Australian Securities and Investments Commission v Macks (No 5)

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v MACKS (No 5)
[2021] SASC 12
Reasons for Decision of the Honourable Justice Doyle

CORPORATIONS - WINDING UP - LIQUIDATORS - REMOVAL
CORPORATIONS - WINDING UP - LIQUIDATORS - SUPERVISION OF LIQUIDATORS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - PARTIAL SUCCESS
The defendant, Mr Macks, is a registered liquidator and an official Liquidator pursuant to the provisions of the Corporations Act 2001 (Cth) (the Act). The plaintiff, ASIC, sought an inquiry under s 536(1) of the Act into two aspects of Mr Macks’ conduct as the liquidator of Bernsteen Pty Ltd and Newmore Pty Ltd (together, the Companies) which had been the subject of findings in earlier Supreme Court proceedings.
The first aspect of the inquiry concerned the findings made in relation to the creation of two memoranda (the Memoranda) provided by Mr Macks to ASIC in response to a notice to produce issued by ASIC to Mr Macks in connection with an investigation into his conduct as the liquidator of the Companies. It was alleged by ASIC that Mr Macks fabricated the Memoranda with the intention of passing them off to ASIC as either original documents created on the dates they bore, or true photocopies of the originals, and forged on them the initials of other persons working at his firm. ASIC alleged that Mr Macks did so dishonestly, and for the purpose of deceiving ASIC in the course of its investigation into his conduct.
The second aspect of the inquiry concerned the finding that Mr Macks, as the liquidator of Bernsteen, contravened s 180(1) of the Act by reason that from 28 April 2006 he failed to exercise the degree of care and diligence required of him as an officer of Bernsteen in applying its funds: in pursuing proceedings known as ‘the Bernsteen proceedings’; and pursuant to an indemnity by which Mr Macks indemnified Ms George against her liability for the costs of the proceedings known as ‘the George proceedings’. ASIC alleged that from at least 28 April 2006 onwards, Mr Macks continued the Bernsteen proceedings and continued to indemnify Ms George in respect of the costs of the George proceedings in circumstances where no reasonable person in his position would have done so.
The inquiry was conducted in May 2020, and findings on the matters the subject of the inquiry were published in October 2020. The Court found that ASIC had established the allegations the subject of the first aspect of the inquiry (in relation to the creation of the Memoranda), but had not established the allegations the subject of the second aspect of the inquiry (in relation to the expenditure of funds in connection with the Bernsteen and George proceedings).
ASIC now seeks relief against Mr Macks pursuant to ss 473(1), 503 and 536 of the old version of the Act, and s 1577 of the current version of the Act. ASIC also seeks an order that Mr Macks pay the costs of the inquiry on a standard basis.
Held (per Doyle J):
1.      Given the isolated nature of Mr Macks’ conduct, and the professional and personal price that he has already paid for that conduct over an extended period of time, there is very little risk that he would ever again engage in any dishonest conduct, and little need for additional personal deterrence or to protect the public from him. Further, a period of cancellation or suspension of seven to 10 years, as contemplated by ASIC, would operate particularly harshly upon Mr Macks, and effectively end his career.
2.      It nevertheless remains important to mark the Court’s disapproval of his dishonesty, and to ensure that the penalty imposed is adequate both to ensure a level of general deterrence, and to preserve the public’s confidence in the regulation and supervision of insolvency practitioners.
3.      In the circumstances, it is appropriate that Mr Macks be prevented from holding or taking any appointments as an insolvency practitioner for a period of three years. Orders will be made removing him from his current appointments, facilitating his replacement in those appointments, suspending his registration as liquidator for a period of three years, and restraining him from accepting any further appointments during that same period.
4.      Mr Macks is to pay 50 per cent of ASIC’s costs of the proceedings on the standard basis.
Corporations Act 2001 (Cth) ss 180(1), 473(1), 503, 536, 536(1), 1577, 1617; Insolvency Reform Act 2016 (Cth); Corporations Regulations 2001 (Cth), referred to.
Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209; Viscariello v Macks (2014) 103 ACSR 542; Macks v Viscariello (2017) 130 SASR 1 ; Australian Securities and Investments Commission v Macks (No 2) (2019) 133 SASR 251 ; Australian Securities and Investments Commission v Edge (2007) 211 FLR 137; Commissioner for Corporate Affairs v Harvey [1980] VR 669; Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497; Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98; Australian Securities and Investments Commission v Franklin (2014) 223 FCR 204; Australian Securities and Investments Commission v Wily (2019) 137 ACSR 1; Kennards Hire Pty Ltd v RMGA Pty Ltd [2010] NSWSC 1387; Hall v Poolman (2009) 75 NSWLR 99; Morley v Australian Securities and Investments Commission (No 2) (2011) 83 ACSR 620; Elliott v Australian Securities and Investments Commission (2004) 10 VR 369; Australian Securities and Investments Commission v Helou (No 2) [2020] FCA 1650; Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 ; Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; Australian Securities and Investments Commission v White (2006) 58 ACSR 261 ; Australian Securities and Investments Commission v Ariff [2009] NSWSC 829; Re Iles (1922) 66 Sol Jo 297; Attorney-General v Bax [1999] 2 Qd R 9; Council of Law Society of ACT v Bandarage [2019] ACTSCFC 1; Council of the Law Society of the ACT v Davey ; Council of the Law Society of the ACT v Davey (2019) 14 ACTLR 159; Siganto v The Queen (1998) 194 CLR 656; Secretary to the Department of Education and Training v Paul [2020] VSCA 280; Australian Securities and Investments Commission v Citrofresh International Ltd (No 3) (2010) 268 ALR 303; Re Nixon [2015] FCA 976; Re ACN 156 335 781 Pty Ltd [2017] FCA 815; Re Ballistic Hydraulic Hose and Fittings Pty Ltd [2017] FCA 1101; Re McGrath (2005) 54 ACSR 55; Oshlack v Richmond River Council (1998) 193 CLR 72 ; Mericka v Rathbone (2016) 125 SASR 563 , considered.

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v MACKS (No 5)
[2021] SASC 12
Civil

DOYLE J: These reasons address the orders for relief that are appropriate as a result of the findings I made following the inquiry I conducted into the conduct of Mr Macks, as the liquidator of Bernsteen Pty Ltd and Newmore Pty Ltd. Those findings, and the reasons for them, are set out in Australian Securities and Investments Commission v Macks (No 4)[1]. These reasons also address the issue of the costs of the inquiry.
[1] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209.
Background
Mr Macks is a registered liquidator and an official liquidator pursuant to the provisions of the Corporations Act 2001 (Cth) (the Act).
By its originating process filed in these proceedings, ASIC sought relief against Mr Macks pursuant to ss 473(1), 503 and 536 of the Act as it stood immediately prior to the commencement of schedule 2 to the Insolvency Reform Act 2016 (Cth) on 1 March 2017, and s 1577 of the current version of the Act. In support of the ultimate relief which it sought, ASIC sought an inquiry into Mr Macks’ conduct as the liquidator of Bernsteen and Newmore (together, the Companies). An inquiry was sought in relation to two aspects of Mr Macks’ conduct of those liquidations.
As set out in detail in Australian Securities and Investments Commission v Macks (No 4),[2] the first aspect of the inquiry sought by ASIC concerned the findings made in some earlier Supreme Court proceedings (the Viscariello proceedings) in relation to the creation of two memoranda (the Memoranda). The Memoranda were provided by Mr Macks to ASIC on 26 February 2010, in response to a notice to produce issued by ASIC to Mr Macks in connection with an investigation into his conduct as the liquidator of the Companies. It was alleged by ASIC that, on or about 25 February 2010, Mr Macks fabricated the Memoranda with the intention of passing them off to ASIC as either original documents created on the dates they bore, or true photocopies of the originals, and that he forged on them the initials of other persons working at his firm. ASIC alleged that Mr Macks did so dishonestly, and for the purpose of deceiving ASIC in the course of its investigation into his conduct.
[2] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [9]-[14].
The second aspect of the inquiry sought by ASIC concerned the finding by the Full Court in the Viscariello proceedings that Mr Macks, as the liquidator of Bernsteen, contravened s 180(1) of the Act by reason that from 28 April 2006 he failed to exercise the degree of care and diligence required of him as an officer of Bernsteen in applying its funds both in pursuing and defending the various aspects of the litigation referred to as ‘the Bernsteen proceedings’, and pursuant to an indemnity in favour of Heidi George by which Mr Macks had indemnified Ms George against her liability for the costs incurred in connection with the litigation referred to as ‘the George proceedings’. ASIC alleged that from at least 28 April 2006 onwards, Mr Macks continued the Bernsteen proceedings, and continued to indemnify Ms George in respect of the costs of the George proceedings, in circumstances where no reasonable person in his position would have done so.
On 22 February 2019, for the reasons set out in Australian Securities and Investments Commission v Macks (No 2),[3] I ordered that there be an inquiry into these two aspects of Mr Macks’ conduct, and the allegations made by ASIC in relation to the same. I ordered that the parties file pleadings articulating their claims and defences, which they duly did.
[3] Australian Securities and Investments Commission v Macks (No 2) (2019) 133 SASR 251.
I conducted the inquiry during May 2020, and in October 2020 published my findings on the matters the subject of inquiry. For the reasons set out Australian Securities and Investments Commission v Macks (No 4),[4] I found that ASIC had established the allegations the subject of the first aspect of the inquiry (in relation to the creation of the Memoranda),[5] but had not established the allegations the subject of the second aspect of the inquiry (in relation to the expenditure of funds in connection with the Bernsteen and George proceedings).[6]
[4]    Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209.
[5]    Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [521].
[6]    Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [657].
It is not necessary for me to repeat the detail of my findings, or the reasons for them. In that respect, these reasons should be read in conjunction with the detail of my findings and reasoning set out in Australian Securities and Investments Commission v Macks (No 4).[7]
[7] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209.
Orders sought by ASIC
ASIC has filed minutes of the orders that it proposed be made in light of my findings in respect of the fabrication of the Memoranda. In summary, ASIC seeks orders providing for:
1.the removal of Mr Macks as the liquidator of various companies set out in annexures to the minutes of order, and as the receiver and manager of Logos Research Institute Management Pty Ltd, pursuant to ss 473(1), 503 and 536(1) of the old Act and s 1577 of the current Act, and for an orderly handover of those administrations;
2.the removal of Mr Macks’ name from the register of liquidators, and the imposition of a restraint upon him to prevent him from re-applying to be registered as a liquidator for a period of seven to 10 years, or from applying to be registered or from accepting appointment as a liquidator, provisional liquidator, voluntary administrator, administrator, or as a receiver or other controller of property for a period of seven to 10 years, pursuant to s 536(1) of the old Act and s 1577 of the current Act; and
3.Mr Macks to pay ASIC’s costs of the inquiry on the standard basis, as taxed or agreed.
Mr Macks opposes the orders sought by ASIC. Through his counsel, he acknowledged the seriousness of the findings made against him, and indicated that he would not oppose an order removing him from his current appointments, suspending his registration as a liquidator, and preventing him from accepting any appointment as a liquidator or other controller, for a period of 12 months. However, he opposed any order removing him from the register, or preventing him from re-applying for registration or otherwise accepting any appointments for a period of the length sought by ASIC.
In relation to the issues of costs, Mr Macks objected to any order for costs against him. He contended that his success in relation to the issues the subject of the second aspect of the inquiry justified confining any order for costs in ASIC’s favour to the costs of the issues raised by the first aspect of the inquiry, and making an order for costs in Mr Macks’ favour in respect of the issues raised by the second aspect of the inquiry. In the alternative, Mr Macks contended that there should be no order as to costs of the proceedings, given the mixed result.
The high standard of conduct expected of a liquidator
Mr Macks’ conduct falls to be assessed in light of his role as a liquidator, and the high standards of conduct expected of a liquidator.
A liquidator is, of course, a professional person who is being paid for his or her services, and as a result, a high standard of care and diligence is required.
More importantly in present context, a liquidator is also an officer of the Court, through whom the Court itself notionally conducts compulsory liquidations when so appointed. As such, the liquidator is entrusted with the reputation of the Court for the impartial and proper dispatch of the liquidator’s duties.[8]
[8] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137 at [39]; Commissioner for Corporate Affairs v Harvey [1980] VR 669 at 696; Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497 at [202].
Section 536(1) is a statutory embodiment of the Court’s power to supervise its officers, but extends to all liquidators, whether appointed by the Court or otherwise. This is no doubt because all liquidators, however appointed, perform an important public function.
Liquidators not only act in a fiduciary capacity, but are also afforded wide and extensive powers. There is a broad range of statutory functions which they might be called upon to exercise, and duties to which they may be subject. Their extensive powers entail corresponding vulnerability on the part of creditors, shareholders and others who may be affected by those powers. As a result, high standards of honesty, impartiality and probity are imposed under both the Act and the general law.[9] These high standards are reflected in the professional codes of conduct governing the conduct of liquidators.
[9] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137 at [42]-[44], [51]; Commissioner for Corporate Affairs v Harvey [1980] VR 669 at 696.
More broadly, the position of liquidator can be seen as a repository of public trust. As Stewart J explained in Commissioner of Taxation v Iannuzzi (No 2):[10]
The position of liquidator is a repository of public trust; the public is entitled to trust a liquidator to perform their functions to a high standard and with scrupulous attention to obligations of candour, honest and integrity.
When a liquidator falls short of the standards expected of them, the public’s trust in the office of liquidator is eroded. That in turn has a corrosive effect on the administration of the body of insolvency law, and consequently on the administration of justice.
[10] Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497 at [203]-[204].
It is against this background that Middleton J in Australian Securities and Investments Commission v Dunner[11] said that registration as a liquidator should be seen as a privilege conditional upon maintenance of appropriate standards of conduct, and emphasised the importance of public confidence in the regulation of liquidators:[12]
[T]here is a compelling public interest in the maintenance of a system which recognises that registration as a liquidator is a privilege, the continuance of which is conditional upon diligent performance of its attendant duties. It is also important to demonstrate to the public that there exists a regulatory regime applicable to liquidators which is effective in maintaining high standards.
[11] Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98.
[12] Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98 at [219].
The Court’s powers to supervise and remove liquidators
There is no dispute that the Court has the power to make the orders sought by ASIC, and in particular Mr Macks’ removal from the register of liquidators and prohibition from holding the office of liquidator (or other like offices).
Sections 473(1) and 503 of the old Act provided the Court with power to remove a liquidator, and appoint a replacement liquidator, in the case of court-ordered and voluntary windings up respectively.
Section 536(1) of the old Act, the terms of which are set out in my earlier reasons, provided for broader relief, empowering the Court to take “such action as it thinks fit” following an inquiry. While the transitional provisions in s 1617 of the current Act provide for the continued application of the old Act in the present case, s 1577 of the current Act also relevantly confers a discretion upon the Court, in circumstances where the old Act continues to apply, to suspend or cancel the registration of a person as a liquidator. As such, it is accepted that the Court also has power to make the orders sought under both s 536(1) of the old Act and s 1577 of the current Act.
The Court is conferred with a broad discretion to remove a liquidator under ss 473 and 503. The discretion under these sections is conditioned only upon cause being shown. As White J (with Jessup and Robertson JJ agreeing) said in Australian Securities and Investments Commission v Franklin:[13]
The words “cause shown” [in s 503] are not to be construed narrowly. An applicant for removal may rely on any conduct or inactivity by a liquidator ranging from moral turpitude to bias, lack of independence, incompetence or other unfitness for office. The overall considerations are the interests of the liquidation and the purpose for which the liquidator was appointed.
[13] Australian Securities and Investments Commission v Franklin (2014) 223 FCR 204 at [55] (citations omitted).
As for the nature of the Court’s jurisdiction under s 536(1) of the old Act, I have explained in my earlier reasons in this matter that the Court’s powers under that section are an important aspect of its supervisory and disciplinary jurisdiction over liquidators.[14] In particular, the Court’s powers under that section are directed to the regulation, supervision, discipline and correction of liquidators with a view to upholding the public interest in the honest and efficient administration of companies subject to winding up.[15] They will often fall to be exercised in circumstances where normal market forces, and the exercise by shareholders of their rights to control, are attenuated or non-existent.[16]
[14] Australian Securities and Investments Commission v Macks (No 2) (2019) 133 SASR 251 at [48]-[51]; see also Australian Securities and Investments Commission v Wily (2019) 137 ACSR 1 at [27]-[29].
[15] Kennards Hire Pty Ltd v RMGA Pty Ltd [2010] NSWSC 1387 at [37].
[16] Hall v Poolman (2009) 75 NSWLR 99 at [53].

Consistently with the above, the Court’s jurisdiction and powers under s 536(1) are again broadly expressed, and are not to be narrowly construed or applied.
It is well established that orders for the cancellation of a liquidator’s registration may be made pursuant to this section.[17] In determining whether a disqualification is justified, and if so for what period, it is important to bear in mind that the primary purpose of such an order is to protect the public.[18] The complementary considerations of general and personal deterrence will also be relevant in determining an appropriate response to the relevant misconduct.[19] However, the orders made should be proportionate, and go no further than is necessary in order to achieve the necessary protection and deterrence.[20] As such, while the practical reality is that the orders will involve the imposition of a penalty, it is unhelpful to speak in terms of the punitive effect of the orders.[21]
[17] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137 at [613]; Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98 at [222]-[229]; Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497 at [1]-[2], [227]-[228]; cf Australian Securities and Investments Commission v Wily (2019) 137 ACSR 1 at [29].
[18] Morley v Australian Securities and Investments Commission (No 2) (2011) 83 ACSR 620 at [126].
[19] Elliott v Australian Securities and Investments Commission (2004) 10 VR 369 at [137]; Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98 at [218].
[20] Australian Securities and Investments Commission v Helou (No 2) [2020] FCA 1650 at [147].
[21] Australian Securities and Investments Commission v Helou (No 2) [2020] FCA 1650 at [148].
In my view, similar considerations govern the exercise of the Court’s jurisdiction under s 1577 of the current Act.
In the analogous context of disqualification orders against directors, Santow J in Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler,[22] formulated a number of propositions that guide the Court’s exercise of its discretion. They include:[23]
[22] Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80.
[23] Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 at [56] (as set out in the reasons of McHugh J in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [49]) (citations omitted).
1.Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards.
2. The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office.
3. Protection of the public also envisages protection of individuals who deal with companies, including consumers, creditors, shareholders and investors.
4. The banning order is protective against present and future misuse of the corporate structure.
5.     The order has a motive of personal deterrence, though it is not punitive.
6.     General deterrence is an object of the legislation.
7. In assessing the fitness of an individual to manage a company, it is necessary that the individual have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company.
8. Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty.
9.In assessing an appropriate length of prohibition, consideration is given to the degree of seriousness of the contraventions, the propensity of the defendant to engage in similar conduct in the future and the likely harm that may be caused to the public.
10. It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the defendant’s conduct.
11. A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming.
12. The eight criteria to govern the exercise of the court’s powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper have been influential. It was held that in making such an order it is necessary to assess:
(a)     the character of the defendant;
(b)     the nature of the breaches;
(c)     the structure of the company or companies and the nature of its or their business;
(d)     the interests of shareholders, creditors and employees;
(e)     the risks to others from the continuation of the defendant as a director;
(f)      the honesty and competence of the defendant;
(g)     hardship to the defendant and to his or her personal and commercial interests; and
(h)     the defendant’s appreciation that future breaches could result in future proceedings.
These propositions have been cited with approval in a number of subsequent authorities.[24]
[24] Eg, Elliott v Australian Securities and Investments Commission (2004) 10 VR 369 at [136]; Australian Securities and Investments Commission v White (2006) 58 ACSR 261 at [21].
In Rich v Australian Securities and Investments Commission,[25] McHugh J summarised the range of factors that the courts take into account in determining whether, and for what period, to disqualify a director or other company officer:[26]
They take into account a wide variety of factors in addition to determining whether any and, if so, what period of disqualification should be imposed. They consider more than the present and future fitness of the defendant to manage corporations. They take into account factors such as the size of any losses suffered by the corporation, its creditors and consumers, legislative objectives of personal and general deterrence, contrition on the part of the defendant, the gravity of the misconduct, the defendant’s previous good character, prejudice to the defendant’s business interests, personal hardship and the willingness of the defendant to render assistance to statutory authorities and administrators.
[25] Rich v Australian Securities and Investments Commission (2004) 220 CLR 129.
[26] Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [43].
Then, after setting out in full the propositions that had been formulated by Santow J, McHugh J added:[27]
The first four propositions formulated by Santow J go directly to the protection issue, that is, the protection of the public from the defendant’s future conduct. Other propositions, such as the ninth, tenth and twelfth, also pertain to the protection of the public. Some propositions, however, which relate to considerations that operate to reduce the period of disqualification, such as personal hardship to the defendant, mitigating factors, repayment of amounts misappropriated and the defendant’s expressed intention no longer to hold a management position, benefit the defendant rather than protect the public. Still others, such as the fifth and sixth propositions, recognise that the disqualification provisions also have the objectives of personal and general deterrence. These latter propositions strongly resemble sentencing principles under the criminal law.
[27] Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [50].
Other authorities
In the course of submissions in this matter the parties both directed my attention to several other authorities involving misconduct by liquidators. I consider it appropriate to mention these authorities, as I have found them to be of some general assistance. However, I do so cognisant of the limitations upon the guidance they can provide given the extent to which each turned upon its own facts.
In Australian Securities and Investments Commission v Edge,[28] Dodds-Streeton J ordered that the liquidator should be removed from the offices that he then held, and prohibited for a period of 10 years from holding the office of liquidator, provisional liquidator, voluntary administrator, deed administrator or receiver.
[28] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137.
ASIC had alleged that Mr Edge breached approximately 30 different statutory provisions in the course of various liquidations and administrations. The essential allegations were that Mr Edge repeatedly drew remuneration from the assets of the companies he had administered without obtaining any, or any valid, approval; that he destroyed or caused to be destroyed the books and records of numerous companies; that he failed to maintain records; that he failed to lodge, or lodged inadequately, forms, accounts and reports as required by legislation; that he failed to hold meetings in accordance with statutory requirements or at all; that he inappropriately delegated his duties; and that he accepted appointments for improper purposes.
Following contested proceedings, the allegations were largely upheld, although Dodds-Streeton J made a number of modifications to the relief sought. In summary, her Honour concluded that Mr Edge had repeatedly contravened numerous significant provisions of the Act and Corporations Regulations2001 (Cth) in relation to numerous companies. The breaches were characterised as “chronic and wide spread”.[29] As to the destruction of books and records, her Honour found that such actions involved a “serious breach of duty”.[30] Dodds-Streeton J ultimately concluded that “the defendant failed faithfully to perform his duty as a liquidator, and has conducted administrations in a manner prejudicial or potentially prejudicial to the creditors and members of the relevant companies.”[31]
[29] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137 at [632].
[30] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137 at [633].
[31] Australian Securities and Investments Commission v Edge (2007) 211 FLR 137 at [639].
In Australian Securities and Investments Commission v Ariff,[32] the liquidator was prohibited from holding office for life and ordered to pay compensation pursuant to s 536 of the Act. He had extensive professional experience, had been working in his own practice for six years, and was 45 years of age at the time of judgment. He had a previously unblemished record.
[32] Australian Securities and Investments Commission v Ariff [2009] NSWSC 829.
Mr Ariff consented to the prohibition sought by ASIC, and also made a number of admissions. The conduct in question included failures in lodging accounts; lodgement of false accounts; failures in establishing and administering a deed fund, making unauthorised or improper payments (including to himself); charging a group of companies to which he was appointed as administrator for overseas travel for both himself and his family; paying family members company funds for services which were not related to the companies; charging for disbursements which had not yet been paid; accepting an invalid or improper appointment; failing to call meetings; allowing companies to remain in control of assets inappropriately; failing to pay dividends, superannuation and tax; improper communications with the Insolvency Practitioners Association of Australian; and misleading communications with creditors.[33]
[33] Australian Securities and Investments Commission v Ariff [2009] NSWSC 829 at [8], [9], [12]-[22].
The lifetime prohibition was imposed notwithstanding the liquidator’s age; his previously unblemished record; his cooperation, which was evident from the extensive admissions he made and saved the plaintiff regulator and the public the cost of an anticipated six week hearing; his insight into his wrongdoing; and the strain that the proceedings had brought upon the liquidator and his family.
In Commissioner of Taxation v Iannuzzi (No 2),[34] the Court made prohibition orders in respect of the liquidator for a period of 10 years. Mr Iannuzzi had been a registered liquidator for almost seven years prior to judgment.
[34] Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497.
At a late stage of the proceedings, shortly before the hearing of the inquiry, Mr Iannuzzi made a series of admissions and consented to orders disqualifying him for 10 years. The conduct in issue related to at least six corporate groups. The liquidator made admissions that he failed to identify transactions that contravened Part 5.78 of the Act; failed to conduct steps and make enquiries within the timeframe in which an external administrator exercising reasonable care and diligence should have; failed to comply with statutory obligations such as timeframes, the requirement to provide a creditors’ report, requirements to provide notice of meetings and the requirement to provide a Declaration of Independence, Relevant Relationships and Indemnities (DIRRI); exhibited a lack of candour in correspondence with the Deputy Commissioner of Taxation; knowingly made false statements in various DIRRIs; and failed to ensure that final reports contained information which was likely to be material to creditors.
Stewart J concluded that Mr Iannuzzi had been repeatedly negligent in his responsibilities as a liquidator over an extended period of time. His Honour observed that on many occasions Mr Iannuzzi had failed to make even the most basic inquires and that his supervision of his staff was inadequate. While the Court was prepared to find that Mr Iannuzzi was reckless, it expressly refrained from making findings of wilful wrongdoing. His Honour went on to observe that whilst the material before him suggested that there may be a proper case to investigate whether Mr Iannuzzi’s lack of candour was such as to amount to dishonesty, that conclusion was not open on the facts that had been admitted. While that gave his Honour some reason to pause, on the basis that a finding of dishonesty might suggest a more serious sanction – possibly a lifetime ban – would be required, his Honour ultimately proceeded on the basis of the facts as admitted. Stewart J also noted that a significant factor in his assessment that the agreed orders were within the range of appropriate orders was the lateness of Mr Iannuzzi’s insight into his wrongful conduct.[35]
[35] Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497 at [218]-[227].
In Australian Securities and Investments Commission v Dunner,[36] the Court prohibited the liquidator from practising for a period of five years. That order was coupled with orders for the repayment of certain amounts by Mr Dunner. Although the proceedings were contested, Mr Dunner sought to have ASIC cancel his registration, and offered to consent to an order not to practise for a period of up to three years.
[36] Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98.
In that case, ASIC alleged that the liquidator had failed to investigate the circumstances of companies to which he was appointed; paid remuneration to himself which was not validly approved; and communicated inaccurately or unsatisfactorily with creditors in relation to a number of companies and corporate groups. The Court found that the conduct in question “indicate[d] a systemic failure of administration and internal protocols, as well as (in a number of instances) extremely poor professional judgment.”[37]
[37] Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98 at [230].
Mr Dunner had been practising in insolvency for at least 26 years, having first being registered as a liquidator on 10 February 1986 and having been registered as an official liquidator on 21 August 1991. A number of character references were given in support of submissions directed towards a reduced period of prohibition. Mr Dunner also relied upon his “unblemished” record as a liquidator, insolvency practitioner and accountant.[38]
[38] Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98 at [229].
The Court did not find that Mr Dunner acted dishonestly. It expressly noted that if it were not for the substantial cooperation given by Mr Dunner during the proceedings, and his ultimate acceptance of his own shortcomings, the Court would have made the period of disqualifications substantially longer.[39]
[39] Australian Securities and Investments Commission v Dunner (2013) 303 ALR 98 at [234].
In addition to these authorities involving the prohibition of liquidators from practice, ASIC also drew my attention to several cases involving dishonest conduct of solicitors.[40] It was said, and I accept, that there is some analogy to be drawn with these cases given the role of solicitors as officers of the Court. They reflect an approach where disqualification from practice is usually ordered when a solicitor is found to have acted dishonestly.
[40] Namely, Re Iles (1922) 66 Sol Jo 297; Attorney-General v Bax [1999] 2 Qd R 9; Council of the Law Society of the ACT v Bandarage [2019] ACTSCFC 1; Council of the Law Society of the ACT v Davey (2019) 14 ACTLR 159.
Of particular significance in the context of the solicitor cases is Attorney-General v Bax.[41] In that case a solicitor had backdated a loan and a mortgage to defeat the claims of creditors of his insolvent client. While this misconduct itself was of an isolated nature, rather than of the repeated or systemic nature seen in the liquidator cases to which I have referred, nevertheless the Court in Attorney-General v Bax considered it significant that the solicitor perpetuated his dishonesty over an extended period by engaging in conduct that included misleading creditors about the documents, giving evidence in the Federal Court effectively denying any recollection of the creation of the documents, and refusing to answer further questions on the grounds that he might incriminate himself. He then instructed his solicitors to write a letter containing a false account of the creation of the documents, and gave a false account in sworn testimony to a disciplinary committee. In ordering that the solicitor be struck off the roll of practitioners, the Court made various observations as to the significance of the solicitor’s persistence in his dishonesty. I shall return to those observations later in these reasons.
[41] Attorney-General v Bax [1999] 2 Qd R 9.
Mr Macks and his conduct
Mr Macks was registered as a liquidator on 28 March 1990 by the Corporate Affairs Commission of South Australia, and was subsequently registered as a liquidator by the then Australian Securities Commission under the Corporations Law on 1 January 1991. He was registered as an official company liquidator on 24 November 1992. He continues to be registered in both capacities.
Mr Macks is 63 years of age. At the time of the events the subject of the inquiry before me, Mr Macks was practising as a principal of the firm Prentice Parbery Barilla (PPB). Following the dissolution of that firm in around 2012, he practised for a short period as a principal of the successor firm Macks Hall Clifton, before establishing his own firm, Macks Advisory, in July 2012.
Mr Macks continues to practise as the principal of that firm. In that role he works closely with Ian Burford, who is also a registered liquidator and a director of Macks Advisory. Mr Macks and Mr Burford have held a number of joint appointments over the last decade. The evidence reveals that Mr Macks currently holds close to 40 appointments. Most of these are joint appointments with Mr Burford, although a few of them are sole appointments.
The central findings against Mr Macks on the first aspect of the inquiry are contained in the following paragraph from my reasons in Australian Securities and Investments Commission v Macks (No 4):[42]
… I am satisfied that, on or about 25 February 2010, Mr Macks fabricated the Memoranda, and placed on them the initials of other persons working at [his firm]. In other words, the Memoranda were not created with the intention of reproducing original documents existing on Mr Macks’ laptop, as there were no such original documents. Rather, the Memoranda were created with the intention of passing them off to ASIC as either original documents created on the dates they bore, or as true photocopies of those originals. I am also satisfied that Mr Macks fabricated the documents, placed the initials on them, and submitted them to ASIC [in response to a notice to produce issued by ASIC], dishonestly and for the purpose of deceiving ASIC in the course of its investigation of his conduct as the liquidator of Bernsteen. In so doing, he sought to create the false impression that he had contemporaneously documented his satisfaction that Ms Hamilton-Smith had sufficient assets (or at least potential access to sufficient assets) to justify the commencement and continuation of legal proceedings against her, and that this had the concurrence of others at [his firm].
[42] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [521].

On any view, Mr Macks misconduct was serious. It involved deliberate and dishonest conduct in fabricating two documents with the intention of providing them to ASIC and passing them off as original documents (or at least true photocopies of originals).
In contending that this was not the most serious kind of dishonesty, Mr Macks emphasised, and ASIC acknowledged, the isolated nature of the misconduct, and the limited personal benefit to Mr Macks.
In relation to the former, and unlike the conduct of the liquidators in the authorities referred to earlier, it should be acknowledged that there was nothing systematic or repetitious about Mr Macks’ misconduct. To the contrary, both Memoranda were fabricated by Mr Macks at essentially the same time, and he has not subsequently engaged in any further conduct of this nature.
I also accept that Mr Macks fabricated the Memoranda during the early hours of the morning before he was due to produce documents to ASIC, and in circumstances where he was likely to have been under significant pressure and stress. That pressure and stress, while no doubt particularly acute at the moment he created the Memoranda, was likely the product of a significant accumulation of frustration and stress as a result of several years of involvement in litigation with Mr Viscariello (including, but not confined to, the Bernsteen and George proceedings), and ASIC’s investigations in relation to the same. While in no way excusing Mr Macks’ conduct, these considerations no doubt explain why a person of Mr Macks’ otherwise good character (see below) throughout a long professional career engaged in such conduct. On the other hand, and as elaborated upon below, the isolated nature of the misconduct in question must also be considered in the context of Mr Macks’ perpetuation of his dishonesty through his subsequent denials of it.
In relation to the limited personal benefit to Mr Macks of his conduct, it did not involve any misappropriation of funds, or any indeed any direct financial gain at all. Nor did it occasion any direct harm or loss to any person or entity, or indeed to the liquidations of the Companies.
It is true that the conduct was motivated by self-interest, namely an attempt to convey to ASIC a false impression about the steps he had taken to satisfy himself that it was worth pursuing legal proceedings against Ms Hamilton-Smith, and to thereby avoid or lessen any personal criticism for his pursuit of those proceedings. However, it would seem that the documents themselves had little impact upon the course of ASIC’s investigation or events more generally. Neither the existence nor contents of the fabricated Memoranda were likely to have been of great significance in justifying Mr Macks’ conduct of the Bernsteen and George proceedings. And, indeed, various aspects of their contents (particularly in the case of the second of the Memoranda) merely reflected matters contained in other (genuine) contemporaneous documents within the so-called “watching brief”.[43] There was no evidence to suggest that anyone from ASIC was in fact deflected from their task of investigating Mr Macks’ conduct by the Memoranda, or that Mr Macks’ fabrication of these documents otherwise altered the course of that investigation in any way. To the contrary, it can be inferred that the Memoranda did not have that effect.
[43] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [512]-[516].
On the other hand, the significance of the context in which Mr Macks’ conduct occurred should not be overlooked. In particular, his dishonest acts were aimed at misleading a regulator in the performance of its statutory duties. They were not dishonest acts committed in a casual or personal setting. Rather, they were dishonest acts committed in the formal context of responding to a notice to produce issued by ASIC in the course of its investigation into Mr Macks’ professional conduct.
It is also significant that Mr Macks’ subsequent conduct has had the effect of perpetuating his dishonesty over a very substantial period of time.
Having fabricated the Memoranda in early 2010, Mr Macks gave a false account of their creation during his evidence given in the Viscariello proceedings in December 2012. When first questioned about the Memoranda in cross-examination, Mr Macks made no mention of the circumstances of their creation, despite having been asked questions which challenged their authenticity. Then, after an adjournment sought by his counsel, he was given leave to adduce further evidence in chief about the Memoranda. Instead of coming clean about the documents, Mr Macks proceeded, on oath, to give a false description of the circumstances of their creation, which he then maintained during cross-examination.[44]
[44] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [416]-[418], [421]-[437].
Further, this evidence of Mr Macks upon the resumption of the trial had been preceded by a letter from his solicitors dated 13 December 2012. This letter, which I found was likely to have been prepared with some care to ensure that it accurately reflected Mr Macks’ instructions, contained a similar (false) version of the creation of the Memoranda.[45]
[45] Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [419]-[420].
Mr Macks did not give evidence in the inquiry before me. However, he not only defended ASIC’s allegation that he fabricated the Memoranda, but also adduced some expert evidence intended to support his (false) version of the creation of the Memoranda. While Mr Macks is not to be punished for defending the allegations against him, the effect of his stance in these proceedings has been to continue to perpetuate his dishonesty. This perpetuation continued through until the hearing of submissions in relation to this final stage of the inquiry, when Mr Macks, through his counsel, ultimately acknowledged both the fact and seriousness of his misconduct.
I accept the submission of ASIC that the circumstances of the present case contain some echoes of the conduct of the solicitor in Attorney-General v Bax.[46] In that case, the perpetuation of the solicitor’s dishonesty in sworn evidence, and by a letter from his solicitors, was considered a significant matter in determining the appropriate sanction. McPherson JA said the following of the solicitor’s persistence in his dishonest conduct:[47]
As in all matters of this character, full disclosure and genuine remorse might have gone some way to diminishing the penalty to be imposed. It is, however, impossible to extend that benefit to the solicitor in this instance. The deception here was, as Pincus JA has pointed out, persistent. It is true that, very shortly before the matter was heard in this Court, the solicitor abandoned his appeal against the finding of misconduct and confined his appeal to the penalty imposed; but, in doing so, he continued, through his counsel, to maintain that he was guilty only of ignorance of proper conveyancing practice, or that at the time he was “confused” about what he was doing. That comes close to denying that there was any misconduct at all, and so manifests a lack of remorse on his part for what was correctly found by the Statutory Committee to be conduct undertaken with an intention on his part to mislead.
[46] Attorney-General v Bax [1999] 2 Qd R 9.
[47] Attorney-General v Bax [1999] 2 Qd R 9 at 14.
Pincus JA, after referring to the solicitor’s conduct in not making any “attempt to assist the Federal Court towards discovery of the whole truth”, and his subsequent equivocation about the matter reflected in both a letter from his solicitors written on his instructions and in the evidence he gave before the Statutory Committee, made similar observations:[48]
The same theme – persistence in the deception – is seen in his having initially misdated the deed of loan, following that up by misdating the mortgage and misleading the creditors at the meeting some months later. A momentary or at least temporary lapse from proper standards of honest behaviour is one thing; persistence in such conduct over a substantial period is another.
[48] Attorney-General v Bax [1999] 2 Qd R 9 at 20.
Shepherdson J, who agreed with the reasons of McPherson and Pincus JJA, added some observations of his own, emphasising the attitude taken, and persisted in, by the solicitor, and his Honour’s view that this evinced a lack of any genuine remorse for his conduct.
I accept ASIC’s submission that Mr Macks’ perpetuation of his dishonesty, right up to the point of submissions in relation to the relief that should be ordered in light of my findings on the inquiry, is a relevant consideration. While I have been careful not to separately punish Mr Macks for this subsequent conduct, and certainly not to punish him for defending the allegations made against him in these proceedings,[49] his conduct in continuing to deny his fabrication of the Memoranda limits my ability to extend him leniency on account of the otherwise isolated and temporary nature of his dishonesty. It also means I am left without any evidence from Mr Macks to the effect that he is remorseful or contrite for his misconduct. Having contested the allegations through to judgment following the inquiry before me, Mr Macks is also not entitled to the leniency that has been extended to liquidators in other matters for their cooperation with the investigation into their misconduct.[50]
[49] Siganto v The Queen (1998) 194 CLR 656 at [30]-[31]; Secretary to the Department of Education and Training v Paul [2020] VSCA 280 at [132]; Australian Securities and Investments Commission v Citrofresh International Ltd (No 3) (2010) 268 ALR 303 at [23]-[27].
[50] Eg, Australian Securities and Investment Commission v Ariff [2009] NSWSC 829; Commissioner of Taxation v Iannuzzi (No 2) (2019) 140 ACSR 497.
Mr Macks’ ultimate acceptance of the findings that have been made against him, and acknowledgment of the seriousness of those findings, provides some evidence of insight on his part into the significance of his conduct. However, the late timing of that acceptance and acknowledgment means that they are of limited significance.
Despite the above, I am nevertheless satisfied that Mr Macks is otherwise a person of good character and professional standing. He filed affidavits from several people testifying to their personal knowledge and experience of his good character, both in his personal and professional capacities. The evidence establishes that he is regarded as an honest and trustworthy person, with a high standing as an insolvency professional, and who has given of his time generously with a number of charity and community groups. There is no basis for thinking that he has on any other occasion engaged in similar conduct, and I accept that his conduct in fabricating the Memoranda (and persisting in his denial of this conduct) was out of character for him.
The evidence adduced by Mr Macks included evidence that in the period since July 2012, Mr Macks and his firm have taken on close to 200 appointments, all of which have been undertaken without any material issue. No claims have been made by Mr Macks to his professional indemnity insurer over that same period, other than in relation to the (now dismissed) allegations made by Mr Viscariello regarding his conduct as administrator and then liquidator of the Companies.[51] Throughout this period, Mr Macks and his firm have been called upon to undertake work for both ASIC and the ATO, which has occurred with full cooperation and without incident.
[51] And one other notification in respect of a person who has been declared vexatious, and to which I attach no weight in the present context.
Since the inception of his firm, Macks Advisory, in July 2012, Mr Macks has subjected himself to a process of annual peer review by an independent insolvency practitioner, Richard Morrow. That review process has not identified any reason for concern in relation to Mr Macks’ honesty or competence.
In summary, not only has Mr Macks had an unblemished career prior to the misconduct the subject of these proceedings, but also the very substantial period that has passed since that misconduct occurred has given Mr Macks the opportunity to demonstrate that it was an aberration.
In addition to this, I am also mindful of the very significant consequences that Mr Macks has already endured by reason of the findings of the trial judge in the Viscariello proceedings (which included not only the findings in relation to the Memoranda which I have upheld, but also various other adverse findings which were either overturned by the Full Court or not made out on the evidence adduced in the inquiry before me). As a result of those findings, his membership of the Australian Restructuring Insolvency & Turnaround Association was immediately cancelled, and as a result of the significant publicity given to those findings, his professional reputation has been severely affected. His professional indemnity insurers declined him indemnity, with the result that he has personally incurred very significant legal costs in defending the extensive allegations against him (most of which have not ultimately been sustained) in both the Full Court hearing of the Viscariello proceedings and in the present inquiry. Not surprisingly, the evidence also reveals that the findings made against Mr Macks, as well as the drawn-out process of litigation culminating in the present hearing, have taken a significant personal toll upon him, both mentally and emotionally.
It follows from my conclusions as to the isolated nature of Mr Macks’ conduct, and the professional and personal price that he has already paid for that conduct over an extended period of time, that there is very little, if any, risk that Mr Macks would ever again engage in any dishonest conduct. As such there is little need for any additional personal deterrence, or to protect the public from him.
Further, given that Mr Macks is 63 years of age, to impose a period of cancellation or suspension of the length contemplated by ASIC would operate particularly harshly upon him. It would effectively end his career. It would also likely have very significant ramifications for the continuation of his firm, and hence also for the employees of that firm.
It remains important to mark the Court’s disapproval of his dishonesty, and to ensure that the penalty imposed is adequate both to ensure a level of general deterrence, and to preserve the public’s confidence in the regulation and supervision of insolvency practitioners. However, I consider that in the circumstances of this case what might otherwise be seen as a relatively modest penalty for dishonest conduct is sufficient.
In all the circumstances, I consider that it is appropriate that Mr Macks be prevented from holding or taking any appointments as an insolvency practitioner for a period of three years. I will thus make orders removing him from his current appointments, and then providing for a three year prohibition from practice. Given the limited period of time I have in mind, and the desirability of certainty as to his future, I consider it appropriate that this latter aspect of the penalty take effect as a period of suspension, rather than as a cancellation of his registration as a liquidator accompanied by a period of restraint upon any re-application for registration.
Given Mr Burford’s consent to taking over those appointments from which Mr Macks will be removed, and the parties’ agreement that this would be appropriate, I propose to make orders to give effect to the transition of those appointments to Mr Burford.
Costs
In support of its application for costs, ASIC relies upon its success in making out its allegations of dishonesty that were the subject of the first aspect of the inquiry before me, and in obtaining the substance of the relief it sought (namely, orders removing Mr Macks from his various appointments, and preventing him from taking any new appointments for such period as the Court sees fit). ASIC contends that as it has been substantially successful in the inquiry, and consistently with the usual approach in civil proceedings that costs follow the event, it should have an order that Mr Macks pay its costs of the inquiry proceedings.
Mr Macks, on the other hand, relies upon his success in relation to the issues the subject of the second aspect of the inquiry; namely, the allegations that from at least 28 April 2006 Mr Macks failed to exercise the care and diligence expected of a reasonable liquidator in his expenditure of funds on both the Bernsteen and George proceedings. Mr Macks contends that not only did this second aspect of the inquiry raise quite separate issues, but also it occupied a greater proportion of the hearing time and occasioned a greater proportion of the costs incurred in the proceedings more generally. It is on this basis that Mr Macks contends that the Court should make an order for costs in his favour in respect of the second aspect of the inquiry, or in the alternative that the Court should simply make no order as to the costs of the inquiry.
It is, of course, true that Mr Macks did succeed on the issues the subject of the second aspect of the inquiry. While the allegations made by ASIC were reasonably made, and indeed reflected findings made by the Full Court in the Viscariello proceedings, the evidence adduced in the inquiry was ultimately insufficient to sustain those allegations.
I also accept that the issues the subject of the second aspect of the inquiry were not only separate from those the subject of the first aspect, but also likely to have been responsible for a significant proportion of the costs incurred by the parties. The first aspect of the inquiry was the one that attracted the burden of the oral evidence, and probably occupied a slightly greater proportion of the time in Court. And I accept ASIC’s submission that the second aspect of the inquiry was largely a matter of characterising uncontested facts that emerged from the documents. However, given the significant volume of this documentary material, and the detail in it was necessary to consider to address the issues raised by the second aspect of the inquiry, I am satisfied that the issues raised by this second aspect of the inquiry would likely have occupied an at least equal, if not greater, proportion of the parties’ time in preparing for, and presenting, the inquiry.
I am satisfied that the matters relied upon by Mr Macks justify some departure from the ordinary rule that costs follow the event. However, there are several overlapping reasons why I would not go as far as making any costs order in Mr Macks’ favour in respect of the second aspect of the inquiry.
The first is that even where it is appropriate that there be some allowance made for a losing party’s success on some issues, the court should not lose sight of the significance of the other party’s overall success. That is all the more so in a case, such as the present, where the other party’s success on limited issues has resulted in it obtaining substantially the relief it sought, and that party’s lack of success on other issues was not the result of any unreasonable conduct on its part.
The second relates to the nature of these proceedings. It is well recognised that where there is a public interest dimension to civil litigation, this may be relevant to a court’s exercise of its discretion in relation to costs.[52] It has also been recognised that this principle may have application in disciplinary proceedings, with the public interest that often exists in those proceedings having the potential to justify making no order as to costs against the complainant despite the proceedings being unsuccessful.[53]
[52] Oshlack v Richmond River Council (1998) 193 CLR 72 at 126-7; Mericka v Rathbone (2016) 125 SASR 563 at [11], [23], [175].
[53] Mericka v Rathbone (2016) 125 SASR 563 at [11], [13], [23], [174]-[176].

Here, as I have explained in my earlier reasons,[54] the Court’s jurisdiction to conduct an inquiry under s 536(1) of the Act is an aspect of its supervisory, regulatory and disciplinary role in respect of liquidators, and as such exists to serve the public interest. In circumstances where the allegations made by ASIC in the present inquiry were based upon findings made by this Court in the earlier Viscariello proceedings, I am satisfied that the proceedings brought by ASIC were, even in the respect they were unsuccessful, brought reasonably and in the proper pursuit of the public interest that s 536(1) is intended to serve.
[54] Australian Securities and Investments Commission v Macks (No 2) (2019) 133 SASR 251 1 at [48]-[51].
The third consideration is the nature of Mr Macks’ defence of the allegations the subject of the first aspect of the inquiry. While it was, on the face of it, reasonable for Mr Macks to contest the allegations that were made against him, it is a consequence of the findings that I have made that this aspect of Mr Macks’ defence of the proceedings was predicated upon a version of events which Mr Macks must have known to be false. As I have said, Mr Macks was entitled to put ASIC to proof on its allegation that he dishonestly fabricated the Memoranda, and cannot be punished for doing so. However, his defence at times went beyond merely putting ASIC to proof. While Mr Macks did not give evidence in the inquiry, he put forward a positive version of events based upon his evidence given at the trial of the Viscariello proceedings, and sought to support it with expert evidence from an IT forensics expert. Having found this version of events to be false, and accepting as I do that Mr Macks must have known it was false, it follows in my view that this aspect of his conduct of the proceedings was unreasonable and caused ASIC to incur significant costs which it ought not to have been required to incur.
ASIC has not sought, and I do not consider it appropriate to make, any separate costs order on a higher scale to reflect this aspect of Mr Macks’ conduct. However, I do accept ASIC’s submission that the nature of Mr Macks’ defence of the allegations the subject of the first aspect of the inquiry is a relevant consideration in determining an appropriate reduction in ASIC’s overall costs entitlement.
Bearing in mind all of the above, and taking the broad brush approach that is appropriate when considering issues of costs, I propose to order that Mr Macks pay 50 per cent of ASIC’s costs of these proceedings on the standard basis. I do not propose to make any separate or special costs order in respect of the work done in an attempt to prepare an agreed statement of facts.
Orders
For the reasons set out, I will make orders removing Mr Macks from his current appointments, facilitating his replacement in those appointments by Mr Burford, suspending his registration as a liquidator for a period of three years, and restraining him from accepting any further appointments during that same period. I will order that Mr Macks pay ASIC 50 per cent of its costs of the proceedings on the standard basis. I will hear further from the parties as to the precise terms of the orders to be made.

[2021] SASC 12

01/01/2021