Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd

[2008] NSWSC 1224

Reported Decision: 69 ACSR 1

New South Wales

Supreme Court

CITATION:	ASIC v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	5 – 8, 12 – 15 May, 10 – 12, 16 – 19 June, 4, 5 & 14 August, 1 - 2, 4 - 5 & 25 September 2008
JUDGMENT DATE :	21 November 2008
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Some claims that third defendant committed breaches of his duties as a director established, others rejected.
CATCHWORDS:	APPEAL AND NEW TRIAL [102] – Appeal – General principles – Points and objections not taken below – When not allowed to be raised on appeal – Questions not raised on pleadings or in argument – Particular cases – Other matters – Claims not encompassed in statement of claim – Whether relief on those claims may be granted – Whether parties choose to fight the case on issues chosen at the trial - CORPORATIONS [1245], [1246], [1247] – Management and administration – Duties and liabilities of officers of corporations – Fiduciary and related statutory duties – Of care, skill and diligence – To act honestly – Duties involving conflicts of interest – Generally – Ambit of foregoing duties - TRADE AND COMMERCE [80] – Trade Practices and related matters – Consumer protection – Misleading, deceptive or unconscionable conduct – Character and attributes of conduct – Representations – As to future matters – Reasonable grounds for making representations – Evidentiary burden on representor to prove reasonable grounds – TPA s 51A, ASIC Act s 12BB – Sections do not apply where it is alleged that director caused or permitted company to make the impugned representations.
LEGISLATION CITED:	Australian Securities and Investments Commission Act 2001 (Cth) ss 12BAA, 12BAB, 12BB, 12DA, 12DB, 12DF, 12GB, 12GF & 33 Companies (New South Wales) Code s 229 Corporations Act 2001 (Cth) ss 9, 45A, 95A, 180 – 182, 191 – 195, 206C, 257A, 285, 286, 314, 319, 533(2), 589, 601ED, 700, 706, 708, 708A, 728, 729, 734, 761A, 761G, 764A, 766A, 766B, 911A, 911B, 1010A, 1018A, 1041H, 1041I, 1101B, 1305, 1311, 1317E, Corporations Law s 232 Evidence Act 1995 s 140 Trade Practices Act 1974 (Cth) s 51A Uniform Civil Procedure Rules 2005 rr 14.28, 28.1, 29.9
CATEGORY:	Principal judgment
CASES CITED:	Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 ASIC v Elm Financial Services Pty Ltd [2005] NSWSC 1033 ASIC v Enterprise Solutions 2000 Pty Ltd [2003] 1 Qd R 135 ASIC v Sydney Investment House Equities Pty Ltd [2008] NSWSC 796 ASIC v Sydney Investment House Equities Pty Ltd [2008] NSWSC 814 Australian Competition & Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276 Australian Securities and Investments Commission v Adler (2002) 168 FLR 253 Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373 Australian Securities and Investments Commission v Online Investors Advantage Incorporated (2005) 194 FLR 449 Australian Securities and Investments Commission v Oxford Investments (Tasmania) Pty Ltd [2008] FCA 980 Australian Securities and Investments Commission v Rich (2005) 191 FLR 385 Australian Securities and Investments Commission v Takaran Pty Ltd (2002) 43 ACSR 46 Australian Securities and Investments Commission v Warrenmang Ltd (2007) 63 ACSR 623 Australian Softwood Forests Pty Ltd v Attorney-General (NSW); Ex Relatione Corporate Affairs Commission (1981) 148 CLR 121 Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 Brian Cassidy Electrical Industries Pty Ltd (in prov liq) v Attalex Pty Ltd [1984] 3 NSWLR 52 Briginshaw v Briginshaw (1938) 60 CLR 336 Burton v Arcus (2006) 32 WAR 366 Clowes v Federal Commissionier of Taxation (1953) 91 CLR 209 Daniels v Anderson (1995) 37 NSWLR 438 Dare v Pulham (1982) 148 CLR 658 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) (1997) 26 ACSR 544 Fasold v Roberts (1997) 70 FCR 489 Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547 FGT Custodians Pty Ltd v Fagenblat [2003] VSCA 33 Gamble v Hoffman (1997) 24 ACSR 369 Gate Gourmet Australia Pty Ltd (In Liq) v Gate Gourmet Holding AG [2004] NSWSC 149 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 Henjo Investments Pty Limited v Collins Marrickville Pty Limited (No 1) (1988) 39 FCR 546 Hope v Bathurst City Council (1980) 144 CLR 1 Hungier v Grace (1972) 127 CLR 210 In re Griffin: ex parte the Board of Trade (1890) 60 LJQB 235 Iso Lilodw’ Aliphumeleli Pty Ltd (in liq) v Commissioner of Taxation (Cth) (2002) 42 ACSR 561 Lewis v Doran (2004) 184 FLR 454; (2005) 219 ALR 555 Linton v Telnet Pty Ltd (1999) 30 ACSR 465 Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599 Maguire v Makaronis (1997) 188 CLR 449 Minlabs Pty Ltd v Assaycorp Pty Ltd (2001) 37 ACSR 509 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 New Cap Reinsurance Corporation Ltd (in liq) v A E Grant [2008] NSWSC 1015 Permanent Building Society (in liq) v McGee (1993) 11 ACSR 260 Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 Re Allebart Pty Ltd (in liq); Re Home Holdings Pty Ltd (in liq) [1971] 1 NSWLR 24 Re Market Wizard Systems (UK) Ltd [1998] 2 BCLC 282 Re PFS Wholesale Mortgage Corporation Pty Ltd; Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (2006) 57 ACSR 553 Rejfek v McElroy (1965) 112 CLR 517 Sandell v Porter (1966) 115 CLR 666 Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213 The Queen v Byrnes; The Queen v Hopwood; Byrnes v The Queen (1995) 183 CLR 501 Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1 Walker v Wimborne (1976) 137 CLR 1 Wanted World Wide (Aust) Ltd v Commissioner of Taxation (Cth) (2004) 139 FCR 205 Wright v TNT Management Pty Limited (1989) 15 NSWLR 679
TEXTS CITED:	Austin and Ramsay, Ford’s Principles of Corporations Law (online edition) [8.080]
PARTIES:	Australian Securities and Investments Commission (P) Sydney Investment House Equities Pty Ltd (D1) Sydney Investment House Capital Ltd (D2) Edwin James Goulding (D3) Stephen Geagea (D4) Sydney Investment House Pty Ltd (D5) Sydney Investment House (Newcastle) Pty Ltd (D6) Sydney Investment House (Beaconsfield) Pty Ltd (D7) Melbourne Investment House Pty Ltd (D8) Melbourne Investment House (Hawthorn) Pty Ltd (D9) Melbourne Investment House (Collingwood) Pty Ltd (D10)
FILE NUMBER(S):	SC 2941/06
COUNSEL:	A J McInerney & D J Barnett (P) In Person (D3) No other appearances
SOLICITORS:	Kim Turner, Solicitor (P) In Person (D3) No other appearances

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 21 NOVEMBER 2008

2941/06 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v SYDNEY INVESTMENT HOUSE EQUITIES PTY LTD & ORS

JUDGMENT (amended 28 November 2008 and 4 March 2009)

1 HIS HONOUR:

TABLE OF CONTENTS

1	CONTENTS	[1]
2	INTRODUCTION	[2], [3]
3	FACTUAL FRAMEWORK	[4] – [16]
4	THE CONTRAVENTIONS ALLEGED	[17] – [21]
5	THE LAW	[22]
5.1	Breaches of directors’ duties	[23] – [48]
5.2	Indirect breaches of directors’ duties	[49] – [51]
5.3	Solvency	[52] – [57]
5.4	Evidence: company records	[58] – [63]
5.5	Evidence: standard of proof	[64] – [65]
5.6	Orders which depart from the pleadings	[66] – [74]
6	CREDIT OF WITNESSES	[75] – [93]
7	MR GOULDING’S GENERAL SUBMISSIONS	[94] – [98]
8	THE INDIVIDUAL BREACHES	[99]
8.1	The making of loans	[100] – [184]
8.2	“Roll overs”	[185] – [202]
8.3	Misappropriations	[203] – [252]
8.4	Conduct by Equities of unregistered managed investment scheme	[253] – [271]
8.5	Capital’s failures to report	[272] – [282]
8.6	Carrying on by Equities and Capital of unauthorised financial services business	[283] – [385]
8.7	Provision of unauthorised financial services	[386] – [401]
8.8	Advertising by Equities of financial products without complying with requirements	[402] – [421]
8.9	Misleading or deceptive conduct by Equities and Capital	[422] – [473]
8.10	Ad hoc dealings with investors by Capital, Newcastle, Melbourne and Hawthorn	[474] – [503]
9	FINDINGS SOUGHT	[504] – [514]
10	CONCLUSION	[515] – [535]
Ann A	Control and Ownership of SIH Group and Goulding Trusts	[6]
Ann B	Equities Loan Agreements entered into by investors in Equities	[9]
Ann C	“Roll over” Transactions	[14]
Ann D	Intercompany Loans and Drawdowns	[15]
Ann E	Money paid to Mr Goulding by Category, Year and Company	[17]
Ann F	Examples of Payments from SIH Group Bank Accounts apparently for Mr Goulding’s Private Purposes	[17]
Ann G	Misrepresentations Ultimately Relied on by ASIC	[422]

2 INTRODUCTION

2 In these proceedings, the plaintiff (“ASIC”) seeks declarations and orders against the third defendant (“Mr Goulding”). The declarations sought are that Mr Goulding was guilty of various breaches of the Corporations Act 2001 (Cth) (“the CA”) and of the Australian Securities and Investments Commission Act 2001 (Cth) (“the ASIC Act”) in his conduct as director of various companies in the Sydney Investment House Group (“the SIH Group”) and orders that for an appropriate period he be disqualified from managing corporations and restrained from providing financial services in Australia. No claim is made for the imposition of penalties or for orders for the payment of compensation.

3 The proceedings were originally brought by ASIC against eight companies in the SIH Group, Mr Goulding and the fourth defendant (“Mr Geagea”). Mr Goulding and Mr Geagea were or acted as directors of all or most of those companies. The companies are now all in liquidation and Quentin Olde (“Mr Olde”) is the liquidator of each. ASIC does not proceed against the corporate defendants, as this course would be futile in view of their liquidation. The trial conducted before me commenced against Mr Goulding and Mr Geagea only. On the fourth day of the trial the proceedings were settled as between ASIC and Mr Geagea and I ordered the separate decision of the questions between them so that effect could be given to that settlement before a different Judge, in view of the fact that the proceedings against Mr Goulding were to continue before me. Hammerschlag J in fact made orders giving effect to that settlement on 9 May 2008. The proceedings against Mr Goulding continued to the close of ASIC’s case. Mr Goulding then made an application for the dismissal of the proceedings under r 29.9(1)(a) of the Uniform Civil Procedure Rules 2005 (“the UCPR”). ASIC declined to argue the question raised by the application. Mr Goulding submitted that the Court had a discretion to allow the question to be argued, although ASIC had declined to do so. I ruled that the Court had no such discretion: ASIC v Sydney Investment House Equities Pty Ltd [2008] NSWSC 796. Mr Goulding then applied under r 29.10 for judgment in his favour on the plaintiff’s claim generally. That application I dismissed: ASIC v Sydney Investment House Equities Pty Ltd [2008] NSWSC 814. Mr Goulding then announced that he did not propose to call any evidence and specifically announced that he did not seek leave under r 29.10(4) to call evidence despite the dismissal of his r 29.10 application. Both parties have subsequently presented me with written and oral submissions on ASIC’s case. A very large part of ASIC’s case falls to be proved by the evidence of Mr Olde. Mr Olde was the subject of vigorous attack as to his credit by Mr Goulding, which I shall deal with below. But Mr Olde’s evidence, like the other evidence led by ASIC, remains uncontradicted.

3 FACTUAL FRAMEWORK

4 I have drawn on ASIC’s written submissions for the following statement of facts that are undisputed.

5 The defendants to the proceedings are as follows:

(a) 1st defendant – Sydney Investment House Equities Pty Ltd (“Equities”);

(b) 2nd defendant – Sydney Investment House Capital Ltd (“Capital”);

(c) 3rd defendant – Mr Goulding;

(d) 5th defendant – Sydney Investment House Pty Ltd (“House”);

(e) 6th defendant – Sydney Investment House (Newcastle) Pty Ltd (“Newcastle”);

(f) 7th defendant – Sydney Investment House (Beaconsfield) Pty Ltd (“Beaconsfield”);

(g) 8th defendant – Melbourne Investment House Pty Ltd (“Melbourne”);

(h) 9th defendant – Melbourne Investment House (Hawthorn) Pty Ltd (“Hawthorn”); and

(i) 10th defendant – Melbourne Investment House (Collingwood) Pty Ltd (“Collingwood”).

6 The first, second and fifth to tenth defendants, together with the trusts known as the WSS Unit Trust (“the WSSUT”), the NC41 Hybrid Trust (“the NC41 Trust”), the NC49 Hybrid Trust (“the NC49 Trust”) and the NC13 Hybrid Trust (“the NC13 Trust”), are collectively referred to as “the SIH Group”. The ownership and structure of the SIH Group is summarised in Annexure A to this judgment, which is based on Exhibit T in the proceedings. In summary, it appears from Annexure A that:

(a) Mr Goulding was a director (in most cases the sole director) and either directly or indirectly (through House) a shareholder of the corporate members of the SIH Group; and
(b) House or Newcastle was the trustee and a beneficiary of the various trusts that formed part of the SIH Group.

7 On or about 26 March 2003, Equities issued the Equities Information Memorandum. The Equities Information Memorandum summarised the terms of an “investment offer”, pursuant to which investors would make loans to Equities of moneys to be on lent to “Approved Development Borrowers”. The expression “Approved Development Borrower” was defined in the “Loan Agreement Terms” to mean “a party approved by the Borrower for the purposes of lending moneys for the development of a property development project”.

8 The Equities Information Memorandum annexed a standard form of Loan Agreement Execution Deed to be executed by each investor and Equities. Items 9(a) and (c) of the standard form Loan Agreement Execution Deed state that “the loan monies may only be used by the Approved Development Borrower(s) for the purposes of”, in effect:

(a) acquiring property or rights to property;
(b) improving property acquired;
(c) paying costs associated with or incidental to the acquisition, improvement, financing, realisation or marketing of property acquired; and
(d) the discharge or repayment of liabilities of Approved Development Borrowers “in connection with a property development project undertaken by the Approved Development Borrower(s)”.

9 Between about 13 May 2003 and 1 November 2004, Equities entered into some 69 Loan Agreement Execution Deeds with investors. Those Deeds are in evidence. Equities raised approximately $5.2 million pursuant to loans advanced under those Deeds. The loan agreements are tabulated in Annexure B to this judgment.

10 In about October 2004, Capital issued a Prospectus (“the Capital Prospectus”). The Capital Prospectus provided that “The Sydney Investment House Capital Fund will primarily invest all funds raised from this prospectus into the financing of, or in taking an equity position in property development projects”. It was stated in the Capital Prospectus that such “investments are also not limited to any one [sic] or group of property developers or to any geographic location, other than to within Australian states and territories”.

11 The Capital Prospectus further provided that:

“The Sydney Investment House Capital Fund shall only make investments after consideration has been given by the Sydney Investment House Investment Team …

No investment decision is binding against Sydney Investment House Capital Ltd as a result of a recommendation from the Investment Team; however, Sydney Investment House Capital Ltd must have received a Recommendation from the Investment Team prior to being able to place an investment of Sydney Investment House Investment [sic] Ltd funds.

The Sydney Investment House Fund may invest in projects where directors have a direct or indirect interest provided that the investment is made on an arms [sic] length basis, the directors comply with the Corporations Act 2001 in regard to disclosures, board meeting presence and voting, and similarly the relevant directors abstain from decisions of the Investment Team where there are material conflicts of interest”.

12 Provision was made in the Investment Plan, parts of which were extracted in the Capital Prospectus, for the functions and meetings of the Investment Team. It was a requirement for meetings of the Investment Team to be formally minuted and such minutes were required to include “any records, recommendations and actions required”.

13 Between about November 2004 and June 2005, Capital issued approximately $7.8 million of preference shares to a large number of investors under the Capital Prospectus.

14 During the same period, ASIC originally alleged that 41 investors in Equities “rolled over” their investment in Equities in an amount of approximately $5.7 million into shares in Capital. The roll overs concerning which complaint was made were ultimately reduced to 31. In summary, the procedure was as follows. The loan that Equities owed to each “roll over” investor was cancelled. The “roll over” investor was issued shares in Capital. No cash changed hands between either the investor and Capital or Equities and Capital as “consideration” for Capital issuing the shares. However, a form of “consideration” or benefit to Capital was recognised in the MYOB records of the SIH Group in the form of the recording of a “transfer” by Equities to Capital of the benefit of inter group receivables and the creation of a new receivable owing to Capital from Equities. A table collating the documentary evidence relating to the 31 “roll overs” ultimately relied on is Annexure C to this judgment.

15 During the period 2003 to 2006, Equities, Capital and various other members of the SIH Group entered into loan agreements with, and advanced funds to, other members of the SIH Group. A table prepared by ASIC showing the loan agreements entered into and the drawdowns or advances actually made is attached as Annexure D to this judgment. This is divided into two sections, of which Section A deals with loans by Equities and Section B deals with loans by Capital. As the table was originally presented by ASIC, it contained a Section C that dealt with loans by other companies in the SIH Group, as these were also the subject of complaint by ASIC during the course of the proceedings. However, ultimately, when it was pointed out that this complaint was not the subject of appropriate pleading allegations in the fifth further amended statement of claim (“the statement of claim”), this portion of the claim was abandoned and only Sections A and B remain.

16 Mr Olde was appointed provisional liquidator of the corporate members of the SIH Group on 27 October 2006 and 21 November 2006 and liquidator of those companies on 24 November 2006 (in the case of Collingwood) and 4 December 2006 (in all other cases). On 21 November 2006, Mr Olde was also appointed receiver and manager of trusts associated with the SIH Group and Mr Goulding, specifically the Alcorn Trust, the Discretionary Property Trust (“the DPT”), the Goulding Family Trust (“the GFT”), the WSSUT, the NC13 Trust, the NC41 Trust, and the NC49 Trust.

4 THE CONTRAVENTIONS ALLEGED

17 ASIC alleges that the Court should find that Mr Goulding committed the following breaches of the CA and the ASIC Act:

(1) Mr Goulding acted in breach of ss 180 - 182 of the CA in causing or permitting Equities and Capital to make loans and advance moneys pursuant to those loans to other members of the SIH Group. These loans are alleged to have been made in circumstances where the borrowers were insolvent or virtually insolvent, so that there was no reasonable prospect that the loans would be repaid. It is also alleged that the loans were made in breach of procedures laid down in the Equities Information Memorandum and the Capital Prospectus for the making of such loans. The loans and advances are those summarised in Annexure D to this judgment.

(2) Equities and Capital entered into “roll over transactions” with investors, whereby investors in effect exchanged their rights to repayment of their investments in Equities for shares in Capital and Mr Goulding acted in breach of ss 180 - 182 of the CA in causing or permitting Capital to issue shares in this fashion.
(3) Mr Goulding acted in breach of ss 180 - 182 of the CA by misappropriating a total of $4.5 million, or in the alternative $3.5 million, from various companies in the SIH Group. ASIC proffered a schedule that is Annexure E to this judgment evidencing the moneys Mr Goulding misappropriated from each relevant entity during each relevant financial year. This schedule is summarised in table form in [209] below. Annexure F contains a non exhaustive list, drawn from bank statements that are in evidence, of withdrawals, apparently for Mr Goulding’s private purposes.
(4) Mr Goulding acted in breach of ss 180 and 181 of the CA by causing or permitting Equities to conduct an unregistered managed investment scheme in breach of s 601ED of the CA.
(5) Mr Goulding acted in breach of ss 180 and 181 of the CA by causing or permitting Capital to fail to report to investors and to ASIC in breach of ss 314 and 319 of the CA.
(6) Mr Goulding acted in breach of ss 180 and 181 of the CA by causing or permitting Equities and Capital to carry on a financial services business without the appropriate authorisation in breach of ss 911A and 911B of the CA.
(7) In breach of s 911B of the CA Mr Goulding provided financial services without appropriate authorisation.
(8) Mr Goulding acted in breach of ss 180 and 181 of the CA by causing or permitting Equities to advertise financial products without complying with s 1018A of the CA.
(9) Mr Goulding acted in breach of ss 180 and 181 of the CA by causing or permitting Equities and Capital to engage in misleading or deceptive conduct contrary to ss 12DA, 12DB and 12DF of the ASIC Act and s 1041H of the CA.
(10) Mr Goulding acted in breach of ss 180 - 182 of the CA by causing or permitting Capital, Newcastle, Melbourne and House to enter into various ad hoc dealings with investors.

18 The breaches relied on by ASIC may be tabulated as set out below. The sections referred to are of the CA unless otherwise specified. PWS refers to ASIC’s written submissions.

No	Breach	Sec	PWS
1	Causing or permitting loans to entities which were insolvent or in breach of procedures laid down for making such loans	180 - 182	120 - 183
2	Causing or permitting Capital to issue shares pursuant to “roll overs”	180 - 182	184 – 194
3	Misappropriations	180 - 182	195 - 246
4	Causing or permitting conduct by Equities of unregistered managed investment scheme	180, 181, 601ED	255 - 275
5	Causing or permitting failure by Capital to report to investors and to ASIC	180, 181, 314, 319	276 - 284
6	Causing or permitting Equities and Capital to carry on financial services business without appropriate authorisation	180, 181, 911A	285 – 356
7	Provision of financial services without appropriate authorisation	911B	357 - 368
8	Causing or permitting Equities to advertise financial products without complying with requirements	180, 181, 1018A	Supplementary 7 – 23
9	Causing or permitting Equities and Capital to engage in misleading or deceptive conduct	180, 181, 728, 1041H & ASIC Act 12DA, 12DB, 12DF	Supplementary 24 - 85
10	Causing or permitting Capital, Newcastle, Melbourne and House to enter into ad hoc dealings with investors	180 - 182	Supplementary 86 – 123

19 If Breaches 6 and 7 are established, this conduct will empower the Court to make an order restraining Mr Goulding from providing financial services in Australia under s 1101B of the CA. If breaches of ss 180 - 182 are established, this will enliven the power of the Court to make declarations of civil penalty contraventions under s 1317E of the CA. That in turn will empower the Court, upon a subsequent “penalty” hearing, to make orders under s 206C of the CA disqualifying Mr Goulding from managing corporations.

20 The precise findings now sought by ASIC against Mr Goulding are set out under the heading Findings Sought at [504] - [514] below.

21 The detail in which those proposed findings are set out is driven in part by s 1317E of the CA, which provides as follows:

“(1) If a Court is satisfied that a person has contravened 1 of the following provisions, it must make a declaration of contravention:
(a) subsections 180(1) and 181(1) and (2), 182(1) and (2), 183(1) and (2) (officers’ duties)
……

These provisions are the civil penalty provisions .

Note: Once a declaration has been made ASIC can then seek a pecuniary penalty order (section 1317G) or (in the case of a corporation/scheme civil penalty provision) a disqualification order (section 206C).

(2) A declaration of contravention must specify the following:
(a) the Court that made the declaration;
(b) the civil penalty provision that was contravened;
(c) the person who contravened the provision;
(d) the conduct that constituted the contravention;
(e) if the contravention is of a corporation/scheme civil penalty provision - the corporation or registered scheme to which the conduct related.”

5 THE LAW

22 This section deals with some areas of law that are applicable to more than one of the breaches alleged and call for discussion at a little length. Matters of law that are straightforward and are relevant to individual breaches are dealt with in the sections relating to those particular breaches.

Section 180

23 Section 180(1) of the CA provides:

“A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:
(a) were a director or officer of a corporation in the corporation’s circumstances; and
(b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.”

24 Section 180 replaces s 232 of the Corporations Law, which in turn replaced s 229 of the Companies (New South Wales) Code, as a statutory restatement of the duties that the general law of negligence imposed on a company director.

25 The following statement by Clarke and Sheller JJA in the Court of Appeal in Daniels v Anderson (1995) 37 NSWLR 438 at 505 concerning the replaced s 232 of the Corporations Law applies equally to s 180:

“We are of opinion that a director owes to the company a duty to take reasonable care in the performance of the office. As the law of negligence has developed no satisfactory policy ground survives for excluding directors from the general requirement that they exercise reasonable care in the performance of their office. A director’s fiduciary obligations do not preclude the common law duty of care. Modern statutory company law points to the existence of the duty. In some circumstances the duty will require action. The concept of a sleeping or passive director has not survived and is inconsistent with the requirements of current company legislation such as, at the relevant time, s 229 and s 269 of the Companies (New South Wales) Code …

A person who accepts the office of director of a particular company undertakes the responsibility of ensuring that he or she understands the nature of the duty a director is called upon to perform. That duty will vary according to the size and business of the particular company and the experience or skills that the director held himself or herself out to have in support of appointment to the office. None of this is novel. It turns upon the natural expectations and reliance placed by shareholders on the experience and skill of a particular director. The duty is a common law duty to take reasonable care owed severally by persons who are fiduciary agents bound not to exercise the powers conferred upon them for private purpose or for any purpose foreign to the power and placed, in the words of Ford and Austin, Ford’s Principles of Corporations Law, 6th ed (1992), at 429, at the apex of the structure of direction and management. The duty includes that of acting collectively to manage the company. Breach of the duty will found an action for negligence at the suit of the company. Negligent directors are tortfeasors within the meaning of s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946.”

26 The most compendious statement of the relevant principles is that made in numbered propositions by Santow J in Australian Securities and Investments Commission v Adler (2002) 168 FLR 253 at [372].

27 The central principles were recently summarised by Brereton J in Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373 at [99] - [101] in the following terms:

“[99] The statutory duty imposed by s 180(1) reflects, and to some extent refines, that which obtains at general law. As Santow J (as his Honour then was) explained in ASIC v Adler (2002) 168 FLR 253; 41 ACSR 72; [2002] NSWSC 17 at [372], both the common law and equity imposes on directors a duty of care and skill ( Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 109; 14 ACSR 109; Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438; 118 FLR 248; 16 ACSR 607), the content of which is essentially the same as the statutory duty: Sheahan v Verco (2001) 79 SASR 109 at 134; 37 ACSR 117 at 141; [2001] SASC 91 (Mullighan J); Daniels v Anderson at NSWLR 603; FLR 408–9; ACSR 756–7 (Powell JA); see also Australian Innovation Ltd v Petrovsky (1996) 21 ACSR 218 at 222 (Lockhart J). Similarly, the statutory duties imposed by ss 181 and 182 reflect, and to some extent refine, corresponding obligations of directors under the general law.

[100] In determining whether a director has exercised reasonable care and diligence, as s 180(1) expressly contemplates, the circumstances of the particular corporation concerned are relevant to the content of the duty. These circumstances include the type of company, the provisions of its constitution, the size and nature of the company’s business, the composition of the board, the director’s position and responsibilities within the company, the particular function the director is performing, the experience or skills of the particular director, the terms on which he or she has undertaken to act as a director, the manner in which responsibility for the business of the company is distributed between its directors and its employees, and the circumstances of the specific case: Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 at 427; (Romer LJ); Commonwealth Bank of Australia v Friedrich (1991) 5 ACSR 115 at 125 (Tadgell J); Australian Securities Commission v Gallagher (1993) 11 WAR 105; 10 ACSR 43; 11 ACLC 286; Daniels v Anderson at NSWLR 504–5; FLR 310; ACSR 667–8; ASIC v Adler at [372]; explanatory memorandum to the CLERP Bill 1999: para 6.75.

[101] Directors are not required to exhibit a greater degree of skill in the performance of their duties than may reasonably be expected for persons of commensurate knowledge and experience, in the relevant circumstances: ASC v Gallagher . And while directors are required to take reasonable steps to place themselves in a position to guide and monitor the management of the company ( Daniels v Anderson at NSWLR 495–505; FLR 300–11; ACSR 659–668), they are entitled to rely upon others, at least except where they know, or by the exercise of ordinary care should know, facts that would deny reliance: Re City Equitable Fire Insurance Co; Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11; 11 ACSR 785 at 856–8; Daniels v Anderson at NSWLR 502–4; FLR 308–10; ACSR 665–6; Re Property Force Consultants Pty Ltd [1997] 1 Qd R 300; (1995) 13 ACLC 1051 (QSC).”

28 One way in which the duty of care owed pursuant to s 180 may be breached is by causing the company to enter into transactions that expose it to risks without the prospect of producing any benefit for the company.

29 In the Federal Court in Gamble v Hoffman (1997) 24 ACSR 369, Carr J considered the relevant duty of care owed by directors to a company, and whether their conduct constituted negligence for the purposes of s 589 of the CA. That case involved the conduct of directors who caused a company (Tallimba), of which they were in effect the only shareholders and directors, to advance moneys that were unlikely to be recovered to another company (Sunhaven), of which they were the only shareholders. At 373 – 374 Carr J said:

“In my view, the respondents’ duty of care required them to take the following steps:
1 Assess what benefit, if any, Tallimba would derive from making these payments on behalf of Sunhaven.
2 If there were any benefit so to be derived by Tallimba, to assess whether there was any reasonably foreseeable prospect of detriment to Tallimba?
If there was a reasonable prospect of detriment to Tallimba the court has to decide whether that prospect of detriment outweighed the likely benefit to the company to the extent that making the payments amounted, in all the circumstances, to negligence? I adopt, respectfully, the approach along these lines suggested by Ipp J (with whom Malcolm CJ agreed) in Vrisakisv ASC (1993) 9 WAR 395 at 449-50. At the core of this question was the prospect of recovering the money.”

His Honour concluded at 381:

“In my view, the respondents’ conduct in causing Tallimba to make the above payments fell short of their duty to take reasonable care in the performance of their office as directors. In summary, I find that there was no benefit which Tallimba would derive from making the payments. There was the relatively minor detriment of interest incurred or interest lost on the monies paid out. But the most important factor was the almost inevitable loss of these amounts by virtue of Sunhaven's inability to repay. The respondents were well aware of that inability.”

See also the decision of Roberts-Smith J in the Supreme Court of Western Australia in Minlabs Pty Ltd v Assaycorp Pty Ltd (2001) 37 ACSR 509 at 518.

30 One aspect of s 180 (which overlaps with s 181 and s 182) that needs to be borne in mind is the duties of directors in circumstances of actual or potential conflicts between the interests of the company and personal interest. As Santow J stated in his Proposition (14) in ASIC v Adler supra:

“(14) Where there is a transaction involving the potential for conflict between interest and duty, as here arose, the duty of care and diligence falls to be exercised in a context requiring special vigilance, calling for scrupulous concern on the part of those officers who become aware of that transaction to ensure that any necessary corporate approvals are obtained and safeguards put in place.”

31 In Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1 the Court of Appeal rejected the submission that the degree of negligence that must be established to constitute a breach of the statutory duty is higher than that which would support a finding of negligence at common law: per Spigelman CJ at [63], [152].

Section 181

32 Section 181(1) of the CA relevantly provides:

“A director or other officer of a corporation must exercise their powers and discharge their duties:
(a) in good faith in the best interests of the corporation; and
(b) for a proper purpose.”

This statutory duty reflects the duty owed by a director to the company under the general law relating to fiduciary duties.

33 Its general ambit was stated as follows by Brereton J in ASIC v Maxwell supra at [106]:

“As to s 181(1), which requires a director or other officer of a corporation to exercise his or her powers and discharge his or her duties in good faith in the best interests of the corporation, and for a proper purpose, in Chew v R (1991) 4 WAR 21; 5 ACSR 473, Malcolm CJ (at WAR 47; ACSR 499) summarised the requirements of the duty to act in good faith as including that directors: (1) must exercise their powers in the interests of the company, and must not misuse or abuse their power; (2) must avoid conflict between their personal interests and those of the company; (3) must not take advantage of their position to make secret profits; and (4) must not misappropriate the company’s assets for themselves.”

34 It is to be noted that, unlike the former s 232 of the Corporations Law, there is no requirement that the director act honestly. Section 181, when read with s 184, makes it clear that there can be a breach of s 181 where the conduct of the director is not in the interests of the corporation, even if there is no subjective dishonesty.

35 One matter at the heart of the duty under s 181, where the company in question is one of a group of companies, is that each company is a separate legal entity that has its own interests, to which proper regard must be paid.

36 Another matter to be borne in mind in the operation of s 181 is that where a company is insolvent, or its solvency is in doubt, the “corporation” to whose best interests regard must be had includes its creditors.

37 The points in both the immediately preceding paragraphs were dealt with by Mason J (with whom Barwick CJ agreed) in Walker v Wimborne (1976) 137 CLR 1 at 6 – 7 as follows:

“Indeed, the emphasis given by the primary judge to the circumstance that the group derived a benefit from the transaction tended to obscure the fundamental principles that each of the companies was a separate and independent legal entity, and that it was the duty of the directors of Asiatic to consult its interests and its interests alone in deciding whether payments should be made to other companies. In this respect it should be emphasized that the directors of a company in discharging their duty to the company must take account of the interest of its shareholders and its creditors. Any failure by the directors to take into account the interests of creditors will have adverse consequences for the company as well as for them. The creditor of a company, whether it be a member of a ‘group’ of companies in the accepted sense of that term or not, must look to that company for payment. His interests may be prejudiced by the movement of funds between companies in the event that the companies become insolvent.”

38 In a group situation, benefits to the company indirectly, which accrue to the company through benefits to the group as a whole, if they are real, may be taken into account. This situation was recently dealt with in the Court of Appeal in Lewis v Doran (2005) 219 ALR 555, where Giles JA (with whom Hodgson and McColl JJA agreed) said at [148]:

“It was necessary for the directors to consider the interests of Constructions, as a separate legal entity, in deciding whether to participate in the debt restructuring: Walker v Wimbourne [sic] (1976) 137 CLR 1 at 6–7, 3 ACLR 529 at 532. It has nonetheless been recognised that a transaction benefiting one company in a group may have derivative benefits for another company in the group, even if the companies are not parent and subsidiary. In Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; 93 ALR 385; 2 ACSR 161 Brennan J observed (at CLR 183; ALR 409; ACSR 185) that ‘it may be for the benefit of solvent companies in a group to guarantee the liabilities of a holding company in order to benefit the guarantor companies as well as other members of the group’. In Equiticorp Finance Ltd (in liq) v Bank of New Zealand Clarke and Cripps JJA said (at NSWLR 146–7; ACSR 726): ‘It may be accepted, therefore, that actions carried out for the benefit of the group as a whole may, in particular circumstances, be regarded as benefiting as well one or more companies in the group. This may occur even where, for instance, a company is providing a guarantee for its holding company or another company in the group. Similarly a transaction carried out for the benefit of one of the companies in the group, company A, may be seen to be for the benefit of another company in the group, company B.’”

39 Thus, the statement in a leading corporate law commentary (Austin and Ramsay, Ford’s Principles of Corporations Law (online edition) at [8.080]):

“Examples of failure to pay proper regard to the company’s separate interests frequently arise in cases about the affairs of small proprietary companies. Controlling shareholders of such companies sometimes treat the company as if its assets are the same as assets they hold in their own names. They may improperly try to cause the company to incur obligations so that it is in a position to provide personal benefits to directors or shareholders. Directors have a duty to use company resources only for the benefit of the company.”

40 The balancing exercise involved here is the same as that required under s 180, as set out in [29] above.

41 The test to be applied under s 181 is whether an intelligent and honest man in the position of the directors of the company could not have reasonably believed that the transaction was in the best interests of the company having in mind the interests of the company’s creditors: Linton v Telnet Pty Ltd (1999) 30 ACSR 465 at 471 per Giles JA (with whom Beazley JA and Sheppard AJA agreed).

42 Thus, in Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) (1997) 26 ACSR 544 at 585 Hansen J said:

“Assuming for the moment that the level of security was inadequate and that the group’s financial position was perilous, the risk of loss which FFC was assuming would seem to be great. In those circumstances, can it seriously be suggested that an intelligent and honest director of FFC would bona fide believe that the loan was in the best interests of FFC? I think not.“

43 In order to establish a breach of s 181, it has been said that it is necessary to establish that the director acted with a consciousness that what was being done was not in the best interests of the company concerned: ASIC v Maxwell per Brereton J at [108], [109]. But consciousness in this sense means knowledge of the facts that make the conduct not in the best interests of the company; it is not necessary to establish knowledge that the conduct constituted a breach of the law or was improper: The Queen v Byrnes; The Queen v Hopwood; Byrnes v The Queen (1995) 183 CLR 501 at 514 - 515 per Brennan, Deane, Toohey and Gaudron JJ.

Section 182

44 Section 182(1) of the CA provides:

“A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.”

45 In ASIC v Adler at [458], Santow J set out propositions summarising the law in relation to s 182, including the following:

“(1) causing a company to enter into an agreement which confers unreasonable personal benefits on a director is a breach of ss 180, 181 and 182;
……
(4) moreover it is sufficient to establish that the conduct of a company was carried out in order to gain an advantage for that director or someone else without also having to establish that an advantage was actually achieved: Chew v The Queen (1992) 173 CLR 626 at 633 per Mason CJ, Brennan, Gaudron and McHugh JJ;
(5) where a director acts in relation to a transaction in which he or a party to whom the director owes a fiduciary duty stands to gain a benefit without making adequate disclosure of his interest, that director acts ‘improperly’ within the meaning of s 182(1): R v Byrnes (1995) 183 CLR 501 at 516–17. That is likely to lead also to a conclusion of lack of good faith for s 181 purposes …;
(6) finally, impropriety for the purposes of s 182(1) is to be determined objectively and does not depend upon the director’s consciousness of impropriety. It consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case: R v Byrnes (at 514–15) per Brennan, Deane, Toohey and Gaudron JJ.”

46 Santow J’s observations in his Proposition (14) in [372] concerning the need in conflict of interest situations for “special vigilance” and “scrupulous concern” should also be borne in mind.

47 The analysis by Anderson J in Permanent Building Society (in liq) v McGee (1993) 11 ACSR 260 at 289 – 290 is applicable to the circumstances surrounding the making of the Capital Loans. That case concerned proceedings brought by the plaintiff against, relevantly, a director of the plaintiff, by the name of Wheeler, in connection with a loan which the plaintiff made to another company controlled by Wheeler. Anderson J said:

“In my opinion, it is quite clear that Wheeler did place himself in a position of conflict. It is true that he did not actually participate in the meeting of the plaintiff’s board that finally resolved to make the loan. However, this is not a case in which mere disclosure of interest and abstention from voting was sufficient. He must have known that, as things stood, Capital Hall was quite unable to service the loan or to repay it. He was in a better position than Nizzola and McGee to appreciate that fact. Under those circumstances, it was his duty to take positive steps to protect the interests of the plaintiff. At the very least, he was under an obligation to make full and frank disclosure of the extent of Capital Hall’s financial incapacity at that time. There is nothing to show that he did that. However, I think his duty went further than that. He was in a position of power and influence in respect of both companies. There was no doubt he could have prevented the transaction proceeding. One word from him would have been enough. He should have done so. He could not escape from his continuing duty to act bona fide in the interests of the society as a whole ‘by the simple expedient of leaving the room’: Darvall v North Sydney Brick and Tile Co Ltd (1989) 16 ACLR 203, per Kirby P at 250. In my opinion he did, throughout, remain in a position of conflict and it was not overcome by his merely abstaining from participating in the formal resolutions. It was his duty to inform the plaintiff’s board that Capital Hall was not in a position to repay an advance of $1.5m should it be made, nor was it in a position to fulfil its obligations as to payment of interest, and that should the advance be made, there was a high risk that none of it would be recovered. As the loan was to be made to a company which was, in effect, his company, he cannot claim honesty of purpose. He came within the rule which absolutely requires a fiduciary to deal with his principal at arm’s length upon a consent obtained after full disclosure of all relevant facts: Murphy v O’Shea [1845] 2 Jones & Lat 422 per Sugden LC at 425; Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 per Gibbs J at 396; Green & Clara v Bestobell Pty Ltd [1982] WAR 1.”

48 An appeal to the Full Court of the Supreme Court of Western Australia was successful, but on grounds that did not impugn the correctness of the above propositions: Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 at 218 per Ipp J.

5.2 Indirect breaches of directors’ duties

49 The duties imposed by ss 180 and 181 of the CA are owed to the company itself. They are not directly concerned with the obligation of directors to conduct the affairs of the company in accordance with the law. But it has been recognised that causing a company to engage in a course of conduct that breaches the law may involve on the part of directors a failure to exercise reasonable care and skill and a failure to act in the best interests of the company within the meaning of s 181 of the CA.

50 In ASIC v Maxwell supra, Brereton J said at [104]:

“There are cases in which it will be a contravention of their duties, owed to the company, for directors to authorise or permit the company to commit contraventions of provisions of the Corporations Act. Relevant jeopardy to the interests of the company may be found in the actual or potential exposure of the company to civil penalties or other liability under the Act, and it may no doubt be a breach of a relevant duty for a director to embark on or authorise a course which attracts the risk of that exposure, at least if the risk is clear and the countervailing potential benefits insignificant.”

At [105] His Honour added that:

“… if a contravention of s 180(1) is to be established, it must be founded on jeopardy to the interests of the corporation, and not to protection of the interests of potential investors (though the interests of investors may be relevant to the interests of the corporation, as potential creditors).”

51 His Honour also considered the reasoning of Barrett J in ASIC v Elm Financial Services Pty Ltd [2005] NSWSC 1033. If Barrett J in ASIC v Elm at [4] differed from Brereton J’s last quoted statement, I prefer Brereton J’s view, as did Gordon J in the Federal Court in Australian Securities and Investments Commission v Warrenmang Ltd (2007) 63 ACSR 623 at [27].

5.3 Solvency

52 The locus classicus concerning the test of insolvency is in the judgment of Barwick CJ in Sandell v Porter (1966) 115 CLR 666 at 670 - 671, where his Honour said:

“Insolvency is expressed in s 95 as an inability to pay debts as they fall due out of the debtor’s own money. But the debtor’s own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirely and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor’s inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. Whether that state of his affairs has arrived is a question for the Court and not one as to which expert evidence may be given in terms though no doubt experts may speak as to the likelihood of any of the debtor’s assets or capacities yielding ready cash in sufficient time to meet the debts as they fall due.”

53 The definition of insolvency for the purposes of the CA now omits the reference to payment out of its own moneys and simply provides that a company is insolvent if it is unable to pay all its debts as and when they become due and payable: CA s 95A.

54 In Lewis v Doran (2004) 184 FLR 454 Palmer J reviewed at length whether s 95A had changed the law as laid down in Sandell v Porter. His Honour concluded at [116]:

“For those reasons I conclude that s 95A CA has changed the pre-existing law as to the definition of insolvency as stated in cases such as Sandell v Porter , and that it is no longer necessary in order to assess solvency to ascertain whether the company is able to pay all of its debts ‘from its own monies’, in the sense discussed in those cases. In my opinion, s 95A requires the Court to decide whether the company is able, as at the alleged date of insolvency, to pay all its debts as they become payable by reference to the commercial realities. If the Court is satisfied that as a matter of commercial reality the company has a resource available to pay all its debts as they become payable then it will not matter that the resource is an unsecured borrowing or a voluntary extension of credit by another party.”

55 The Court of Appeal in Lewis v Doran supra upheld Palmer J’s decision. In particular, it confirmed that, whether or not s 95A changed the law as stated in Sandell v Porter, the availability of unsecured borrowings could be taken into account in determining solvency: per Giles JA at [110].

56 The present law as to insolvency was compendiously stated by Palmer J in Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213 at [54]. One of the principles stated by his Honour is that whether or not a company is insolvent is “a question of fact to be ascertained from a consideration of the company’s financial position taken as a whole”. That statement was adopted by Davies AJ in Iso Lilodw’ Aliphumeleli Pty Ltd (in liq) v Commissioner of Taxation(Cth) (2002) 42 ACSR 561 at [13]. A comprehensive discussion of the ambit of s 95A in the context of the solvency of a reinsurer is contained in the judgment of White J in New Cap Reinsurance Corporation Ltd (in liq) v A E Grant [2008] NSWSC 1015.

57 Referring to s 95A, Lander J in the Federal Court said in Wanted World Wide (Aust) Ltd v Commissioner of Taxation (Cth) (2004) 139 FCR 205 at [61]:

“ The definition suggests that the issue of solvency needs to be resolved by having regard to the cash flow of a company but, of course, the sum total of its assets and liabilities, as disclosed in the balance sheet, is not irrelevant.”

5.4 Evidence: company records

58 ASIC tendered, first, financial records of each company in the SIH Group created by those companies. They included MYOB records, including profit and loss statements and balance sheets; financial reports; bank statements; the Equities Loan Agreements with investors; share certificates issued by Capital and deeds of release in furtherance of “roll over” transactions.

59 Secondly, ASIC tendered financial records of each company in the SIH Group created by Mr Olde, including provisional liquidator’s reports; tracing spreadsheets; and liquidator’s report under s 533(2) of the CA concerning the SIH Group.

60 Under ss 285 and 286 of the CA, a company must keep written financial records that not only correctly record and explain its transactions, financial position and performance, but also enable true and fair financial statements to be prepared and audited. A document purporting to be a book kept by a company is, unless the contrary is proved, taken to be a book kept in accordance with s 1305(1): s 1305(2) of the CA.

61 Section 1305 of the CA provides that a book kept by a body corporate under a requirement of the CA is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book: s 1305(1). In s 9 “books” is defined to include any register, record of information and financial reports and financial records, however compiled, recorded or stored and “financial records” is defined to include invoices, receipts, cheques, vouchers and documents of prime entry.

62 Each of the documents specified in [58] and [59] above is admissible under s 1305(1) of the CA and is, therefore, prima facie evidence of any matter that it states or records.

63 These propositions apply to documents created by the liquidator in the course of the liquidations as well as to documents created by the companies. In Australian Securities and Investments Commission v Rich (2005) 191 FLR 385 at [268] - [271], Austin J held that the liquidator’s reports (ie “books”) kept by the liquidator for the purpose of the liquidation were admissible under s 1305 of the CA. His Honour said:

“[268] Section 531 obliges a liquidator to keep ‘proper books’ in which he or she must cause to be made entries or minutes of proceedings at meetings and such other matters as are prescribed, and creditors and contributories have the right to inspect those books unless the court otherwise orders. Regulation 5.6.01 prescribes, as the matters to be recorded, all matters that are required to give a complete and correct record of the liquidator’s administration of the company’s affairs. Under s 542(1), where a company has been wound up, all books of the company and of liquidator that are relevant to affairs of the company at or subsequent to the commencement of the winding up are, as between the contributories of the company, prima facie evidence of the truth of all matters purporting to be recorded in those books. By s 542(2), once the company has been wound up, the liquidator must retain the books referred to in subs (1) for a period of 5 years, except in the special circumstances set out in s 542(3).

[269] Is it correct to say that, for the purposes of s 1305, documents kept by the liquidators in that capacity are kept by the body corporate to which they have been appointed; and if it is, are they kept by the body corporate ‘under a requirement of [the Corporations] Act’?

[270] When performing their functions and exercising their powers as such, liquidators occupy the position of agent of the company: A R Keay, McPherson’s Law of Company Liquidation , 4th ed, LBC Information Services, Sydney, 1999, p 288, and cases there cited. If, therefore, the liquidators take some authorised step in carrying on the business of the company, that step is binding on the company as principal, just as if it had been taken by or on behalf of the company’s board of directors prior to commencement of the voluntary administration. It would have been a step taken by the company as principal.

[271] In my opinion the same consequences flow when the liquidators take a step in the administration of the affairs of the company, since in doing so they are acting as the company’s agent. The liquidators’ keeping of reports to creditors prepared by them in their capacity as liquidators or administrators, by retaining them, is conduct by them as agent for the company. It follows that the reports are kept by the body corporate, and therefore those documents are books kept by a body corporate for the purposes of s 1305. Clearly, they are books kept under requirements of the Act, namely the requirements set out above which oblige liquidators to keep and retain such documents.”

See also Re PFS Wholesale Mortgage Corporation Pty Ltd; Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (2006) 57 ACSR 553 at [72] per Hargrave J.

5.5 Evidence: standard of proof

64 I have constantly borne in mind, in determining these proceedings the requirements of s 140 of the Evidence Act 1995, and particularly of s 140(2). Section 140 provides as follows:

“(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence, and
(b) the nature of the subject-matter of the proceeding, and
(c) the gravity of the matters alleged.”

65 The Court of Appeal has said in Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 at [61] that the test to be applied under s 140(2)(a) is the test in Briginshaw v Briginshaw (1938) 60 CLR 336 as enunciated by Dixon J at 361 – 362. See also Rejfek v McElroy (1965) 112 CLR 517 at 521 – 522 per curiam; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 171 per Mason CJ, Brennan, Deane and Gaudron JJ; and Vines v ASIC supra at [808] – [813] per Ipp JA.

5.6 Orders which depart from the pleadings

66 It is necessary to state the background against which the discussion of this branch of the law took place.

67 It became apparent during final submissions that there were grave doubts as to whether certain of the contraventions alleged against Mr Goulding were in fact supported by allegations in the statement of claim. If this were so, orders made in respect of those contraventions would depart from the pleadings. As a result of this problem being raised, ASIC abandoned its claim in relation to loans made by companies in the SIH Group other than those made by Equities and Capital (Breach 1); there was simply no allegation at all in the statement of claim concerning such loans. ASIC has, however persisted with alleging a contravention by Mr Goulding relating to the issue of shares by Capital as a result of “roll over” transactions (Breach 2).

68 Behind the consideration of this problem lie the purposes of pleadings, as defined by the courts. One purpose is, of course, the definition for the court of the issues to be tried. But the primary purpose is to inform the opposing party of the claim or defence that it has to meet.

69 In general terms, relief should not be granted that is not founded on the pleadings. If the evidence departs from the pleadings, the pleadings or particulars may be amended, even at a late stage. But, if the parties choose to fight the case on issues other than those in the pleadings, a verdict may be entered or relief given on the issues fought without amendment.

70 In Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 at 517 - 518 Isaacs and Rich JJ said:

“Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest… There are qualifications, no doubt, and each case must depend for the proper application of the principle upon its own facts. It has been laid down by the Privy Council that ‘As a rule relief not founded on the pleadings should not be granted.’ ‘But in this case’ (said their Lordships) ‘the substantial matters which constitute the title of all the parties are touched, though obscurely, in the issues; they have been fully put in evidence, and they have formed the main subject of discussion and decision in all three Courts. The High Court are right in treating the case as not within the rule’: Sri Mahant Govind Rao v Sita Ram Kesho 25 Ind App 195 at 207.”

71 In Dare v Pulham (1982) 148 CLR 658 at 664 the High Court (Murphy, Wilson, Brennan, Deane and Dawson JJ) said:

“Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it ( Gould and Birbeck and Bacon v Mount Oxide Mines Ltd. (In liq) (1916) 22 CLR 490 at 517); they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial ( Miller v Cameron (1936) 54 CLR 572 at 576-7); and they give a defendant an understanding of a plaintiff’s claim in aid of the defendant’s right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings ( Gould and Birbeck and Bacon (1916) 22 CLR 490 at 517-8; Sri Mahant Govind Rao v Sita Ram Kesho (1898) LR 25 Ind App 195 at 207). But where there is no departure during the trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party to a verdict based upon the evidence. Particulars may be amended after the evidence in a trial has closed ( Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 111, 112, 127), though a failure to amend particulars to accord precisely with the facts which have emerged in the course of evidence does not necessarily preclude a plaintiff from seeking a verdict on the cause of action alleged in reliance upon the facts actually established by the evidence ( Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446; 50 ALJR 666 at 668).”

72 In Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 – 287 Mason CJ and Gaudron J said:

“The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In liq) (1916) 22 CLR 490, at p 517, per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, eg, Browne v Dunn (1893) 6 R, at p 76; Mount Oxide Mines (1916) 22 CLR, at pp 517-518.”

73 In Vines v ASIC supra Spigelman CJ adopted the three passages from the judgments of the High Court quoted above. His Honour said at [57], [58]:

“[57] If necessary at all, each contravention will have to be addressed separately with a view to determining whether, in any respect in which there is found to be a departure between the pleadings and the finding of contravention, the test that the parties have chosen to fight the case on a different basis has been met. (The relevant test being that as set out in Mount Oxide Mines and Dare v Pulham , quoted above.)

[58] It may also be necessary to assess the significance of any departure from the pleadings in view of the express statutory requirement in s 1317EA(2), set out above, that any declaration of contravention must identify ’a specified act or omission’ which constitutes the contravention.”

74 At [515] his Honour said that he was not prepared in that case, in the context of civil penalty proceedings, to conclude that the tests in Mount Oxide Mines and Dare v Pulham had been met.

6 CREDIT OF WITNESSES

75 The witness whose evidence was principally under attack was Mr Olde, on whose reports, affidavits and oral evidence ASIC largely relied to prove Mr Goulding’s breaches of duty.

76 In support of his application under r 29.10 Mr Goulding made submissions concerning Mr Olde’s credit. I summarised those submissions as follows in my r 29.10 judgment supra at [12]:

“In the forefront of those submissions there was a submission that the affidavit and, indeed, the other evidence of Mr Olde, the liquidator, was ‘tainted with bias, prejudice, and are not an accurate reflection of the complete record [held by the liquidator]’. In amplification of that submission, the third defendant submitted ‘that Mr Olde’s evidence is tainted by the adverse opinion that he formed about the honesty and integrity of the third defendant immediately [sic] or prior to his appointment as a liquidator of the eight corporate entities’. A further ground of bias alleged was that the final report prepared by Mr Olde ‘was prepared pursuant to a request by the plaintiff and upon payment of a fee of $100,000’. Detailed submissions were then made of regards in which it is said that Mr Olde’s knowledge of or reference to the records and investigations relating to the company were said to be defective. The third defendant continued in his written submissions to submit that ‘in light of the above list of gaps, due to omission, ignorance or dismissal of facts the Court should treat the evidence of Mr Olde with extreme caution. It should do the same with Mr Olde’s selective method as to the issue of solvency of the various corporate entities’. Equally the third defendant submitted ‘that Mr Olde is not an impartial witness from whose evidence the Court is able to draw comfort in making any decision in favour of the plaintiff on any of its pleadings’. In his written submissions in reply the third defendant submitted ‘that on any view Mr Olde is not an arm [sic] length independent witness and as such his evidence should be rejected in its entirety’”.

77 Those submissions were essentially repeated by Mr Goulding in his closing submissions. Both on the r 29.10 application and in final submissions, Mr Goulding relied particularly on a telephone call made by Mr Olde. Mr Goulding elicited in cross examination that Mr Olde became aware that Mr Goulding was employed by BankWest. He had thereupon telephoned Peter Steele, the State Manager, and said, “If I were you, Peter, I would type the name [Edwin Goulding] into Google.” Thereafter, Mr Goulding was dismissed by BankWest, which Mr Olde had contemplated as possible when he made the phone call. Mr Olde’s reason given for making the call was that BankWest was an important client of his firm and he was dealing daily with Mr Steele at that time.

78 ASIC submitted that Mr Goulding’s attack on Mr Olde’s evidence on the ground of bias should be rejected on the grounds set out below.

79 There is no authority requiring the Court “to hold that an ‘interested’ expert’s evidence be rejected because of a ‘perception’ that the witness might favour the party seeking to adduce that evidence”: FGT Custodians Pty Ltd v Fagenblat [2003] VSCA 33 at [29] per Ormiston JA.

80 The main thrust of the attack made by Mr Goulding on Mr Olde’s credibility was that Mr Olde was “biased” because Mr Olde had formed the view that Mr Goulding was a dishonest person.

81 I do not find that Mr Olde was “biased” because he made a judgment about Mr Goulding’s behaviour as a director of the companies within the SIH Group. Indeed, he was required as a liquidator to form a judgment about Mr Goulding’s behaviour: see per Street J in Re Allebart Pty Ltd (in liq); Re Home Holdings Pty Ltd (in liq) [1971] 1 NSWLR 24 at 26; and per McHugh JA in Brian Cassidy Electrical Industries Pty Ltd (in prov liq) v Attalex Pty Ltd [1984] 3 NSWLR 52 at [79]. This is precisely what Mr Olde did, as he was required to do, in submitting his provisional liquidator’s reports to the Court and in submitting his s 533 reports to ASIC.

82 It is not an adverse reflection on Mr Olde that he formed the view that Mr Goulding was dishonest. It is not surprising that he did so. This was a consequence of evidence he discovered tending to show that Mr Goulding acted dishonestly as a director of the companies in the SIH Group. The evidence does not demonstrate that Mr Olde had a closed mind on the issues raised. On my assessment of his evidence, he continued to assess the material dispassionately despite the view of Mr Goulding he had formed on the evidence available to him. It was not the case that Mr Olde’s views were incapable of alteration.

83 ASIC submits that, in respect of an officer of the Court such as Mr Olde, the Court would be very slow to conclude that his conduct constitutes “bias” in the relevant sense of pre judgment incapable of alteration.

84 In any event, it should be remembered that Mr Olde’s evidence consists largely of factual material (rather than opinion evidence). The consequence is that, in order to impugn successfully Mr Olde’s evidence, Mr Goulding would have had to demonstrate that the alleged “bias” caused Mr Olde to produce or record false or incorrect factual records or material. Mr Goulding did not make any such suggestion to Mr Olde in cross examination.

85 In respect of Mr Olde’s opinion evidence (in particular, his conclusions as to solvency), to impugn those conclusions successfully Mr Goulding would have had to demonstrate in cross examination that Mr Olde did not truly hold those opinions or would not have held them but for the alleged “bias”. Again, Mr Goulding did not put any such proposition to Mr Olde in cross examination. Further, a submission to that effect (that is, that Mr Olde did not truly hold the opinions he expressed or would not have held them but for “bias”) would have to be rejected by the Court, given that the opinions of Mr Olde were entirely consistent with the factual material adduced into evidence.

86 I turn to my findings concerning Mr Olde’s credit. His credit was impugned on the ground of bias, essentially on three bases, first, that he was paid for his services; second, that what he did was informed by an early view he formed that Mr Goulding was dishonest; and, third, his actions in relation to Mr Steele.

87 As to the first basis, the Court will not infer bias simply from the fact that a witness, eg, an expert, is paid to prepare evidence. It could hardly be otherwise where an expert witness is required to devote large amounts of time to the preparation of the evidence. The Court must, of course be vigilant to see that a paid expert has maintained independence and has not become an advocate. But the fact alone of payment cannot be a basis destructive of credit. In this case, much or most of the material on which Mr Olde relied in giving his evidence was not assembled or created in the course of preparing his evidence, but in the course of carrying out his duties as a liquidator. Although the Court must view carefully the evidence of a liquidator, as that of other witnesses, it will not lightly find that a liquidator, who has particular duties to the Court, has acted in breach of his duties.

88 As to the second basis, the view of Mr Goulding that Mr Olde formed in the course of carrying out his duties as liquidator on the material that became available to him, he could hardly have formed another view. The correctness of that material has not been substantially challenged in this case.

89 As to the third basis, minds may differ as to the appropriateness of Mr Olde’s actions in relation to Mr Steele. It is clear, however, that Mr Olde regarded himself as under a duty to a client to draw attention to facts relating to Mr Goulding and the SIH Group. I do not find that fact of itself derogatory of his credit.

90 The real question is whether Mr Olde allowed the view that he had come to concerning Mr Goulding’s honesty to taint his recording of the factual matters that he discovered or the opinions he expressed as to the affairs of members of the SIH Group. I cannot see any evidence that he did. In my view, his evidence was given carefully and in a measured fashion. He was prepared to concede matters that were put to him, for instance, gaps in his knowledge concerning the factual matrix. He gave careful consideration before giving answers on controversial matters. I was impressed by his demeanour as a witness. I could not conclude that any view that he had formed about Mr Goulding affected his judgment in relation to matters of fact he recorded or opinions he expressed. I do not find that his evidence was tainted by bias.

91 It was also contended that the validity of Mr Olde’s evidence was compromised by gaps in his knowledge revealed in cross examination. It is hardly surprising that there were gaps as he sat in the witness box, bearing in mind the large and complex body of factual material that he had traversed in relation to the affairs of the SIH Group. He was ready to concede that there were gaps in relation to particular matters put to him; he did not pretend to know matters that he did not. The gaps demonstrated related to relatively minor matters, were mostly cured and were not such as to compromise either his factual findings or the opinions he expressed.

92 All in all, I find that Mr Olde was a witness whose credit was not seriously impugned and whose statements of fact and opinion are in general terms fit for acceptance by the Court, as appropriate.

93 Mr Goulding in cross examination attacked the ASIC officers and the lay witnesses called by ASIC with varying degrees of success. However, the results of these attacks were not such as to lead me to reject any of the evidence of those witnesses that was germane to the findings that I have in fact made in these proceedings.

7 MR GOULDING’S GENERAL SUBMISSIONS

94 Mr Goulding’s written submissions contain a number of submissions that extend beyond the individual headings or breaches dealt with in these reasons. I propose to deal with them here rather than under the individual headings. In fact, they correspond with similar submissions that Mr Goulding made in support of his r 29.10 application and that I overruled in my r 29.10 judgment at [7] – [10]. What appears below substantially repeats what I said in that judgment.

95 The first matter is that Mr Goulding put forward in a number of places in support of his submissions the contents of affidavits filed on his behalf. In fact, he led no evidence on the trial. The filing of the affidavits did not introduce them into evidence. He announced that he did not intend to call evidence and the affidavits were not read. He was therefore not exposed to cross examination, which he otherwise would have been. I have not read the affidavits (despite the provisions of s 69 of the CPA). I shall not, of course, advert to their contents.

96 The second preliminary submission by Mr Goulding that is misguided is that the fact that Mr Olde neither entered an appearance nor filed a defence on behalf of any or all of the eight named corporate defendants is fatal to ASIC’s case. It is patent that Mr Olde’s decision not to defend on behalf of the corporate defendants flows from the fact that each of them is in liquidation and there is no leave to proceed against them. Equally, there is no obligation on ASIC as plaintiff to pursue them and there is no point, in view of their status, in pursuing them in this case. It is quite erroneous to suggest that a plaintiff in circumstances such as the present must proceed (or obtain relief) against the corporate defendants as a basis for making out a case against a director of those defendants. The failure of ASIC to pursue and Mr Olde to defend the proceedings against the corporate defendants cannot assist Mr Goulding in these proceedings. Equally, the failure to seek relief against the trustees of any of trusts does not enure in Mr Goulding’s favour.

97 Thirdly, Mr Goulding asks that he should be given relief or that the Court should act in some way upon the provisions of r 14.28(1)(c) of the UCPR relating to the striking out of matter in pleadings as being an abuse of the process of the Court. It is claimed that the relevant portion of the statement of claim and the relief sought are equally applicable to Mr Geagea as the fourth defendant and, furthermore, that the declarations and orders sought apply to the eight corporate defendants and also to various trusts that are not named as parties to the proceedings. It is claimed that for ASIC to proceed in those circumstances amounts to an abuse of the process of the Court. That proposition is clearly quite incorrect and the submission is rejected. A plaintiff may proceed against whichever of the defendants it chooses to without proceeding against others. This does not mean that Mr Goulding cannot rely in an appropriate way on deficiencies in ASIC’s pleading.

98 The fourth of the preliminary points to which I have referred is that the absence of Mr Geagea as a defendant is somehow fatal to ASIC’s case against Mr Goulding. ASIC and Mr Geagea settled the proceedings as between them on the fourth day after the hearing commenced. Mr Geagea, against whom the proceedings had continued up to that point, was also sued as a director or a person who had acted as a director of the corporate defendants. As the settlement by the making of orders by consent against Mr Geagea involved Mr Geagea making admissions, I was asked not to deal with the effectuation of the settlement, and, indeed, I should not in any event have done so. I made an order for the separate determination of those questions, which order was subsequently modified in some regards by Hammerschlag J, who dealt with the effectuation of the settlement. The submission that this somehow affected ASIC’s right to proceed against Mr Goulding is without foundation. ASIC and Mr Geagea were perfectly entitled to settle the litigation between them, if they were minded to do so. They did settle the proceedings as between them. That had no effect upon ASIC’s entitlement to continue to conduct the proceedings against Mr Goulding, which, indeed, it has.

8 THE INDIVIDUAL BREACHES

532 I make findings in terms of Findings (b)(1), (2), (4) and (5) in [513] above.

533 I refuse to make findings in terms of Findings (a)(2) and (b)(3) in [513] above.

534 Breach 10: I make a finding in terms of the Finding Sought in [514] above.

535 Short minutes should be brought in to encompass in appropriate form the findings made. Presumably these should be in the form of declarations that comply with the provisions of s 1317E of the CA.

**********

ANNEXURE A

Control and Ownership of SIH Group and Goulding Trusts –

See [6] above

PTB – Plaintiff’s Tender Bundle – Exhibit A in the proceedings

Companies in the SIH Group

Company Name	Directors (formally appointed as such)	PTB	Shareholders	PTB
House	Goulding (also Secretary)	10/3970	Goulding 1 x $1 share	10/3970
Equities	Goulding (also Secretary)	10/3967-3968	House 100 Ordinary shares	10/3968
Capital	Goulding Geagea Daniel Hammersley-Cave (01/06/05 - 31/10/05) Carmel Goulding (10/10/03 – 01/06/05) Edward Malalani (10/10/03 – 07/05/04)	10/3961	House 100 “H” Class shares 1000 Ordinary shares Investors Redeemable preference shares	10/3965
Newcastle	Goulding (also Secretary)	10/3959	Goulding 1 x Ordinary share	10/3946
Beaconsfield	Goulding	11/4304	Goulding 2 x Ordinary shares	11/4305
Melbourne	Goulding (also Secretary)	10/3956	House 100 Ordinary shares	10/3957
Hawthorn	Goulding David Upfal (09/04/03 – 25/03/04)	10/3953	House 100 Ordinary shares	10/3954
Collingwood	Goulding David Upffal (09/04/03 – 25/03/04) Michael Lloyd (09/04/03 – 25/03/04)	10/3949	Goulding 100 Ordinary Shares	10/3950

Trusts in the SIH Group

Trust Name	Trustee	PTB	Unitholders	PTB	Special Features
WSSUT	House	3/1120	House 100 Ordinary units Tresair Pty Ltd 500,000 G class units	3/1120
NC41 Trust	House	2/806	House 100 Ordinary units Goliath Strategies Pty Ltd 200,000 G class units	2/806
NC49 Trust	House	2/492	House atf NC49 100 A class units House atf GFT 50,000 G class units House atf GFT 1,525,000 G class units Antonio Sidoti 300,000 G class units John Neophyton 200,000 G class units	2/492	Goulding himself was also a beneficiary by reason of being a beneficiary of the GFT (A2/482)
NC13 Trust	Newcastle	2/575	House atf Goulding 100 Ordinary units Family Trust 5,500,000 Ordinary units 2,880,000 Ordinary units Granite Hill Holdings Pty Ltd 140,625 Ordinary units	2/575	Goulding himself was also a beneficiary by reason of being a beneficiary of the GFT (A2/565)

Goulding Trusts

Trust Name	Trustee	PTB	Beneficiaries	PTB	Special Features
GFT	House	1/28	Goulding	1/28	Discretionary trust. Goulding is the “primary beneficiary”
DPT	House	1/385	Amber Goulding Any relative of Amber Goulding (A1/365)	1/385	Discretionary trust. Goulding is the Appointor. Goulding is a beneficiary by reason of being a relative of Amber Goulding.
Alcorn Trust	House	4/1452	House atf GFT – 100 units	4/1452	“Hybrid” unit trust/ discretionary trust. Goulding is a discretionary beneficiary of the Alcorn Trust by reason of his being a beneficiary of the GFT (A4/1447)

ANNEXURE B

See [9] above

Equities Loan Agreements entered into by Investors in Equities

PTB – Plaintiff’s Tender Bundle – Exhibit A in the proceedings

No	Investor	Amount	Interest Rate	Loan Date	PTB
1	Kim Buttigieg	$100,000.00	20%	12/4906 to 12/4909
2	Bhattacharjee Family Superannuation Fund	$50,000.00	25%	13/05/2003	1/334 to 1/339
3	Stewart Harris	$50,000.00	25%	13/05/2003	1/339 to 1/342
4	J & D Scarcella Family Trust and/or Nominee	$80,000.00	25%	16/05/2003	1/343 to 1/346
5	The Galimi Holdings Pty Ltd atf Galimi Holdings Hybrid Trust	$200,000.00	25%	04/06/2003	1/350 to 1/353
6	P.G Nayler and/or Nominee	$100,000.00	21%	14/06/2003	1/355 to 1/358
7	Bello Mondo	$100,000.00	25%	23/06/2003	1/386 to 1/389
8	P.G Nayler and/or Nominee	$20,000.00	21%	29/06/2003	1/398 to 1/401
9	Bello Mondo	$40,000.00	25%	04/07/2003	2/498 to 2/501
10	Neville & Beryl Hopkins	$100,000.00	18%	16/07/2003	2/550 to 2/553; 2/615 to 2/618
11	Pym Yvonne Balzan & Richard Anthony Balzan and/or Nominee	$200,000.00	25%	18/07/2003	2/592 to 2/595
12	Graham Lester	$100,000.00	18%	18/07/2003	2/583 to 2/586
13	Grant Hewald	$50,000.00	20%	21/07/2003	2/602 to 2/605
14	Sze Pung Phillip Ho and/or Nominee	$50,000.00	15%	22/07/2003	2/606 to 2/612
15	Martin Munro	$270,000.00	20%	01/08/2003	2/620 to 2/623
16	Mercedita Rabasa	$50,000.00	25%	04/08/2003	2/625 to 2/628
17	Chen Jong Chong	$165,000.00	20%	20/08/2003	2/634 to 2/637
18	Percy Nayler	$80,000.00	21%	20/08/2003	2/638 to 2/641
19	Kiky Hutchinson & Matthew Le Pavoux	$100,000.00	20%	01/09/2003	2/643 to 2/646
20	Tony Vlatko	$50,000.00	20%	13/09/2003	2/647 to 2/650
21	John Neophyton atf The Neophyton Hybrid Trust	$100,000.00	25%	17/09/2003	2/651 to 2/656
22	Stewart Harris	$50,000.00	25%	13/10/2003	2/678 to 2/681
23	Inova Holdings atf The Inova Trust	$70,000.00	20%	29/10/2003	2/697 to 2/700
24	Alpang Consultancy Pty Ltd atf The Alpang Superannuation Fund	$50,000.00	25%	20/11/2003	2/717 to 2/720
25	De Freitas & Cruz Superannuation Fund	$50,000.00	20%	21/11/2003	2/721 to 2/724
26	Geoff Easson	$50,000.00	20%	21/11/2003	2/727 to 2/735
27	John Neophyton and/or Nominee	$100,000.00	25%	21/11/2003	2/735 to 2/738
28	Jim Liapis	$50,000.00	20%	24/11/2003	2/739 to 2/742
29	Gary Stirton and/or Nominee	$50,000.00	20%	25/11/2003	2/747 to 2/750
30	Elzbieta Helena Yeoh & Oon Tian Yeoh atf The ELA Superannuation Fund and/or Nominee	$100,000.00	27.5%	25/11/2003	2/743 to 2/746
31	Brian Chapman	$50,000.00	25%	28/11/2003	2/753 to 2/756
32	Coho Endeavour Trust	$50,000.00	18%	10/12/2003	2/767 to 2/771
33	Jane Dovers & Katherine Marshall	$100,000.00	20%	21/12/2003	3/812 to 3/815
34	Chu Chin Lie	$50,000.00	18%	30/01/2004	3/832 to 3/836
35	Sally Hall	$75,000.00	25%	22/02/2004	3/856 to 3/859
36	Challenge Investment Enterprises Pty Ltd	$210,000.00	25%	25/02/2004	3/860 to 3/863
37	Perce Nayler	$200,000.00	15%	25/02/2004	3/864 to 3/867
38	Ming Chiat Tan and/or Nominee	$10,000.00	10.5%	27/02/2004	3/871 to 3/874
39	Perce Nayler	$50,000.00	15%	04/03/2004	3/875 to 3/878
40	Adrian Richard Nash & Rebecca Nash	$100,000.00	12.5%	09/03/2004	3/883 to 3/886
41	Challenge Investment Enterprises Pty Ltd	$50,000.00	24%	10/03/2004	3/896 to 3/899
42	John Neophyton and/or Nominee	$100,000.00	24%	10/03/2004	3/900 to 3/903
43	Dampmaster Pty Ltd	$150,000.00	$150.00	11/03/2004	3/911 to 3/914
44	Ian Shaw atf The Ian Shaw Superannuation Fund	$50,000.00	24%	11/03/2004	3/915 to 3/918
45	Sally Hall	$25,000.00	25%	31/03/2004	3/926 to 3/929
46	Vincent Blackburn	$18,000.00	9%	16/04/2004	3/935 to 3/938
47	J & D Scarcella Family Trust and/or Nominee	$130,000.00	25%	30/04/2004	3/995 to 3/999
48	Lindsay Jon Marriott and/or Nominee	$50,000.00	24%	05/05/2004	3/1004 to 3/1007
49	Cedar Grove Nominees Pty Ltd	$100,000.00	24%	06/05/2004	3/1012 to 3/1014
50	Sze Pung Phillip Ho Hybrid Trust	$50,000.00	24%	11/05/2004	3/1026 to 3/1028
51	John Buttigieg & Alice Buttigieg atf John Buttigieg & Alice Buttigieg Super Fund	$50,000.00	24%	12/05/2004	3/1038 to 3/1040
52	Joe Barakat	$40,000.00	12%	19/05/2004	3/1051 to 3/1054
53	Lindsay Jon Marriott and/or Nominee	$50,000.00	24%	21/05/2004	3/1055 to 3/1058
54	Stewart Harris	$50,000.00	25%	31/05/2004	3/1067 to 3/1070
55	Kevin Gardiner	$100,000.00	24%	01/06/2004	3/1073 to 3/1075
56	Gary Stirton and/or Nominee	$50,000.00	24%	01/06/2004	3/1076 to 3/1078
57	Galimi Holdings Pty Ltd atf Galimi Holdings Hybrid Trust	$250,000.00	25%	05/06/2004	3/1085 to 3/1088
58	Ian Shaw atf The Ian Shaw Superannuation Fund	$100,000.00	24%	29/06/2004	3/1144 to 3/1147
59	Sealtiel Pty Ltd atf Sebastian Family Trust	$35,000.00	24%	30/06/2004	4/1251 to 4/1254
60	Lyle & Mariella Prangell atf The Lyle Prangell Superannuation Fund	$100,000.00	24%	07/07/2004	4/1264 to 4/1267
61	Inova Holdings atf The Inova Trust	$50,000.00	24%	14/07/2004	4/1277 to 4/1280
62	Lure Investment Pty Ltd atf The D & D Hybrid Trust	$50,000.00	14.4%	21/07/2004	4/1330 to 4/1333
63	Ranjit & Dolly Property Fund	$34,000.00	25%	20/08/2004	4/1362 to 4/1365
64	Daniel Peter Cooney and/or nominee	$50,000.00	18%	27/08/2004	4/1367 to 4/1370
65	Kevin Gardiner	$100,000.00	24%	30/08/2004	4/1371 to 4/1374
66	Graham Lester atf The Lester Hybrid Trust	$50,000.00	24%	15/09/2004	4/1412 to 4/1415
67	John Buttigieg & Alice Buttigieg	$50,000.00	24%	15/09/2004	4/1409 to 4/1411
68	Little Turtle Pty Ltd atf The Con Paize Family Trust	$100,000.00	18%	09/10/2004	4/1542 to 4/1545
69	Kevin Gardiner	$40,000.00	24%	01/11/2004	5/1677 to 5/1680

ANNEXURE F

Examples of Payments from SIH Group Bank Accounts apparently for Mr Goulding’s Private Purposes

See [17](3) above

PTB – Plaintiff’s Tender Bundle – Exhibit A in the proceedings

Equities Bank Account

Date	Transaction detail listed in Bank Statement	Debit	PTB
27/05/2003	Pierucci - Chifley Plaza Sydney NSW 005729	$510.00	1/138
24/06/2003	Handyway Zambelli R 0001 Sydney 002978	$600.00	1/140
15/07/2003	Macro Wholefoods Bondi Junction 005387	$92.65	1/142
07/08/2003	Pierucci International Sydney NS 147496	$674.70	1/144
07/08/2003	Toys 'R' Us Supacenta Moore Park 175584	$104.84	1/144
01/09/2003	Handyway Zambelli R 0001 Sydney 003696	$501.20	1/146
08/09/2003	Target East Garden NSW 099702	$132.10	1/147
08/09/2003	Handyway Mambo Bond 0005	$74.95	1/147
10/09/2003	Handyway Video Ezy 0001 Randwick 000453	$63.95	1/148
19/09/2003	Natural Foodstore Forest Glen 334912	$142.36	1/149
23/09/2003	KMart Caloundra QLD 020237	$198.27	1/149
27/10/2003	Coles Noosa QLD 763829	$53.36	2/663
17/10/2003	Grace Bros Sydney City NSW 314631	$47.96	2/662
27/11/2003	Macro Wholefoods Bondi Junction 005842	$107.29	2/708
28/11/2003	Fish Records Bondi Junction 970746	$228.00	2/708
23/12/2003	Giggles Children's wear Randwick 009448	$97.85	2/764
29/12/2003	IGA Maleny QLD 084666	$247.73	2/764
12/01/2004	Target Maroochydore QLD 241491	$163.91	3/816
20/01/2004	Deli on Dolphin Coogee NSW 004951	$52.60	3/817
23/01/2004	Dynamic Vegies Eltham VIC 013375	$55.45	3/817
09/02/2004	Cue ATM 006269	$500.00	3/837
29/03/2004	Rip Curl Torquay VIC 435729	$120.91	3/880
17/05/2004	Myer Maroochydore QLD 385281	$166.25	3/1016
28/05/2004	Melbourne Caravan and Tourist Park 074160	$285.00	3/1017
01/06/2004	Macro Life Bondi Junction 290009	$274.11	3/1018
21/06/2004	Macro Life Bondi Junction 168860	$348.89	3/1083
20/09/2004	Maleny Art Supplies Maleny 002850	$286.78	4/1384
04/10/2004	Macro Life Bondi Junction 750618	$322.49	4/1386
24/11/2004	Pierucci International Sydney NS 455083	$800.00	5/1687
02/12/2004	Coles Avondale Heights VIC 814091	$209.98	5/1688
04/03/2005	Bras N Things Maroochydore 299762	$49.95	6/2146
23/05/2005	Coles Bondi Junction NSW 253205	$223.83	6/2353
23/05/2005	So Music Newtown NSW 067371	$131.75	6/2354
20/06/2005	Randwick Dental Clinic 267927	$161.00	6/2441
12/09/2005	Macro Life Bondi Junction 483632	$184.04	8/2967
12/09/2005	Linen Factory Moore Park 474554	$89.00	8/2967
12/09/2005	Freedom Furniture Moore Park 477134	$124.85	8/2967
12/09/2005	Handyway to Shade Moore Park 000983	$325.00	8/2967
19/09/2005	Borders Books & Music 365516	$22.00	8/2968
21/09/2005	Priceline Pharmacy 499214	$87.30	8/2968
26/09/2005	Macro Life Bondi Junction 819694	$185.27	8/2969
03/10/2005	IGA Maleny 016578	$98.22	8/2969
03/10/2005	IGA Maleny 062430	$142.36	8/2969
03/10/2005	Natural Foodstore Forest Glen 667112	$51.66	8/2969
04/10/2005	Macro Life Bondi Junction	$117.82	8/2969
06/10/2005	7-Eleven Randwick Barjker Street 084365	$50.01	8/2970
10/10/2005	NAB ATM Village Hoyts Cinema Centre 591575	$500.00	8/3068
18/10/2005	NAB ATM Village Hoyts Cinema Centre 826364	$150.00	8/3068
18/10/2005	Kinokuniya Book Stores of Australia 078325	$30.80	8/3069
20/10/2005	Campbells Cash & Carry 801395	$115.33	8/3069
20/10/2005	Quix 10263 Lindfield 237058	$60.00	8/3069
21/10/2005	Handyway Darby St 001735	$24.40	8/3069
24/10/2005	Handyway Darby St 001753	$59.60	8/3069
24/10/2005	Quix 10263 Lindfield 237238	$67.80	8/3069
25/10/2005	Ikea Moore Park 324092	$228.05	8/3069
25/10/2005	Macro Life Bondi Junction 8883162	$259.94	8/3069
31/10/2005	Maleny Supa IGA 000708	$81.74	8/3070
03/11/2005	Macro Life Bondi Junction 792909	$117.70	8/3070
16/11/2005	WW Metro 1755 Coogee 001508	$114.65	8/3213
22/11/2005	WW Metro 1755 Coogee 005615	$128.03	8/3214
28/11/2005	Handyway Win Xuan T 0001 Haymarket 000020	$155.00	8/3214
28/11/2005	WW Metro 1755 Coogee 006277	$142.23	8/3214
30/11/2005	Handyway Maleny Aut 0001 Maleny 001966	$97.15	8/3215
02/12/2005	Longbench on Darby Newcastle 656068	$227.00	8/3215
28/12/2005	Target Maroochydore Qld 505353	$159.37	8/3329
28/12/2005	Maleny Supa IGA 008233	$244.15	8/3330
03/01/2006	Handyway Maleny 000536	$42.85	8/3330
03/01/2006	Gone Bonkers Discount Maleny	$43.32	8/3330
03/01/2006	Maleny Supa IGA 008233	$184.97	8/3330
06/01/2006	Kmart Caloundra 939791	$260.34	8/3330
06/01/2006	Handyway Sunland 031546	$10.50	8/3330
06/01/2006	Maleny Supa IGA 009474	$117.24	8/3330
09/01/2006	Thai Seabreeze Café 003337	$54.50	9/3416
09/01/2006	Maleny Supa IGA 010499	$104.99	9/3416
11/01/2006	Myer Brisbane City 121923	$144.90	9/3416
11/01/2006	Maleny Supa IGA 011185	$142.41	9/3417
12/01/2006	Burlington s/m Fortitude Val 775961	$173.66	9/3417
12/01/2006	Coles Express Nudgee 778829	$50.25	9/3417
16/01/2006	Natural Foodstore Forest Glen 907945	$142.77	9/3417
23/01/2006	WW Metro 1755 Coogee 009845	$241.48	9/3418
24/01/2006	Handway Maple Street 008666	$73.85	9/3418
24/01/2006	Maleny Supa IGA 011855	$129.95	9/3418
31/01/2006	Maleny Supa IGA 007524	$153.06	9/3418
01/02/2006	Maleny Supa IGA 003669	$75.62	9/3418
06/02/2006	Macro Life Bondi junction 578015	$143.73	9/3419
08/02/2006	Natural Foodstore Forest Glen 835722	$84.28	9/3461
17/02/2006	Moda Bar & Restaurant\Bondi Junctn 002964	$115.10	9/3462
20/02/2006	WW Metro 1755 Coogee 002898	$100.00	9/3462
22/02/2006	Coles Randwick 959986	$150.00	9/3462
27/02/2006	Maleny – Maple Street 000468	$200.00	9/3463
27/02/2006	Paddington Antique 661578	$154.00	9/3463
27/02/2006	Maleny Supa IGA 016078	$110.84	9/3463
03/03/2006	Caltex 7-Eleven 22399 Coogee 054183	$40.00	9/3463
06/03/2006	Howards Storage 023702	$164.75	9/3463
06/03/2006	Macro Life Bondi Junction 356864	$101.22	9/3463
06/03/2006	Rebel Sport Bondi Junction 048591	$44.97	9/3463
06/03/2006	The Music Shop 020517	$22.00	9/3463
09/03/2006	Priceline Pharmacy 000659	$50.08	10/3756
09/03/2006	Howards Storage 023815	$210.65	10/3756
14/03/2006	Handyway Maple 010122	$27.05	10/3757
22/03/2006	The Java Lounge 001163	$47.37	10/3758
27/03/2006	Redi Cua Eumundi Markets 005733	$200.00	10/3758
27/03/2006	Café by the Beach 003005	$54.40	10/3758
27/03/2006	Natural Foodstore Forest Glen 423327	$29.20	10/3758
27/03/2006	Handyway Maple Street 010497	$66.85	10/3758
15/05/2006	Moda Bar & Restaurant Bondi Junction 000402	$95.20	10/3858
15/05/2006	Greater Union Sydney 336651	$35.10	10/3858
16/05/2006	44 Park St Convenience 013065	$43.85	10/3859
22/05/2006	Woolworths 2619 Maleny 001731	$117.89	10/3859
24/05/2006	Coles Express Nudgee 1097 234631	$30.01	10/3860
24/05/2006	Woolworths 2619 Maleny 000887	$217.91	10/3860
26/05/2006	Target Maroochydore 330120	$141.92	10/3860
26/05/2006	Bodycentre for Hlth\Maleny 0007699	$65.00	10/3860
26/05/2006	Handway Shoe City 0666 Maroochydore 009983	$89.95	10/3860
29/05/2006	Maleny Supa IGA 025456	$50.57	10/3860
29/05/2006	Netowork Video Maleny 022569	$37.00	10/3860
01/06/2006	Maleny Newsagency 291726	$80.00	10/3861
13/06/2006	Woolworths 2619 Maleny 002070	$196.86	10/4009
19/06/2006	Maleny Supa IGA 016628	$167.81	10/4009
20/06/2006	Maleny Florist 355365	$50.00	10/4009
22/06/2006	The Maleny Medical C 595607	$72.00	10/4010
22/06/2006	Handyway Maleny 021149	$132.60	10/4010
22/06/2006	Maleny Supa IGA 023987	$123.05	10/4010
26/06/2006	Koala Maleny 001309	$98.00	10/4010
26/06/2006	Woolworths 2619 Maleny 005468	$403.98	10/4010
26/06/2006	Maleny Supa IGA 028589	$213.91	10/4010
03/07/2006	The Maleny Medical C 881064	$75.00	10/4011
03/07/2006	Maleny Supa IGA 028871	$151.85	10/4011
05/07/2006	Woolworths 2619 Maleny 006357	$632.63	10/4011
10/07/2006	Woolworths 2619 Maleny 004573	$225.46	11/4087
18/07/2006	Strandbags 067 022708	$55.00	11/4088
20/07/2006	Handyway Maleny Vet 0001 001012	$104.70	11/4088
20/07/2006	Woolworths 2619 Maleny 004986	$240.97	11/4088
21/07/2006	Natural Foodstore Forest Glen 826310	$84.29	11/4088
27/07/2006	Mooloolaba Gricer 002387	$200.00	11/4089
31/07/2006	Maleny Supa IGA 032610	$71.76	11/4089
01/08/2006	Handyway Maleny Pha 0004 Maleny 018099	$82.75	11/4089
06/09/2006	Maleny Supa IGA 037217	$35.87	11/4157

Capital Bank Account

Date	Transaction detail	Debit	PTB
17/05/2005	Foxtel Netbank Bpay	$179.60	6/2293
08/06/2005	Collection House Netbank Bpay	$1,464.10	6/2294
29/06/2005	Foxtel Netbank BPay Edwin Goulding	$89.80	6/2294
01/07/2005	Austar Entertainment Netbank Bpay	$130.30	6/2294
17/05/2006	3 Australia Netbank BPay Ed Mobile	$208.40	10/3811
17/05/2006	Optus Home Phone Netbank Bpay	$277.47	10/3811

House Bank Account

Date	Transaction detail listed in Bank Statement	Debit	PTB
30/09/2005	Netbank TFR Gift	$900.00	8/2984
05/10/2005	Optus TV/Net Cable	$84.57	8/2985
05/10/2005	School fee	$1,550.00	8/2986
05/10/2005	Netbank GIFT INVS	$1,949.95	8/2986
06/10/2005	Cici Mobile	$78.00	8/2986
10/10/2005	Optus Home phone	$140.36	8/2987
07/11/2005	Gift	$500.00	8/3169
11/11/2005	Foxtel Edwin Goulding	$81.85	8/3170
01/12/2005	Gift	$5,000.00	8/3293
01/12/2005	NAB Credit Card*	$5,000.00	8/3293
15/12/2005	NAB Credit Card*	$1,000.00	8/3295
20/12/2005	NAB Credit Card*	$2,000.00	8/3296
05/01/2006	Gift	$1,000.00	8/3298
11/01/2006	NAB Credit Card*	$2,500.00	8/3298
18/01/2006	Foxtel Edwin Goulding	$168.80	9/3430
18/01/2006	NAB Credit Card*	$3,000.00	9/3430
24/01/2006	NAB Credit Card*	$2,000.00	9/3431
27/01/2006	Ed Mobile	$225.62	9/3432
27/01/2006	NAB Credit Card*	$5,000.00	9/3432
31/01/2006	NAB Credit Card*	$2,000.00	9/3432
31/01/2006	Hoskin Diamond	$2,172.50	9/3432
07/02/2006	NAB Credit Card*	$2,000.00	9/3433
06/03/2006	NAB Credit Card*	$3,000.00	9/3737
10/03/2006	Foxtel Edwin Goulding	$191.61	9/3737
17/03/2006	NAB Credit Card*	$1,000.00	9/3738
27/03/2006	School fee	$300.00	9/3740
05/04/2006	Gift	$1,500.00	9/3742
18/04/2006	NAB Credit Card*	$1,000.00	10/3821
19/04/2006	Telstra E Goulding Maleny	$846.11	10/3821
26/04/2006	NAB Credit Card*	$1,000.00	10/3822
10/05/2006	NAB Credit Card*	$1,000.00	10/3825
15/05/2006	Optus Internet	$69.94	10/3826

Mr Goulding’s MasterCard Statements show that the debit transactions appearing as “NAB Credit Card*” in the above table appear as credit transactions in Goulding’s MasterCard Statements on the corresponding day as follows:

Date	Amount deposited	PTB
01/12/2005	$5,000.00	8/3231
15/12/2005	$1,000.00	8/3337
20/12/2005	$2,000.00	8/3337
11/01/2006	$2,500.00	9/3426
18/01/2006	$3,000.00	9/3427
24/01/2006	$2,000.00	9/3427
27/01/2006	$5,000.00	9/3427
31/01/2006	$2,000.00	9/3427
07/02/2006	$2,000.00	9/3428
06/03/2006	$3,000.00	10/3556
17/03/2006	$1,000.00	10/3766
18/04/2006	$1,000.00	10/3817
26/04/2006	$1,000.00	10/3817
10/05/2006	$1,000.00	10/3818

ANNEXURE G

Misrepresentations Ultimately Relied on by ASIC – See [422] above

Equities Information Memorandum Misrepresentations (pars 70 - 72 of the Statement of Claim)

PTB – Plaintiff’s Tender Bundle – Exhibit A in the proceedings

No	Date	Misrep (as pleaded)	Rep made from	Rep made to	Method of Rep	PTB	Reference to Statement of Claim
1	26 March 2003	The investment offer is to be made to a limited number of parties in accordance with section 708 of the Act.	Equities	Public	Written	1/152	pars 70(i), 72, 170, 171
2	26 March 2003	A personal offer may be utilised by the company in respect to no more than 20 investors in a 12 month period who together invest less than $2 million (in accordance with section 708 (1) of the Act.	Equities	Public	Written	1/152	pars 70(ii), 72, 170, 171
3	26 March 2003	Where you agree to provide a loan to the company, the purpose of your loan will be for the lending and advancement of monies to Approved Development Borrower(s) on a secured or unsecured basis and subject to conditions that the loan monies may only be used by the Approved Property Borrower(s) for the purpose of their approved property development projects	Equities	Public	Written	1/155	pars 70(iv), 72, 170, 171
4	26 March 2003	The company will satisfy itself as to the level of additional security and assurances to be provided by the Approved Development Borrowers as a condition of the loan	Equities	Public	Written	1/155	pars 70(viii), 72, 170, 171
5	26 March 2003	the First Defendant failed to disclose that the First Defendant intended to apply the monies raised in making loans to companies and trusts associated with the Third Defendant	Equities	Public	Representation by silence	1/150-179	pars 72, 170, 171

Capital Prospectus Misrepresentations (pars 76 – 78 of the Statement of Claim)

No	Date	Misrep	Rep made from	Repmade to	Method of Rep	Exhibit F	Reference to Pleading
1	October 2004	the rights ascribed to the shares included a nine (9) percent per annum cumulative dividend	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	209	pars 76(e), 78, 186, 187
2	October 2004	it was the intention that all shares would be redeemed or alternatively acquired by the Second Defendant under a selective share buy-back scheme at the subscription amount of $1.00 per share or the paid up capital on the share, thus returning the full capital amount	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	210	pars 76(g), 78, 186, 187
3	October 2004	the Sydney Investment House Capital Fund would primarily invest all funds raised from the prospectus into the financing of, or in taking an equity position in property development projects	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	213	pars 76(o), 78, 186, 187
4	October 2004	the Sydney Investment House Capital Fund would only make investments after consideration had been given by the Sydney Investment House Investment Team and otherwise in accordance with the Sydney Investment House Plan	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	214	pars 76(r), 78, 186, 187
5	October 2004	the Second Defendant must have received a recommendation from the Investment Team prior to being able to place an investment of the Second Defendant’s funds	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	214	pars 76(s), 78, 186, 187
6	October 2004	the Sydney Investment House Fund would not invest in projects where the directors had a direct or indirect interest where the investment was not made on an arm’s length basis	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	214	pars 76(t), 78, 186, 187
7	October 2004	the directors of the Second Defendant would abstain from decisions of the Investment Team where there were material conflicts of interest	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	Exhibit F, 214	pars 76(u), 78, 186, 187
8	October 2004	the Redemption Date would be thirty-six (36) months after the date of issue of the shares or otherwise agreed in writing between the shareholder and the company	Capital	Public, including Capital Investors listed in Schedule B of FFASC	Written	Exhibit F, 229	pars 76(w), 78, 186, 187

05/03/2009 - Amendment of finding - Paragraph(s) [517] and [518]