Triton......	[82]
Ashworths – second purchase of shares (27,500 shares owned by Green Triton....	[89]
Ashworths – third purchase of shares (22,000 shares owned by Firepower Investments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[95]
Baird – first purchase of shares (300,000 shares owned by Owston........ ........ ........	[101]
Baird – second purchase of shares (154,000 shares owned by Firepower Investments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[108]
Carters – purchase of shares (22,000 shares owned by Firepower Investments.....	[114]
Angela Jones and Penny Buchan – purchase of shares (50,000 shares owned by Owston........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[120]
Penny Buchan – purchase of shares (20,000 shares owned by Owston........ ........ ...	[127]
Furlans – first purchase of shares (202,000 owned by Green Triton........ ........ .......	[133]
Furlans – second purchase of shares (202,000 shares owned by Owston	[140]
Edmondsons – first purchase of shares (290,000 owned by Green Triton........ ......	[148]
Edmondsons – second purchase of shares (48,000 shares owned by Firepower Investments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[155]
Nottles – purchase of shares (50,000 shares owned by Owston........ ........ ........ ........	[161]
Trusso Family Trust – purchase of shares (40,000 shares owned by Seaswan.......	[168]
The Gilenos – purchase of shares (40,000 shares owned by Seaswan........ ........ ......	[178]
Schilling – purchase of shares (shares owned by Owston and Seaswan........ ........ ..	[184]
THE PLAINTIFF'S CASE AGAINST AXIS AND WARD........ ........ ........ ........ ........ ..	[194]
Axis and Ward: consideration........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[198]
PURPOSE: SECTIONS 707(3) AND 707(4)........ ........ ........ ........ ........ ........ ........ ........ ...	[205]
THE PLAINTIFF'S CASE AGAINST FIREPOWER INVESTMENTS AND GREEN TRITON........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[208]
THE PLAINTIFF'S CASE AGAINST OWSTON........ ........ ........ ........ ........ ........ ........ .	[215]
THE PLAINTIFF'S CASE AGAINST SEASWAN........ ........ ........ ........ ........ ........ .......	[219]
Purpose of Firepower BVI: Seaswan's allotment........ ........ ........ ........ ........ ........ .......	[231]
Seaswan's purpose: acquisition of Firepower BVI shares........ ........ ........ ........ ........ .	[242]
RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[282]
Declarations........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[282]
Publicity orders........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[285]
CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[294]
SCHEDULE A........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
SCHEDULE B........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
SCHEDULE C........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
SCHEDULE D – CROSS-REFERENCED TO SHARE REGISTER........ ........ ........ ..
SCHEDULE E........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
SCHEDULE F........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 157 of 2008

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff

AND:

AXIS INTERNATIONAL MANAGEMENT PTY LTD
(ACN 075 799 772)
First Defendant

FIREPOWER INVESTMENTS PTE LTD
Second Defendant

OWSTON NOMINEES NO 2 PTY LTD (ACN 001 769 099)
Third Defendant

SATTVIC PTY LTD (ACN 114 153 954)
Fourth Defendant

SEASWAN HOLDINGS PTY LTD (ACN 059 000 538)
Fifth Defendant

QUENTIN PHILLIP O'DOHERTY WARD
Sixth Defendant

TIMOTHY FRANCIS JOHNSTON
Seventh Defendant

GREEN TRITON LTD
Eighth Defendant

JUDGE:

GILMOUR J

DATE:

8 FEBRUARY 2011

PLACE:

PERTH

REASONS FOR JUDGMENT

INTRODUCTION

1. The plaintiff, the Australian Securities and Investments Commission, seeks declaratory and other relief with respect to various alleged contraventions of s 727(1) of the Corporations Act 2001 (Cth) (the Corporations Act).  I have been greatly assisted by the parties who appeared at trial in the formulation of these reasons by their detailed written submissions.  Much of these were uncontroversial and I have adopted parts from each where I could but without attribution at every point.  I have attached to these reasons to which I refer variously a number of Schedules for ease of reading.  The Schedules, nonetheless, form part of these reasons.

2. Broadly, s 727(1) of the Corporations Act prohibits the making, in certain circumstances, of an offer of securities or the distribution of an application form for an offer of securities that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with the plaintiff. The securities, in this case, comprised shares in Firepower Holdings Group Ltd (Firepower BVI).

3. No disclosure document was lodged with respect to the several offers to sell shares, which are the subject of this proceeding.

4. In each case the alleged breaches relate to offers to sell shares in Firepower Holdings BVI owned by the second, third, fifth and eighth defendants. It is alleged that these defendants contravened s 727(1) by making those offers. There are 21 offers involved.

5. Seventeen of those offers were brokered by the first defendant, Axis International Management Pty Ltd (Axis), of which the sixth defendant, Quentin Phillip O’Doherty Ward (Ward), was a director.

6. The second defendant, Firepower Investments Pte Ltd (Firepower Investments), was a company incorporated on 15 April 2005 under the laws of the Federal Territory of Labuan, Malaysia. Firepower Investments was a shareholder in Firepower BVI and a seller of its shares. The plaintiff alleges that Firepower Investments breached s 727(1) of the Corporations Act by offering to sell some of those shares as particularised in B of Schedule A and in the Summary of Offers in Schedule E.

7. Firepower Investments and the third defendant Owston Nominees No 2 Pty Ltd (Owston) did not appear at the trial.  Owston, at all material times, was a substantial shareholder in Firepower BVI.  Mr Warren Anderson was a director of Owston.

8. The trial of the case against the fourth defendant, Sattvic Pty Ltd, is to be heard separately in March. 

9. The fifth defendant, Seaswan Holdings Pty Ltd (Seaswan), was at all material times a shareholder in Firepower BVI.  Mr Gordon Hill and his wife, Diane Hill, were its directors.

10. The seventh defendant, Timothy Francis Johnston (Johnston), did not appear at the trial although he attended, by videolink from Brisbane, as a witness under subpoena at the instance of Seaswan on the last day of the trial.  He wrote to the Court prior to the trial consenting to the relief sought against him "whilst still reserving (his) full rights".  However, the plaintiff does not rely on that apparent consent.  In his defence, Johnston has admitted he was an officer of Firepower Investments and Green Triton at the relevant times. 

11. The eighth defendant Green Triton Limited (Green Triton), was a company incorporated on 1 February 2005 in the British Virgin Islands. Green Triton was a substantial shareholder in Firepower BVI and a seller of its shares. The plaintiff alleges that Green Triton breached s 727(1) of the Corporations Act by offering to sell some of those shares as particularised in F of Schedule A and in the Summary of Offers in Schedule E.

12. The plaintiff received information that both Firepower Investments and Green Triton have been deregistered.  It has, with leave of the Court, discontinued against each of them but seeks findings of contraventions by them as the foundation for an order for disqualification of Johnston.

    RELIEF SOUGHT 

13. Relief is sought against each of Axis, Owston, Seaswan, and Ward for declarations pursuant to s 1337B of the Corporations Act, s 21 Federal Court of Australia Act 1976 (Cth) and s 39B Judiciary Act 1903 (Cth) of contraventions by those defendants of s 727(1). The declarations relate to offers for the sale of shares where:

    (a)Owston and Seaswan made offers to sell shares; and

    (b)Axis, Seaswan and Ward distributed application forms for offers to sell shares.

14. Particulars of the dates and parties to the relevant transactions are set out in Schedule A to these reasons: 

    •     The alleged contraventions by Axis are particularised at A of Schedule A.

    •     The alleged contraventions by Owston are particularised at C of Schedule A.

    •     The alleged contraventions by Seaswan are particularised at E of Schedule A.

    •     The alleged contraventions by Ward are particularised at paragraphs 1, 2, 5, 9, 10, 11, 12, 13, 15, 16, 17 and 18 at A of Schedule A.

15. There are 21 offers which are the subject of the relief sought.  They are summarised under Schedule E to these reasons.

16. Further relief is sought against Owston and Seaswan for orders pursuant to s 1324B of the Corporations Act requiring those defendants to:

    (a)send a letter in terms of Schedule B hereto, to persons who hold shares in Firepower BVI sold by the relevant defendant before 7 June 2006; and

    (b)advertise in terms of Schedule C hereto, in various newspapers such advertisements being directed to advising affected shareholders that sales of shares were in breach of the Act and suggesting they may like to take legal advice.

17. Relief is also sought against Ward and Johnston pursuant to s 206E of the Corporations Act for orders disqualifying them from managing corporations for a period that the Court considers appropriate.  The foundation for the relief sought against Johnston are the alleged contraventions of Firepower Investments and Green Triton which are particularised at B and F, respectively, of Schedule A.

18. I have acceded to the plaintiff's request, which was without objection from any party, that I first make findings and grant relief, to whatever extent, in respect of the alleged contraventions of s 727(1). If the necessary findings are, in due course, made then disqualification orders against Ward and Johnston will be sought at a later hearing.

    BACKGROUND

19. By early 2004 a company, Firepower Holdings Ltd (Firepower Cayman Islands), had been incorporated in the Cayman Islands.  This company was associated with Johnston and Trevor Nairn.  It was involved with the development and manufacture of liquid products and a fuel pill both of which were said to improve the power and efficiency of petrol engines and reduce carbon emissions.

20. The liquid product was being marketed by distributors in Europe, including Russia but the fuel pill was not then widely marketed.

21. About that time Johnston was introduced to Gordon Hill who was a lawyer with a small legal practice in Dunsborough, Western Australia, and a former Minister of the State Government.  Hill undertook some legal work for Firepower Cayman Islands.  Johnston proposed that Firepower Cayman Islands pay for that legal work by the issue of shares in that company.

22. Not long afterwards, Johnston and Nairn also proposed to Hill that he join the Firepower Cayman Island board of directors. By late August 2004 terms for Hill’s remuneration were being discussed.  That remuneration was to be on the basis of a monthly fee and a share package.  On 1 September 2004, Hill was appointed a director of Firepower Cayman Islands.  It does not appear that Nairn took much more of a role in the affairs of that company.

23. At this time, Firepower Cayman Islands was investigating its listing on the Alternative Investment Market (AIM) of the London Stock Market.  The Memorandum and Articles of Association disclose that Firepower BVI was incorporated on 2 June 2005 on the advice of London based lawyers in the British Virgin Islands for the purpose of listing on the AIM.  Effectively Firepower BVI displaced Firepower Cayman Islands.  The restructure occurred because of legal advice that the British Virgin Islands was a much more satisfactory jurisdiction for a proposed float on the AIM.  According to that advice the legal status of companies registered in the British Virgin Islands was taken more seriously and had a better standing in the London market than that of companies registered in the Cayman Islands. 

24. On 1 February 2005 Green Triton, another British Virgin Islands company, was incorporated and on 15 April 2005 Firepower Investments was incorporated in the Malaysian Federal Republic of Labuan.  Johnston has admitted to being an officer of Green Triton and of Firepower Investments.  Additionally, there was other uncontradicted evidence that he controlled Firepower BVI, Green Triton and Firepower Investments.

25. Incorporation of Firepower BVI was undertaken by Portcullis TrustNet (BVI) Limited a company based in Singapore.  Johnston and Hill were appointed by the subscriber to the Memorandum of Association on incorporation to be the first directors of Firepower BVI.

26. There was also an Australian company, Firepower Operations Pty Limited (Firepower Operations), which operated in Australia.  Firepower Operations was funded by money raised by Green Triton and Firepower Investments through share sales.

27. By a directors resolution adopted without a meeting and dated 2 June 2005 it was noted that Firepower BVI had received applications for shares and was resolved to accept those applications and to issue the shares.  The plaintiff contends that Hill, one of the directors who signed the minute of the resolution, could not have done so before 29 July 2005. 

28. Nonetheless, the share register shows that, amongst others, the following shares were issued by Firepower BVI on 2 June 2005:

    (a)216,508,000 shares to Green Triton;

    (b)40,000,000 shares to Owston; and

    (c)20,000,000 shares to Seaswan.

29. Seaswan is the trustee company for the G Hill Family Trust and the shares issued to Seaswan were intended to be both an incentive as well as part of the remuneration package earned by Hill for his work as a director of Firepower BVI.  Hill was a director of Seaswan in the relevant period.

30. Owston was a company of which Warren Anderson, as I mentioned, was a director.  Shares in Firepower BVI issued to Owston were also by way of an incentive and for consulting services rendered by Anderson.

31. The share register, as at 8 March 2008, was tendered by the plaintiff as a business record of Firepower BVI.  The plaintiff also relies on the spreadsheet, created by Mr Bertram, an employee of the plaintiff from the information in the share register, which is exhibit GMB3 to his affidavit sworn on 30 March 2010.   No party taking part in the trial has objected to the tender of these materials.

32. The plaintiff relied on the share register as an accurate record of the issue and sale of shares except where there is clear evidence that it is inaccurate.

33. The share register shows that in the period 2 June 2005 to 2 June 2006 a large number of sales of shares took place.  This proceeding is primarily concerned with only 21 of those sales.  Strictly it is concerned with the making of offers of shares and the distribution of application forms for offer of shares.  The plaintiff does, however, rely on the fact that, in addition to the sales specifically relied on against the vendors, Green Triton, Firepower Investments, Owston and Seaswan made numerous other sales in that period, as detailed in the Schedule to the Further Amended Statement of Claim.  I have reproduced this Schedule as Schedule D to these reasons subject only to the omission of shares sold by the fourth defendant, Sattvic Pty Ltd.  The plaintiff relies on these additional sales to support its case that the vendors of the shares in the 21 specific cases had the requisite purpose when it acquired those shares, and submits that the fact that the vendors sold so many shares supports this contention.  It further submits that the inference is also open from these other transactions that the issuer, Firepower BVI, had the requisite purpose in issuing the shares to the vendors.

    THE STATUTORY PROVISIONS

    Disclosure required

34. Section 727(1) of the Corporations Act provides that:

    A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with ASIC.

1. Under s 727(2) of the Corporations Act any disclosure document must then accompany the offer form for the securities.

2. Part 6D.2 of the Corporations Act sets out in:

   (a)       Division 2 – the offers that need disclosure to investors; and
              (b)       Division 3 – the types of disclosure documents.

3. Pursuant to s 707(1) of the Corporations Act, an offer of securities for sale needs disclosure to investors only if disclosure is required by sub-sections (2), (3) or (5).  Sections 708 and 708A contain certain exemptions.

4. The plaintiff relies on s 707(3) which provides that:

   An offer of a body’s securities for sale within 12 months after their issue needs disclosure to investors under this Part if:

   (a)the body issued the securities without disclosure to investors under this Part; and

   (b)either:

   (i)the body issued the securities with the purpose of the person to whom they were issued selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them; or

   (ii)the person to whom the securities were issued acquired them with the purpose of selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them;

   and section 708 or 708A does not say otherwise.

5. Disclosure in respect of an offer to sell, rather than issue, securities is therefore only required under s 707(3) where the purpose of the issue or acquisition of the securities was for on–sale or transfer. This is an anti–avoidance provision, aimed at attempts by on-selling or transferring shares to circumvent disclosure requirements for initial offerings of securities.

6. Relevantly, s 707(3) is directed not merely to the first on–sale of shares, but any subsequent re-sales. The words “an offer ... for sale” refers, in my opinion, to any offer, rather than just the first offer. It would undermine the anti-avoidance effect of the section if it were confined to the first offer, as an initial sale could be made with an available exemption under s 708 and all subsequent offers would not be caught even where no exemption applied.

7. The plaintiff submits, and I accept, that the decision in Re Timor Sea Petroleum NL (2000) 35 ACSR 186 does not require a different conclusion. It was there decided that, if the exemption for a scheme of arrangement applied (s 708(17)), then it applied not just to the issue of shares as part of the scheme but also to a subsequent sale which was also part of the scheme. Warren J, as her Honour then was, at [25] in obiter said that she did not think that s 707(3) was concerned with subsequent sales. Moreover, the case concerned the Corporations Law provision which was significantly different to s 707(3) of the Corporations Act.  In particular, the former provision did not cover the purpose of the person to whom the shares were issued, and dealt solely with the purpose of the issuer of the shares.  The current provision accordingly captures a broader scope of conduct.  

8. The plaintiff also relies on s 707(4) of the Corporations Act which contains a deeming provision in these terms:

   For the purposes of subsection (3):

   (a)securities are taken to be:

   (i)        issued with the purpose referred to in subparagraph (3)(b)(i); or

   (ii)       acquired with the purpose referred to in subparagraph (3)(b)(ii);
             if there are reasonable grounds for concluding that the securities were issued or acquired with that purpose (whether or not there may have been other purposes for the issue or acquisition);  and

   (b)without limiting paragraph (a), securities are taken to be:

   (i)        issued with the purpose referred to in subparagraph (3)(b)(i); or

   (ii)       acquired with the purpose referred to in subparagraph (3)(b)(ii);

   if any of the securities are subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the issue and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the securities were issued or acquired with that purpose.

9. Thus, where shares are sold or offered for sale within 12 months of issue the purpose for which the shares were issued will be taken to be one of the purposes under subpara (3)(b)(i) or (3)(b)(ii) unless it is proved “that the circumstances of the issue and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the securities were issued or acquired with that purpose”. Section 707(4)(b), in effect, creates a rebuttable presumption that securities sold within 12 months of their issue were issued or acquired for the purpose of re–sale within s 707(3).

10. Paragraphs (3)(b) and (4)(b) of s 707 are both expressed disjunctively. Accordingly, in order for the statutory presumption in s 707(4)(b) to be rebutted it is necessary for there to be proof of reasonable grounds establishing that neither the issuer nor the acquirer had the necessary purpose.

11. The object of Part 6D.2 is to protect investors by requiring that certain kinds of offers are made with disclosure to investors, in a disclosure document that contains specific information meeting the requirements of Part 6D.2, and which must first be lodged with the plaintiff. Accordingly, the disclosure requirements in s 707 are directed at protecting investors involved in capital raisings.

    Offer

12. An “offer of securities” includes both an offer to sell securities as well as an invitation for offers to purchase securities: s 700(2) of the Corporations Act.  This definition goes beyond the common law concept of what constitutes an "offer" although it will include a contractual offer capable of giving rise to a binding obligation immediately upon acceptance: Ford's Principles of Corporations Law 14^th Ed at [22.070]; Australian Securities & Investments Commission v Australian Investors Forum Pty Ltd (No 2) (2005) 53 ACSR 305 at 324.

13. For the purpose of Chapter 6D, the person who offers securities is the person who has the capacity, or who agrees, to issue or transfer the securities if the offer is accepted: s 700(3).

    Purpose under section 707(3)

14. The word "purpose" is relevantly defined in the Macquarie Dictionary as " the object for which anything exists or is done, made, used" and "an intended or desired result; end or aim".

15. The High Court, albeit in a trade practices case, explained “purpose” as meaning the subjective "end sought to be achieved" by the relevant persons: News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563. This is apt in the present context. The relevant purpose under s 707(3) is therefore the subjective end or object sought to be achieved by either the issuer when issuing the shares, or by the subscriber when acquiring the shares. Section 707(3) does not require that the relevant purpose be the sole purpose.

    Distributing application forms

1. Section 727(1) prohibits a person from making an offer of securities as well as from distributing an application form for such an offer that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with the plaintiff. The proper construction of this provision is central to the issues between the plaintiff and Axis and Ward which I will consider later.

   Exemptions to disclosure requirement

2. Sections 708 and 708A contain a number of exemptions to the disclosure requirements in cases such as small scale offerings, where the investors are sophisticated or professional investors.

3. The defendants bear the onus of proving facts which would bring them within an exemption: Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc (2009) ACSR 1 at [40].

   Summary

4. The plaintiff submits, correctly, that the following propositions emerge from the relevant statutory provisions:

   (a)The object of Chapter 6D is to protect investors by ensuring that they have certain information about a company when they participate in a capital raising for the company.

   (b)Unless certain exemptions apply, a person offering securities for issue in a company must provide the required disclosure to investors: s 706. 

   (c)The disclosure requirement applies to the resale of securities by an intermediary within 12 months of their issue, where:

   (i)the issuer issued the securities with the purpose that the intermediary would resell them; or

   (ii)the intermediary acquired the securities with the purpose of reselling them: s 707(3).

   (d)The purpose test is satisfied when either the issuer or the intermediary had the requisite purpose: ss 707(3)(b) and 707(4)(a).

   (e)There is a statutory presumption that the purpose test for either the issuer or the intermediary is satisfied where the intermediary resells the securities within 12 months of their issue: s 707(4)(b).

   (f)The statutory presumption can be rebutted by proof that neither the issuer nor the intermediary had the requisite purpose. That is, to rebut the presumption it must be proved that both issuer and intermediary lacked the requisite purpose: ss 707(3)(b) and 707(4)(b).

   (g)The purpose test can be applied in the case of two or more resales within the 12 month period: s 707(3).

   (h)Both the offer of securities without disclosure and the distribution of application forms for securities without disclosure are prohibited: s 727(1).

   THE EVIDENCE

   The affidavit evidence

5. The following affidavits were read, subject, in some cases, to partial omission following concessions or rulings upholding objections.

   Affidavits tendered by ASIC
              Deponent  Date
   Robin Ronald Baird (except paras13 & 39second sentence)  22.04.08
              Carol Ann Ashworth  23.04.08
              Gregory Vernon Ashworth (except paras 9, 12, 16 & first sentence of 11)    23.04.08

   Ronald Geoffrey Nottle   23.04.08
   Marilyn Agnes Nottle  23.04.08
   Ludmilla Elizabeth Edmondson  24.04.08
   Darryl John Edmondson  24.04.08
   Nicolino Gileno  28.04.08
   Benjamin Carter  30.04.08
   Shannon Farrell Carter  30.04.08
   Ian Jeffrey Craig  08.05.08
   Nicholas Joseph Furlan (except paras 22 and highlighted
   parts of 18 and 22)  13.06.08
   Camelia Furlan  25.08.10
   Geoffrey Ronald Allan  26.06.08
   Penny Therese Buchan  01.07.08
   Angela Janet May Jones  01.07.08
   John Finnin  10.07.08
   Linda Michelle Sandwell  04.08.08         
   Adam John Schilling  14.01.09
   Antonio Trusso  15.01.09

   Gary Martyn Bertram (except for the
   transcripts of s 19 examinations, being exhibits GMB2,
   GMB3, GMB4, GMB5 (Gary Conwell); GMB7, GMB8,
   GMB9 (Leslie Stein); GMB11, GMB12, GMB13, GMB16
   (Kim Stokeld); GMB18, GMB19, GMB20 (Quentin Ward);
   GMB22 (Gordon Hill), GMB24 (Alfred John Catt); GMB26
   (Timothy D'Emden); GMB28 (Vincenzo Vallelonga); GMB30,
   GMB31 (Timothy Johnston).  27.03.09

   Su-King Hii  21.05.09

   Nola Janice Allan  25.02.10
   Gary Martyn Bertram  30.03.10

   Affidavits tendered by Seaswan

   Deponent  Date
              Gary Jonathon Conwell  30.04.09

   Gordon Leslie Hill  30.04.09
   Diane Jean Hill  30.04.09

   Section 19 examinations

6. The plaintiff and Seaswan each rely on s 76 and s 77 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) which together provide for the use of statements made during s 19 examinations as evidence in legal proceedings.

7. Pursuant to s 76(1) a statement made by a person at an examination of the person is admissible in evidence against that person unless that person can take the objections (described in general terms) that:

   (a)they have a privilege against self incrimination pursuant to s 68(3);

   (b)the statement is not relevant and they object to the tender;

   (c)the statement is qualified or explained by another statement, evidence of that statement is not tendered and they object to the tender;

   (d)the statement discloses matters in respect to which a claim for legal professional privilege could be made and they object to the tender.

8. The statement can be used against the person even where the proceeding is heard together with a proceeding against another person: s 76(2) of the ASIC Act.

9. Pursuant to s 77 a statement made at a s 19 examination is admissible in evidence about a matter where:

   (a)direct evidence of  that matter could be given by the person being examined; and

   (b)the evidence tends to establish the matter,

   without the examinee being called to give evidence where:

   (c)the person cannot be present for a variety of reasons including that they have died or unfit, cannot be found or they live outside the State or Territory and it would not be reasonably practicable to secure their attendance; or

   (d)unless another party to the proceedings requires their attendance as a witness and the tendering party does not call them as a witness.

10. No party has required the attendance of any of the s 19 examinees at this trial.

11. Admissions made by a natural person in a s 19 examination may be relied on against a company of which he or she is or was an agent: Australian Securities & Investments Commission v Fortescue Metals Group Ltd (No 2) (2009) 176 FCR 529.

12. A statement can be used where the written record of the s 19 examination has been signed by the examinee or otherwise authenticated.  Here each of the transcripts sought to be tendered has either been signed or, in the case of the examination of Ms Stokeld on 3 March 2008, has been authenticated by the affidavit of Gary Martyn Bertram sworn 27 March 2009.  Mr Bertram is a senior ASIC investigator in the Deterence – Financial Services Team in Western Australia.

13. The plaintiff relies on the s 19 transcripts of the following:

    (a)Mr Ward, as admissions under s 76, both against himself and against Axis;

    (b)Mr Hill, as admissions under s 76, against Seaswan;

    (c)Mr Johnston, as admissions under s 76, against himself and against Green Triton and Firepower Investments;

    (d)Mr Conwell, as admissions against Firepower BVI under s 76, and under s 77(b);

    (e)Mr Stein, as admissions against Firepower BVI under s 76, and under s 77(b);

    (f)Ms Stokeld, as admissions against Firepower BVI under s 76, and under s 77(b);

    (g)Mr Catt, under s 77(b);

    (h)Mr D’Emden, as admissions against Owston and Seaswan under s 76, and under s 77(b); and

    (i)Mr Vallelonga, as admissions against Axis under s 76, and under s 77(b).

    Evidence on exemptions

14. The defendants bear the onus of proving that the exemptions to the disclosure requirements apply.  None has attempted to discharge this onus.

15. The evidence demonstrates that no statutory exemptions arise.  Each investor deposes in his or her affidavit to the fact the exemptions did not apply to him or her, or the company that purchased the shares.  There is evidence that Firepower BVI was not or could not have been listed on any prescribed financial market.  The evidence discloses that the investors were, colloquially, "mums and dads" and "ordinary investors".

    THE 21 OFFERS

16. A summary of the 21 offers is contained in Schedule E to these reasons.  I find, on the basis of the evidence summarised in Schedule E that the shares in each case were offered for sale as alleged by the plaintiff.  Seventeen of the 21 offers were brokered by Axis.  Axis and Ward have admitted that they were authorised to distribute share application forms and had authority to offer the shares for sale on behalf of the relevant vendors.  It is accepted by the plaintiff in its case against Axis and Ward, that neither Axis nor Ward had the authority to effect or agree to a transfer or conclude an agreement to transfer the shares if the offer was accepted. 

17. The plaintiff, Axis and Ward made a written agreement about the facts to be relied on by the plaintiff against those defendants.  It is dated 15 October 2010, signed by the solicitors for the parties and is evidence in this case as between the parties to the agreement.  The agreement is in a document entitled 'Statement of Factual Matters not in Dispute', a copy of which, absent the annexures, is Schedule F to these reasons.  The plaintiff relies on those facts for all purposes of this trial in respect of the seventeen transactions involving Axis and Ward.  I am satisfied, in any event, subject to what follows, that the evidence as a whole supports findings of fact consistent with those agreed.  The agreed facts include that Firepower BVI issued 215,585,500 of its shares to Green Triton and 40,000,000 to Owston on or after 29 July 2005.  This is inconsistent with the share register of Firepower BVI which discloses that 216,508,000 shares were issued to Green Triton and 40,000,000 shares to Owston on 2 June 2005.  These differences are immaterial so far as they concern any part of the plaintiff's case.  

18. The facts relied on by the plaintiff in relation to the other four offers, which I also find are made out on the evidence, are also set out below.  The evidence to which I have referred is in Schedule E but also includes the evidence adduced by Seaswan.

    Allans – first purchase of shares (145,000 shares owned by Green Triton)

19. Nola Janice Allan and Geoffrey Ronald Allan (Allans) are the trustees for the Teret Superannuation Fund.

20. On about 21 September 2005, Axis, by Ward, gave a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Geoffrey Allan.

21. This application form stated that:

    (a)the vendor was Green Triton;

    (b)the price per Share was A$0.35;

    (c)the Allans would be applying for 145,000 shares;

    (d)the total consideration payable was A$50,750; and

    (e)payment was to be made to ANZ Banking Group Limited, Melbourne for account of UBS AG, Singapore in the name of Green Triton.

22. This application form was for the sale of shares on behalf of Green Triton that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the application form on behalf of Green Triton.

23. On 21 September 2005, the Allans signed the Application Form.  

24. The Allans returned the completed Application Form together with a cheque for the purchase of 145,000 shares in Firepower BVI at 35 cents each, at a total cost of $50,750 to Ward.

25. The sale of 145,000 shares owned by Green Triton to the Allans was completed when the transfer of the shares was entered in the Share Register of Firepower BVI (Register) (which bears the date 8 March 2006) and a certificate for those shares was issued to the Allans as trustee for the Teret Superannuation Fund (dated 20 March 2006).

    Allans – second purchase of shares (75,000 shares owned by Firepower Investments)

26. Geoffrey Allan again met with Ward at Ward's office on or about 5 April 2006.

27. At this meeting, Axis, by Ward, provided Geoffrey Allan another application form.

28. This application form stated that:

    (a)the vendor of the shares was Firepower Investments;

    (b)the price per Share was US$1 or A$1.38; and

    (c)payment for the shares was to be made via the Morgan Alteruthemeyer Trust Account.

29. This application form was for the sale of shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

30. At or after the meeting on or about 5 April 2006, Geoffrey Allan completed the following details on the application form, and then signed and returned it to Ward:

    (a)the figure "75,000" for the number of shares purchased;

    (b)"$103,500.00" for the total price; and

    (c)the Allans' details and the date 5 April 2006.

31. Geoffrey Allan returned the completed application form to Ward together with a cheque in the amount of $103, 500 to the Morgan Alteruthemeyer Trust Account as payment.

32. The sale of 75,000 shares owned by Firepower Investments to the Allans was completed when the transfer of the shares was entered in the Register (which bears the date 22 May 2006) and a certificate for those shares was issued to the Allans as trustee for the Teret Superannuation Fund (dated 22 May 2006).

    Ashworths – first purchase of shares (145,000 shares owned by Green Triton)

33. Gregory Vernon Ashworth and Carol Ann Ashworth (Ashworths) are trustees for their self-managed superannuation fund, called "Ashdown Superannuation Fund" (Ashdown SF).

34. On or about 3 October 2005, Axis, by Vallelonga, sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Carol Ashworth.

35. This application form stated that:

    (a)the purchaser of the shares would be Gregory Vernon Ashworth and Carol Ann Ashworth ATF Ashdown Superannuation Fund;

    (b)the vendor of the shares was Green Triton;

    (c)the price per share was A$0.35;

    (d)the Ashworths would be applying for 145,000 shares;

    (e)the total consideration payable was A$50,750; and

    (f)payment for the shares should be made to the Morgan Alteruthemeyer trust account.

36. This application form was for shares to be transferred by Green Triton, that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the application form on behalf of Green Triton.

37. On or about 1 November 2005, the Ashworths completed the following details on the application form and then signed and returned it to Ward:

    (a)"$50,750.00" for the sum of the cheque enclosed with the form; and

    (b)Gregory Vernon Ashworth and Carol Ann Ashworth's details, passport numbers and the date "3-10-05".

38. The Ashworths paid for the shares by a cheque for $50,750 made out to the Morgan Alteruthemeyer trust account, which they provided to Ward.

39. The sale of 145,000 shares owned by Green Triton to the Ashdown SF was completed when the transfer of the shares was entered in the Register (which bears the date 8 March 2006) and a certificate for those shares was issued to the Ashworths (dated 20 March 2006).

    Ashworths – second purchase of shares (27,500 shares owned by Green Triton)

40. On or about 3 May 2006, Axis, by Vallelonga, emailed Carol Ashworth a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd".

41. The application form stated that:

    (a)the purchaser of the shares was Carol Ann Ashworth;

    (b)the vendor of the shares was Firepower Investments;

    (c)Carol Ashworth would be applying for 27,500 shares;

    (d)the price per Share was US$1 or A$1.30;

    (e)the total consideration payable was A$35,750; and

    (f)payment for the shares should be made to the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonwealth Bank.

42. This application form was for the sale of shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

43. On or about 5 May 2006, Carol Ashworth completed the following details on the application form and then signed and returned it to Vallelonga:

    (a)she inserted the figure for the cheque she had enclosed with the application form in the appropriate place on the form;

    (b)she inserted her telephone contact details onto the appropriate place on the form; and

    (c)she inserted the date "5-5-06".

44. Carol Ashworth returned the completed application form to Vallelonga together with a cheque for A$35,750 made out to the Morgan Alteruthemeyer trust fund for the purchase of the shares.

45. The sale of 27,500 shares from Firepower Investments to Carol Ashworth was completed when the transfer of the shares was entered in the Register (which bears the date 26 May 2006) and a certificate for those shares was issued to Carol Ashworth (dated 26 May 2006).

    Ashworths – third purchase of shares (22,000 shares owned by Firepower Investments)

46. On or about 17 May 2006, Axis, by Ward, sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to the Ashworths for the sale of 22,000 fully paid shares at A$1.31 per Share.

47. The application form stated that:

    (a)the purchaser was Gregory Vernon Ashworth and Carol Ann Ashworth ATF Ashdown Superannuation Fund;

    (b)the vendor of the shares was Firepower Investments;

    (c)the price per Share was US$1 or A$1.31;

    (d)the Ashworths would be applying for 22,000 shares;

    (e)the total consideration payable was $28,820; and

    (f)payment for the shares should be made via the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonwealth Bank.

48. This application form was for the sale of shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

49. On or about 17 May 2006, Carol Ashworth completed the following details on the application form and then signed and returned it to Ward:

    (a)"35,750.00" as the sum of the cheque payable to the Morgan Alteruthemeyer Account;

    (b)she inserted her work telephone number; and

    (c)"17-5-06" as the date. 

50. The Ashworths returned the application form to Ward together with a cheque made out to the Morgan Alteruthemeyer trust account for A$53,820.  This cheque included $28,820 for the purchase of the Firepower BVI shares, and $25,000 for an unrelated transaction.

51. The sale of 22,000 shares from Firepower Investments to Ashdown SF was completed when the transfer of the shares was entered in the Register (which bears the date 6 June 2006) and a certificate for those shares was issued to the Ashworths (dated 6 June 2006.

    Baird – first purchase of shares (300,000 shares owned by Owston)

52. Robin Ronald Baird (Baird) and Margot Louise Baird are the two directors of Pejean Pty Ltd (Pejean).  Pejean is the trustee of the RMZ Superannuation Fund (RMZ SF).

53. On or about 1 February 2006, Axis, by Vallelonga, sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Baird.

54. The application form indicated that:

    (a)the vendor of the shares was Owston;

    (b)the price per Share was $A0.50;

    (c)Baird would be applying for 300,000 shares;

    (d)the total consideration payable for the shares was A$150,000; and

    (e)payment for the shares should be made to the Morgan Alteruthemeyer trust account.

55. This application form was the sale of shares on behalf of Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the application form on behalf of Owston.

1. On or about 1 February 2006, Baird completed the following details on the application form and then signed and returned it to Axis by Vallelonga:

   (a)"01/02/2006" as the date; and

   (b)"Pejean Pty Ltd ATF RM2 Superannuation Fund" under the section "shares to be held in the name of".

2. Baird paid for the shares by cheque for A$150,000 payable to the Morgan Alteruthemeyer trust account and provided it to Axis by Ward.

3. The sale of 300,000 shares owned by Owston to Pejean was completed when the transfer of the shares was entered in the Register (which bears the date 1 February 2006).

   Baird – second purchase of shares (154,000 shares owned by Firepower Investments)

4. On or about 4 May 2006, Axis, by Vallelonga sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Baird.

5. This application form stated that:

   (a)the vendor of the shares was Firepower Investments;

   (b)the price per Share was US$1 or A$1.30;

   (c)payment for the shares should be made to the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonwealth Bank.

6. This application form was for the sale of shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

7. On or about 4 May 2006, Baird completed the following details on the application form and then signed and returned it to Axis by Vallelonga:

   (a)"154,000" as the number of shares;

   (b)"200,200" as the total consideration payable;

   (c)"$200,200" as the sum of the cheque payable to the Morgan Alteruthemeyer Trust Account;

   (d)"Pejean Pty Ltd ATF RMZ Superannuation Fund" under the section "shares to be held in the name of"; and

   (e)Pejean's details and "4 May 2006" as the date.

8. Baird paid for the shares by a cheque payable to the Morgan Alteruthemeyer trust account for A$200,200.

9. The sale of 154,000 shares owned by Firepower Investments was completed when the transfer of the shares was entered in the Register (which bears the date 24 May 2006) and a certificate for those shares was issued to Pejean (dated 30 May 2006).

   Carters – purchase of shares (22,000 shares owned by Firepower Investments)

10. On or about 3 April 2006, Axis, by Vallelonga, emailed a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Shannon Carter.

11. The application form stated that:

    (a)the vendor was Firepower Investments;

    (b)the price per Share was US$1 or A$1.35;

    (c)Shannon Carter would be applying for 22,000 shares;

    (d)the total consideration payable was A$29,700; and

    (e)payment for the shares should be made to the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonwealth Bank.

12. This application form was for the sale of shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

13. On or about 4 April 2006, Shannon Carter signed and dated the application form.

14. On or about 4 April 2006, Shannon Carter returned the application form to Ward by post together with a cheque for A$29,700 payable to the Morgan Alteruthemeyer trust account, and separate bank cheque for A$1,485 payable to Axis.

15. The sale of 22,000 shares from Firepower Investments Pte Ltd to Shannon Carter was completed when the transfer of the shares was entered in the Register (which bears the date 22 May 2006) and a certificate for those shares was issued to Shannon Carter (dated 22 May 2006).

    Angela Jones and Penny Buchan – purchase of shares (50,000 shares owned by Owston)

16. Angela Jones and Penny Buchan are trustees for the following self-managed superannuation funds:

    (a)"The P Buchan Superannuation Fund" (Buchan SF); and

    (b)"The A Jones Superannuation Fund" (Jones SF).

17. On or about 22 November 2005, Axis, by Ward, gave Jones a form headed "Share Transfer Form".

18. The Share Transfer Form stated that:

    (a)the vendor was Owston;

    (b)the price per Share was A$0.50;

    (c)the total number of shares to be purchased was 50,000;

    (d)the total consideration payable was A$25,000; and

    (e)payment was to be made to Owston via Morgan Alteruthemeyer Trust Account.

19. The form was for the sale of shares on behalf of Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

20. On or about 22 November 2005, Jones and Buchan completed the following details on the Share Transfer Form, and then signed and returned it to Ward:

    (a)"Angela May Jones & Penny Therese Buchan ATF The A Jones Superannuation Fund & Angela May Jones as Tenants in Common 1. A Jones Super Fund holding 40,000 of 50,000 shares 2.Angela May Jones holding 10,000 of 50,000 shares" in the section "shares to be held in the name of";

    (b)Jones's address; and

    (c)"22/11/2005" as the date.

21. At the same time as completing the Share Transfer Form, Jones prepared a cheque for A$20,000 from her Macquarie Bank account, which was the bank account for Jones SF and gave it to either Ward or Vallelonga.  Short after the meeting, Jones paid $5,000 by bank cheque and sent it to Axis.

22. The sale of the shares was completed when the transfer of the shares was entered in the Register (which bears the date 22 November 2005) and a certificate for those shares was issued to Jones and Buchan (dated 20 March 2006).

    Penny Buchan – purchase of shares (20,000 shares owned by Owston)

23. On or about 22 November 2005, Axis, by Ward provided another Share Transfer Form to Buchan and Jones.

24. The Share Transfer Form stated that:

    (a)the vendor was Owston;

    (b)the price per Share was A$0.50;

    (c)the total number of shares to be purchased was 20,000;

    (d)the total consideration payable was A$10,000; and

    (e)payment was to be made to Owston via Morgan Alteruthemeyer Trust Account.

25. The Share Transfer Form was for the sale of shares on behalf of Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

26. Buchan and Jones completed the following details on the Share Transfer Form, and then signed it and gave to Ward:

    (a)"Penny Therese Buchan & Angela May Jones ATF The P Buchan Superannuation Fund" in the section "shares to be held in the name of";

    (b)Jones's address; and

    (c)"22/11/2005" as the date.

27. Penny Buchan prepared a cheque for A$10,000 from The P Buchan Superannuation Fund and dated it 22 December 2005 and gave it to Ward together with the completed Share Transfer Form.  Ms Buchan, in her written evidence, said that she was not sure whether she incorrectly dated the cheque 22 December 2005 instead of 22 November 2005, being the date on the Share Transfer Form, or whether she signed the cheque after the 22 November meeting and dated it correctly.  Nothing turns on this question.

28. The sale of shares was completed when the transfer of the shares was entered in the Register (which bears the date 22 November 2005) and a certificate for those shares was issued to Jones and Buchan (dated 22 March 2006).

    Furlans – first purchase of shares (202,000 owned by Green Triton)

29. On about September 2005 Nicholas Joseph Furlan and Camelia Furlan (Furlans) met Ward at Ward's offices in Subiaco.

30. On or about 5 October 2005, Axis, by Vallelonga sent an email attaching a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to the Furlans.

31. The application form stated that:

    (a)the vendor was Green Triton;

    (b)the price per share was A$0.35;

    (c)the total number of shares to be purchased was 202,000;

    (d)the total consideration payable was A$70,700;

    (e)the shares were to be held in the name of "Nicholas Furlan & Camelia Furlan ATF Furlan Family Superannuation Fund AND Nicholas Furlan & Camelia Furlan (As Tenants in Common) AS TENANTS IN COMMON With Furlan Family Superannuation Fund holding 145,000 of 202,000 shares and Nicholas & Camelia Furlan holding 57,000 of 202,000 shares"; and

    (f)payment was to be made to Green Triton via Morgan Alteruthemeyer Trust Account.

32. The application form was for shares to be transferred by Green Triton that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the form on behalf of Green Triton.

33. On or about 12 October 2005, the Furlans, on behalf of themselves and as trustees of Furlan SF, signed the form, dated it "12th Oct 2005" and then returned it to Ward.

34. The Furlans paid A$19,950 for the purchase of the shares by cheque, and resolved to pay A$50,750 for the shares as trustees of the Furlan SF.

35. The sale of shares was completed when the transfer of the shares was entered in the Register (which bears the date 8 March 2006) and a certificate for those shares was issued to the Furlans (dated 8 March 2006).

    Furlans – second purchase of shares (202,000 shares owned by Owston)

36. At a meeting with Ward at the Furlan's home in December 2005, Nicholas Furlan told Ward that the Furlans would buy 60, 000 shares in Firepower BVI.

37. Axis, by Ward, provided the Furlans a form headed "Share Transfer Form".

38. The Share Transfer Form stated that:

    (a)the shares were to be transferred from Owston, but (incorrectly) that the vendor was Seaswan;

    (b)the price per Share was A$0.50;

    (c)the total number of shares to be purchased was 60,000;

    (d)the total consideration payable was A$30,000;

    (e)the shares were to be held in the name of "Nicholas Furlan & Camelia Furlan ATF Furlan Family Superannuation Fund "; and

    (f)payment was to be made to the Morgan Alteruthemeyer Trust Account. 

39. The form was for the sale of shares to be transferred by Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

40. On or about 18 January 2006, the Furlans, as trustees of the Furlan SF, signed the form, dated it "18/1/2006" and returned it to Ward.

41. The Furlans paid A$30,000 for 60,000 shares at fifty cents each by way of a cheque made out to "Morgan Alteruthemeyer Trust Fund" signed and sent to Axis on or about 17 January 2006.

42. The sale of shares was completed when the transfer of the shares was entered in the Register (which bears the date 18 January 2006 and indicates that the shares were transferred from Owston to the Furlans) and a certificate for those shares was issued to the Furlan SF (dated 20 March 2006).

43. On or about 20 December 2006 the Furlans disposed of 30,000 shares by selling them to Ward.  The Furlans did this by completing an "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd", which Ward had provided them with.  Ward subsequently gave the Furlans a cheque for A$30,000.

    Edmondsons – first purchase of shares (290,000 owned by Green Triton)

44. Ludmilla Elizabeth Edmondson and Darryl John Edmondson are the joint trustees of the DJ & LE Edmondson Superannuation Fund (Edmondson SF).

45. On or about 9 September 2005, Axis, by Ward, sent a form headed "Share Transfer Form" to the Edmondsons.

46. The Share Transfer Form stated that:

    (a)the vendor was Green Triton;

    (b)the price per Share was A$0.35;

    (c)the total number of shares to be purchased was 290,000;

    (d)the total consideration payable was A$101,500;

    (e)the shares were to be held in the name of "Darryl John Edmondson & Ludmilla Elizabeth Edmondson ATF DJ & LE Edmondson Superannuation Fund"; and

    (f)payment was to be made to Green Triton via Morgan Alteruthemeyer Trust Account.

47. The form was for shares to be transferred by Green Triton, that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the form on behalf of Green Triton.

48. On or about 15 September 2005, the Edmondsons signed the form, dated it "15.9.05", and returned it to Ward.

49. On 15 September 2005, the Edmondsons, as trustees of Edmondson SF, paid A$101, 500 by way of a cheque.

50. The sale of shares was completed when the transfer of the shares was entered in the Register (which bears the date 8 March 2006) and a certificate for those shares was issued to Edmondson SF (dated 20 March 2006).

    Edmondsons – second purchase of shares (48,000 shares owned by Firepower Investments)

51. On or about 28 April 2006, Axis, by Ward sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to the Edmondsons.

52. The application form stated that:

    (a)the vendor was Firepower Investments;

    (b)the price per Share was US$1.00 or A$1.35;

    (c)the total number of shares to be purchased was 48,000;

    (d)the total consideration payable was A$64,800;

    (e)the shares were to be held in the name of "Darryl John Edmondson & Ludmilla Elizabeth Edmondson ATF DJ & LE Edmondson Superannuation Fund"; and

    (f)payment was to be made to Firepower Investments via Morgan Alteruthemeyer Trust Account.

53. The form was for shares to be transferred by Firepower Investments, that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the form on behalf of Firepower Investments.

54. On or about 28 April 2006, the Edmondsons, as trustees of the Edmondson SF, signed the form and dated it "28/4/06", and then returned it to Ward.

55. The Edmondsons paid A$64,800 for the purchase of the shares by cheque made out to "Morgan Alteruthemeyer Trust Account" sent to Ward on or about 28 April 2006.

56. The sale of shares was completed when the transfer of the shares was entered in the Register (which bears the date 24 May 2006) and a certificate for those shares was issued to Edmondson Superannuation Fund (dated 24 May 2006).

    Nottles – purchase of shares (50,000 shares owned by Owston)

57. Ronald Geoffrey Nottle and Marilyn Agnes Nottle (Nottles) are the trustees of The RG & MA Nottle Superannuation Fund (Nottle SF).

58. On or about 29 November 2005, Axis, by Ward sent a letter enclosing a form headed " Share Transfer Form" to the Nottles, as trustees of the Nottle SF, for the sale of 50,000 shares at A$0.50 per Share.  

59. The Share Transfer Form stated that:

    (a)the vendor was Owston;

    (b)the price per Share was A$0.50;

    (c)the total number of shares to be purchased was 50,000;

    (d)the total consideration payable was A$25,000;

    (e)the shares were to be held in the name of "Ronald Geoffrey Nottle & Marilyn Agnes Nottle ATF The RG & MA Nottle Superannuation Fund"; and

    (f)payment was to be made to Owston via the Morgan Alteruthemeyer Trust Account.

60. The form was for the sale of shares by Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

61. On or about 9 December 2005, Ronald Nottle, as trustee of the Nottle SF, signed the form and dated it "9-12-2005", and returned it to Ward.

62. The Nottles paid A$25,000 for the purchase of the shares by cheque made out to "Morgan Alteruthemeyer Trust Account" sent to Axis on or about 9 December 2005.

63. The sale of the shares was completed when the transfer of the shares was entered in the Register on 9 December 2005 and a certificate for those shares was issued to the Nottle SF on 31 March 2006.

    Trusso Family Trust – purchase of shares (40,000 shares owned by Seaswan)

64. This offer by Seaswan did not involve a broker.  The evidence about the offer is found in the affidavit of Antonio Trusso.

65. Mr Trusso is a director of Joric Pty Ltd, which is the trustee of the Trusso Family Trust.  In 2005 Mr Trusso had heard about the Firepower product.  He called Firepower BVI and spoke to a person who sent Mr Trusso some product for him to test in one of his trucks.

66. Mr Trusso again telephoned Firepower BVI with a view to investing.  He was referred to Mr Hill.  Either at or about Christmas 2005, or early January 2006, Mr Trusso spoke to Mr Hill and told him that he and some friends were interested in investing in Firepower BVI.

67. Seaswan submits that this demonstrates that it was not offering shares for sale including not inviting an offer to purchase its shares in Firepower BVI.

68. Whilst it is the position that Mr Trusso initiated the approach to Seaswan through Hill seeking to acquire Firepower BVI shares the fact is that following various exchanges between them Mr Hill ultimately offered, on behalf of Seaswan to sell to Joric Pty Ltd 40,000 Firepower BVI shares at 0.50 cents each.  This was confirmed in an email from Hill to Trusso dated 19 January 2006 when he said "I am prepared to sell a final parcel at A$0.50 on the basis we discussed".  Hill also emailed him an 'Application for Share Transfer from an Existing Shareholder' form as well as information about buying the shares.  The form was complete as to the vendors name, Seaswan, the purchaser's name, Joric Pty Ltd atf Trusso Family Trust, the price per share and the total price.  Contract details were also complete.

69. I am satisfied that these facts warrant the conclusion that Seaswan offered securities for sale to Joric whether in a direct sense or whether characterised as inviting an offer to purchase the shares.  These facts satisfy the indicia as to the making of an offer referred to by Palmer J in Australian Securities & Investments Commission v Australian Investors Forum Pty Ltd (No 2) at [99]. As his Honour said at [97] and with which I respectfully agree:

    [97] Section 700(2) makes it clear that the distinction between “offer” and “invitation to treat” which is drawn in the classical theory of contract formation is not to be slavishly applied in determining whether an offer requiring disclosure under Chapter 6D has been made.

    . . .

    Many investors would have made up their minds about whether to take up securities well before they are confronted either with the application form or with some document containing all of the terms of a contract.

70. Again as Palmer J said at [102]:

    [102]   The indicia of an offer of securities …  need not appear in the one document or oral communication. Some pieces of information may be given later than others.

71. Mr Trusso signed and dated the form and returned it.  In due course a share certificate dated 26 April 2006 was issued.

72. Seaswan also submits that the share sales were not legally capable of conclusion until after 6 June 2006 pursuant to the relevant Deed of Settlement, and that the only person with the capacity to agree to the transaction or the issue or the transfer was Johnston which occurred after the execution of the Deed by the directors of Firepower BVI.

73. This last submission misconceives the conduct proscribed by s 727. None of those facts are relevant.

    The Gilenos – purchase of shares (40,000 shares owned by Seaswan)

74. Mr Trusso also enquired of Firepower BVI on behalf of his friend Mr Nicolino Gileno.

75. This offer also did not involve a broker.  The evidence about it is contained in the affidavits of Nicolino Gileno and Antonio Trusso.

76. In early January 2006 Mr Hill provided a document entitled “Application for Share Transfer from an Existing Shareholder” to Mr Trusso who passed it on to Mr Gileno.  Hill had not authorised or asked him to do this.  That document was completed as to the vendor, Seaswan, and the price per share to be paid but it required completion as to the number of shares, the total price, and the purchaser's details.

77. Mr Gileno filled in the form on behalf of himself and Mrs Gileno for 40,000 shares for a total consideration of $20,000 and provided details of his name, address and contact numbers. He signed the form, drew a cheque and gave it back to Mr Trusso, who returned it to Mr Hill.  In due course a share certificate dated 26 April 2006 was issued.   

34.      This application form stated that:

(a)the purchaser of the Shares would be Gregory Vernon Ashworth and Carol Ann Ashworth ATF Ashdown Superannuation Fund;

(b)the vendor of the Shares was Green Triton;

(c)the price per share was A$0.35;

(d)the Ashworths would be applying for 145,000 Shares;

(e)the total consideration payable was A$50,750; and

(f)payment for the Shares should be made to the Morgan Alteruthemeyer trust account.

35.      This application form was for Shares to be transferred by Green Triton, that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the application form on behalf of Green Triton.

36.      On or about 1 November 2005, the Ashworths completed the following details on the application form and then signed and returned it to Ward:

(a)"$50,750.00" for the sum of the cheque enclosed with the form; and

(b)Gregory Vernon Ashworth and Carol Ann Ashworth's details, passport numbers and the date "3-10-05".

37.      A copy of the completed application form is annexed and marked CAA2.

38.      The Ashworths paid for the shares by a cheque for $50,750 made out to the Morgan Alteruthemeyer trust account, which they provided to Ward.

39.      The sale of 145,000 Shares owned by Green Triton to the Ashdown SF was completed when the transfer of the Shares was entered in the Register (which bears the date 8 March 2006) and a certificate for those Shares was issued to the Ashworths (dated 20 March 2006).

Ashworths – second sale of Share (27,500 Shares owned by Green Triton)

40.      On or about 3 May 2006, Axis, by Vallelonga, emailed Carol Ashworth a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd".

41.      A copy of the email is annexed and marked CAA6.

42.      The application form stated that:

(a)the purchaser of the Shares was Carol Ann Ashworth;

(b)the vendor of the Shares was Firepower Investments;

(c)Carol Ashworth would be applying for 27,500 Shares;

(d)the price per Share was US$1 or A$1.30;

(e)the total consideration payable was A$35,750; and

(f)payment for the shares should be made to the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonweatlh Bank.

43.      This application form was for the sale of Shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

44.      On or about 5 May 2006, Carol Ashworth completed the following details on the application form and then signed and returned it to Vallelonga:

(a)she inserted the figure for the cheque she had enclosed with the application form in the appropriate place on the form;

(b)she inserted her telephone contact details onto the appropriate place on the form; and

(c)she inserted the date "5-5-06".

45.      A copy of the completed application form is annexed and marked CAA7.

46.      Carol Ashworth returned the completed application form to Vallelonga together with a cheque for A$35,750 made out to the Morgan Alteruthmeyer trust fund for the purchase of the shares.

47.      The sale of 27,500 shares from Firepower Investments to Carol Ashworth was completed when the transfer of the Shares was entered in the Register (which bears the date 26 May 2006) and a certificate for those Shares was issued to Carol Ashworth (dated 26 May 2006).

Ashworths – third sale of Shares (22,000 Shares owned by Firepower Investments)

48.      On or about 17 May 2006, Axis, by Ward, sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to the Ashworths for the sale of 22,000 fully paid Shares at A$1.31 per Share.

49.      The application form stated that:

(a)the purchaser was Gregory Vernon Ashworth and Carol Ann Ashworth ATF Ashdown Superannuation Fund;

(b)the vendor of the Shares was Firepower Investments;

(c)the price per Share was US$1 or A$1.31;

(d)the Ashworths would be applying for 22,000 Shares;

(e)the total consideration payable was $28,820; and

(f)payment for the Shares should be made via the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonweatlh Bank.

50.      This application form was for the sale of Shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

51.      On or about 17 May 2006, Carol Ashworth completed the following details on the application form and then signed and returned it to Ward:

(a)"35,750.00" as the sum of the cheque payable to the Morgan Alteruthemeyer Account;

(b)she inserted her work telephone number; and

(c)"17-5-06" as the date.

52.      A copy of the completed form is annexed and marked CAA10.

53.      The Ashworths returned the application form to Ward together with a cheque made out to the Morgan Alteruthmeyer trust account for A$53,820.  This cheque included $28,820 for the purchase of the Firepower BVI shares, and $25,000 for an unrelated transaction.

54.      The sale of 22,000 Shares from Firepower Investments to Ashdown SF was completed when the transfer of the Shares was entered in the Register (which bears the date 6 June 2006) and a certificate for those Shares was issued to the Ashworths (dated 6 June 2006).

Baird – first purchase of Shares (300,000 Shares owned by Owston)

55.      Robin Ronald Baird (Baird) and Margot Louise Baird are the two directors of Pejean Pty Ltd (Pejean).  Pejean is the trustee of the RMZ Superannuation Fund (RMZ SF).

56.      On or about 1 February 2006, Axis, by Vallelonga, sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Baird.

57.      The application form indiicated that:

(a)the vendor of the Shares was Owston;

(b)the price per Share was $A0.50;

(c)Baird would be applying for 300,000 Shares;

(d)the total consideration payable for the Shares was A$150,000; and

(e)payment for the Shares should be made to the Morgan Alteruthemeyer trust account.

58.      This application form was the sale of Shares on behalf of Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the application form on behalf of Owston.

59.      On or about 1 February 2006, Baird completed the following details on the application form and then signed and returned it to Axis by Vallelonga:

(a)"01/02/2006" as the date; and

(b)"Pejean Pty Ltd ATF RM2 Superannauation Fund" under the section "Shares to be held in the name of".

60.      A copy of the completed application form is annexed and marked RRB8.

61.      Baird paid for the shares by cheque for A$150,000 payable to the Morgan Alteruthmeyer trust account and provided it to Axis by Ward.

62.      The sale of 300,000 Shares owned by Owston to Pejean was completed when the transfer of the Shares was entered in the Register (which bears the date 1 February 2006).

Baird – second purchase of Shares (154,000 Shares owned by Firepower Investments)

63.      On or about 4 May 2006, Axis, by Vallelonga sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Baird.

64.      This application form stated that:

(a)the vendor of the Shares was Firepower Investments;

(b)the price per Share was US$1 or A$1.30;

(c)payment for the Shares should be made to the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonweatlh Bank.

65.      This application form was for the sale of Shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

66.      On or about 4 May 2006, Baird completed the following details on the application form and then signed and returned it to Axis by Vallelonga:

(a)"154,000" as the number of Shares;

(b)"200,200" as the total consideration payable;

(c)"$200,200" as the sum of the cheque payable to the Morgan Alteruthemeyer Trust Account;

(d)"Pejean Pty Ltd ATF RMZ Superannuation Fund" under the section "Shares to be held in the name of"; and

(e)Pejean's details and "4 May 2006" as the date.

67.      A copy of the completed application form is annexed and marked RRB12.

68.      Baird paid for the Shares by a cheque payable to the Morgan Alterethmeyer trust account for A$200,200.

69.      The sale of 154,000 Shares owned by Firepower Investments was completed when the transfer of the Shares was entered in the Register (which bears the date 24 May 2006) and a certificate for those Shares was issued to Pejean (dated 30 May 2006).

Carters – purchase of Shares (22,000 Shares owned by Firepower Investments)

70.      On or about 3 April 2006, Axis, by Vallelonga, emailed a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to Shannon Carter.

71.      A copy of the email is annexed and marked SFC2.

72.      The application form stated that:

(a)the vendor was Firepower Investments;

(b)the price per Share was US$1 or A$1.35;

(c)Shannon Carter would be applying for 22,000 shares;

(d)the total consideration payable was A$29,700; and

(e)payment for the Shares should be made to the Morgan Alteruthemeyer trust account, and provided the details of a relevant bank account with the Commonweatlh Bank.

73.      A copy of the completed form is annexed and marked SFC4.

74.      This application form was for the sale of Shares owned by Firepower Investments that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the application form on behalf of Firepower Investments.

75.      On or about 4 April 2006, Shannon Carter signed and dated the application form.

76.      On or about 4 April 2006, Shannon Carter returned the application form to Ward by post together with a cheque for A$29,700 payable to the Morgan Alteruthmeyer trust account, and separate bank cheque for A$1,485 payable to Axis.

77.      The sale of 22,000 Shares from Firepower Investments Pte Ltd to Shannon Carter was completed when the transfer of the Shares was entered in the Register (which bears the date 22 May 2006) and a certificate for those Shares was issued to Shannon Carter (dated 22 May 2006).

Angela Jones and Penny Buchan – purchase of Shares (50,000 Shares owned by Owston)

78.      Angela Jones and Penny Buchan are trustees for the following self-managed superannuation funds:

(a)       "The P Buchan Superannuation Fund" (Buchan SF); and

(b)       "The A Jones Superannuation Fund" (Jones SF).

79.      On or about 22 November 2005, Axis, by Ward, gave Jones a form headed "Share Transfer Form".

80.      The Share Transfer Form stated that:

(a)the vendor was Owston;

(b)the price per Share was A$0.50;

(c)the total number of Shares to be purchased was 50,000;

(d)the total consideration payable was A$25,000; and

(e)payment was to be made to Owston via Morgan Alteruthemeyer Trust Account.

81.      The form was for the sale of Shares on behalf of Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

82.      On or about 22 November 2005, Jones and Buchan completed the following details on the Share Transfer Form, and then signed and returned it to Ward:

(a)"Angela May Jones & Penny Therese Buchan ATF The A Jones Superannuation Fund & Angela May Joens as Tenants in Common 1. A Jones Super Fund holding 40,000 of 50,000 shares 2.Angela May Jones holding 10,000 of 50,000 shares" in the section "Shares to be held in the name of";

(b)Jones's address; and

(c)"22/11/2005" as the date.

83.      A copy of the completed Share Transfer Form is annexed and marked AJMJ1.

84.      At the same time as completing the Share Transfer Form, Jones prepared a cheque for A$20,000 from her Macquarie Bank account, which was the bank account for Jones SF and gave it to either Ward or Vallelonga.  Short after the meeting, Jones paid $5,000 by bank cheque and sent it to Axis.

85.      The sale of the Shares was completed when the transfer of the Shares was entered in the Register (which bears the date 22 November 2005) and a certificate for those Shares was issued to Jones and Buchan (dated 20 March 2006).

Penny Buchan – purchase of Shares (20,000 Shares owned by Owston)

86.      On or about 22 November 2005, Axis, by Ward provided another Share Transfer Form to Buchan and Jones.

87.      The Share Transfer Form stated that:

(a)the vendor was Owston;

(b)the price per Share was A$0.50;

(c)the total number of Shares to be purchased was 20,000;

(d)the total consideration payable was A$10,000; and

(e)payment was to be made to Owston via Morgan Alteruthemeyer Trust Account.

88.      The Share Transfer Form was for the sale of Shares on behalf of Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

89.      Buchan and Jones completed the following details on the Share Transfer Form, and then signed it and gave to Ward:

(a)"Penny Therese Buchan & Angela May Jones ATF The P Buchan Superannuation Fund" in the section "Shares to be held in the name of";

(b)Jones's address; and

(c)"22/11/2005" as the date.

90.      A copy of the completed Share Transfer Form is annexed and marked PTB2.

91.      Penny Buchan prepared a cheque for A$10,000 from The P Buchan Supernannuation Fund and dated it 22 December 2005 and gave it to Ward together with the completed Share Transfer Form.

92.      The sale of Shares was completed when the transfer of the Shares was entered in the Register (which bears the date 22 November 2005) and a certificate for those Shares was issued to Jones and Buchan (dated 22 March 2006).

Furlans – first purchase of Shares (202,000 owned by Green Triton)

93.      On about September 2005 Nicholas Joseph Fulan and Carnelia Furlan (Furlans) met Ward at Ward's offices in Subiaco.

94.      On or about 5 October 2005, Axis, by Vallelonga sent an email attaching a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to the Furlans.

95.      A copy of the email and attached application form is annexed and marked NJF1.

96.      The application form stated that:

(a)the vendor was Green Triton;

(b)the price per share was A$0.35;

(c)the total number of Shares to be purchased was 202,000;

(d)the total consideration payable was A$70,700;

(e)the Shares were to be held in the name of "Nicholas Furlan & Camelia Furlan ATF Furlan Family Superannauation Fund AND Nicholas Furlan & Camelia Furlan (As Tenants in Common) AS TENANTS IN COMMON With Furlan Family Superannuation Fund holding 145,000 of 202,000 shares and Nicholas & Camliea Furlan holding 57,000 of 202,000 shares"; and

(f)payment was to be made to Green Triton via Morgan Alteruthemeyer Trust Account.

97.      The application form was for Shares to be transferred by Green Triton, that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the form on behalf of Green Triton.

98.      On or about 12 October 2005, the Furlans, on behalf of themselves and as trustees of Furlan SF, signed the form, dated it "12th Oct 2005" and then returned it to Ward.

99.      A copy of the completed application form is annexed and marked NJF2.

100.     The Furlans paid A$19,950 for the purchase of the Shares by cheque, and resolved to pay A$50,750 for the Shares as trustees of the Furlan SF.

101.     The sale of Shares was completed when the transfer of the Shares was entered in the Register (which bears the date 8 March 2006) and a certificate for those Shares was issued to the Furlans (dated 8 March 2006).

Furlans – second purchase of Shares (202,000 Shares owned by Owston)

102.     At a meeting with Ward at the Furlan's home in December 2005, Nicholas Furlan told Ward that the Furlans would buy 60, 000 shares in Firepower BVI.

103.     Axis, by Ward, provided the Furlans a form headed "Share Transfer Form".

104.     The Share Transfer Form stated that:

(a)the Shares were to be transferred from Owston, but (incorrectly) that the vendor was Seaswan;

(b)the price per Share was A$0.50;

(c)the total number of Shares to be purchased was 60,000;

(d)the total consideration payable was A$30,000;

(e)the Shares were to be held in the name of "Nicholas Furlan & Camelia Furlan ATF Furlan Family Superannuation Fund "; and

(f)payment was to be made to the Morgan Alteruthemeyer Trust Account.

105.     A copy of the completed Share Transfer Form is annexed and marked NJF6.

106.     The form was for the sale of Shares to be transferred by Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

107.     On or about 18 January 2006, the Furlans, as trustees of the Furlan SF, signed the form, dated it "18/1/2006" and returned it to Ward.

108.     The Furlans paid A$30,000 for 60,000 Shares at fifty cents each by way of a cheque made out to "Morgan Alteruthemeyer Trust Fund" signed and sent to Axis on or about 17 January 2006.

109.     The sale of Shares was completed when the transfer of the Shares was entered in the Register (which bears the date 18 January 2006 and indicates that the Shares were transferred from Owston to the Furlans) and a certificate for those Shares was issued to the Furlan SF (dated 20 March 2006).

110.     On or about 20 December 2006 the Furlans disposed of 30,000 Shares by selling them to Ward.  The Furlans did this by completing an "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd", which Ward had provided them with.  Ward subsequently gave the Furlans a cheque for A$30,000.

Edmondsons – first purchase of Shares (290,000 owned by Green Triton)

111.     Ludmilla Elizabeth Edmondson and Darryl John Edmondson are the joint trustees of the DJ & LE Edmondson Superannuation Fund (Edmondson SF).

112.     On or about 9 September 2005, Axis, by Ward, sent a form headed "Share Transfer Form" to the Edmondsons.

113.     The Share Transfer Form stated that:

(a)the vendor was Green Triton;

(b)the price per Share was A$0.35;

(c)the total number of Shares to be purchased was 290,000;

(d)the total consideration payable was A$101,500;

(e)the Shares were to be held in the name of "Darryl John Edmondson & Ludmilla Elizabeth Edmondson ATF DJ & LE Edmondson Superannuation Fund"; and

(f)payment was to be made to Green Triton via Morgan Alteruthemeyer Trust Account.

114.     The form was for Shares to be transferred by Green Triton, that were part of the Share Issue to Green Triton.  Axis and Ward had authority to distribute the form on behalf of Green Triton.

115.     On or about 15 September 2005, the Edmondsons signed the form, dated it "15.9.05", and returned it to Ward.

116.     A copy of the completed Share Transfer Form is annexed and marked DJE 2.

117.     On 15 September 2005, the Edmondsons, as trustees of Edmondson SF, paid A$101, 500 by way of a cheque.

118.     The sale of Shares was completed when the transfer of the Shares was entered in the Register (which bears the date 8 March 2006) and a certificate for those Shares was issued to Edmondson SF (dated 20 March 2006).

Edmondsons – second purchase of Shares (48,000 Shares owned by Firepower Investments)

119.     On or about 28 April 2006, Axis, by Ward sent a form headed "Application for Share Transfer from an Existing Shareholder Firepower Holdings Group Ltd" to the Edmondsons.

120.     The application form stated that:

(a)the vendor was Firepower Investments;

(b)the price per Share was US$1.00 or A$1.35;

(c)the total number of Shares to be purchased was 48,000;

(d)the total consideration payable was A$64,800;

(e)the Shares were to be held in the name of "Darryl John Edmondson & Ludmilla Elizabeth Edmondson ATF DJ & LE Edmondson Superannuation Fund"; and

(f)payment was to be made to Firepower Investments via Morgan Alteruthemeyer Trust Account.

121.     The form was for Shares to be transferred by Firepower Investments, that were part of the Share Issue to Green Triton and were transferred on or about 22 May 2006 to Firepower Investments.  Axis and Ward had authority to distribute the form on behalf of Firepower Investments.

122.     On or about 28 April 2006, the Edmondsons, as trustees of the Edmondson SF, signed the form and dated it "28/4/06", and then returned it to Ward.

123.     The Edmondsons paid A$64,800 for the purchase of the Shares by cheque made out to "Morgan Alteruthemeyer Trust Account" sent to Ward on or about 28 April 2006.

124.     The sale of Shares was completed when the transfer of the Shares was entered in the Register (which bears the date 24 May 2006) and a certificate for those Shares was issued to Edmondson Superannuation Fund (dated 24 May 2006).

Nottles – purchase of Shares (50,000 Shares owned by Owston)

125.     Ronald Geoffrey Nottle and Marilyn Agnes Nottle (Nottles) are the trustees of The RG & MA Nottle Superannuation Fund (Nottle SF).

126.     On or about 29 November 2005, Axis, by Ward sent a letter enclosing a form headed " Share Transfer Form" to the Nottles, as trustees of the Nottle SF, for the sale of 50,000 Shares at A$0.50 per Share. 

127.     A copy of the letter and Share Transfer Form is annexed and marked RGN1 and RGN2.

128.     The Share Transfer Form stated that:

(a)the vendor was Owston;

(b)the price per Share was A$0.50;

(c)the total number of Shares to be purchased was 50,000;

(d)the total consideration payable was A$25,000;

(e)the Shares were to be held in the name of "Ronald Geoffrey Nottle & Marilyn Agnes Nottle ATF The RG & MA Nottle Superannuation Fund"; and

(f)payment was to be made to Owston via the Morgan Alteruthemeyer Trust Account.

129.     The form was for the sale of Shares by Owston, that were part of the Share Issue to Owston.  Axis and Ward had authority to distribute the form on behalf of Owston.

130.     On or about 9 December 2005, Ronald Nottle, as trustee of the Nottle SF, signed the form and dated it "9-12-2005", and returned it to Ward.

131.     The Nottles paid A$25,000 for the purchase of the Shares by cheque made out to "Morgan Alteruthemeyer Trust Account" sent to Axis on or about 9 December 2005.

132.     The sale of the shares was completed when the transfer of the Shares was entered in the Register on 9 December 2005 and a certificate for those Shares was issued to the Nottle SF on 31 March 2006.

Sale and purchase of Shares made in Australia

133.     Each of the sales and purchases of Shares, and conduct leading up to those sales and purchases, that are set out above occurred in Australia.

No relevant exemptions apply

134.     In the case of each of the Shares sold, the amount payable by the person buying the Shares for the securities (together Investors) and the amounts previously paid by the Investors for shares in Firepower BVI did not add up to at least A$500,000.

135.     In the case of each of the Investors it did not appear from a certificate given by a qualified accountant no more than six months before the relevant Shares were purchased that the Investors:

(a)had net assets of at least A$2,500,000 (including the net assets of a company or trust controlled by the Investors); or

(b)had a gross income for each of the two financial years preceding the purchase of Shares of at least A$250,000 (including the gross income of a company or trust controlled by the Investors); or

(c)was a company or trust controlled by a person who had net assets of at least A$2,500,000 or had a gross income for each of the two financial years preceding the purchase of Shares of at least A$250,000.

136.     In the case of each of the purchases of Shares:

(a)the person selling the Shares, at the time of selling the Shares, did not hold or make the sale under the authority of an Australian Financial Services Licence;

(b)further or alternatively, the person making the sale did not give the Investors who received the Shares, before, or at the time when, the Shares were sold, a written statement of any reasons for being satisfied that the Investors had previous experience in investing in securities that allowed the Investors to assess:

(i)the merits of the purchase;

(ii)the value of the Shares;

(iii)the risks involved in accepting the purchase;

(iv)the Investors' own information needs; and

(v)the adequacy of the information given by the person making the sale; or

(c)further or alternatively, the Investors who received the Shares did not sign a written acknowledgment before, or at the time when, the purchase was made that any person had not given the Investors a disclosure document under Part 6D.2 in relation to the purchase of Shares (Disclosure Document).

137.     None of the Investors, at the time or times that any purchase of Shares was made by them:

(a)held an Australian Financial Services Licence;

(b)were a body regulated by Australian Prudential Regulation Authority (except to the extent that the Investors were a superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth));

(c)were a body registered under the Financial Corporations Act 1974 (Cth);

(d)were the trustee of:

(i)a superannuation fund; or

(ii)an approved deposit fund; or

(iii)a pooled superannuation trust; or

(iv)a public sector superannuation scheme

within the meaning of the Superannuation Industry (Supervision) Act 1993 that had net assets of at least A$10 million;

(e)were listed on any financial market operated by any of Australia Pacific Exchange Limited, Australian Stock Exchange Limited, Bendigo Stock Exchange Ltd or Stock Exchange of Newcastle Limited;

(f)were a public authority or an instrumentality or agency of the Crown in right of the Commonwealth, in right of a State or in right of a Territory;

(g)carried on a business of investment in financial products, interests in land or other investments, by investing funds received (directly or indirectly) following an offer or invitation to the public;

(h)were a foreign entity that, if established or incorporated in Australia, would have been covered by one of paragraphs 204(a) to 204(g);

(i)had or controlled gross assets of at least A$10 million (including any assets held by an associate of the Investors within the meaning of section 9, or under a trust that the Investors managed); or

(j)were:

(v)a person who made or participated in making, decisions that affected the whole, or a substantial part, of the business of Firepower BVI or any of its related bodies corporate;

(vi)the spouse, parent, child, brother or sister of such a person; or

(vii)a body corporate controlled by such a person.

138.     None of the purchases of Shares were made under a dividend reinvestment plan or bonus share plan.

139.     No shares in Firepower BVI have ever been quoted on any financial market operated by any of Australia Pacific Exchange Limited, Australian Stock Exchange Limited, Bendigo Stock Exchange Ltd or Stock Exchange of Newcastle Limited.

140.     No prospectus, profile statement or offer information statement has been ever lodged with ASIC with respect to any of the share transactions described above.

141.     Further, at no time has ASIC ever approved the use of a profile statement in relation to the issue of shares in Firepower BVI.