Australian Securities and Investments Commission v Managed Investments Ltd (No 9) - [2016] QSC 109

SUPREME COURT OF QUEENSLAND

CITATION: ASIC v Managed Investments Ltd and Ors (No 9) [2016] QSC 109
PARTIES: AUSTRALIAN SECURITIES AND INVESTMENTS
COMMISSION
(plaintiff)
v
ACN 101 634 146 PTY LTD (IN LIQUIDATION)
ACN 101 634 146
(first defendant)
MICHAEL CHRISTODOULOU KING
(fourth defendant)
CRAIG ROBERT WHITE
(fifth defendant)
GUY HUTCHINGS
(sixth defendant)
DAVID MARK ANDERSON
(seventh defendant)
MARILYN ANNE WATTS
(eighth defendant)
FILE NO/S: SC No 12122 of 2009
DIVISION: Supreme Court
PROCEEDING: Trial
DELIVERED ON: Reasons delivered 23 May 2016
DELIVERED AT: Brisbane
HEARING DATE: 4 November 2013; 11-14 November 2013; 18-20 November 2013;
22 November 2013; 25-29 November 2013; 2-6 December 2013; 9-
13 December 2013; 11 April 2014; 22-24 April 2014; 28-29 April
2014; 1-2 May 2014; 5-9 May 2014; 4-8 August 2014; 11-12
August 2014; 14-15 August 2014; 18-22 August 2014; 25-26
August 2014; 3-5 September 2014; 8-12 September 2014
JUDGE: Douglas J

ORDER:

1.

Against Mr King: declarations in the terms of the contraventions alleged against him numbered 1 to 3, 7 to 13
and 15, 16 and 17 of ASIC’s amended schedule of alleged
contraventions.
2.    Against Mr White: declarations in the terms of the contraventions alleged against him numbered 1 to 3, 7 to 13 and 15 to 68 of that schedule.
3.    Against Mr Hutchings: declarations of contraventions in respect of the contraventions numbered 1 to 3 and 5 to 88 of that schedule.
4.    Against Mr Anderson: declarations in the terms of the contraventions alleged against him numbered 1, 2, 5 to 10 and 12 to 46 of that schedule.
5.    Against Ms Watts: declarations in the terms of the contraventions alleged against her numbered 1 to 9 of that schedule.
6.    None of the defendants’ conduct should be excused
pursuant to s 1317S or s 1318 of the Act.
7.    I shall hear further from the parties about the consent orders proposed to be made against MFSIM, the form of the declarations, any claim for pecuniary penalties and other ancillary orders including costs.

CATCHWORDS:

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – where MFSIM was the responsible entity for the managed
investment scheme, PIF – where PIF entered into a facility with the
Royal Bank of Scotland for borrowing of up to $200 million for
PIF’s purposes – where MFSIM as responsible entity for PIF made
a payment of $130 million from PIF’s drawn down facility to another
company in the MFS Group, MFS Administration – where MFS

Administration caused $103 million of the $130 million payment to be paid to Fortress to repay a debt owed by a company in the MFS
corporate group – where the $130 million payment was made

without approval from the Investment Approval Committee of PIF or the Conflicts and Related Party Committee of MFSIM either

before the transaction or at all – where MFSIM as responsible entity for PIF made a payment of $17.5 million from PIF’s drawn down

facility to PacFin – where PacFin needed the money to meet its financial commitments to its debenture holders – where the payments were not authorised investments under PIF’s constitution
– where it was submitted that the payments were made for no
consideration to PIF – where it was submitted that the payments were

explicable by a proposal to restructure MYF, a managed investment scheme operated by MFSIM, partly through investments to be made
by PIF – where, after the payments were made, documents were
prepared purporting to record transactions justifying those payments
as having been made for the benefit for PIF – where PIF was said to

have received the benefit of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF
– where Mr King, Mr White, Mr Hutchings, Mr Anderson and
Ms Watts were involved in the relevant conduct – whether MFSIM
as responsible entity for PIF contravened the Corporations Act 2001
(Cth) – whether Mr King, Mr White, Mr Hutchings, Mr Anderson
and Ms Watts contravened the Corporations Act 2001 (Cth)

CORPORATIONS – MANAGED INVESTMENTS – RESPONSIBLE ENTITY – where Mr White, Mr King and

Mr Anderson were submitted to have been involved in causing PIF to transfer away $130 million for no purpose to PIF and no benefit
to PIF – where Mr White, Mr Anderson, Mr Hutchings and

Ms Watts were submitted to have been involved in causing PIF to transfer away $17.5 million for no purpose to PIF and no benefit to

PIF – where Mr White, Mr King, Mr Anderson, Mr Hutchings and Ms Watts were closely and relevantly connected with MFSIM –
where Mr White, Mr King, Mr Anderson, Mr Hutchings and

Ms Watts were MFSIM’s high managerial agents – where MFSIM was argued to be the victim of the fraud – whether the conduct of the

individual defendants is attributable to MFSIM to establish whether it, as responsible entity, contravened the Corporations Act 2001 (Cth)

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – where Mr King was no longer

director of MFSIM when the relevant transactions occurred – where it was submitted that he had overall responsibility for MFSIM’s operations – where it was submitted that Mr White, an executive
director of MFSIM and effectively the CEO of the MFS Group at the
relevant time, customarily acted in accordance with his wishes –
where it was submitted that Mr King had the capacity to affect
significantly the financial standing of MFSIM – whether Mr King
was an officer of MFSIM under the Corporations Act 2001 (Cth)

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – where Mr Anderson was an

officer of MFSIM – where Mr King was found to be an officer of MFSIM – where MFSIM was the responsible entity of a registered scheme – whether Mr Anderson and Mr King were officers of the responsible entity of a registered scheme – whether an officer of an
entity that is a responsible entity is an officer of the responsible entity
under the Corporations Act 2001 (Cth)

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – where it was submitted that no consideration passed to PIF at the
time of the $130 million payment to MFS Administration – where it

was submitted that consideration passed to PIF for the $130 million payment consisting of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF
– where it was submitted that no consideration passed to PIF at the
time of the $17.5 million payment to PacFin – where the alleged
transactions were not formulated or documented at the time of the

payment – where documents were later created purporting to reflect the alleged transactions and investments – whether the alleged
transactions provided consideration or reimbursement for the
payments from PIF’s funds at the time that the payments were made

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – AUTHORITY, RIGHTS AND POWERS OF OFFICERS OF
CORPORATION – AUTHORITY – where it was submitted that

consideration flowed to PIF for the $130 million payment consisting of $62.5 million worth of interests in participation agreements with
PacFin and 67.5 million units in MYF – where it was submitted that
no consideration passed to PIF at the time of the payment to PacFin
– where the relevant transactions exceeded the defendants’ limit on

delegated authority to make investments – where there was no MFSIM board approval for the transactions – where the parties to
the purported transactions were aware of the absence of actual
authority to enter into the transactions – whether the transactions
were ineffective as having been made without authority

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – AUTHORITY, RIGHTS AND POWERS OF OFFICERS OF

CORPORATION – RATIFICATION AND INDEMNIFICATION – where non–executive directors of MFSIM expressly declined to

approve certain transactions – where the board of MFSIM was not informed about the true purpose and nature of certain transactions –
whether the responsible entity MFSIM had full knowledge of all of
the material circumstances surrounding the transactions – whether
the transactions were ratified by the board of MFSIM

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – RELATED PARTY TRANSACTIONS – where MFS controlled
both MFSIM and MFS Administration – where MFSIM had an
independent board but where Mr King and Mr White, directors of

MFS Administration, wielded practical influence over MFSIM’s operations – where MFS Administration controlled PacFin – where PacFin was managed exclusively by MFS Administration – where
Mr White and Mr Anderson were directors of MFS Administration

and two of the three directors of PacFin – whether MFS Administration and MFSIM were related parties – whether MFSIM’s $130 million payment, to the extent of the $103 million

payment, was a financial benefit given by MFSIM, as responsible entity for PIF, out of scheme property to MFS Administration, a

related party of MFSIM – whether PacFin and MFSIM were related parties – whether MFSIM’s $17.5 million payment was a financial
benefit given by MFSIM, as responsible entity for PIF, out of scheme
property to PacFin, a related party of MFSIM
CORPORATIONS – MANAGEMENT AND ADMINISTRATION
– DUTIES AND LIABILITIES OF OFFICERS OF

CORPORATION – OFFENCES – FALSIFICATION OF RECORDS – where Mr Hutchings, Ms Watts, Mr Anderson and
Mr White were submitted to have been involved in creating or
assisting in the creation of false documents – where it was submitted
that the documents were backdated to reflect transactions as
occurring in 2007 that did not in fact occur in that year – where it
was submitted that the documents reflected events that simply did
not occur – where the alleged transactions recorded in the documents
were inconsistent with contemporaneous records, accounts,
proposals and decisions of the relevant entities – where it was
submitted that documents containing false information were
provided to banks, auditors and were reflected in PIF’s half-yearly
report – whether there was a failure to record correctly and explain

the transactions and financial position of MFSIM – whether MFSIM contravened the Corporations Act 2001 (Cth) – whether Mr White,
Mr Anderson and Mr Hutchings contravened the Corporations Act

2001 (Cth) directly – whether Mr White, Mr Anderson, Mr Hutchings and Ms Watts were knowingly involved in MFSIM’s
contraventions of the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION
– DUTIES AND LIABILITIES OF OFFICERS OF
CORPORATION – where Mr White, Mr King, Mr Anderson, Mr
Hutchings and Ms Watts were closely and relevantly connected with

MFSIM – where MFSIM was found to have contravened the Corporations Act 2001 – whether the defendants were knowingly
involved in MFSIM’s contraventions of the Corporations Act 2001
(Cth) – whether actual knowledge of the essential facts constituting
the contravention must be the only rational inference available in the
circumstances surrounding the contravention – whether it would be
appropriate to grant relief from liability for Mr White, Mr King, Mr
Anderson, Mr Hutchings and Ms Watts’ conduct

Australian Securities and Investments Commission Act 2001 (Cth), s 79(1)
Children’s Services Act 1996 (Vic), s 26
Company Law Review Act 1998 (Cth)
Corporate Law Economic Reform Program Act 1999 (Cth)
Corporations Act 2001 (Cth), s 9, s 9(b), s 9b(i), s 9(b)(ii),
s 9(b)(iii), s 50AA, s 50AA(1), s 50AA(2)(a), s 79, s 79(c), s 208,
s 208(1), s 209(2), s 228, s 251A, s 286, s 286(1), s 286(1)(a),
s 305, s 344, s 344(1), s 601EA(4), s 601FA, s 601FC,
s 601FC(1)(a), s 601FC(1)(b), s 601FC(1)(c), s 601FC(1)(k),
s 601FC(1)(l), s 601FC(2), s 601FC(5), s 601FD, s 601FD(1),
s 601FD(1)(a), s 601FD(1)(b), s 601FD(1)(c), s 601FD(1)(e),
s 601FD(1)(f), s 601FD(3), s 601FD(3)(a), s 601FD(3)(b),
s 601FD(3)(c), s 601FD(3)(e), s 601FD(3)(f), s 601HC, s 601JA(2),
s 601LA, s 601LC, s 601MA, s 1017E, s 1308A, s 1311(3),
s 1317A, s 1317DA, s 1317E, s 1317E(1), s 1317E(1)(b),
s 1317E(1)(f), s 1317E(1)(g), s 1317G(1), s 1317G(1)(aa),
s 1317G(b)(i), s 1317G(b)(iii), s 1317S, s 1317S(2), s 1318,
s 1318(1)
Criminal Code (Cth), s 12.3(2)(b)
Criminal Code (Qld), s 408C
Evidence Act 1997 (Qld), s 59(2)
Managed Investments Act 1998 (Cth), s 82A
Trusts Act 1973 (Qld), s 21
Uniform Civil Procedure Rules 1999 (Qld), r 154, r 149(i)(c)
ABC Developmental Learning Centre v Wallace (2007) 16 VR 409;
[2006] VSC 171, considered
Agricultural Land Management Ltd v Jackson (No 2) (2014) 48
WAR 1; 98 ACSR 615; [2014] WASC 102, considered
Armagas Ltd v Mundogas SA [1986] 1 AC 717, cited
ASIC v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181; [2015]
FCA 342, applied
ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) (2007)
160 FCR 35; [2007] FCA 963, cited
ASIC v Fortescue Metals Group Ltd (No 5) (2009) 264 ALR 201;
[2009] FCA 1586, considered
ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364; [2011]
FCAFC 19, cited
ASIC v Healy (No 2) (2011) 196 FCR 430; [2011] FCA 1003, cited
ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17, applied
ASIC v Macdonald (No 11) (2009) 256 ALR 199; [2009] NSWSC
287, cited
ASIC v Macdonald (No 12) (2009) 259 ALR 116; [2009] NSWSC
714, cited
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Australian Communications and Media Authority v Mobilegate Ltd
(No 8) (2010) 275 ALR 293; [2010] FCA 1197, applied
Australian Securities and Investments Commission v Managed
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considered
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NSWCA 408, cited
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480, cited
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34,
considered
Browne v Dunn [1894] 6 R 67, cited
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(2010) 238 FLR 384; [2010] NSWSC 233, considered
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Commissioner for Corporate Affairs v Bracht [1989] VR 821,
considered
Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR
104, cited
Director-General of Fair Trading v Pioneer Concrete (UK) Ltd
[1995] 1 AC 456, cited
DPP v Gomez [1993] AC 442, considered
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Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218
CLR 471; [2004] HCA 55, cited
Erlich v Leifer [2015] VSC 499, cited
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cited
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Forrest v ASIC (2012) 247 CLR 486; [2012] HCA 39, cited
Giorgianni v The Queen (1985) 156 CLR 473; [1985] HCA 29,
cited

Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296;
[2012] FCAFC 6, considered
Hamilton v Whitehead (1988) 166 CLR 121; [1988] HCA 65, cited
Hancock v Rinehart [2015] NSWSC 646, applied
Hawley Partners v Commissioner of Stamp Duties (Qld) (1996) 96
ATC 4847; [1996] QCA 270, cited
Holland v Revenue and Customs Commissioners [2011] 1 All ER
430; [2010] UKSC 51, cited
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VSC 623
Kern Consulting Group Pty Ltd & Anor v Opus Capital Ltd [2014]
2 Qd R 379; [2014] QCA 111, cited
Leybourne v Permanent Custodians Ltd [2010] NSWCA 78, cited
Linter Group Ltd v Goldberg (1992) 7 ACSR 580; 10 ACLC 739,
cited
Lysaght Bros & Co Ltd v Falk (1905) 2 CLR 421; [1905] HCA 7,
cited

Goodman v J Eban [1954] 1 QB 550, cited considered
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considered
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CLR 146; [1990] HCA 32, cited
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considered
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of Taxation (2008) 238 CLR 516; [2008] HCA 21, considered
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72; [2002] NSWSC 171, cited
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cited
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Shafron v ASIC (2012) 247 CLR 465; [2012] HCA 18, considered
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449; [1988] FCA 179, cited
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considered
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43, cited
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[2013] QCA 357, cited
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FCA 1147, cited
COUNSEL: P J Riordan SC with J P Moore SC and M T Brady for the plaintiff
P J Davis QC with D S Piggott for the fourth defendant
R P S Jackson QC with N Andreatidis for the fifth defendant
D L Williams SC (until 9 May 2014) with C Withers for the sixth
defendant
B D O’Donnell QC with C K George for the seventh defendant
P A Freeburn QC for the eighth defendant
SOLICITORS: Corrs Chambers Westgarth for the plaintiff
Tucker & Cowen for the fourth defendant
Bartley Cohen Litigation Lawyers for the fifth defendant
Kennedys for the sixth defendant
DibbsBarker for the seventh defendant
James Conomos Lawyers for the eighth defendant

Table of Contents

Introduction .............................................................................................................................. 1

The proceedings .............................................................................................................. 2
The individual defendants ............................................................................................... 3
Mr King ................................................................................................................. 3
Mr White ............................................................................................................... 3
Mr Anderson .......................................................................................................... 4
Mr Hutchings ......................................................................................................... 4
Ms Watts ................................................................................................................ 4

MFSIM personnel structure ............................................................................................ 5
The relevant companies in the group .............................................................................. 5
The MFS Group ..................................................................................................... 5
MFS Limited ......................................................................................................... 5
MFS Financial Services Ltd .................................................................................. 5
The Stella Group ................................................................................................... 6
MFS Administration .............................................................................................. 6
Funds Management Division of MFS Group ........................................................ 6
MFSIM .................................................................................................................. 7
PIF ......................................................................................................................... 8
MYF .................................................................................................................... 10
MFS Castle .......................................................................................................... 10
PacFin .................................................................................................................. 10
CVC Asia Pacific Limited ................................................................................... 11
Sunleisure Group Ltd .......................................................................................... 11
Royal Bank of Scotland ....................................................................................... 11

Other relevant individuals ............................................................................................. 11
Cheryl James ....................................................................................................... 12
Janina Howard ..................................................................................................... 12
Karen Platts ......................................................................................................... 12
Kim Kercher ........................................................................................................ 12
Mike Skepper ...................................................................................................... 12
Nigel Fitzgerald ................................................................................................... 12
Rolf Krecklenberg ............................................................................................... 12

History leading up to and including the impugned transactions ................................... 13
The RBS Loan Agreement .................................................................................. 13
The Fortress Loan Agreement ............................................................................. 13
Further background facts ..................................................................................... 14
Countervailing considerations - the proposed restructuring of
MYF during 2007 ................................................................................................ 15
MFS Ltd’s capacity to raise funds by November 2007 ....................................... 20

The $130 million payment ..................................................................................................... 21

MFSIM’s alleged contraventions concerning the $130 million

payment ......................................................................................................................... 21
MFSIM’s alleged misconduct concerning the $130 million payment .......................... 21
Chronology from November 2007 onwards ........................................................ 21
PIF did not intend to make acquisitions in November 2007? ............................. 22
The $130 million payment was effected without approvals ................................ 22
The timing for the drawing down of the funds by PIF from RBS
coincided with the requirement of the funds by MFS Limited ........................... 23
Payment effected without consideration flowing to PIF ..................................... 27
MFSIM and MFS Administration were related parties in respect
of the $130 million payment for the purposes of s 208 of the Act ...................... 28
The alleged transactions were not the subject of
contemporaneous consideration or approval ....................................................... 30
No understanding of the consideration for the $130 million
payment by MFSIM officers and employees ...................................................... 30
The alleged transactions were not formulated until about mid-
January and not documented until late January/early February
2008 ..................................................................................................................... 35
The final formulation of the alleged transactions ................................................ 43
The creation of the alleged transactions .............................................................. 46
The alleged transactions were inconsistent with
contemporaneous accounts of PIF, PacFin, Sunleisure and MYF ...................... 53
The alleged transactions were inconsistent with
contemporaneous MYF proposals ....................................................................... 55
The alleged transactions were inconsistent with
contemporaneous Sunleisure decisions ............................................................... 59

The $17.5 million payment .................................................................................................... 60

MFSIM’s alleged contraventions concerning the $17.5 million

payment ......................................................................................................................... 61
MFSIM’s alleged misconduct concerning the $17.5 million payment ......................... 61
Chronology of events relevant to the $17.5 million payment ............................. 61
The improper purpose ......................................................................................... 62
MFSIM had no intention to make any significant acquisitions ........................... 63
The timing for the $17.5 million payment coincided with
PacFin’s need for money ..................................................................................... 64
The $17.5 million payment was made without any consideration
flowing to PIF - there was no consideration or approval by the
IAC or the CRPC ................................................................................................. 67
There was no contemporaneous consideration or approval given
to the alleged transactions ................................................................................... 68
There was no understanding by officers of MFSIM of what
consideration existed for the $17.5 million payment .......................................... 68
The alleged transactions were not finally formulated until the
second half of January 2008 ................................................................................ 69

iii

The alleged transactions were inconsistent with
contemporaneous accounts of PIF and MYF ...................................................... 70

MFSIM’s alleged contraventions in relation to the $17.5 million
payment: summary ........................................................................................................ 70

False documents case against MFSIM ................................................................................... 72

False documents relating to PIF acquiring class A MYF units .................................... 72
False documents relating to PIF participation agreement with PacFin ........................ 73
False documents relating to MYF participation agreement with PacFin ...................... 75
False documents relating to MYF refinance of Sunleisure loan ................................... 75
Use of false documents - the false documents were kept as though
genuine records ............................................................................................................. 76
Use of false documents - false asset reports were sent to RBS .................................... 76
Use of false documents - the false documents were provided to the
auditors and were reflected in PIF’s half-yearly report ................................................ 77
Summary of contraventions relating to the false documents ........................................ 77
MFSIM ................................................................................................................ 77
Mr White, Mr Anderson, Mr Hutchings and Ms Watts ...................................... 78

Chronology of relevant events concerning the false documents .................................. 78
December 2007 .................................................................................................... 78
2 to 7 January 2008 ............................................................................................. 79
8 to 22 January 2008 ........................................................................................... 80
23 January to 6 February 2008 ............................................................................ 81
7 February to end February 2008 ........................................................................ 82

Pleaded issues - the MFSIM contraventions relating to the creation of
false documents ............................................................................................................. 82
Creating false documents: s 601FC(1)(a) ............................................................ 82
The particular false documents ............................................................................ 83
MYF IAC submission regarding class A units dated 20
November 2007 (the statement of claim para 110) ............................................. 85
PIF IAC submission dated 20 November 2007 regarding PacFin
participation agreement (the statement of claim para 111) ................................. 88
MYF IAC minutes regarding class A units dated 21 November
2007 (the statement of claim para 112) ............................................................... 88
The creation and backdating of the MYF IAC minutes dated 21
November 2007 (the statement of claim para 112) ............................................. 89
MYF class A units information memorandum dated 23
November 2007 (the statement of claim para 113) ............................................. 90
PIF IAC minutes dated 23 November 2007 regarding PacFin
participation agreement and $85 million MYF class A units (the
statement of claim para 114) ............................................................................... 90
MYF IAC submission dated 27 November 2007 regarding
PacFin participation agreement (the statement of claim para

115) ...................................................................................................................... 91
MYF IAC memorandum dated 28 November 2007 regarding
Sunleisure loan (the statement of claim para 116) .............................................. 91

MYF IAC minutes dated 28 November 2007 regarding $55
million PacFin participation agreement and Sunleisure loan (the
statement of claim para 117) ............................................................................... 92
Participation agreement between MYF and PacFin (the
statement of claim para 119) and participation agreement
between PIF and PacFin (the statement of claim para 120) ................................ 92
Application by PIF for 67.5 million class A units in MYF dated
30 November 2007 (the statement of claim para 121) and
application by PIF for 17.5 million class A units in MYF dated
27 December 2007 (the statement of claim para 123) ......................................... 94
PIF Certificate of unitholding in MYF for 67.5 million units
dated 30 November 2007 (the statement of claim para 122) and
PIF Certificate of unitholding in MYF for 17.5 million units
dated 27 December 2007 (the statement of claim para 124) ............................... 95
New loan notice dated 31 December 2007 (the statement of
claim para 125) .................................................................................................... 95
Keeping false documents: s 601FC(1)(a) and s 286 ............................................ 97
Providing false documents to auditors: s 601FC(1)(a) ........................................ 97
Lodging false accounts: s 601FC(1)(a) and s 286 ............................................... 97
Sending false information to RBS: s 601FC(1)(a) .............................................. 98
Misinforming and failing to inform Compliance: s 601FC(1)(a) ........................ 99
Providing false information to Compliance and Mallesons:
s 601FC(1)(a) .................................................................................................... 100

Overall view of the evidence ................................................................................................ 101

Is ASIC’s case within the pleadings? ................................................................................... 102

Relevant statutory provisions ............................................................................................... 104

Legal issues .......................................................................................................................... 109

Attribution of conduct ................................................................................................. 109
Onus of proof .............................................................................................................. 116
Officer of the responsible entity - s 601FD ................................................................ 117
Mr Anderson: an officer of MFSIM .................................................................. 117
No contrary intention ......................................................................................... 120
Mr Anderson’s duties when acting in the “capacity” of an
officer of a responsible entity ............................................................................ 123
Inconsistent with the law of fiduciary duties ..................................................... 124
Inconsistent with Shafron .................................................................................. 125
Conclusions in respect of whether Mr Anderson was an officer
of MFSIM .......................................................................................................... 126
Mr King: an officer of MFSIM ........................................................................ 126
Contention that section 601FD will not work appropriately ............................. 128
The contention that it places duties on others ................................................... 128
The contention that it will cause fearful confusion ........................................... 128
Does the definition of “officer” apply to Mr King on the
evidence here? ................................................................................................... 129

Conclusions in respect of whether Mr King was an officer of
MFSIM .............................................................................................................. 133

Validity and ratification of agreements ...................................................................... 133
Validity .............................................................................................................. 133
Ratification ........................................................................................................ 137

Related parties ............................................................................................................. 145
False documents .......................................................................................................... 148
Knowingly involved ................................................................................................... 151

Have the MFSIM contraventions been established? ............................................................ 156

ASIC’s case against the fourth defendant, Mr King ............................................................ 158

Submissions for ASIC ................................................................................................ 158
Submissions for Mr King ............................................................................................ 164
Conclusions from submissions for Mr King ............................................................... 174

ASIC’s case against the fifth defendant, Mr White ............................................................. 177

Submissions for ASIC ................................................................................................ 177
The $130 million payment ................................................................................ 177
The $17.5 million payment ............................................................................... 181
Events from January 2008 - the false documents case ...................................... 183

Submissions for Mr White .......................................................................................... 186
Conclusions from submissions for Mr White ............................................................. 196

ASIC’s case against the sixth defendant, Mr Hutchings ...................................................... 199

Submissions for ASIC ................................................................................................ 199
The $17.5 million payment ............................................................................... 202
Creation of the false documents ........................................................................ 207

Submissions for Mr Hutchings ................................................................................... 219
False documents ................................................................................................ 219

The $17.5 million payment ............................................................................... 230
Summary for Mr Hutchings .............................................................................. 244
ASIC’s oral submissions in response to the submissions for
Mr Hutchings ..................................................................................................... 244

Conclusions from submissions for Mr Hutchings ...................................................... 250

ASIC’s case against the seventh defendant, Mr Anderson .................................................. 252

Submissions for ASIC ................................................................................................ 252
The $130 million payment ................................................................................ 252
Summary of Mr Anderson’s contravention with respect to the
$130 million payment and the $103 million payment ....................................... 260
The $17.5 million payment ............................................................................... 261
False documents and provision of false information ......................................... 263
“Creative brain” and other requests for Mr Anderson to help .......................... 263
Mr Anderson’s response to the requests for his help: the listing
of loans .............................................................................................................. 264
Mr Anderson’s primary contraventions - false documents ............................... 265

Mr Anderson’s primary contraventions - providing false
information to RBS ........................................................................................... 267
Mr Anderson’s primary contraventions - misinforming and
failing to inform Compliance ............................................................................ 267
Mr Anderson’s involvement in MFSIM’s contraventions -
creating and keeping of false documents .......................................................... 268
Providing false documents to auditors .............................................................. 268
Failure to report contraventions to ASIC .......................................................... 269
Mr Anderson as an officer of MFSIM ............................................................... 269

Submissions for Mr Anderson .................................................................................... 270
The $130 million payment ................................................................................ 270
The $103 million payment ................................................................................ 275
The $17.5 million payment ............................................................................... 276
Mr Anderson’s role ........................................................................................... 278
Related parties and control ................................................................................ 281
January 2008 events .......................................................................................... 282
Listing of loans .................................................................................................. 287
Meeting with Mr White and Mr Stride and creation of

documents .......................................................................................................... 288
Meeting with Mr Korda and Mr White on 25 January 2008 ............................. 290
Recording of transactions and accounts ............................................................ 290
Meeting with Ms Dunn and Mr Hutson on 7 February 2008 ............................ 290
333 Capital information requests ...................................................................... 291
Auditors and half year accounts ........................................................................ 291
Anderson’s involvement with PIF audit and accounts

preparation ......................................................................................................... 294
Keeping of documents ....................................................................................... 296
The discretion to excuse .................................................................................... 298

Conclusions from submissions for Mr Anderson ....................................................... 298

ASIC’s case against the eighth defendant, Ms Watts ........................................................... 304

Submissions for ASIC ................................................................................................ 304
False documents ................................................................................................ 304
Providing false documents to auditors .............................................................. 308
Providing false information to RBS .................................................................. 309
Mr Moore’s oral submissions regarding Ms Watts ........................................... 309

Submissions for Ms Watts .......................................................................................... 314
Conclusions from submissions for Ms Watts ............................................................. 329

Loss ...................................................................................................................................... 331
Conclusion and orders .......................................................................................................... 333

Introduction

This case deals with the payment of two sums totalling $147.5 million from a Premium Income Fund (PIF) for which the first defendant, Management Investments Pty Ltd, then known as MFS Investment Management Pty Ltd (MFSIM), was the responsible entity required by the Corporations Act 2001 (Cth). MFSIM was part of a group of companies I shall call the MFS Group.
The first payment of $130 million was made on 30 November 2007 from PIF by MFSIM
(via PIF’s custodian, Perpetual Nominees Limited (Perpetual)) to another company in the
MFS Group, MFS Administration Pty Ltd (MFS Administration). MFS Administration was the treasury company of the MFS Group.
The second payment of $17.5 million was made by MFSIM from PIF to another company in the MFS Group, MFS Pacific Finance Ltd (PacFin) on 27 December 2007.
The plaintiff, Australian Securities and Investments Commission (ASIC), argues that the two sums were taken illegitimately from funds drawn down from a loan facility provided to PIF by the Royal Bank of Scotland (RBS) and the benefit of which was held by PIF for its members. ASIC alleges the funds were then paid to related parties of MFSIM, not
for the benefit of PIF’s members.
Associated with those aspects of the case are allegations by the plaintiff that, in the last week in January and the first week of February 2008, false documents were prepared purporting to record transactions that sought to justify those payments as having been for the benefit of PIF. The documents were said to be backdated or otherwise made to appear as if the transactions had occurred before the payments, and the approvals had occurred
before the transactions. The plaintiff’s case is that the individual defendants were all
involved in aspects of the contraventions of MFSIM, or themselves directly contravened the Act in and about the transactions and the subsequent creation and use of the false documents.
ASIC argues that the transactions, approvals, and consideration for the payments did not occur and that the documents were designed simply to mask that fact. Its case is that the false documents were used in a variety of ways to hide the fact of the payments having been made for the benefit of other companies in the corporate group rather than for the benefit of PIF or its members.
Alternatively, it argues that the transactions provided no consideration or reimbursement for the payments at the time the payments were made and were ineffective as having been made without authority and in circumstances where they had not validly been ratified by MFSIM.
The defendants’ case is that these impugned transactions were real and explicable by a
proposal to restructure another fund called the Maximum Yield Fund (No 1) (MYF) by seeding it with assets from within the MFS Group which would then be bought with funds from PIF. Those were the proposed transactions which ASIC seeks to impugn and which,
on the defendants’ cases, provided an appropriate return to MFSIM for the payments
made from PIF.
I shall set out brief details of the nature of the proceedings against the individual defendants and identify the relevant corporate entities and the other relevant individuals before going into the background facts in more detail. Much of this information is based on a written opening by counsel for ASIC.

[10] Much of the significant evidence in the case was documentary, based on contemporaneous emails and other corporate records. Many of the essential facts are, therefore, not particularly contentious. The contentious issues arose, generally speaking, from debate about the conclusions or inferences I should draw from the events that occurred. There were also questions of credit associated with the evidence of several witnesses, including the defendants who gave evidence. Many of those questions were able to be resolved principally by reference to contemporaneous emails and other documents but also by reference to my notes taken during the hearing.

I shall then deal with the issues raised by the pleadings and a number of legal arguments important to the final resolution of the claims against all the defendants. I shall then discuss in more detail the cases against each of the five defendants. Inevitably some of the factual issues will be canvassed more than once because of the need to examine the cases against the individual defendants.
The proceedings
These proceedings were commenced in October 2009. ASIC and the first defendant (MFSIM) have reached a settlement of the proceedings between themselves, which involves the filing of a statement of agreed facts and MFSIM consenting to certain declarations of contravention being made against it. The relief to be ordered against MFSIM will be sought at the end of the substantive proceedings. ASIC has discontinued the proceedings against the second and third defendants. It is still necessary, however, to consider the allegations against MFSIM in the context of the allegations made against the other defendants. Accordingly, for the purposes of the trial, the cases to be considered involved the following defendants:

 The fourth defendant (Mr King) - MFS Group Chief Executive Officer (CEO) until
21 January 2008.
 The fifth defendant (Mr White) - MFS Group Deputy CEO and later MFS Group
CEO from 21 January 2008.
 The sixth defendant (Mr Hutchings) - MFSIM CEO.
 The seventh defendant (Mr Anderson) - MFS Group Chief Financial Officer (CFO).
 The eighth defendant (Ms Watts) - MFSIM Fund Manager.
The individual defendants
Mr King

Mr King was a solicitor who co-founded McLaughlins Financial Services in 1999. Until his resignation on 21 January 2008, he was the CEO of MFS Limited and the most senior officer within the MFS Group. Mr King was also an executive director of MFS Limited.
Mr King’s role as CEO of MFS Limited also meant that he was CEO of the entire MFS
Group.
Mr King ceased being a director of MFSIM on 27 February 2007.[1] However, he continued being CEO of the MFS Group after that time. When questioned about his role in MFSIM after he ceased being a director, Mr King acknowledged his continuing overall responsibility for MFSIM after he ceased being a director when he answered as follows in his examination pursuant to s 19 of the Australian Securities and Investments Commission Act 2001 (Cth):[2]
[1] ASIC.0046.0001.0034. This is an exhibit number in the form adopted for the purposes of these proceedings which were conducted as an etrial. It is hyperlinked to the etrial database.
[2] S19.0013.0001.0001 at p 12/10 to p 13/10.
“Q. … Octaviar Investment Management Limited [MFSIM] was one of the
companies and you had a role, direct role for a period of time up until early 2007. What was your role in relation to that company post you, post ceasing as a director?
A. In what it did and how it operated nothing; in worrying about the general activities of the MFS Group, yes, I was always peripherally involved. I
mean, I couldn’t be the CEO of the group and not be concerned about what
was going on in any company … from when I resigned the idea was that that
was Craig’s [Mr White ’s] baby and that, you know, that was one of his areas
of responsibility, but of course I had the responsibility.
Q. You had an overall responsibility?
A. Yes.”
This is consistent with the evidence of many witnesses about the role that Mr King played in the overall management of the MFS Group until he left the Group on 21 January 2008.
Mr White
Craig White was deputy CEO of MFS Limited and had primary day to day conduct of the funds management side of the MFS Group business. He was effectively second in
command to Mr King until Mr King’s resignation on 21 January 2008. Thereafter,
Mr White became the CEO of MFS Limited and by virtue of that position, in effect, CEO of the MFS Group.
Mr White was a member of the Investment Approval Committee (IAC) for both PIF and the other fund known as MYF at all relevant times. He was also an executive director of MFSIM at all relevant times as well as being a director of other companies in the MFS Group, MFS Castle Pty Ltd (MFS Castle), MFS Administration and PacFin.
He was the only defendant not to give evidence in these proceedings, a decision obviously influenced by the fact that he has also been charged with criminal offences in New
Zealand. It has been accepted that there were “substantial areas of factual overlap between the present proceedings and the New Zealand proceedings”.[3] Having been
[3] Australian Securities and Investments Commission v Managed Investments Limited & Ors (No 5) [2013] QSC
refused a stay of these proceedings he conducted his defence on the basis that his counsel was instructed not to cross-examine or call witnesses. Mr RPS Jackson QC and Mr Andreatides for him did, however, make substantial written and oral submissions.
Mr Anderson
Mr Anderson joined the MFS Group in March 2002. He had previously been a partner at the accountancy firm, KPMG, specialising in insolvency related matters. He was also a registered liquidator. Mr Anderson was the CFO of MFS Limited and by virtue of that position acted as the CFO for the entire MFS Group. In that role his responsibilities included overseeing the treasury and financial reporting and taxation functions for the
MFS Group. He was familiar with almost all aspects of the MFS Group’s financial affairs
and provided assistance to Mr King in managing the MFS Group.
Mr Anderson was a director and/or secretary of many of the MFS Group companies in Australia. In particular, he was a company secretary of MFSIM, MFS Administration and MFS Limited and was a director of MFS Castle and PacFin.
Mr Hutchings
Guy Hutchings was the CEO of MFSIM from 23 May 2007. He was also the chief investment officer of MFSIM from earlier in 2007 and was an executive director of MFSIM. As the CEO of MFSIM, he reported on a daily basis to Mr White (as Deputy MFS Group CEO) and also to Mr King from time to time. Mr Hutchings was a member of the IAC for both PIF and MYF at all relevant times.
Ms Watts
Marilyn Watts was the fund manager of PIF and, on ASIC’s case but not hers, of MYF

from June 2007. In that role, she was required to be aware of the assets held by PIF and
MYF and to recommend changes to the investments held by those managed funds.
MFSIM personnel structure

The roles of key MFSIM personnel are described in a document titled “MFSIM Personnel Structure”.[4] That document was emailed by Mr Hutchings to a large number of recipients
[4] DEL.0024.0001.0060.
in October 2007,[5] and accurately summarises the personnel structure for MFSIM at the times relevant to these proceedings.[6] The functional structure of MFSIM is shown in the document titled MFSIM Functional Structure.[7]
[5]     DEL.0024.0001.0057.
[6]     Affidavit of Ms Howard [ASIC.3000.0027.0001] at para 19.
[7]     DEL.0024.0001.0059.
The relevant companies in the group
The MFS Group
The MFS Group of companies (MFS Group) was a collection of corporate entities which started as a mortgage lending business associated with a legal firm on the Gold Coast known as McLaughlins Solicitors.
The companies in the group containing “MFS” in their name changed their descriptions in March 2008 to substitute for “MFS” the word “Octaviar”, apparently in response to a
request from an American company, Massachusetts Financial Services Company, which
also used the abbreviation “MFS”. In this judgment (as in the pleadings) the MFS names

are used rather than the later Octaviar names, as those were the corporate names in place
at the time of most of the relevant events.
MFS Limited

The overall holding company of the MFS Group was MFS Limited, a public company listed on the Australian Stock Exchange. MFS Limited was incorporated in 2004. At the times relevant to these proceedings, it was the ultimate holding company for the MFS Group.
The directors of MFS Limited at the relevant times included Mr King (the fourth defendant) until 21 January 2008 and Mr White (the fifth defendant).
MFS Financial Services Ltd
MFS Financial Services was incorporated in August 2002. Its principal activity was the holding of investments in its immediate subsidiaries. At relevant times, it was a wholly owned subsidiary of MFS Limited.
The Stella Group
In about mid-2005, MFS Limited combined its then existing investments in tourism- related businesses and established the Stella Group as a division of the overall MFS Group. The Stella Group consisted of two main components:

 A hospitality group of companies which owned and operated a portfolio of accommodation facilities in Australia and New Zealand. This aspect of the business included brands such Peppers, Breakfree, Mantra, Saville and other properties.
 The second part of the Stella Group comprised travel services. The brands in this
aspect of the business included Harvey World Travel.

The Stella Group was wholly owned by MFS Limited until it sold 65 per cent of the Stella Group to CVC Asia Pacific (CVC), a private equity investor, on 3 February 2008 for $409.2 million.
During the course of 2007, efforts were made by MFS Limited to sell the Stella Group. It was envisaged that this would free up considerable capital for the use of the wider MFS Group, including to repay debt. Mr King played the lead role in efforts to sell the Stella Group. In May 2007, CVC made a non-binding proposal to acquire 50 per cent of Stella. The sale did not proceed immediately, although negotiations continued with CVC from June 2007 until November 2007.
MFS Administration
MFS Administration Pty Ltd (MFS Administration) was the treasury company for the entire group. It employed all staff of the MFS Group. It was the entity through which intercompany loans within the group were maintained.

[33] Its role as a central treasury company within the MFS Group meant that MFS Administration was a party to most of the intercompany transactions within the MFS Group. However, the managed investment schemes managed their own funds, and each fund had its own accountant.

MFS Administration was a wholly owned subsidiary of MFS Limited which controlled its affairs.
Funds Management Division of MFS Group
The Funds Management division of MFS was established in 1999. Its primary business included the origination, development and management of a range of specialist investment funds at wholesale, retail and institutional levels. By late 2007, the Funds Management division of MFS Ltd comprised a number of corporations which were licensed responsible entities under the Corporations Act.
MFSIM
MFSIM was the responsible entity for a number of managed investment schemes, two of which are of particular relevance to these proceedings:

 the PIF; and
 the MYF.

MFSIM had its own board. During the second half of 2007, the board’s members were:

 John Whateley - chair and non-executive director;
 Jack Diamond - non-executive director;
 Deborah Beale - non-executive director;
 Mr White - executive director (the fifth defendant); and
 Mr Hutchings - executive director (the sixth defendant).

The board of MFSIM had various committees. One of the committees was known as the Conflicts and Related Party Committee (CRPC). The CRPC consisted of the non- executive directors of MFSIM and was charged with the review and approval of transactions involving the various MFSIM funds which may have involved a party that was related to MFS. At the times relevant to these proceedings, the members of the CRPC were Mr Whateley, Mr Diamond and Ms Beale.
In addition to the board committees, there were other important committees of MFSIM known as the Investment Approval Committees (IACs). These were committees consisting of executives of MFSIM (including some executive directors) which had the task of reviewing submissions regarding investments and transactions for the MFSIM funds and deciding whether the relevant fund ought to proceed with the transaction or not and whether additional information was required before transactions could be progressed.
A description of the IACs’ operations is contained in the MFSIM Investment and Asset
Management Department Procedures Manual dated October 2007[8] as well as in the MFSIM Business Analysis and Governance Department Procedures Manual dated November 2007.[9]
[8] OCA.0006.0002.0100 at 0107.
[9] WIM.0010.0004.0130 at 0137.
Each separate investment fund had its own IAC, although there was considerable overlap in membership. For the period of matters relevant to these proceedings, the IACs for PIF and MYF had an identical composition.
During November and December 2007, the IAC for PIF and MYF consisted of:

 Mr White;
 Mr Hutchings;
 Mr Kennedy;
 Mr Kyling, until 12 December 2007, when he resigned; and
 Mr Snowden.

The MFSIM IAC had written processes[10] and a separate charter.[11]
[10] WIM.0010.0004.0035 at 0035–0038.
[11] WIM.0010.0004.0035 at 0039–0040.
MFSIM had a procedures manual dated 31 January 2006,[12] which was updated on 13 November 2007.[13] It dealt with the procedures required to be followed by MFSIM staff.
[12] OCA.0001.0001.0002; affidavit of Ms Cole [ASIC.3000.0011.0001] at para 28.
[13] OCA.0001.0002.0431; affidavit of Ms Cole [ASIC.3000.0011.0001] at para 29.
PIF
PIF was by far the largest managed investment scheme conducted by MFSIM, with reported assets under management on 31 October 2007 of approximately $787 million.
It was described on occasion as the “flagship fund” of MFSIM. These assets were
primarily commercial loans, asset backed investments and interests in managed investment schemes. PIF was a retail fund, in the sense that it was open to retail investors for a minimum of a $5,000 investment.

[46] The operations of PIF were governed by a number of documents including its constitution,[14] its compliance plan[15] and its product disclosure statements as in force from time to time.[16]
[14] ASIC.0003.0001.0345.
[15] OCA.0006.0002.0442.
[16] WIM.0004.0003.0283. 17 WIM.0004.0003.0283.

Clause 15 of the PIF constitution provided that it was the role of the responsible entity to
seek and invest the funds of PIF in “authorised investments”. They were defined to
include the following:

 mortgage investments, being a loan secured by a registered mortgage of land;
 bank deposits or call deposits;
 bills of exchange (including commercial bills) issued, drawn, accepted or endorsed
by any bank or negotiable certificates of deposit issued by any bank;
 any registered investment schemes, including those of which MFSIM was the
responsible entity; and
 any investment authorised under s 21 of the Trusts Act 1973 (Qld), which the
responsible entity considered a prudent investment for PIF.

Section 21 of the Trusts Act provides that a trustee may, unless expressly forbidden by the instrument creating the trust, invest trust funds in any form of investment and at any time vary any investment or realise an investment of trust funds and reinvest an amount resulting from the realisation in any form of investment.
PIF also had a product disclosure statement (PDS).17 Part A of the PIF PDS was dated 2 July 2007 and replaced a PDS dated 13 December 2006 and a supplementary PDS dated
26 March 2007. Part A dealt with PIF’s authorised investments and how PIF was to
assess its investment opportunities. Part B of the PDS specified the target rates of income return (interest rates) for each of the different investment periods and was regularly updated.
The PIF PDS states that the constitution authorised PIF to invest in the following authorised investments:

 commercial loans;
 fixed interest securities, including structured transactions, floating rate and income
securities, convertible, reset and hybrid securities and other high yield securities;
 property backed managed investment schemes;
 asset backed investments; and
 cash and equivalents.

In one respect, the PIF PDS varied from the constitution in relation to authorised investments. The PIF PDS stated that MFSIM would not lend to, or invest in, MFS Ltd
majority owned entities.[18] However, there was no such restriction or requirement in PIF’s
[18] WIM.0004.0003.0283 at 0301.
constitution.
The PIF PDS also described the establishment of a CRPC to monitor related party transactions and investments.[19]
[19] WIM.0004.0003.0283 at 0301.
In addition to the constitution and PDS, PIF also had a compliance plan.[20] The compliance plan was established on 1 December 2005 and it described the processes necessary to ensure that the operations of PIF were conducted in accordance with the responsible entity’s (MFSIM’s) Australian Financial Services Licence,[21] the PIF
[20] OCA.0008.0004.0391.
[21] ASIC.0025.0001.0083. 22 OCA.0002.0003.0014.
constitution, the Corporations Act and other legislation.
Clause 19 of PIF’s compliance plan focused on related party transactions. The clause
was aimed at ensuring that a financial benefit was not given to a related party of MFSIM
out of PIF’s property, or that could diminish or endanger PIF’s property, unless the
Corporations Act was complied with. The clause required that each related party transaction must be in the best interests of the unitholders of PIF, must be on commercial terms and must be properly documented.
Clause 35 of the compliance plan focused on investment restrictions and required that assets of PIF were invested in authorised investments in accordance with the PIF
constitution and the PIF PDS. “Authorised investments” were not defined in PIF’s
compliance plan. Clause 35 provided that the management of PIF was to assess all relevant opportunities on their individual merits and to ensure that assets were only invested in authorised investments.
The compliance plan provided that PIF’s assets would be held by an external custodian
in accordance with general ASIC guidance. Perpetual was appointed by MFSIM to act
as PIF’s external custodian. Perpetual as custodian acted in accordance with instructions
given to it by MFSIM.
Under PIF’s compliance plan, PIF also had an IAC and a CRPC.
MYF
Until at least the end of November 2007, MYF was a managed investment scheme which had a little over $2 million in cash. It had 13 members who were for the most part senior employees or officers or, entities associated with them, within the MFS Group. Its funds were invested in a savings account in the period to the end of November and it was not active in terms of investing. It was closed to new investors and was, for practical purposes, dormant.
The proposed restructuring of MYF from the end of November 2007 is part of the subject of these proceedings.
MFS Castle
MFS Castle was a wholly owned subsidiary of MFS Limited. It was formerly known as MFS Investment Holdings No. 17 Pty Ltd. It did not itself conduct any business, but it was the corporate vehicle through which the MFS Group held a loan facility with Fortress Credit Corporation (Australia) II Pty Ltd (Fortress) for $250 million. The debt had been guaranteed by MFS Limited and MFS Financial Services.
PacFin
The MFS Group also carried on business in New Zealand. There were several entities conducting business in New Zealand, the most significant of which was, for present purposes, PacFin. PacFin raised funds in New Zealand from retail investors by issuing notes or debentures and invested those funds predominantly in loans and securities.
Unlike the Australian companies noted above, PacFin was not wholly owned by MFS Limited, but was about 40 per cent owned by MFS Limited.22 MFS Administration however had a management agreement with PacFin whereby it managed the business of PacFin from MFS’s corporate headquarters in Southport, Queensland.[23] MFS
[23] OCA.0013.0001.0002. 24 BCR.0001.0002.2305.
Administration managed all cash flow of PacFin and, if there was a shortfall, arranged any required funds.
Mr Anderson (the seventh defendant) and Mr White were directors of PacFin. They gave
instructions and directions to the New Zealand management of PacFin on ASIC’s case
although Mr Anderson challenged the extent of his role in that context.
MFS Limited had entered into a put option deed with PacFin, the effect of which was that MFS Limited would pay PacFin the value of any loss on a loan or investment up to a value of $50 million.24 In respect of long to medium term policy and strategic direction, the local New Zealand management of PacFin received instructions and directions from Mr King. Mr King oversaw the New Zealand operations of the MFS Group.[25]
[25] Affidavit of Mr Maywald [ASIC.3000.0005.0001] at para 20.
CVC Asia Pacific Limited
CVC was the Asia Pacific division of CVC Capital Partners, a private equity investment advisor and manager. CVC considered the acquisition of all or a part of the Stella Group from about May 2007. Ultimately, CVC purchased a 65 per cent interest in the Stella Group for $409 million on 3 February 2008. CVC later purchased the remaining 35 per cent of the Stella Group in July 2009.
Sunleisure Group Ltd
In May 2007, MFS Limited acquired the Sunleisure Group. The Sunleisure Group held Sunleisure hotels and other Sunleisure businesses. It focused on managing and letting hotels, residential developments and retail commercial centres in Queensland. In particular, it managed a number of hotels including the Q1 Resort on the Gold Coast. It owned and managed the Q1 Observation Deck as part of the Q1 Resort.
Royal Bank of Scotland
On 29 June 2007, RBS provided MFSIM with a loan facility of $200 million. Clause 3.2
of the Loan Agreement provided that “The Borrower must use the net proceeds of a Funding Portion only for the purposes of the Trust”.[26] The purpose of this facility, as described in PIF’s PDS, was to help manage the liquidity of the fund, ie, managing the
[26] OCA.0008.0003.0134 at 0154.
payment of distributions and redemptions, and to provide short term funding for opportunistic investments where the fund did not have surplus cash to provide for the investments that may arise on an opportunistic basis.[27]
[27] WIM.0004.0003.0283 at 0301.
In November and December 2007, PIF drew down the total amount of the $200 million facility.
Other relevant individuals
The following persons are of particular relevance.
Cheryl James
Ms James was at relevant times a finance manager in the MFSIM team. Her role was to manage the accounts for some of the managed investment schemes operated by MFSIM, including PIF and MYF. She was responsible for preparing monthly management accounts and the half-yearly financial statements, and also assisted senior managers with audit processes.
Janina Howard
During the relevant period, Ms Howard was the head of business analysis and governance
of MFSIM. She was responsible for dealing with the daily running of MFSIM’s custodial obligations, including ensuring all of MFSIM’s obligations as the responsible entity
concerning documentation and record keeping were being complied with. She also assisted with getting documents ready for audits, assisted the compliance team with any inquiries they might have, and ensured that units in, and distributions from, the relevant managed investment schemes were correct.
Karen Platts
Ms Platts was a corporate advisor to the MFS Group, and particularly to Mr White . She reported directly to Mr White and worked closely with him.
Kim Kercher
Ms Kercher joined the MFS Group in 2001 as financial controller and before that she had been an auditor at KPMG. Ms Kercher became a company secretary of many corporate entities within the MFS Group including MFSIM and MFS Limited.
Mike Skepper
Mr Skepper was the MFS Group Compliance manager. In February 2008 he identified a number of breaches in relation to the payments totalling $147.5 million by PIF to MFS Administration and to PacFin in November and December 2007.
Nigel Fitzgerald
Mr Fitzgerald was the MFS Group internal auditor. In March 2008 he prepared a draft internal audit report in relation to the transactions arising from the $147.5 million payment.
Rolf Krecklenberg
Mr Krecklenberg was appointed as an executive director of MFS Limited on 14 April 2005 after MFS Limited acquired Peppers. He resigned from that position in February 2008. Before joining MFS in 2005, Mr Krecklenberg was a managing director of Peppers. He was chief executive officer of the Stella Group until 29 February 2008 and
also a director of MFS Limited. He had a primary role in conducting the Stella Group’s

business. He was also closely involved in efforts to sell the Stella Group during the course
of 2007 and early 2008.
History leading up to and including the impugned transactions
The RBS Loan Agreement

In 2006, PIF had a facility with the National Australia Bank to enable PIF to have the liquidity to move quickly on deals that were presented to it. However, the relationship between MFS and NAB broke down at some point before mid-2007, necessitating that a facility from another finance provider be obtained.
On 29 June 2007, MFSIM as responsible entity of PIF entered into a facility with RBS (RBS Loan Agreement) for borrowings of up to $200 million, which could be drawn down from time to time. The amount of the facility was undrawn before the end of November 2007. The loan facility was to be used for the purposes of PIF.
The Fortress Loan Agreement
On 1 June 2007, MFS Castle entered into a loan facility with Fortress for $250 million,[28] which was used for the purposes of the MFS Group (Fortress Loan Agreement). The whole $250 million was drawn down on 1 June 2007. The money drawn down was paid to MFS Administration.
[28] FRE.0002.0002.0230.
It was originally envisaged that this facility would be a short term one as it was expected that significant funds would come into the MFS Group from the proposed sale of the Stella side of the MFS Group or from the finalisation of a $450 million corporate banking facility. The original date for repayment of the loan was 31 August 2007. However, the sale of Stella did not proceed with the speed that was originally envisaged and MFS agreed with Fortress to extend the date for repayment to 30 November 2007.
During November 2007, it became apparent that the Stella sale would not occur at least in time for its proceeds to be used to repay the Fortress Loan Agreement. On 17 November 2007, Mr King was still expecting that there would be an offer for 50 per cent of Stella by the end of that week,[29] but that did not eventuate. Negotiations with CVC for the sale of Stella had stalled by about 21 November 2007 and CVC had not made a binding offer to purchase an interest in Stella. Further, the assets of Stella could not be used to make the payment because those assets had been ring-fenced from the wider
[29] DEL.1000.0004.5125. 30 BCR.0001.0002.2100. 31 COURT.5000.0001.0003 at paras 191-192, the effect of which is reflected in the following paragraphs of this
corporate group by Stella’s own finance facility with UBS.
By late November 2007, it was apparent that none of MFS Castle, MFS Limited and MFS Financial Services had sufficient funds on hand to enable the repayment in full of the $250 million debt to Fortress by the end of November 2007. On 22 November 2007, Mr Anderson sent an email to Mr White setting out the serious cash flow difficulties that the Group faced at that time.30
Further background facts
In 2007 and early 2008, the MFS Group consisted of a large number of corporate entities
engaged in a multitude of businesses. Relevantly for ASIC’s case, the MFS Group
included two quite distinct categories of enterprise. The first comprised funds management and financial services businesses, which included the management of a number of managed investment schemes. The second class of enterprise was the collection of tourism and travel-related businesses, I have referred to as Stella, or the Stella Group.
PIF’s principal activity was the investment of retail investors’ funds in equities, debt
instruments, cash and registered mortgages in return for which investors would receive monthly distributions of income over fixed investment periods with repayment of their principal at maturity. By 31 October 2007, it had total funds under management of approximately $787 million.
By the middle of 2007, the MFS Group had a $250 million loan with Fortress. This loan was held by a company which came to be called MFS Castle, a wholly owned subsidiary of MFS Limited, whose sole purpose was to hold this loan. The loan was guaranteed by MFS Limited and another company in the MFS Group, MFS Financial Services.
The $250 million Fortress loan was originally due for repayment on 31 August 2007 but this was extended to 30 November 2007. Despite efforts by the MFS Group to raise funds to enable this loan to be repaid or refinanced by the due date, it was unable to do so from the funds then readily available to it. It was likely to have been able to raise the funds, however, by going to the market either by issuing shares or issuing debentures. An inability to repay the loan to Fortress on time could have had potentially devastating effects for the MFS Group, especially given that the loan was secured by the parent company.
During late November 2007, Mr King negotiated with Fortress to defer repayment of the loan either in whole or in part. Those negotiations resulted in an agreement between the MFS Group and Fortress for the payment by 30 November 2007 of $100 million plus an extension fee of $3 million, with the balance of $150 million payable by 1 March 2008.
This necessitated the MFS Group finding $103 million in order to pay Fortress by 30 November 2007. On 27 November 2007 MFSIM as the responsible entity for PIF drew down $150 million of the $200 million loan facility that it had with the RBS. To that time, no money had been drawn down under the RBS facility. The RBS facility should have been used solely for the purposes of PIF and not for the purpose of providing funds to repay the debts of other MFS Group companies.

on the pleading, he submitted, was on whether anything lay behind what was recorded in
the document rather than the content of the document itself or its date.

He argued that the case Mr Moore put orally differed in substantial ways, namely that the documents reflected transactions in 2007 that simply did not occur in 2007 and also reflected other events again in 2007 that simply did not occur. Mr Moore argued that Ms Watts, among others, knew subjectively that the purpose of the documents being falsely backdated was to deceive a reader and that Ms Watts had participated in the wrongful backdating of the documents. He asked for a finding that Ms Watts knew that the money had been paid out by PIF without any transaction pursuant to which, then and there, it should have been paid. The people who were deciding what assets would be put back into the trust had not made that decision before 23 January 2008. Mr Freeburn submitted that Ms Watts did not concede at any stage that she knew there were no transactions behind the documents. She believed that the documents were intended to document actual transactions that occurred in November 2007.
Ms Watts’ position could not be equated with the non-executive directors of James Hardie
in ASIC v Hellicar.848 In that decision, the board of directors actually resolved to approve the offending press release. Here, Mr Hutchings approved the final versions, not Ms Watts.
He also submitted that Mr Moore’s focus on the document described in the body of each
paragraph of the pleading as the one on which ASIC relied was difficult to understand as it seemed to mean that the pleaded document ID numbers should be abandoned and in their place should set the general description of the document in the body of the paragraph. He submitted that was an attempt to remove the document identification numbers and thereby amend the pleading because some documents went through as many as eight drafts. I do not perceive that to be a problem as the pleading properly identifies the relevant document in my view.
He also criticised the submission by Mr Moore that the documents were intended to be read collectively rather than individually. He argued that ASIC was seeking to smear Ms Watts with facts known only to other defendants by asking me to look at the documents collectively. Again, I do not accept that submission. It was clear that this was
a “suite” of documents. It was also clear that some at least were being backdated and that
Ms Watts accepted that she should not have been involved in that exercise.
Mr Freeburn criticised ASIC’s reliance upon Ms Watts not picking up the differences in
detail of the three different lists of loans available to her. He submitted that only one of the lists was properly directed to her and that she explained why she did not notice any differences in the lists.
ASIC’s contention that Ms Watts’ motive was a concern to protect her reputation was not
correct. She was not involved in the payments and did not authorise them. Mr Hutchings was a director and CEO of MFSIM and was involved in the payments. The theory that Ms Watts would have prepared sham documents to cover for unauthorised payments made by others more senior than she was, out of a concern to protect her reputation, was wrong.
Mr Freeburn submitted there was no obvious reason for ASIC to single out Ms Watts from all the other staff and assert that she alone positively knew by 23 January 2008 that Mr White had not yet decided what investments were going to be made. In concluding, he submitted that ASIC had not proved knowledge against Ms Watts and he said the claims failed for that reason as well as for the other reasons he had canvassed.
Conclusions from submissions for Ms Watts
In my view there was no “knowledge problem” in the case against Ms Watts. It was clear
that she knew that the drawdown occurred on the day it occurred and that PIF paid the
$130 million straight from its own bank account to MFS Administration’s account. In
my view ASIC has established very clearly that the only logical inference on the evidence is that there was then no transaction in place to justify that payment out to MFS Administration. As Ms Watts told ASIC, six months after the false documents were created, she came to the view that Mr White did not know what investments PIF had acquired.
The fact that there was no transaction on or about 30 November 2007 pursuant to which PIF received specific assets in return for the $130 million payment must have been confirmed to Ms Watts after details of the supposedly allocated assets were eventually
provided on 23 January 2008. On that day, she was forwarded Mr White’s listing of loans. But between then and the time the documentation purporting to record PIF’s
investments was finalised on about 6 February 2008, the details of the suggested transactions changed markedly. In the face of such changes, she could not genuinely have believed that a transaction or transaction had been undertaken on or about 30 November 2007, pursuant to which PIF received defined assets in return for its $130 million. I accept
ASIC’s submissions on these points.
ASIC also submitted persuasively that the documents that Ms Watts assisted in preparing record that the decision to make investments on behalf of PIF was made by Mr White and Mr Hutchings. Ms Watts had, on her own account, been persistent in chasing
Mr Hutchings for details of the transactions entered into on PIF’s behalf with the $130
million. Mr Hutchings regularly responded that he did not know. If, in truth, Mr Hutchings had made decisions jointly with Mr White at IAC meetings in November 2007 for PIF to enter into specific investment transactions, there is no rational explanation why Mr Hutchings would not pass on details of the investments to Ms Watts, who was
acting at least as PIF’s fund manager. The reality is that there were no such transactions.
When documents began to be drafted in February 2008 recording Mr Hutchings as having made investment decisions jointly with Mr White at IAC meetings in November 2007, Ms Watts did not ask Mr Hutchings why he had been saying for the past six weeks that he did not know what investments had been made. The reason why is obvious. She knew that Mr Hutchings had not made any such decisions in November 2007, contrary to the false suggestion made in the documents she helped draft.
Ms Watts knew that the date on each of the three submissions from her to the IAC dated in November 2007 was false. She knew that she had made no such submission as recorded in those documents to anyone in November 2007. Ms Watts also knew that there had been no meetings of the IAC as recorded in the minutes dated 21 and 23 November 2007. She conceded in her evidence to ASIC that she should not have participated in drafting the documents.
She was involved in providing false documents to the auditors and in sending false information to RBS. In my view the contraventions alleged against her have been
established and I propose to make declarations in the form alleged in ASIC’s amended
schedule of alleged contraventions numbered 1 to 9.849
Nor do I believe that the circumstances justify relief under s 1317S or s 1318 of the Act. Although she played a lesser role in the MFS Group than the other defendants she had a
specific role as a fund manager that required her to act in the investors’ interests. On any
analysis she did not. When it became obvious to her that the investors’ funds had not

been used for investments she participated in a scheme to hide that fact by falsifying
documents. That should not be excused.
Loss

ASIC’s claim for the loss suffered as a result of the contraventions by some of the
defendants was expressed in the following terms:[850]
[850] See ASIC’s closing submissions COURT.0029.0003.0001 at paras 1290-1296 (footnotes omitted).
“1290 As a result of the contraventions by Mr King, Mr White, and Mr Anderson with respect to the $103 million payment, MFSIM as responsible entity for PIF suffered loss of $103 million paid on 3 November 2007 together with the consequential expenses associated with the RBS Loan agreement being:

(a) interest attributable to the $103 Million $4,363,195.38
Payment:

(b) fees on the $150 million drawdown

attributable to the $103 Million Payment: $601,241.14

(c) stamp duty attributable to the $103 $253,127.69
Million Payment:

1291     As a result of the contraventions by Mr White, Mr Anderson, and Mr Hutchings with respect to the $17.5 million payment, MFSIM as responsible entity for PIF suffered in the amount of $17.5 million.
1292     It is submitted that this loss arises, on ASIC’s case, on the basis that
the $103 million payment and the $17.5 million payment were made
from PIF’s account held with Perpetual for which it received no
consideration.
1293     It appears to be contended by the defendants that the losses of MFSIM were reduced by the fact that in February 2008 transactions were documented, with respect to transactions purportedly entered into in November 2007; and that (even if false) such documents were effective to transfer units and interests in participation agreements from the date they were in truth documented.
1294     It is submitted that, even accepting the defendant’s contention in this

regard, the loss of PIF should not be reduced for the following
reasons:

(a) The false documents were not effective or legally enforceable because (despite purporting to have the appropriate authorisations) they were executed beyond authority; and have not been ratified (see paras 73-103 above); and
(b) the loss of MFSIM was not reduced by such purported transfers because the amounts due under the participation agreement and the value of the units were unrecoverable.
1295     The evidence of nil recoverable value is contained in:

(a) the ‘Premium Income Fund Vendor Due Diligence Schedule’ by
333 Capital; and

(b)

the Premium Income Fund Interim Financial Report for the half year ended 31 December 2009, which was reviewed by PwC.
1296     The relevant references from these documents are set out in the table below. The page references are to pages of the PDF document.

Borrower Final list 333 Capital PwC
Through alleged MYF unit holding

Qdeck/Sunleisure $30,000,000 pp 100-101 p 14
MFS Blue Sky Trust $45,097,529 pp 100-101 p 14

Gersh Development $9,902,471 pp 100-101 p 14
Fund
Through alleged PIF-PacFin loan participation agreement

MFS RAP $4,883,771.04 pp 112-113 p 13

Young Village Estates $23,683,612.88 pp 130-131 p 13

Copperfield $10,000,000 p 87 p 13

Investment $10,102,271.36 p 95 p 13
Enterprises
Southport Holdings $11,057,278.66 pp 122-123 p 13

SPV Pty Ltd $2,773,066.06 pp 126-127 p 13

Total $147,500,000.00

The defendants did not address any arguments to the issue of damages. I shall leave the question in abeyance until the delivery of my reasons in this matter.
Conclusion and orders
When all is said and done - and much has been said at least - this remains a sorry tale of
the misuse of other people’s money by those who should have known better. All the
defendants knew that the money belonged to the investors in PIF and that it should have been used for their purposes. It was drawn down from the RBS loan for the improper purposes of paying off the Fortress debt and, later, the PacFin debenture holders. It was used to pay off the Fortress debt. Whether it was actually used to pay off the PacFin debenture holders may not be established on the evidence, but it is perfectly clear that it was not used for the investors in PIF.
It may have been possible to structure the drawdown differently so that it was “invested”
in other assets forming part of MFS Limited’s “recyclable capital”. To do that it would

have been necessary to have observed the statutory strictures affecting such transactions
between related parties in the MFS Group. That did not occur then or later.

The “mastermind” behind the scheme, Mr White, still considered the money to be a
repayable loan as late as 22 January 2008. His direction, with Mr Anderson, that the
transactions be explained by an attempt to re-characterise them as investments in a “listing of loans” may have had some resonance with other plans within the MFS Group but those

plans had not been realised in any concrete form such as to justify the payments either
when they were made or later.

The “false documents” were just another part of this sorry tale. They were ineffective to
do what they purported to do and were prepared in haste in a transparent attempt to hide the previous misappropriations from the auditors and RBS. They were further examples of dishonest conduct within the MFS Group lending credence to the perception that PIF
was a “slush fund” run in the group’s interests rather than the interests of its investors.

[1623] All of the defendants were, in their own different ways, involved in MFSIM’s

contraventions. The declarations sought against them should be made in the terms I have
indicated, namely:

Against Mr King: declarations in the terms of the contraventions alleged against him
numbered 1 to 3, 7 to 13 and 15, 16 and 17 of ASIC’s amended schedule of alleged
contraventions.[851]
[851] COURT.0030.0001.0030.
Against Mr White: declarations in the terms of the contraventions alleged against him numbered 1 to 3, 7 to 13 and 15 to 68 of that schedule.
Against Mr Hutchings: declarations of contraventions in respect of the contraventions numbered 1 to 3 and 5 to 88 of that schedule.
Against Mr Anderson: declarations in the terms of the contraventions alleged against him numbered 1, 2, 5 to 10 and 12 to 46 of that schedule.
Against Ms Watts: declarations in the terms of the contraventions alleged against her numbered 1 to 9 of that schedule.
None of the defendants’ conduct should be excused pursuant to s 1317S or s 1318 of the
Act.
I shall hear further from the parties about the consent orders proposed to be made against MFSIM, the form of the declarations, any claim for pecuniary penalties and other ancillary orders including costs.

the determination of the proceedings in New Zealand. An appeal from that decision was dismissed by the
Court of Appeal in White v Australian Securities and Investments Commission & Ors [2013] QCA 357.

judgment.

table under item numbered 3).

That question is followed by a statement that PIF “requires first class management for each of its five asset

classes...”. The statement is followed by a table that lists the five asset classes. One of those is Asset Backed

Securities with the fund name “MFSIM Maximum Yield Fund (Re-organised)”. When asked about this Ms Howard’s evidence, which was not the subject of any re-examination, was “When we received the

Maximum Yield Fund within our area of responsibility, it was for all intents and purposes a shell with nothing in it so there was always an intention to do something with it”: (Howard T11-16/17-24). Ms Howard also gave

evidence that “there was lots of discussions about what should happen Maximum Yield Fund”: (Ms Howard

T11-16/26-29).

Private Debt Opportunities Fund (PDOF). The details in the IAC register state, relevantly, that the Committee noted a proposal for the provision of a $50 million five year loan from PIF to PDOF, as part of the transition

of $100 million of PIF loans to PDOF. In effect, as can be seen, PIF would “seed” the PDOF (see

DEL.2004.0001.2983 referred to in Mr Molesworth’s affidavit at 82). Mr Petherick commenced with MFS

group in October 2005 and by October/November 2007 he was promoted into a business operations/business

analysis role (Mr Petherick’s affidavit at 18). He gave evidence that PIF did invest in other parts of the MFS

empire (Mr Petherick T16-65/25-26) and that PIF had invested in Causeway in the sum of around $50 million

(Mr Petherick T16-65/27-31).

regarded as a financial success if they had $100 million in funds under management: (.2165). Note also

Mr King’s evidence as to this during cross-examination by Mr Williams SC – T35-34/15-20.

in Ms Cole’s affidavit at 124; further version of the document titled “MYF Product Proposal Jan 2008.doc” - DEL.2020.0001.0408 referred to in Ms Cole’s affidavit at para 126; document titled “MYF Product Proposal 17 Jan 2008.doc - DEL.2004.0001.4749 referred to in Ms Cole’s affidavit at para 130.

restructure Max Yield Fund and look at the Causeway fund as possibilities” (DEL.2008.0005.3130). On same

day, by email sent at 7:45 am Ms Watts wrote “We will have to think about how to properly restructure the MYF to make it flexible enough for PIF, the public and potentially NZ investors to get access.”

(DEL.2020.0001.0429). After being taken to the email from Ms Watts of 8 November 2007, Ms Howard was asked and she confirmed that it was fair to say that around this time there was a great deal of consideration being given to the best way to restructure MYF (Ms Howard T11-17/4-5).

and Ms Ross that states “Looks like we will be restructuring the Maximum Yield Fund a closed end fund very

soon so in case that is not on your list could you please add it to your regular list to review although it may end

up being an information memorandum and not a PDS anything is possible Many thanks”. At 12:26 pm, Ms Hollidge asked how soon and the response from Ms Watts was “We will be talking about it on Monday.

Nothing definite yet but soon (ie Weeks, not months)” (DEL.2009.0003.1550). See also email exchange

between Ms Howard and Ms Watts on 9 November 2007 (DEL.2020.0001.0427 referred to in Ms Howard’s

affidavit at para 59).

that included item 6 “Restructure of Max High Yield Fund” (DEL.2008.0005.2731 referred to in Ms Cole’s

affidavit at para 40). Ms Watts circulated the email exchange she had with Ms Howard with Ms Cole and Mr Hutchings on the morning of 13 November 2007 regarding the restructure of MYF because she thought it would be useful as background ahead of the MT meeting to be held that morning (DEL.2020.0001.0427

referred to in Ms Howard’s affidavit at para 59). The minutes for the MFSIM Management Team meeting for 12/13 November 2007 “In Maximum Yield Fund – to change from closed and to an opened fund. Either need

to distribute income to existing investors and go ahead and restructure or could set up a new asset class. GH, JH and MW to meet and discuss before putting together a proposal.” (DEL.2009.0003.0518 referred to in

Ms Cole’s affidavit at para 88).

the board meeting.

presentation included as an Appendix to the board papers focusing on strategy and structure. The board

discussed matters outlined in the presentation.” (WIM.0004.0001.0265 at .0269 referred to in Mr Whateley’s

affidavit at para 75).

DEL.1100.0009.2407.

126 of Mr Hutchings’ affidavit: HUTG.1100.0001.0001.

of investments for the funds consistent with a Babcock & Brown fund model as is referred to in many of the
documents: see T35-37.

subject of any direct challenge and was submitted to be obviously consistent with it having occurred before the

email, DEL.2006.0007.2992, in any case.

60 T48-9/1-16.

ending in an email from Mr White to Mr Hutchings sent at 4.21 pm on 27 November 2007 stating, in part, that

Mr White was happy to discuss the restructure of MYF.

November 2007 and stated “we are looking at drawing down on this facility shortly” and requesting preparation

of documents to prepare for the drawdown and to identify how much can be borrowed bearing in mind the gearing ratio covenant (DEL.2002.0002.9915, bottom of the page). On 21 November 2007 the task was completed and Ms Ring forwarded an email with some attachments responding to the request (DEL.2002.0002.9915; Ms Howard T11-10/15-35). Ms Howard emailed Ms Hulme on 21 November 2007 asking for some amendments to be made to the draft documents (DEL.2002.0002.7726; DEL.2002.0002.7727; Ms Howard T11-11/29-45).

(DEL.2002.0002.8883 at .8885; Ms Howard T11-12/25-45). Ms Howard’s response was to thank Ms Watts

for the update by indicating that she could do nothing more until she was instructed about the amount to be
drawn down (DEL.2002.0002.8883 at .8884).

of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”).

[COURT.0020.0001.0001].

Act [COURT.0020.0001.0001] (no 11). This evidence, it was submitted, should be preferred to his evidence at trial (eg T34-69/4-7) because it was given closer to the relevant events, when his recollection would be better.

of the ASIC Act [COURT.0020.0001.0001] (no 17).

Mr King).

DEL.1000.0003.5313,

DEL.2002.0001.9690,

DEL.2002.0001.9687,

DEL.2002.0001.2526,

DEL.2002.0002.0953.

[COURT.7000.0001.0006], Mr Hutchings’ amended defence, para 45 [HUTG.1100.0005.0001].

particulars: COURT.0008.0001.0205.

participation by PIF in PacFin loans [DEL.2004.0006.0440 attaching DEL.2004.0006.0441].

302, 312-313; [2014] HCA 43 at [13]-[16], [46]-[47] and Kern Consulting Group Pty Ltd & Anor v Opus

Capital Ltd [2014] 2 Qd R 379, 386-387; [2014] QCA 111 at [28]-[32].

Mr Anderson was cross-examined by ASIC about this email, starting at T49-87/5 and I refer to that later.

DEL.2004.0001.4910.

Ms Watts [AFF.MAW.0002] at para 134; see also T52-55/8-9.

DEL.2005.0004.1210.

Mr Kennedy [ASIC.3000.0018.0001] at paras 98-105).

email.

diffusing”.

email.

tendered under s 79 of the ASIC Act [COURT.0020.0001.0004].

DEL.2005.0004.0950.

313 DEL.2008.0005.1246.

[ASIC.3000.0050.0001] at paras 76-79.

[ASIC.3000.0050.0001] at paras 70-74.

[ASIC.3000.0050.0001] at paras 75, 95-98.

CBA.0001.0001.0051.

been tendered against Ms Watts [COURT.0020.0004.0001].

submissions.

4853.

[ASIC.3000.0004.0001] at para 64). Mr Anderson was cross-examined by ASIC this email, starting at T49- 87/5 where the issue was whether he had confused it with money received from a Domain/Guardian and Living and Leisure transaction.

known as “Black Friday” within the company.

127, 129-130; The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1, 679 at

[6144]; [2008] WASC 239 at [6144].

NSWLR 1, 99 at [475].

Petroleum v Johnson (1993) 43 FCR 1, 24-32 at [22.20]-[22.34]; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1, especially at 99 and Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, 366-367 especially at [282]-[286]; Dal Pont, Law of Agency 2nd ed at paras 22-57.

of Australia Pty Ltd v Brilley (2008) 73 NSWLR 241, 244-245, 268-269 especially at [6], [7] and [157].

Erlich v Leifer [2015] VSC 499 at [78]-[94].

450.

of the Federal Court; see ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364, 396-397 at [78] per Keane CJ (with whom Emmett and Finkelstein J agreed). The comments were not considered by the High Court, see Forrest v ASIC (2012) 247 CLR 486. See also Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, 5 and the remarks of Gzell J in ASIC v Macdonald (No 11) (2009) 256 ALR 199, 239 at [186].

(in liq) (1992) 30 NSWLR 185; Linter Group Ltd v Goldberg (1992) 7 ACSR 580; 10 ACLC 739. Also see

Ford, Principles of Corporations Law at [8.140] dealing with “The interests of the company” in a group of

companies.

98 ACSR 615, 660 at [277], 665-670 at [300]-[332].

- Corporate Law Economic Reform Program No 9 (October 2003), Ch 9 at [569] and [570]; Corporations and Markets Advisory Committee, Personal Liability for Corporate Fault Discussion Paper (May 2005) at 74) and White J in Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384, 411- 413; [2010] NSWSC 233 at [125]-[126]. ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) (2007) 160 FCR 35, 100 at [490] per Jacobson J.

Australia Pty Ltd (No 4) (2007) 160 FCR 35, 100 at [490] per Jacobson J; (emphasis added).

[COURT.0020.0001.0001] (No 1).

particular. See also the submissions about Holland v Revenue and Customs Commissioners [2010] UKSC 51; [2011] 1 All ER 430 and ASIC v Vines (2005) 55 ACSR 617, 855-856, 874 at [1053]-[1056] and [1129]-[1131].

COURT.4000.0001.0016 at para 200, but not sufficiently strongly in my view to offset their overall effect.

184 and Armagas Ltd v Mundogas SA [1986] 1 AC 717, 777, cited in Midas Management v Equator Communications [2008] NSWSC 255 at [55]. See also Dal Pont, Law of Agency (LexisNexis Butterworths, 3rd ed, 2014) at para [20.39].

p 411.

para [5.19]. Taylor v Smith (1926) 38 CLR 48, 54-55, 59, 62.

[5.22].

perfectly right, we say that the whole thing is a sham. We don’t run a case which requires your Honour to assess the underlying value.” He was clearly referring in context, however, to the case not being one about the

underlying value of the “investments” but rather the falsity of the transactions. I did not take him to be making

a submission about the legal meaning attributable to the word “sham”.

[2008] HCA 21; 238 CLR 516, 531-532 at [35]-[36] per Gleeson CJ, Gummow and Crennan JJ and at 553,
[112], 559, [134], 562-563, [144]-[149] per Kirby J.

Pty Ltd v Commissioner of Taxation (1992) 38 FCR 555.

omitted).

122 at [22] and SAJ v The Queen (2012) 36 VR 435, 436 at [6], 454 at [127], 452-454 at [112]-[127]; [2012]
VSCA 243.

Principles of Corporations Law at [9.284].

v Stripe Capital Pty Ltd [2011] FCA 1147 at [30].

COURT.0029.0003.0001.

DEL.1300.0005.2958 where Mr Anderson writes an email to Mr White saying “keen to discuss logistics re the remaining A$17.5m to be provided”.

296, 366-367 at [282]-[284].

[22].

Adler (2002) 41 ACSR 72, 166-167 at [372].

Pty Ltd v Flower & Hart (1998) 156 ALR 169, 218.

T45-62/11-19.

DEL.2006.0003.2937).

[COURT.0020.0001.0004] (no 7).

For

the

attachments

see

DEL.2004.0001.7215,

DEL.2004.0001.7217,

DEL.2004.0001.7205,

DEL.2004.0001.7207,

DEL.2004.0001.7213,

DEL.2004.0001.7211

and

DEL.2004.0001.7209.

DEL.2005.0001.7233, attaching DEL.2005.0001.7234.

OCA.0025.0001.0117; OCA.0025.0001.0121; OCA.0025.0001.0371; OCA.0025.0001.0369.

discussed in Quince v Varga [2009] 1 Qd R 359, 365-366, 372-378; [2008] QCA 376 at [1]-[4], [6], [25]-[40].

“accounting records” to “financial records” as a reason for not following the decision in Duke Group Ltd (in

liq) v Pilmer (1994) 63 SASR 364.

Consistently with my views about Browne v Dunn [1894] 6 R 67 expressed elsewhere I do not regard it as essential to put every contradictory piece of evidence to a witness in a case like this.

DEL.2002.0002.8883 (27 November 2007).

CATCHWORDS:	CORPORATIONS – MANAGEMENT AND ADMINISTRATION – where MFSIM was the responsible entity for the managed
investment scheme, PIF – where PIF entered into a facility with the
Royal Bank of Scotland for borrowing of up to $200 million for
PIF’s purposes – where MFSIM as responsible entity for PIF made
a payment of $130 million from PIF’s drawn down facility to another
company in the MFS Group, MFS Administration – where MFS
Administration caused $103 million of the $130 million payment to be paid to Fortress to repay a debt owed by a company in the MFS
corporate group – where the $130 million payment was made
without approval from the Investment Approval Committee of PIF or the Conflicts and Related Party Committee of MFSIM either
before the transaction or at all – where MFSIM as responsible entity for PIF made a payment of $17.5 million from PIF’s drawn down
facility to PacFin – where PacFin needed the money to meet its financial commitments to its debenture holders – where the payments were not authorised investments under PIF’s constitution
– where it was submitted that the payments were made for no
consideration to PIF – where it was submitted that the payments were
explicable by a proposal to restructure MYF, a managed investment scheme operated by MFSIM, partly through investments to be made
by PIF – where, after the payments were made, documents were
prepared purporting to record transactions justifying those payments
as having been made for the benefit for PIF – where PIF was said to
have received the benefit of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF
– where Mr King, Mr White, Mr Hutchings, Mr Anderson and
Ms Watts were involved in the relevant conduct – whether MFSIM
as responsible entity for PIF contravened the Corporations Act 2001
(Cth) – whether Mr King, Mr White, Mr Hutchings, Mr Anderson
and Ms Watts contravened the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGED INVESTMENTS – RESPONSIBLE ENTITY – where Mr White, Mr King and
Mr Anderson were submitted to have been involved in causing PIF to transfer away $130 million for no purpose to PIF and no benefit
to PIF – where Mr White, Mr Anderson, Mr Hutchings and
Ms Watts were submitted to have been involved in causing PIF to transfer away $17.5 million for no purpose to PIF and no benefit to
PIF – where Mr White, Mr King, Mr Anderson, Mr Hutchings and Ms Watts were closely and relevantly connected with MFSIM –
where Mr White, Mr King, Mr Anderson, Mr Hutchings and
Ms Watts were MFSIM’s high managerial agents – where MFSIM was argued to be the victim of the fraud – whether the conduct of the
individual defendants is attributable to MFSIM to establish whether it, as responsible entity, contravened the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – where Mr King was no longer
director of MFSIM when the relevant transactions occurred – where it was submitted that he had overall responsibility for MFSIM’s operations – where it was submitted that Mr White, an executive
director of MFSIM and effectively the CEO of the MFS Group at the
relevant time, customarily acted in accordance with his wishes –
where it was submitted that Mr King had the capacity to affect
significantly the financial standing of MFSIM – whether Mr King
was an officer of MFSIM under the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – where Mr Anderson was an
officer of MFSIM – where Mr King was found to be an officer of MFSIM – where MFSIM was the responsible entity of a registered scheme – whether Mr Anderson and Mr King were officers of the responsible entity of a registered scheme – whether an officer of an
entity that is a responsible entity is an officer of the responsible entity under the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – where it was submitted that no consideration passed to PIF at the
time of the $130 million payment to MFS Administration – where it
was submitted that consideration passed to PIF for the $130 million payment consisting of $62.5 million worth of interests in participation agreements with PacFin and 67.5 million units in MYF
– where it was submitted that no consideration passed to PIF at the
time of the $17.5 million payment to PacFin – where the alleged
transactions were not formulated or documented at the time of the
payment – where documents were later created purporting to reflect the alleged transactions and investments – whether the alleged
transactions provided consideration or reimbursement for the
payments from PIF’s funds at the time that the payments were made
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – AUTHORITY, RIGHTS AND POWERS OF OFFICERS OF
CORPORATION – AUTHORITY – where it was submitted that
consideration flowed to PIF for the $130 million payment consisting of $62.5 million worth of interests in participation agreements with
PacFin and 67.5 million units in MYF – where it was submitted that
no consideration passed to PIF at the time of the payment to PacFin
– where the relevant transactions exceeded the defendants’ limit on
delegated authority to make investments – where there was no MFSIM board approval for the transactions – where the parties to
the purported transactions were aware of the absence of actual
authority to enter into the transactions – whether the transactions
were ineffective as having been made without authority
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – AUTHORITY, RIGHTS AND POWERS OF OFFICERS OF
CORPORATION – RATIFICATION AND INDEMNIFICATION – where non–executive directors of MFSIM expressly declined to
approve certain transactions – where the board of MFSIM was not informed about the true purpose and nature of certain transactions –
whether the responsible entity MFSIM had full knowledge of all of
the material circumstances surrounding the transactions – whether
the transactions were ratified by the board of MFSIM
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – RELATED PARTY TRANSACTIONS – where MFS controlled
both MFSIM and MFS Administration – where MFSIM had an
independent board but where Mr King and Mr White, directors of
MFS Administration, wielded practical influence over MFSIM’s operations – where MFS Administration controlled PacFin – where PacFin was managed exclusively by MFS Administration – where
Mr White and Mr Anderson were directors of MFS Administration
and two of the three directors of PacFin – whether MFS Administration and MFSIM were related parties – whether MFSIM’s $130 million payment, to the extent of the $103 million
payment, was a financial benefit given by MFSIM, as responsible entity for PIF, out of scheme property to MFS Administration, a
related party of MFSIM – whether PacFin and MFSIM were related parties – whether MFSIM’s $17.5 million payment was a financial
benefit given by MFSIM, as responsible entity for PIF, out of scheme property to PacFin, a related party of MFSIM
CORPORATIONS – MANAGEMENT AND ADMINISTRATION
– DUTIES AND LIABILITIES OF OFFICERS OF
CORPORATION – OFFENCES – FALSIFICATION OF RECORDS – where Mr Hutchings, Ms Watts, Mr Anderson and
Mr White were submitted to have been involved in creating or
assisting in the creation of false documents – where it was submitted
that the documents were backdated to reflect transactions as
occurring in 2007 that did not in fact occur in that year – where it
was submitted that the documents reflected events that simply did
not occur – where the alleged transactions recorded in the documents
were inconsistent with contemporaneous records, accounts,
proposals and decisions of the relevant entities – where it was
submitted that documents containing false information were
provided to banks, auditors and were reflected in PIF’s half-yearly
report – whether there was a failure to record correctly and explain
the transactions and financial position of MFSIM – whether MFSIM contravened the Corporations Act 2001 (Cth) – whether Mr White,
Mr Anderson and Mr Hutchings contravened the Corporations Act
2001 (Cth) directly – whether Mr White, Mr Anderson, Mr Hutchings and Ms Watts were knowingly involved in MFSIM’s
contraventions of the Corporations Act 2001 (Cth)
CORPORATIONS – MANAGEMENT AND ADMINISTRATION
– DUTIES AND LIABILITIES OF OFFICERS OF
CORPORATION – where Mr White, Mr King, Mr Anderson, Mr
Hutchings and Ms Watts were closely and relevantly connected with
MFSIM – where MFSIM was found to have contravened the Corporations Act 2001 – whether the defendants were knowingly
involved in MFSIM’s contraventions of the Corporations Act 2001
(Cth) – whether actual knowledge of the essential facts constituting
the contravention must be the only rational inference available in the
circumstances surrounding the contravention – whether it would be
appropriate to grant relief from liability for Mr White, Mr King, Mr
Anderson, Mr Hutchings and Ms Watts’ conduct
Australian Securities and Investments Commission Act 2001 (Cth), s 79(1)
Children’s Services Act 1996 (Vic), s 26
Company Law Review Act 1998 (Cth) Corporate Law Economic Reform Program Act 1999 (Cth) Corporations Act 2001 (Cth), s 9, s 9(b), s 9b(i), s 9(b)(ii), s 9(b)(iii), s 50AA, s 50AA(1), s 50AA(2)(a), s 79, s 79(c), s 208, s 208(1), s 209(2), s 228, s 251A, s 286, s 286(1), s 286(1)(a), s 305, s 344, s 344(1), s 601EA(4), s 601FA, s 601FC, s 601FC(1)(a), s 601FC(1)(b), s 601FC(1)(c), s 601FC(1)(k), s 601FC(1)(l), s 601FC(2), s 601FC(5), s 601FD, s 601FD(1), s 601FD(1)(a), s 601FD(1)(b), s 601FD(1)(c), s 601FD(1)(e), s 601FD(1)(f), s 601FD(3), s 601FD(3)(a), s 601FD(3)(b), s 601FD(3)(c), s 601FD(3)(e), s 601FD(3)(f), s 601HC, s 601JA(2), s 601LA, s 601LC, s 601MA, s 1017E, s 1308A, s 1311(3), s 1317A, s 1317DA, s 1317E, s 1317E(1), s 1317E(1)(b), s 1317E(1)(f), s 1317E(1)(g), s 1317G(1), s 1317G(1)(aa), s 1317G(b)(i), s 1317G(b)(iii), s 1317S, s 1317S(2), s 1318, s 1318(1) Criminal Code (Cth), s 12.3(2)(b) Criminal Code (Qld), s 408C Evidence Act 1997 (Qld), s 59(2) Managed Investments Act 1998 (Cth), s 82A Trusts Act 1973 (Qld), s 21 Uniform Civil Procedure Rules 1999 (Qld), r 154, r 149(i)(c)
ABC Developmental Learning Centre v Wallace (2007) 16 VR 409; [2006] VSC 171, considered Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1; 98 ACSR 615; [2014] WASC 102, considered Armagas Ltd v Mundogas SA [1986] 1 AC 717, cited
ASIC v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181; [2015]
FCA 342, applied ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) (2007) 160 FCR 35; [2007] FCA 963, cited ASIC v Fortescue Metals Group Ltd (No 5) (2009) 264 ALR 201; [2009] FCA 1586, considered ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364; [2011] FCAFC 19, cited ASIC v Healy (No 2) (2011) 196 FCR 430; [2011] FCA 1003, cited ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17, applied ASIC v Macdonald (No 11) (2009) 256 ALR 199; [2009] NSWSC 287, cited ASIC v Macdonald (No 12) (2009) 259 ALR 116; [2009] NSWSC 714, cited ASIC v Rich (2005) 53 ACSR 752; [2005] NSWSC 417, cited ASIC v Vines (2005) 55 ACSR 617; [2005] NSWSC 738, cited
Australian Communications and Media Authority v Mobilegate Ltd
(No 8) (2010) 275 ALR 293; [2010] FCA 1197, applied
Australian Securities and Investments Commission v Managed
Investments Limited & Ors (No 5) [2013] QSC 313, cited Beach Petroleum NL v Johnson (1993) 43 FCR 1; [1993] FCA 283, considered Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408, cited Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1; [1951] HCA 480, cited Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, considered Browne v Dunn [1894] 6 R 67, cited
Buzzle Operations Pty Ltd v Apple Computer Australia Pty Ltd
(2010) 238 FLR 384; [2010] NSWSC 233, considered
Buzzle Operations Pty Ltd v Apple Computer Australia Pty Ltd
(2011) 81 NSWLR 47; [2011] NSWCA 109, cited Commissioner for Corporate Affairs v Bracht [1989] VR 821, considered Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104, cited
Director-General of Fair Trading v Pioneer Concrete (UK) Ltd
[1995] 1 AC 456, cited DPP v Gomez [1993] AC 442, considered Duke Group Ltd (in liq) v Pilmer (1994) 63 SASR 364, cited Edwards v The Queen (1993) 178 CLR 193; [1993] HCA 63, cited Elkington v Farsands Solutions Pty Ltd [2012] NSWCA 334, cited Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55, cited Erlich v Leifer [2015] VSC 499, cited Fitzmaurice v Bayley (1856) 119 ER 1087; (1856) 6 El & Bl 868, cited Ford v Andrews (1916) 21 CLR 317; [1916] HCA 29, cited Forrest v ASIC (2012) 247 CLR 486; [2012] HCA 39, cited Giorgianni v The Queen (1985) 156 CLR 473; [1985] HCA 29,
cited
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6, considered Hamilton v Whitehead (1988) 166 CLR 121; [1988] HCA 65, cited Hancock v Rinehart [2015] NSWSC 646, applied Hawley Partners v Commissioner of Stamp Duties (Qld) (1996) 96 ATC 4847; [1996] QCA 270, cited Holland v Revenue and Customs Commissioners [2011] 1 All ER 430; [2010] UKSC 51, cited JC Houghton & Co v Nothard, Lowe and Wills [1928] AC 1, cited JGM Nominees Pty Ltd v Australvic Pty Ltd (in liq) (No 3) [2010] VSC 623 Kern Consulting Group Pty Ltd & Anor v Opus Capital Ltd [2014] 2 Qd R 379; [2014] QCA 111, cited Leybourne v Permanent Custodians Ltd [2010] NSWCA 78, cited Linter Group Ltd v Goldberg (1992) 7 ACSR 580; 10 ACLC 739, cited Lysaght Bros & Co Ltd v Falk (1905) 2 CLR 421; [1905] HCA 7, cited
Goodman v J Eban [1954] 1 QB 550, cited considered
Meridian Global Funds Management Asia Ltd v Securities
Commission [1995] 2 AC 500, considered McHugh v Eastern Star Gas (2012) 88 ACSR 707; [2012] NSWCA 169, cited Midas Management v Equator Communications [2008] NSWSC 255, cited Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66, cited Norman v FEA Plantations (2010) 191 FCR 39; [2010] FCA 1274, considered Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; [1990] HCA 32, cited Owen v Madden (No 3) (2012) 201 FCR 360; [2012] FCA 313, considered Pereira v Director of Public Prosecutions (1988) 82 ALR 217; [1988] HCA 57, cited Presidential Security Services of Australia Pty Ltd v Brilley (2008) 73 NSWLR 241; [2008] NSWCA 204, cited Quince v Varga [2009] 1 Qd R 359; [2008] QCA 376, cited R v Byrnes (1995) 183 CLR 501; [1995] HCA 1, cited
Raftland Pty Ltd as Trustee of the Raftland Trust v Commissioner
of Taxation (2008) 238 CLR 516; [2008] HCA 21, considered Re Hampshire Land Co [1896] 2 Ch 743, cited Re HIH Insurance Ltd (in prov liq); ASIC v Adler (2002) 41 ACSR 72; [2002] NSWSC 171, cited Rural Press Ltd v ACCC (2003) 216 CLR 53; [2003] HCA 75, cited Russo-Chinese Bank v Li Yau Sam [1910] AC 174, cited SAJ v The Queen (2012) 36 VR 435; [2012] VSCA 243, cited
Shafron v ASIC (2012) 247 CLR 465; [2012] HCA 18, considered
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449; [1988] FCA 179, cited Snook v London and West Riding Investments Ltd [1967] 2 QB 786, considered Sonenco (No 87) Pty Ltd v Commissioner of Taxation (1992) 38 FCR 555; [1992] FCA 560, cited
Spedley Securities Ltd (in liq) v Greater Pacific Investments Pty
Ltd (in liq) (1992) 30 NSWLR 185, cited Taylor v Smith (1926) 38 CLR 48; [1926] HCA 16, cited Tesco Supermarkets Ltd v Nattrass [1972] AC 153, considered
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9)
(2008) 39 WAR 1; [2008] WASC 239, cited The Zamora (No 2) [1921] 1 AC 801, cited Twinsectra Ltd v Yardley [2002] 2 AC 164, cited Ultraframe (UK) Ltd v Fielding (2005) EWHC 1638 (Ch); [2005] All ER (D) 1397, considered Vines v ASIC (2007) 73 NSWLR 451; [2007] NSWCA 75, cited Walker v Wimborne (1976) 137 CLR 1; [1976] HCA 7, cited Wellington Capital Ltd v ASIC (2014) 254 CLR 288; [2014] HCA 43, cited
White v Australian Securities and Investments Commission & Ors
[2013] QCA 357, cited White v Tomasel [2004] 2 Qd R 438; [2004] QCA 89, cited White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169; [1998] FCA 806, cited Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65, cited Young Investments Group Pty Ltd v Stripe Capital Pty Ltd [2011] FCA 1147, cited
COUNSEL:	P J Riordan SC with J P Moore SC and M T Brady for the plaintiff P J Davis QC with D S Piggott for the fourth defendant R P S Jackson QC with N Andreatidis for the fifth defendant D L Williams SC (until 9 May 2014) with C Withers for the sixth defendant
B D O’Donnell QC with C K George for the seventh defendant
P A Freeburn QC for the eighth defendant
SOLICITORS:	Corrs Chambers Westgarth for the plaintiff Tucker & Cowen for the fourth defendant Bartley Cohen Litigation Lawyers for the fifth defendant Kennedys for the sixth defendant DibbsBarker for the seventh defendant James Conomos Lawyers for the eighth defendant

Qdeck/Sunleisure	$30,000,000	pp 100-101	p 14
MFS Blue Sky Trust	$45,097,529	pp 100-101	p 14

MFS RAP	$4,883,771.04	pp 112-113	p 13
Young Village Estates	$23,683,612.88	pp 130-131	p 13
Copperfield	$10,000,000	p 87	p 13
Investment	$10,102,271.36	p 95	p 13
Enterprises
Southport Holdings	$11,057,278.66	pp 122-123	p 13
SPV Pty Ltd	$2,773,066.06	pp 126-127	p 13