Joubert and Members of the Companies Auditors and Liquidators Disciplinary Board - [2018] AATA 944

Joubert and Members of the Companies Auditors and Liquidators Disciplinary Board [2018] AATA 944 (19 April 2018)
Division:TAXATION & COMMERCIAL DIVISION
File Number(s): 2016/2617
Re:Randall Joubert
APPLICANT

AndMembers of the Companies Auditors and Liquidators Disciplinary Board
RESPONDENT

AndAustralian Securities and Investments Commission
OTHER PARTY

DECISION
Tribunal:Deputy President B W Rayment
Date:19 April 2018
Place:Sydney

The reviewable decision is affirmed.
............................[sgd]...............................................
Deputy President B W Rayment
Catchwords
CORPORATIONS – liquidators – duties and functions of an administrator and liquidator – whether applicant failed to carry out or perform adequately and properly the duties of a liquidator – whether failure to disclose relevant relationships – “relationship”, meaning of – whether failure to disclose indemnities and payments received – whether failure to investigate causes of company failures – whether failure to have proper or adequate systems in place – whether applicant is a fit and proper person to remain registered as a liquidator – whether failure to perform adequately and properly the duties of a liquidator – whether applicant acted recklessly or dishonestly – failure to disclose relevant relationship amounted to dishonesty – lack of due care and diligence established – applicant not a fit and proper person to remain registered as a liquidator – decision affirmed
Legislation
Australian Securities and Investments Commission Act 2001, s 15
Corporations Act 2001, ss 60(2), 436DA, 474, 497(11), 499, 506A, 508, 530B, 531, 533, 539, 545, 1292(2)(d), (9)
Corporations Regulations 2001, r 5.6.01
Cases
Albarran v Companies Auditors and Liquidators Disciplinary Board [2006] FCAFC 69; (2006) 151 FCR 466; 233 ALR 37
Australian Securities and Investments Commission v Franklin (Liquidator), Re: Walton Constructions Pty Ltd [2014] FCAFC 85; (2014) 223 FCR 204; (2014) 101 ACSR 87
Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41
Gould v Companies Auditors and Liquidators Disciplinary Board [2009] FCA 475; (2009) 71 ACSR 648
Hill and Members of the Companies Auditors and Liquidators Disciplinary Board and Australian Securities & Investments Commission [2015] AATA 245
Law Society of NSW v McNamara (1980) 47 NSWLR 72
Murdaca v Australian Securities and Investments Commission [2009] FCAFC 92; (2009) 178 FCR 119; (2009) 258 ALR 223
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449; (1992) 67 ALJR 170
Nut Trading Co (Aust) Pty Ltd v KKL (Kangaroo Line) Pty Ltd (1997) 25 ACSR 580
Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; 184 CLR 23; (2014) 322 ALR 581
Ziems v The Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279; [1957] ALR 620
Secondary Materials
Code of Professional Practice (1^st Edition), Insolvency Practitioners Association of Australia
REASONS FOR DECISION
Deputy President B W Rayment
19 April 2018
BACKGROUND

These proceedings arise from an application by ASIC made to the Companies Auditors and Liquidators Disciplinary Board (the Board) for a liquidator, Mr Randall Joubert, to be dealt with under s.1292(2)(d) of the Corporations Act 2001 (Cth) (the Act). Mr Joubert was dissatisfied with the decision of the Board and applied to this Tribunal for review of that decision. The alleged misconduct giving rise to the application made before the Board took place in the years 2009 and 2010, not long after he commenced practising on his own account. He had worked for another firm of insolvency practitioners, de Vries Tayeh, from 2000 to 2008. While still employed by that firm, he became a registered liquidator in 2006.
The Board’s decision was given in 2016. The present proceedings came on for hearing before me in December 2017 and as a result of directions made by me during the hearing these reasons are concerned only with alleged misconduct, with any sanction to be dealt with subsequently. Because of that direction, the final resolution of several issues already the subject of evidence before me must in my opinion await the further hearing as to sanction, as indicated below. Before the Board, allegations of dishonesty made by ASIC against Mr Joubert were rejected by the Board on pleading grounds and therefore not dealt with by the Board, and, speaking generally, those allegations have been re-pleaded before this Tribunal and are dealt with in these reasons. I will consider the allegations of dishonesty in a separate section of these reasons after making findings about the various alleged departures by Mr Joubert from his obligations. Those findings are made having regard to what was said by the members of the Full Court of the Federal Court in Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; 184 CLR 23; (2014) 322 ALR 581, and by the NSW Court of Appeal in Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41 at [126]-[127], and to the need to not lightly make a finding that fraudulent conduct has been engaged in (cf. Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449; (1992) 67 ALJR 170 at 171).
The primary allegations against Mr Joubert relate to five creditors’ voluntary windings up in respect of which he was appointed by the companies as liquidator in 2009 and early 2010. The names of the companies when they were trading were:
(i)Endeavour Cleaning Group Pty Ltd (Endeavour Cleaning);
(ii)ACN 121 404 073 Pty Ltd, formerly World of Timber Pty Ltd (World of Timber);
(iii)Aleksandra Holdings Pty Ltd (Aleksandra Holdings);
(iv)Provenzano Marble and Granite Pty Ltd (Provenzano); and
(v)Zagoonda Pty Ltd (Zagoonda).
The referring accountants in all but the last-mentioned company were a firm named CAP Accounting. That firm seems to have been instrumental in appointing Ms Karen Foster as the sole director of the four first-mentioned companies on various dates or purported dates from 2009 onwards. The persons from CAP Accounting with whom Mr Joubert dealt were mainly Mr David Cassaniti, a partner of that firm, and Mr Amir Attia, an employee. CAP Accounting had, according to Mr Joubert’s evidence before the Board, also referred work to Mr Joubert’s previous employer. The referring accountant for Zagoonda was Banq Accountants and the partner was Mr David Cassaniti’s brother.
The pleadings which have been filed on both sides are prolix. However the case is a largely documentary one, and oral evidence has been of limited use in resolving many of the issues which arise, in part because of the passage of time since the events of 2009 and 2010, and because Mr Joubert and staff members called have told both the Board and the Tribunal that they do not recollect a number of matters.
I will first discuss the sources of the various obligations said to have been owed by Mr Joubert, and said to have been contravened by him. I will then discuss the findings which I make about those matters, and in a separate section of these reasons, where dishonesty has been pleaded, the findings which I make about those allegations. The evidence led before the Board was tendered before me without objection and I was told by Ms McDonald SC who appeared for ASIC with Mr Russell, that cross-examination before me would not seek again to elicit any admissions made by Mr Joubert before the Board. I will also make reference to some changes which appear on the evidence to have been made in Mr Joubert’s firm since the events with which the principal allegations are concerned.
The declarations under s.506A
At the relevant time s.506A of the Act (which applied to cases in which the company passes a resolution for voluntary winding up) provided in substance that before convening a meeting of the company’s creditors,[1] the liquidator must make a ‘declaration of relevant relationships’, and give a copy of it to as many of the company’s creditors as reasonably practicable, together with the notice of the meeting of creditors. Non-compliance with that requirement is an offence under the Act. The section also provided that if the declaration becomes out of date, or an error comes to the liquidator’s attention, there was a duty to make a replacement declaration. At the relevant time the section did not require the declaration to be filed with ASIC, nor did the Act require that the declaration extend to indemnities which the liquidator had obtained from any person (in respect of his own fees). However, the 2008 Code of Professional Practice for Insolvency Practitioners (the Code) published by the then Insolvency Practitioners Association of Australia[2] did require that the declaration extend to indemnities.
[1] That is, within 11 days after the company passes its resolution for voluntary winding up, as is provided by s.497(1) of the Act.
[2] Now the Australian Restructuring Insolvency and Turnaround Association.
The purpose of a declaration of relevant relationships is to enable creditors to be informed about possible conflicts of interest affecting a liquidator chosen by the company itself, and to enable them to make an informed decision as to whether to change the liquidator appointed by the company (as is the company’s duty under s.499 of the Act) before work is done on the liquidation. Section 497(11) of the Act gave creditors a right to remove the liquidator from office and appoint another person as liquidator instead.
Section 60(2) of the Act provides:
(2)       In this Act, a declaration of relevant relationships, in relation to a   liquidator of a company, means a written declaration:
(a)stating whether any of the following:
(i)     the liquidator;
(ii)    if the liquidator's firm (if any) is a partnership--a partner in that partnership;
(iii)    if the liquidator's firm (if any) is a body corporate--that body corporate or an associate of that body corporate;
has, or has had within the preceding 24 months, a relationship with:
(iv)   the company; or
(v)    an associate of the company; or
(vi)   a former liquidator, or former provisional liquidator, of the company; or
(vii)     a former administrator of the company; or
(viii)    a former administrator of a deed of company arrangement executed by the company; and
(b)if so, stating the liquidator's reasons for believing that none of the relevant relationships result in the liquidator having a      conflict of interest or duty.
Section 60(2)(b) proceeds on the basis that if the liquidator proposed to be appointed under s.499 believes that he or she would have a conflict of interest or duty if the appointment were accepted, the appointment should be declined.
The role played by the declaration of relevant relationships thus becomes easily understood. If circumstances exist which may give rise to a conflict of interest in the liquidator accepting the appointment, they should be disclosed in the declaration so that the creditors can make up their mind about whether to remove the liquidator and replace him or her with someone else. The power of the creditors to remove and replace a liquidator is unconfined. There is no duty on the creditors to act reasonably. They can remove and replace a liquidator for more abundant caution.
An associate of a body corporate includes a director of the body corporate, pursuant to s.11 of the Act. So, if a liquidator has, or has had within the preceding 24 months, a “relationship” with a director of the company being wound up, the combined effect of s.60(2) and s.506A of the Act is that the declaration must refer to that fact. Moreover, if the liquidator has or has had within the previous 24 months such a relationship, the liquidator must, in the declaration, state his or her reasons for believing that none of the relevant relationships result in the administrator having a conflict of interest or duty.
The question whether a “relationship” exists which is required to be disclosed will often be a matter of fact and degree. Conflicts of interest or duty should be obvious, or at least usually so. That which has been taken into account as a possible source of conflict, even if rejected, may often require disclosure in the declaration, together with the liquidator’s reasons for believing that no conflict of interest or duty arises.
On the other hand, any kind of relationship may suffice. In the explanatory memorandum,[3] reference was made to “any professional, personal or business relationship”. The reasons of the Full Court of the Federal Court in Australian Securities and Investments Commission v Franklin (Liquidator), Re: Walton Constructions Pty Ltd [2014] FCAFC 85; (2014) 223 FCR 204; (2014) 101 ACSR 87 did not explicitly adopt that description. The language of the statute is what will guide, rather than language used in the explanatory memorandum. The Full Court investigated the requirements of sections of the Act applicable to administrators, rather than the liquidators under voluntary windings up. Administrators were required by s.436DA of the Act to make a declaration of relevant relationships and a declaration of indemnities. Section 436E(4) gave to the meeting of creditors a power of removal and replacement of the administrator. The provisions as to declarations of indemnities were not discussed by the court in Franklin.
[3] Corporations Amendment (Insolvency) Bill 2007, explanatory memorandum.
The discussion of the provisions by the Full Court is clearly relevant to the issues arising in these proceedings because the sections are relevantly similar.
Robertson J gave a judgment in which both Jessup and White JJ agreed. He said:
[29] The word “relationship” is not relevantly defined in the Corporations Act. In my opinion the provision means that there is an obligation to state the connection between the relevant entities: the administrators on the one hand and the company or an associate of the company on the other. A bare intention to investigate a transaction of an entity does not, in my opinion, constitute a relationship between the relevant entities.
His Honour also said:
[31] Importantly, in my opinion the requirement to state a relationship does not cover the entire field of conflict of interest or duty. It is only where there has been or is a relationship that the obligation to state the administrator’s reasons for believing that the relevant relationship does not result in the administrator having a conflict of interest or duty arises. It is not permissible, in construing the provision, to reason that because an investigation or proposed investigation into a transaction may result in the administrator having a conflict of interest or duty that, therefore, there is a relationship between the entities.
That paragraph focuses attention on the tense used in s.60. It refers to present and past relationships or connections, not future relationships or relationships arising from acts intended to be taken by the administrator.
Two other observations were made by his Honour which may be important to note in the present case. At [33]-[35] of the judgment, he referred to a submission of ASIC that might have imposed an obligation on the administrator to do more than state his or her reasons for believing that the association did not give rise to a conflict of interest or duty in that case. ASIC submitted that a wider duty was reposed in the administrator. He concluded:
[35] In my opinion, the Court should not give to the provision the wide construction for which ASIC contended where a breach of the provision constitutes an offence: see s 1311 of the Corporations Act.
Finally, he rejected a submission of ASIC that the Code of Professional Practice for Insolvency Practitioners published by the former Insolvency Practitioners Association of Australia was extrinsic material appropriate or permitted to be taken into account in construing s.60 or s.436DA of the Act.
The case made by ASIC against Mr Joubert related to his declarations of relevant relationships made in two of the windings up, that for World of Timber and that for Aleksandra Holdings. The alleged need was for Mr Joubert to have disclosed a relationship with Ms Karen Foster, who was the sole director[4] of several companies successively put into voluntary liquidation to which Mr Joubert was appointed the liquidator.[5] At the dates set out below, she was the sole director of each of the following companies for which he was liquidator:
(i)Endeavour Cleaning from 1 August 2009 (he was appointed liquidator on 15 October 2009 at a meeting of members chaired by Ms Foster and held at Mr Joubert’s offices);
(ii)World of Timber from 15 June 2009 (he was appointed as liquidator on 6 November 2009); and
(iii)Aleksandra Holdings from 2 February 2009 to which he was appointed liquidator on 17 December 2009.
[4] And therefore an “associate”.
One issue debated in the case is whether, as at November 2009 he had a relationship with Ms Foster because of his dealings with her as the liquidator of Endeavour Cleaning and whether as at December 2009 he had a relationship with her because of his dealings with her as the liquidator of Endeavour Cleaning and also of World of Timber.
Ms Foster became the sole director of Provenzano from 23 July 2009 and Mr Joubert was appointed as liquidator of that company on 28 June 2010. When he came to draw his declaration of relevant relationships for this company’s creditors he did disclose in his declaration of relevant relationships that he was liquidating the other three companies which had the same director.
The evidence called before the Board and that called before me includes no explanation of how Ms Foster came to be the sole director of several of the companies, and neither she nor the referring accountants were called. Her appointment looks peculiar, to say the least, because the business of each of the companies was quite different, and in each case she became the sole director before the resolution to wind up the companies, and the directors who had apparently conducted the affairs of the companies when they got into difficulties left office when she was appointed. In several cases her appointment as a director of the companies was notified to ASIC around the date of Mr Joubert’s appointment although the date from which she was notified to ASIC as a director was stated to be an earlier date. The liquidator himself was never examined, so far as I can see, about his enquiries concerning that matter although he made other assertions about Ms Foster herself.
Mr Joubert said in evidence before the Board that he met her once (without identifying when that was) and cannot remember whether he also met her on other occasions. He said that he met her at CAP Accounting’s offices.
Mr Joubert said that a note made by an ASIC officer in July 2011 agreed with his recollection. The note records that Mr Joubert then said: Karen Foster does exist and Joubert claims has [sic] met her. Lives up north, on the dole, Aussie girl 23-30 years old, blonde hair, slim. Claims that he would have met her some time before the end of the [Endeavour] Cleaning matter.
Before the Board, ASIC tendered a copy of the driver’s licence of Ms Foster which Mr Joubert agreed did not correspond with some of the physical particulars Mr Joubert had given.
Nor was Mr Joubert cross-examined about what he said he had learned about her financial circumstances or the significance, if any, which he attributed to that information, and he was not cross-examined to suggest that there had been any personal interaction with her other than as he asserted. Mr Joubert had interactions with Ms Foster almost exclusively by correspondence.
Mr Joubert’s expressed state of mind was to accept that he should have disclosed a relationship with Ms Foster as a director of the various companies, and that he failed to do so, thereby admitting in effect a case of want of due care, while denying any dishonesty alleged by ASIC. He rather suggested that he must not have remembered that Ms Foster was the same person who was the sole director of the other company or companies he was liquidating. However it is submitted on his behalf that there was no obligation to disclose a relationship with Ms Foster, because it is submitted that there was none. I will deal with that submission next.

The date of the declaration in World of Timber was 6 November 2009, during the month after he had been appointed as liquidator of Endeavour Cleaning. It was not established whether the meeting at which Mr Joubert said he met Ms Foster was before or after 6 November 2009.
By a note in his handwriting dated 12 October 2009 Mr Joubert recorded concerning Endeavour Cleaning, amongst other things: “Quote approx. $10K + GST ?? How am I going to get paid? – 3 companies to liquidate by director”. The director was not named in the note.
His file included a document dated 25 September 2009 signed “Karen Foster – Director”, authorising Joubert Insolvency to convene a meeting of members to consider the proposal to put Endeavour Cleaning into liquidation and the appointment of Mr Joubert as liquidator. It also included a number of documents signed by Ms Foster in various capacities, and purporting to be dated on dates in September and October 2009. The documents were prepared in Mr Joubert’s offices by members of his staff. They included a notice of meeting of directors dated 25 September 2009 signed by Ms Foster convening a meeting of directors at Shoal Bay on 11 October 2009 to consider and pass resolutions in connection with the proposed winding up, and a notice of meeting of members in Shoal Bay to wind up the company and appoint Mr Joubert as liquidator dated 11 October 2009. As a shareholder Ms Foster consented to short notice of the meeting and as chair of a meeting of members said to have been held not in Shoal Bay but at Mr Joubert’s Sydney office on 15 October 2009, recording the passing of a winding up resolution and appointing Mr Joubert as liquidator. She also signed as a director a summary of affairs made up to 11 October 2009. On 15 October Mr Joubert signed a declaration of relationships and filed a form informing ASIC of his appointment and enclosing a copy of minutes signed by Ms Foster as chairperson of the meeting of members.
On 19 October 2009 he wrote to Ms Foster at her Shoal Bay address to request under s.530B of the Act that she forward all files in her possession, including all books and records of the company.
At the meeting of creditors held on 27 October 2009, Ms Foster was among those present by proxy. Mr Attia represented her and also CAP Accounting, which also filed a proof of debt. Ms Foster claimed to be a creditor in the sum of $1,500 and the file contains her undated proof of debt for that amount for “unpaid entitlement”.
On a date prior to 6 October 2009 (being a date admitted in Mr Joubert’s Statement of Facts, Issues and Contentions, and wrongly stated on the note as 2 November 2009) Mr Joubert’s note of a meeting about World of Timber with Mr Cassaniti and Mr Attia includes the words “This is one of 3 coy spoken about to liquidate together”. It concludes with the sentence “Advised to prepare apptmt docs”. As noted earlier, declaration for World of Timber is dated 6 November 2009 and makes no disclosure about any relationship with Ms Foster.
Ms Foster was the only officer or shareholder of Endeavour Cleaning and was also a minor creditor of that company. She had also been asked to produce books and records. The documentary dealings with Ms Foster were substantial during October 2009 (and perhaps September as well). Notwithstanding his oral evidence, I would infer that Mr Joubert was aware that she was the sole director of both Endeavour Cleaning and World of Timber on 6 November 2009, and therefore an “associate” of those companies, and that his dealings with her, at least documentary dealings, were very recent and likely to continue, in relation to Endeavour Cleaning. If she came to his office on 15 October 2009 to attend the meeting of members, as the minutes suggested, then he may have met her personally at that time.
Mr Jones SC put that s.60(2) of the Act ought not to be given a wide construction because a breach of the section constitutes an offence, referring to what was said in Franklin at [35]. The Full Court applied that principle by having regard to the exact language of the provision. Thus it was held that the liquidator was not obliged to do more than state his or her reasons for believing that the relationship did not give rise to a conflict of interest and duty, as distinct from being obliged to state reasonable grounds for such a conclusion. The belief had to be genuine and bona fide, not necessarily based upon reasonable grounds. I take the Full Court in that case to have treated the word “relationship” as a word of very general application. The judgment utilizes the words “association” and “connection” as synonyms for the word used in the section.
He sought to submit that the word “relationship” was not to be analysed as going beyond professional, personal or business relationships. I do not take the Full Court in Franklin to have reached that conclusion. Nor am I sure that adopting such an approach would lead to any different result in this case. My reluctance to adopt the approach suggested by the applicant is that the statutory language is simply “relationship” and the adoption of different language is undesirable.
His submission was that there was no relationship as a matter of fact which was put in a number of ways, including the fact that once the liquidator was appointed, Ms Foster lost all powers as a director.
He made submissions critical of the bases on which the Board had found that there was a relationship with Ms Foster, describing them as obviously flawed. I have not chosen to reach my own conclusions based upon tests proposed by the Board, but I have reached the same conclusion as the Board, and for reasons some of which are similar to those of the Board.
Mr Jones SC also submitted that the relationship had to arise from past events not future events, which would include expectations. The connection or association indeed had to have already existed (within the previous 24 months) but could in my opinion produce a likelihood of further contact, which it would not be irrelevant to take into account. Franklin did not decide to the contrary.
The facts and circumstances I have recounted in paragraphs 7-36 above, in my opinion, suffice to show that Mr Joubert had a “relationship” with Ms Foster within the meaning of s.60(2) of the Act. That was because not only was Ms Foster a director of each company, but she was the person who brought about the steps taken in his appointment, she was ostensibly the repository of the company’s books and records, and one person against whom action may need to be taken if (as happened) she did not produce the books and records. She was a person apparently in a position to give him information about the recent trading history of each company. As will appear, she was a person to whom a letter was sent in each case asking for the liquidator to be put in funds for the expenses of the winding up. Her own role as a director of the companies was mysterious, itself capable of calling for some inquiry by the liquidator. These objective facts (whether or not actually considered by the liquidator) show a relationship requiring disclosure in my opinion.
I reach the same conclusions about Aleksandra Holdings. By the date of his declaration in relation to that company, on 17 December 2009, he had recently had a number of communications with her in her capacity as the sole director of both Endeavour Cleaning and World of Timber (generally similar to those I have described in relation to Endeavour Cleaning) and was likely to have similar dealings with her in relation to Aleksandra Holdings.
Mr Joubert’s departures from the requirements of s.60(2) in relation both to World of Timber and Aleksandra Holdings are in my opinion established.
Amended declarations were prepared by him for each of those two companies. Such a document was prepared for World of Timber on 25 November 2009, which corrected the omission to disclose the relationship with Ms Foster.
Mr Joubert says in his Statement of Facts, Issues and Contentions in effect that it was a document which normally would have been sent to creditors with the next communication to creditors but since there was no subsequent communication it was not sent. Paragraph 81(c) of his Statement of Facts, Issues and Contentions is in the following terms:
(c)…
(i)     there was no statutory requirement that he immediately send to creditors a copy of an amended DIRRI updating his declarations as to relevant relationship when signed;
(ii)    the IPA Code of Professional Conduct did not require that he immediately sends to creditors an amended DIRRI;
(iii)    says that the occasion for sending out the amended DIRRI would normally arise when, and if, further communication with the general body of creditors was entered into, and would be tabled at the next meeting of creditors, should there be one; and
(iv)   as was ultimately the case, such events did not arise in this administration.
This explanation does not accord with s.506A(5) of the Act, which requires the replacement declaration to be sent out “as soon as practicable”.
If Mr Joubert did not send out the document for the reasons advanced in paragraph 81 of his pleading, that would show a misunderstanding of the section which bound him. Mr Joubert gave evidence consistent with his pleading. When asked about his failure to send out the amended declaration he said: “No, the Code – the Code- I’m under an obligation to send out the amended DIRRI, the next communication with creditors, like the next meeting with creditors; that’s what the Code says”.
The Code cannot amend the statute, of course. Clause 6.14.3 of the Code is in the following terms: “If a practitioner becomes aware that the DIRRI has become out of date or there is an error, then a Practitioner must update the DIRRI and provide it to creditors with the next communication with creditors and table the DIRRI at the next meeting of creditors.”
The Code is cast in language which would probably justify a liquidator in waiting for the next communication with creditors before sending out an amended declaration. It is incorrect, but if a liquidator relies upon it, it would be excessive to criticise him or her on that account.
In fact the occasion to send out the amended declaration, as apparently understood by Mr Joubert, did arise in August 2010, in the World of Timber liquidation, when a circular was sent to creditors inviting them to contribute funds for investigations, yet the circular does not suggest that the amended DIRRI was sent out at the same time. There is no record of the document being sent out and the terms of the circular suggest the contrary. In those circumstances, Mr Joubert’s evidence as to his practice seems to me to be an insufficient basis to be satisfied that it was sent out.
More importantly, however, the declaration actually sent out in Aleksandra Holdings is very difficult to understand, since it was sent out on 17 December 2009, some three weeks after the correcting document had been prepared for World of Timber. No suggestion was made by either party before me that the correcting document prepared for World of Timber was wrongly dated. The parties were at one in treating the date of the correcting document as accurate. Mr Joubert gave no evidence that the correcting document was prepared at some different time from its date, and I put that possibility to one side and like the parties, I have treated the correcting document in World of Timber as having been prepared on the date it bears.
The circumstances were after all, relevantly identical. Both the correcting document in World of Timber and the declaration sent out in Aleksandra Holdings’ documents bear Mr Joubert’s signature. Ms McDonald SC took this matter up with Mr Joubert in cross-examination and his answers were to the effect that he cannot now recall whether the amended declaration of November in World of Timber was actively in his mind when he made the declaration of 17 December about Aleksandra Holdings. If it was actively in his mind, then the Aleksandra Holdings declaration was plainly false and knowingly so. The answer given by Mr Joubert does not assist me to understand how the declaration in Aleksandra Holdings could have been sent out otherwise than with an intention to mislead.
I regard the chronology of the preparation of an amended declaration in one company to correct a failure to refer to Ms Foster in one case, and, three weeks later a repetition of the same error in the case of another company of which Ms Foster was also the sole director, as quite important in understanding what occurred in 2009 despite the passage of time since the events occurred.
Mr Joubert signed on 12 January 2010 an amended declaration for the purposes of notifying creditors of his relationship with Ms Foster, but again that document does not appear to have been sent out.
As I have mentioned above, a declaration sent out in June 2010 in relation to Provenzano correctly disclosed the relationship with Ms Foster, mentioning the three earlier appointments where she was the sole director. This fact has implications in favour of Mr Joubert, on the question of whether his having deprived the creditors of World of Timber and Aleksandra Holdings of the opportunity to consider his relationship with Ms Foster was deliberate. The fact remains however that he did deprive the creditors of those two companies of that opportunity.
Absence of Declarations of Indemnities and reports as to payments received
The Act did not at the relevant times, as I have said, require Mr Joubert to state whether his fees were indemnified by any person. The declarations made by Mr Joubert did not disclose any such indemnity. This part of ASIC’s case relates to all of the companies involved except Endeavour Cleaning.
ASIC asserts and Mr Joubert denies that in the relevant liquidations he had indemnities and in due course received payments which, in accordance with s.1292 of the Act, required disclosure under the 2008 Code. Section 1292 is submitted to be engaged not only when a statutory obligation has been breached but also when professional standards and codes stating a rule of practice have been breached.[6] (The current form of the statute does require a declaration of indemnities to be dispatched to creditors and also requires both declarations of indemnities and declarations of relevant relationships to be filed with ASIC.)
[6] See Dean-Willcocks v Companies Auditors and Liquidators Disciplinary Board [2006] FCA 1438 at [21]-[34]; (2006) 59 ACSR 698 (Tamberlin J).
Mr Joubert does not contest that a contravention of the Code could cause s.1292 to be engaged; what has been put in issue is what the Code meant and whether within the meaning of the Code, there were indemnities involved.
Payments were received by him during the liquidations which were not disclosed to creditors and the case made by Mr Joubert is that on the proper construction of the Code such payments did not need to be disclosed.
The word “indemnity” is defined in the Code (unless otherwise indicated) as follows:
Refers to any payment made as well as arrangement whereby payments are promised.
Mr Jones SC submitted that in this definition, the word “indemnity” forms part of the context that facilitates construction of the words chosen. The word “indemnity” has a quite different meaning, in ordinary legal parlance from that which it is defined to refer to. A contract or an arrangement to pay fees earned would not be described as an indemnity, which might refer to liabilities, or to outgoings rather than profit. A payment made would not be called an indemnity. I do not read the word “indemnity” as creating a context to understand the words of the definition which follow.
Clause 6.14(d) of the Code states that a declaration must comprise a Declaration of Indemnities disclosing the identity of each indemnifier and the extent and nature of each indemnity, (other than statutory indemnities); and any payment made by or for the insolvent on account of the Practitioner’s remuneration and disbursements. Mr Joubert submitted that the word “payment” means a payment in advance, rather than any payment of fees incurred by the liquidator. I see no reason to read the words “on account of” as restricting payments to payments in advance. The words seem to me to be wide enough to include a payment in respect of the liquidator’s fees. In the definition which I have quoted in paragraph 61 above, if payments were intended to be limited to payments in advance, one would expect the definition to have said so.
Mr Hayes, whom ASIC called as an expert, suggested that payments made by reason of realisation of the assets of the company do not require an amended declaration. That may be so as a matter of practice, and I am not required by the circumstances of this application to decide whether such a payment is required to be treated as a “payment made by or for the insolvent” within the meaning of the Code.
Mr Jones SC sought to highlight references made by Mr Hayes to “voluntary” disclosures made by liquidators, in order to found a suggestion that a strict compliance with the Code was not necessary. I do not construe clause 6.14(d) as making compliance with it optional for liquidators.
Nor do I accept that the reasons advanced by Mr Joubert for not disclosing payments received (that the amounts received were within a cap approved by the creditors, and that nothing further needed to be done at the relevant time) were available reasons for departing from the requirements of the Code.
The Code, as mentioned earlier, provides that if a practitioner becomes aware that the DIRRI has become out of date or there is an error, then a Practitioner must update the DIRRI and provide it to creditors with the next communication with creditors and table the DIRRI at the next meeting of creditors.
Did Mr Joubert have an arrangement whereby a promise was made to indemnify him for his fees or disbursements? For the liquidator it is submitted that such an arrangement had to be enforceable to qualify as an indemnity within the meaning of the Code, and that any such arrangement was not enforceable.
On the question of construction of the Code, these points may be made: First, the word “arrangement” is often used in legal contexts to include dealings falling short of binding contracts. That kind of meaning seems to me to be the one utilised in the Code, with its emphasis on transparency and the provision of full information to creditors. I would not read the word “promise” as requiring in itself a legally binding promise. I also think that it is likely that a competent liquidator would have so understood the Code as I have suggested.
Mr Joubert says that he did not disclose an indemnity because he took a different view. He says he regarded the word “indemnity” as requiring a legally enforceable contract, and he says that he did not have a binding contract. The words of the Code do not make the point crystal clear, especially to a layman. While I have some doubt that he understood its terms as he has suggested, I accept that the evidence which he gave about the meaning of the Code as he saw it is a possible view. This observation is more relevant to the findings of dishonesty which I am asked to make than to the question of whether he acted with due care and diligence.
I turn to the facts proved. In some cases at least, Mr Joubert had a meeting in person with his referring accountants, in which he gave those persons a quote for his fees. The only evidence of what was discussed is Mr Joubert’s notes and his oral evidence.
The giving of a quote suggests that he expected the referring accountants to pay or arrange for payment of his fees, whether as a matter of binding obligation or as a matter of understanding. That must have been the case with all of the companies. After all, if he had no expectation of payment, he had no reason to accept the appointments. He had nothing in writing from the members (or Ms Foster) to give him comfort that fees would be paid by them. Such an expectation, as a matter of probability, is likely to have been engendered if not made express at least in the case of one or more of the earlier voluntary liquidations which Mr Joubert handled for the referring accountants. Mr Joubert gave evidence that he had an expectation that his fees would be paid, and says that today, in such a case, he always discloses an indemnity.

ASIC drew attention to some evidence given by Mr Joubert in cross-examination before the Board in which he referred to an “agreement” that his fees would be paid and referred to an “assurance” by the accountant that his remuneration would be paid by the directors. He told the meetings of creditors of the companies that he had no indemnity, suggesting that he did not regard what had been said to him as an enforceable agreement, which may perhaps be because he was uncertain that the directors had made the accountant their agent. Just who the “directors” were is not clear, since the role played by Ms Foster is obscure on the evidence before the Tribunal. Mr Jones SC suggested that reliance by ASIC on the evidence before the Board was unfair because it was not put to him again before me. Ms McDonald SC had made plain that she would not go over ground already the subject of admissions before the Board and I am not inclined to reject the statements made by Mr Joubert before the Board on that ground. On the other hand I do not treat the evidence given before the Board as necessarily inconsistent with Mr Joubert’s evidence that he did not regard what he was told as amounting to a binding contract.
In each case, he sent out a letter addressed to the directors and the secretary following a template, which stipulated that he would take no step in the liquidation until receipt of payment in advance of a stipulated amount (“as requested”) on account of fees and disbursements to be incurred. That letter did not lead to any payment being immediately received, and led to no complaint from Mr Joubert that it had not been honoured.
He sent out an invoice for fees incurred, and in most cases actually received payment for those fees within a short period of time. So if he anticipated payment of his fees, he was not disappointed.
In World of Timber he invoiced CAP Accounting for $6,000 on 17 January 2010 and received payment on 21 January 2010. Mr Joubert claims in his pleading that the sending of the invoice to CAP Accounting was an error and that the invoice should have gone to the directors. As I have said, we do not know from Mr Joubert when he asserts that he found out that Ms Foster was on the dole. A person on the dole might be thought to have been unlikely to be able to pay such an invoice. The sum of $5,000 paid for fees in the Provenzano liquidation is similarly denied by Mr Joubert to be attributable to CAP Accounting and asserted to be a matter for “the directors” (presumably Ms Foster). An invoice in the Zagoonda matter addressed to that company on 1 July 2010 led to payment of $4,997.40 on 6 July 2010.
In Aleksandra Holdings the sum of $5,000 was received into his bank account and subsequently the sum of $4,980 was invoiced and deducted from the account.
I think it is reasonable to infer from the fact that Mr Joubert sent invoices that he took it that he had an understanding or expectation under which CAP Accounting (or some officer or shareholder) would pay or arrange for payment of his fees. The payment of those invoices suggests that CAP Accounting or their clients had the same understanding. It does not matter whether the meeting of minds which presumably explained that mutual understanding was tacit (such as having been based on some prior dealing) or express or implied in some way (such as some industry practice or assurance given expressly to Mr Joubert). Nor does it matter for this purpose, whether Ms Foster as a director was party to the understanding, although I do not find that she was.
The fact that he had nothing in writing from CAP Accounting (or any other person) promising that his fees would be paid (and the fact that he made no threats to sue, when I think in one case, his fees were not paid) provides some ground to accept his evidence that he did not believe that he had the benefit of an enforceable obligation to pay his fees.
The case made against the liquidator by ASIC as to indemnities and payments received was twofold: It is said that his declarations were false, and that in any event, as payments were received, he was obliged to report them to creditors in six-monthly accounts sent out in accordance with s.539 of the Act, and, in accordance with the Code, as correcting declarations of indemnities. Mr Joubert admitted that he did not disclose payments throughout the relevant period in relation to the relevant liquidations.[7] He says that he now does so. As to the breach of the Code, he may possibly have failed to notice that the Code defined an indemnity to include a payment made. Otherwise his failure to disclose the payments received involves a clear breach of the Code, and, prima facie, a knowing breach. As to his breach of the obligations to record receipts and payments, his practice cannot be so explained. The explanation advanced is that his staff was to blame for that failure, and that he did not pick up the error when authenticating the documents. If so it was a quite uniform oversight on the part of his staff and on his part.
[7] He did however refer to a payment made in the Provenzano liquidation by an amended declaration dated 6 September 2011. That was after a meeting with ASIC inspectors of July 2011. He attributed the payment to “the director” although the identity of the paying party does not appear from records produced to the Board or the Tribunal.
As to his alleged failure to send out amended declarations, it is not disputed that he neither sent out nor prepared any amended declarations. Mr Joubert’s case is that he asserts there were no “indemnities” to disclose. I reject that submission.
Mr Joubert in his pleadings attributes the failure to disclose payments received in the s.539 documents to staff errors rather than something for which he personally has responsibility. He maintained that position in evidence before me, and said that he did not notice any error when he signed the forms. The Form 524, Presentation of accounts and statement, required disclosure of remuneration paid to the liquidator during the period to which the accounts were made up. The language of the liquidator’s verification specified in the form required explicit confirmation of any payments of fees, and although the forms were prepared by staff members, the liquidator therefore had a personal duty to check the accuracy of the forms submitted. Forms (later corrected at least for Zagoonda) for World of Timber and Zagoonda expressly declared that no payments had been received by way of remuneration.
Generally as to ASIC’s contentions, I have accepted ASIC’s submissions as to construction of the Code, and I have found that there were indemnities requiring disclosure in the initial declarations. It follows from my findings above that in my opinion there was also a statutory obligation to prepare and send out amended declarations as soon as practicable after payments were received. As to the s.539 documents, the liquidator accepts that his firm was at the time in breach of duty, but denies that he picked up the errors when he signed the documents, and says that the system has now been fixed. Mr Bowers (then employed by the firm) accepts, having recently read activity sheets, that he prepared the forms, and may intend to have accepted in his statement that he prepared them incorrectly. He says that his recollection is that he ascertained the amount of fees paid to the firm by looking at bank statements. Whether that method was efficient has not been made clear to me, and why he did not seek access to the firm’s own bank accounts to see whether payments had been received is also not clear to me. He says that he learned the ropes from Mr Joubert as to how to prepare forms.
If Mr Joubert did not notice the errors in any case that may mean that he signed all the documents without reading them, an explanation that he did not put forward. His financial oversight of his fledgling firm should have made him at least generally acquainted with payments received for professional fees, so if he read the forms he should have noticed that they were inaccurate.
The evidence led on this matter is not sufficiently cogent to permit of the finding of dishonesty sought by ASIC. The payments received were not very large, and therefore, perhaps, less memorable, and no motive for failing to disclose them is apparent. His departures from good practice may be attributed to inattention to detail rather than to dishonesty. Mr Joubert may not, at the time, have appreciated that payments of his invoices for fees amounted to “indemnities” within the meaning of the Code.
Deficient or false liquidator’s accounts as to proofs of debt received
Section 539(1) of the Act provided at the relevant time that:
(1)       A liquidator must, within 1 month after the end of the period of 6 months   from the date of his or her appointment and of every subsequent period of               6 months during which he or she acts as liquidator and within 1 month after                 he or she ceases to act as liquidator, lodge:
(a)an account in the prescribed form and verified by a statement in writing showing:
(i)     his or her receipts and his or her payments during each such period or, where he or she ceases to act as liquidator, during the period from the end of the period to which the last preceding account related or from the date of his or her appointment, as the case requires, up to the date of his or her so ceasing to act; and
(ii)    in the case of the second account lodged under this subsection and      all subsequent accounts--the aggregate amount of receipts and payments during all preceding periods since his or her appointment; and
(b)in the case of a liquidator other than a provisional liquidator--a statement in the prescribed form relating to the position in the winding up, verified by a statement in writing.
The prescribed form for this purpose was Form 524. It is alleged by ASIC and not denied by Mr Joubert that proofs of debt received by the liquidator in the liquidation of Endeavour Cleaning were not taken into account in preparing the Form 524. Mr Joubert asserts that the cause of the failure was that data entry processes were not observed by staff, and that he signed the documents without picking up the errors. The allegations of ASIC do not include allegations of dishonesty. The admissions made by Mr Joubert are pleaded on his behalf with particularity. Staff failures involved failures to make data entries about proofs of debt received and the documents followed the reports as to affairs signed by the director Ms Foster without being updated after proofs of debts were received. The use of the Report as to Affairs (RATA) to the Australian Taxation Office (ATO) debts rather than the amount stated by the ATO itself in proofs of debt appears to me to be reasonable for reasons pleaded by Mr Joubert.
Causes of failure of each company
In forms filed by the liquidator nominating causes of failure of each of the five companies, it is alleged that the liquidator falsely or negligently nominated causes of failure without having a proper or reasonable basis for such nominations. Issues requiring to be dealt with are whether the allegations properly arise under s.1292, and whether the liquidator properly stated the causes in question.
One purpose for which the forms were filed was to comply with s.533(1)(c) of the Act, which requires a report if the company may pay its creditors less than 50 cents in the dollar. Form EX01, part of an ASIC Regulatory Guide, which Mr Joubert filled out in the case of each of the five companies, having determined that they would each pay creditors less than 50 cents in the dollar, indicates that the liquidator was asked to go beyond the literal requirements of s.533 of the Act and, amongst other things, state what he considers to have been the causes of failure of the relevant company. I take it that a submission made to me in opening by Mr Jones SC on behalf of the liquidator that the form did not invite more than a statement of opinion, which did not need to have any sound basis is not pressed, since Mr Joubert accepted in cross-examination that he understood himself to have authenticated the form in terms of EX01, to which he referred by an abbreviated form of words in his electronic filing of the form. In any event, with respect, I do not accept the submission. The liquidator had to hold the opinions in question bona fide, and a liquidator had, or rather usually would be thought to have, some evident expertise in nominating the opinions.
I also do not accept that the collection of the form for “statistical purposes” qualifies the obligation of the liquidator to hold the opinions which he expresses. In any event, as Ms McDonald SC pointed out, s.15 of the Australian Securities and Investments Commission Act 2001 (Cth) provides: “If a report has been lodged under section ... 533 of the Corporations Act, ASIC may investigate a matter to which the report relates for the purpose of determining whether or not a person ought to be prosecuted for an offence against the corporations legislation...”.
It will be necessary to examine the causes nominated by Mr Joubert and to consider whether he had any basis for doing so. Mr Joubert asserted that he was told the causes by his referring accountants, CAP Accounting, probably at the initial meeting but perhaps later in the administrations. The question asks what the liquidator considers to be the causes of failure of the company, and does not, it is pointed out by Mr Jones SC in submissions, in terms require the liquidator to express a reasonably-based opinion. That means that if his opinions turn out to be wrong on some objective test, the liquidator is not for that reason alone in breach of duty. Of course, it would not be expected that a liquidator would express such an opinion without having what he considered was a proper basis to do so. The certification which the form requires, and which Mr Joubert intended to incorporate by reference in the documents he filed, was to the effect that the information in the form was “true and complete”.
Staff members who gave evidence about their recollection of this matter recalled that the nomination of the causes of failure was done in all cases by Mr Joubert himself.
One matter which is relied upon by Mr Joubert is the decision of the Full Federal Court in Murdaca v Australian Securities and Investments Commission [2009] FCAFC 92; (2009) 178 FCR 119; (2009) 258 ALR 223. In that case there was some discussion about the provisions of s.533 of the Act. At [100] the Court said that the liquidator is obliged to act bona fide and must not express views in the report which are not genuinely held. The court added: “Section 533 does not require that the liquidator have reasonable grounds for the views, opinions and statements expressed by him in such a report.” That remark was made in the context of findings made about whether ASIC’s powers under s.206F(1)(a) of the Act were engaged. That section enabled ASIC to serve a notice to show cause on a company director why he should not be disqualified from managing corporations, inter alia, if he had been the director of two companies in respect of which the liquidator had lodged a s.533 report about their inability to pay their debts. It had been held to be a threshold provision, satisfied if a liquidator filed reports under s.533 which appeared to be regular on their face, stating the relevant matter. The section did not require ASIC to investigate whether the reports were correct. The Court also remarked at [105]:
In our judgment, the liquidator is not required to express any particular views or conclusions in a s.533 report. If opinions or views on the part of the liquidator are expressed in the report, the liquidator is not required to set out the basis for such opinions or views. Nor is the liquidator obliged to have reasonable grounds for holding such opinions or views before articulating them...
The remarks which I have quoted were not intended in my opinion to state exhaustively the standards applicable to liquidators making reports under s.533. The Full Court stated that the opinions expressed must be genuinely held and must act bona fide, and I approach the matter on that basis. Not to have any basis for holding the opinions will usually involve a breach of duty. Not to hold the opinions at all will, consistently with what the Full Court said, amount to a breach of duty by the liquidator. I note the remark that the liquidator is not obliged to have reasonable grounds for holding his or her opinions. Having such reasonable grounds will obviously be desirable. To have suspicions rather than opinions may well involve a liquidator who does not make that fact clear in a breach of duty, and to base an opinion on material which the liquidator appreciates is not reliable may also well involve a liquidator in a breach of duty.
The Full Court was dealing with s.533 itself rather than the EX01 document referred to in the Regulatory Guide, which was, I understand, what was usual to be lodged at the time of the events in question. The reports described by the Full Court are not said to deal with causes of failure.
ASIC submits that one reason to reject part of Mr Joubert’s evidence is that Mr Joubert’s notes of his initial meetings with the accountants do not contain any reference to the causes of failure. Mr Jones submitted that the case made by ASIC that because things are not noted in Mr Joubert’s notes of his original discussions with the referring accountants, it did not happen, yet ASIC alleges that Mr Joubert is a poor note keeper. There is a certain tension between those two allegations, but at a general level, I have not understood ASIC’s allegation of a failure to keep records of his decision-making to include an allegation that particular diary notes which Mr Joubert did keep were incomplete. If Mr Joubert wanted to obtain the view of CAP Accounting as to the causes of failure, with a view to his later including those causes in a report to be filed with ASIC, it seems very unlikely that he would not have made a note, and instead relied upon his memory. Indeed one might expect that he would have also asked questions as to the basis on which any such view were expressed by CAP Accounting, so he could assess its reliability, and the notes similarly record nothing about that.
There was some reason for Mr Joubert to doubt the reliability of anything that was said by CAP Accounting about the reasons for the failure of the companies. In each case where he called upon that firm to produce its books and records relating to the companies they failed to do so. If they had books and did not produce them, that must have cast doubt on their bona fides. If they had no books, that casts doubt on their knowledge of the affairs of the company. Another matter of some relevance to the acceptance of Mr Joubert’s evidence about the nomination of causes of failure referred to by ASIC is that his annual reports did not regularly nominate the same causes of failure as did the reports made in Form EX01.
The causes nominated by Mr Joubert in the s.533(1)(c) forms filed by him electronically were as follows:
·Endeavour Cleaning: under-capitalisation; poor economic conditions and trading losses.
·World of Timber: poor management of accounts receivable; inadequate cash flow or high cash use; poor economic conditions.
·Aleksandra Holdings: poor management of accounts receivable; poor strategic management of business; poor economic conditions.
·Provenzano: poor management of accounts receivable; poor strategic management of business; inadequate cash flow or high cash use.
·Zagoonda: poor strategic management of business; poor economic conditions; inadequate cash flow or high cash use.
While it is true that those causes are not such as to excite suspicion of deliberate misconduct, there is no reason on the evidence to think that the liquidator was deliberately stating bland causes of failure so as to deflect any regulatory concerns. Moreover, he made it clear in the s.533 forms that his sources of knowledge were limited. In each of the forms he disclosed that he had not obtained or inspected the books and records, and was not reporting any possible misconduct on the part of the directors. It was reasonable for him to expect that, given the limitations on his sources of knowledge about the companies, his nomination of causes would not be regarded as definitive.

To exemplify differences in the statement of causes of failure stated in the annual reports it suffices to take one example. In the annual report of Provenzano, signed five days before the s.533(1)(c) form, he stated that it appears that the reasons for the company’s failure were: poor strategic management; economic conditions and particularly the economic downturn; inadequate cashflow and capital injection; and poor trading performance.
The annual report also stated that Mr Joubert had not received “sufficient books and records of the company and consequently written demands for books and records pursuant to the Act have been served on the director and external accountant”. It went on to say:
Accordingly, at this stage of the liquidation we are of the view that the Company has not maintained adequate books and records in accordance with Section 286 of the Act. The books and records failed to explain the financial position and performance of the Company, and did not explain the true nature of the Company’s transactions.
The annual report was a document filed with ASIC, as Mr Joubert elected in each case to rely upon s.508(1)(b)(ii), rather than to adopt the alternative provided by that section of convening a meeting of creditors. Thus it would have been apparent to ASIC (if it compared the two documents) that the document under s.533(1)(c) and the document under s.508(1)(b) stated causes of failure somewhat differently. Each of the documents made it clear that the liquidator’s sources of knowledge were limited, and neither of the documents explained how he had discovered the apparent causes of failure. Such a reading of both documents would tend to confirm that the nomination of causes in both documents was possibly unreliable.
In Mr Joubert’s statement he begins by saying that although he has no recollection of exactly what he was told in the five liquidations, he recalls having discussions with CAP Accounting and Banq Accounting and in each case being given a very brief outline of the causes of the company’s failure. The source of knowledge which he identified in evidence, the referring accountants, was, as I have suggested not apparently reliable. The accountants consistently failed to produce any books and records to him when required to do so, although they put in proofs of debt indicating that they were owed professional fees. On that basis his nomination of the causes of failure is open to criticism, and suggests a somewhat cavalier approach to the discharge of his duties. He stated that he sometimes made a note of what he was told about causes of failure, and sometimes did not. If he intended to state the same causes to ASIC in due course, I do not understand why no note would be made. The evidence before me contains no example of a note of an initial (or later) meeting with the accountants in which causes of failure were mentioned.
Having heard his evidence I am not persuaded that he took the sources of failure from the referring accountants, or even that his nomination of the causes of failure was believed by him to be soundly based.
However, the liquidator is not to be found to be in breach of duty simply because his evidence is unpersuasive. This is all the more so after the passage of some eight or nine years since the events in question. I have concluded that I should make a finding adverse to Mr Joubert on the question of the alleged breach of his duty of due care and diligence based upon my apprehension of the probabilities: there is no note to justify his suggestion that the accountants told him these causes, and in any event reliance by him on what they said about the matter would have been improbable.
ASIC’s senior counsel, Ms McDonald SC, put to Mr Joubert that in nominating the causes of failure, he was reckless as to whether those causes were correct. She also put that he did not hold the opinions. It seems to me that either Mr Joubert held the opinions or he did not. If he did not, as the Full Court held in Murdaca, there was a breach of duty. If he had no proper basis for holding the opinions, at least in his own mind, then it is almost the same as if he did not hold the opinions at all. The suggestion that he was reckless as to whether he held the opinions or not may be tantamount to a suggestion that he was putting forward guesses, rather than opinions, as to the causes of failure. It seems to me that the main question is whether he had the opinions at all.
It was submitted by Mr Jones that in part at least, what was noted as having been said to Mr Joubert at the initial meetings provided support for the causes later nominated by him. That support is rather difficult to discern, and is not express, as one would expect if Mr Joubert was making a note about what he was told as to the causes of failure. He also submitted, with justification, that the global financial crisis was likely to have affected the operations of all five companies, so that a nomination of poor economic conditions was hard to criticize.
Mr Jones submitted in final submissions that there was another basis for the opinions as to causes of failure of the companies. He submitted that an examination of various documents in the liquidator’s files might have justified at least some of the opinions which he expressed. Such a case would have been easier to accept if Mr Joubert had given evidence that the documents in question constituted the basis on which he expressed the relevant opinions in his report. He gave no such evidence. At their highest, Mr Jones SC’s submissions show that he could have had a basis for the statement of some of his opinions in the documentary evidence in question. But in his preparation for the investigation by ASIC and for his statements and cross-examination before the Board and before me, he is likely to have made a careful examination of his files, and the only source indicated by him for the opinions he expressed was the referring accountants.
It is peculiar that he expressed any opinion at all about the causes of failure, because he had done so little to investigate the trading history of the companies. However he made no secret of that fact, indicating, for example, that he had not obtained the books and records. Thus he was not representing to a reader that the opinions he expressed should be regarded as reliable or were, in the circumstances, being put forward as such. That fact may qualify the significance of the breach of duty I have found.
Both parties made submissions before me about whether the failure of Mr Joubert to keep proper notes recording the decision-making involved in the administrations was itself a breach of his obligations. Section 531 of the Act requires the liquidator to keep books in which he or she must cause to be made entries or minutes of proceedings at meetings “and of such other matters as are prescribed”. Regulation 5.6.01 of the Corporations Regulations 2001 (Cth) (the Regulation) described the prescribed matters as “those that are required to give a complete and correct record of the liquidator’s…administration of the company’s affairs”.
In Nut Trading Co (Aust) Pty Ltd v KKL (Kangaroo Line) Pty Ltd (1997) 25 ACSR 580 at 606 Einstein J stated that what is required by the predecessor of r.5.6.01 are records of an accounting nature. That decision has not been uniformly followed and may be out of line with some later decisions to which I was referred by Mr Jones SC. A more expansive view of r.5.6.01 than that enunciated by Einstein J may well be available, but I do not think these proceedings require the close examination of relevant authorities. Mr Joubert’s notes are of greater significance as notes of conversations, than as records kept under the Regulation, which they may or may not have been intended to be.
Failures to investigate the affairs of Provenzano
Provenzano was another company in which Ms Foster was purportedly the sole director from 23 July 2009, and purportedly until that date two members of the Provenzano family, Salvatore and Piero, had been the directors for the previous 13 years, apparently since the company was taken off the shelf. Salvatore Provenzano remained the secretary throughout. By a document lodged with ASIC by Ash Corporate and Secretarial Pty Ltd (apparently an affiliate of CAP Accounting) on 25 June 2010 Ms Foster was shown as having been appointed the sole director from 23 July 2009 and as the sole shareholder, having purportedly bought all the issued shares from the Provenzanos on 23 July 2009. On 28 June 2010 Ms Foster chaired a meeting of members (being herself) resolving that the company go into voluntary liquidation and appointing Mr Joubert as liquidator.
On 28 June 2010 Mr Joubert summoned a meeting of creditors for 9 July 2010 and enclosing a declaration which disclosed amongst other things that he had first met with the company’s director/advisor on or around 28 May 2010 and that subsequently to that meeting the company’s register of directors had been changed and Ms Foster appointed as a new director and that he was the liquidator of the three other companies of which she was the director.
At paragraphs [193]-[212] of ASIC’s pleading a number of communications and dealings of Mr Joubert were summarised and ASIC thereafter alleged a number of failures to investigate against Mr Joubert. Those allegations are made in paragraphs [213]-[215] of ASIC’s pleading, each of which Mr Joubert’s pleading denies.
It is necessary first to recount salient aspects of the communications and dealings relied upon. Two motor vehicles were notified as having been sold in March and June 2010, not long before the voluntary liquidation resolution was passed. It then emerged on 8 December 2010 from a facsimile letter to Mr Joubert from the ATO that assets were sold to LGM NSW Pty Ltd (LGM)(as trustee for the Provenzano Asset Trust) also in March 2010 and the purported consideration was $129,044 including GST. Ms Foster was, according to the 25 June 2010 document, already the sole director of the company at the time of all three transactions of which Mr Joubert learned during 2010. If that document was incorrect about her commencing date, the Provenzanos appeared to have been the directors at the relevant times.
Mr Joubert’s demand for the company’s books and records of 9 July 2010 addressed to CAP Accounting had been ignored, as was usual in these five liquidations.
The 8 December 2010 facsimile received from the ATO appears to have spurred Mr Joubert into further action. On 8 December 2010, he sent letters addressed to Piero Provenzano and Ms Foster noting he had received no response to his letter requesting the company’s books and records and asking for a detailed accounting of the sale by the company of its assets to LGM on 29 March 2010 and a detailed accounting of the proceeds from the sale and how they were applied, and asking for copies of the company’s bank statements for the last two years and other records.
On 8 December he also asked CAP Accounting by email enclosing copies of his letters to Piero Provenzano and Ms Foster and asking for a response to his request for the books and records of 9 July 2010. Mr Jones SC asked me to infer that the meaning of the letter to CAP Accounting was that he expected the response to come from that firm. I think that the letter inferentially asks CAP Accounting to encourage or perhaps assist Ms Foster and Piero Provenzano to reply reasonably promptly.
On 20 December 2010 he wrote a letter in which he asked Piero Provenzano and Ms Foster to attend his office on 18 January 2011 and to deliver the books and records of the company. That letter nominated a definite date for their attendance, together, for an evidently important purpose. The recipients must have taken it to embody a formal requirement made by the liquidator.
On the same date he drafted a letter or drafted amendments (or perhaps, added a note) to a letter to Mr Salvatore Provenzano requiring him to deliver books and records to him and warning of consequences if he did not comply including that ASIC would be advised. Mr Joubert’s pleading responds to the allegations in this paragraph by admitting that he made annotations containing the warning and alleging that the letter was to be retyped and “potentially for further changes and ultimately for his signature”. The pleading says nothing about whether any letter was sent to Salvatore Provenzano.
As Mr Jones SC submitted the activity sheet for 20 December 2010 records that Mr Bowers spent an hour telephoning the ATO described as “Call to ATO Letter to Director/Former director/accountant” and a further hour described as “Letter to director/Mailing of Letters”. Whether he mailed two letters described in paragraph 119, or those letters and also the letter described in paragraph 120 is not clear.
On 18 January 2011 neither Ms Foster nor Piero Provenzano attended his office.
On 21 January 2011 he sent a circular to creditors which should be set out in full:
Circular to Creditors regarding Investigations
The records of the above named entity indicate that you are a creditor of the company. To date despite requests for books and records, l have received limited books and records from the external accountant and or director. As a result this has curtailed any in depth investigations into the financial affairs of the Company and the conduct of the director.
At present I am not in funds to conduct public examinations of the director and officers of the Company to obtain their evidence under oath as to the operations and trading of the Company and its ultimate demise.
Moreover I advise that pursuant to Section 545(1) of the Corporations Act 2001, a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property.
In this regard, I request that you advise me within 14 days from of this letter whether or not you are willing to fund any further investigations into the financial affairs of the Company or indemnify the liquidator against any adverse findings as a result of his investigations.
The results of my cursory investigations will be included in my report to ASIC pursuant to Section 533 of the Corporations Act 2001.
I look forward to hearing from you and should you have any questions, please contact me on (02) 8234 1558.
Dated 21 January 2011
Provenzano Marble & Granite Pty Limited
(In liquidation)
It is remarkable that the letter seeking funds from creditors did not mention the sale of 29 March 2010. Nor did it mention that three days earlier, Ms Foster and Mr Piero Provenzano had failed to attend on 18 January 2011, as they had been required to do by the letter of 20 December 2010. Mr Joubert would have appreciated that those facts gave him his best argument if he wished to persuade the creditors to put him in funds.
The “limited books and records” said to have been received were wrongly described, an error which Mr Joubert attributes to a staff error following a template from another matter.
The activity sheet for 24 January 2011 refers to Mr Joubert spending 0.8 of one hour “email to Amir re: letters re: ATO queries to directors”. That email has not been produced.
Thereafter Mr Joubert corresponded with CAP Accounting but not with either of the Provenzanos or Ms Foster. He was provided with a letter of 18 February 2011 from Mr David Cassaniti of CAP Accounting to the effect that the consideration for the sale was the assignment of the remaining obligations under the hire purchase agreement for the goods sold to LGM which reflected the value of the asset at the time. He was also said in the letter to have been provided with a copy of the documentation said to have been provided to the ATO, no copy of which has been provided by either party as part of the documents in this case.
Then, by way of letters on 8 & 9 March 2011, Mr Joubert asked CAP Accounting for any independent valuation of the assets involved in the sale. Some work by Mr Joubert on the GST issue appears from the activity slip for 8 March 2011 to have been done by him. How he spent the 1.3 hours claimed on that date does not appear from the evidence before me.
The activity slip for 9 March 2011 shows Mr Joubert spending 1.1 hours on the telephone to the ATO and ASIC and “letter to accountant” (presumably the letter of the same date referred to in paragraph 128). There is a faxed letter of 9 March 2011 to the ATO asking for a phone call. The content of the communication with ASIC is not explained in the evidence.
On 22 March 2011 the activity sheet shows Mr Joubert sending an email to the ATO, which is not before me.
On 13 April 2011 he was told by email by Mr Attia of CAP Accounting that the ATO was satisfied with the sale of the equipment and were not pursuing the matter any further and enquiring whether Mr Joubert required any further confirmation on this issue or a reply to his correspondence. On the following day, 14 April 2011, the activity slip indicates a 1.6 hour contact with Mr Attia regarding “status of investigations with ATO”.
On 14 April 2011 Mr Joubert wrote to the ATO enclosing Mr Attia’s email, asking the ATO to confirm it is not pursuing the matter. On 15 April 2011, the ATO responded that it had finalized its audit of the GST claim for the machinery based on supporting documentation received and stating the company was not audited as it was currently in liquidation and that the ATO’s decision should not prevent Mr Joubert from pursuing money for the machinery from the trust.
That is the extent of Mr Joubert’s action taken so far as the evidence before me reveals. As Mr Jones SC pointed out, a number of documents which ought to have been included in Mr Joubert’s file are missing, including the documentation said by CAP Accounting to have been provided to the ATO, mentioned above. Nevertheless no evidence has been given by Mr Joubert to suggest that anything else was done to investigate what happened about the asset sale to the trust, and he does not give evidence that CAP Accounting ever satisfied his demand for valuation evidence. There does not appear to be any report to ASIC that Piero Provenzano, and Ms Foster had failed to attend his office when required to do so, that no party had produced the books and records or bank statements, that Ms Foster or the Provenzanos had disposed of assets in 2010 in favour of the trust, that no valuations for that sale had been provided to Mr Joubert following his request to CAP Accounting, (or, even that motor vehicles had been disposed of in March and June 2010). Just why Salvatore Provenzano was excluded from the demands of December 2010, if he was excluded, is unexplained.
Importantly, why he did not reply to Mr Attia’s email of 13 April 2011 insisting that the information be supplied is also unexplained. Why the creditors were not asked for funds to investigate these matters in the light of the asset sales and failures or refusals to provide information, and why an application was not made to ASIC for funding is also not apparent. Mr Joubert’s burst of activity in writing letters seeking information and documents seems to have begun when he heard from the ATO, and to have ended when they ceased their GST investigation. The GST investigation carried out by the ATO seems to not have involved any verification of asset values, having regard to the contents of the ATO letter of 15 April 2011, and the letter from Mr Attia to Mr Joubert dated 13 April 2011 does not assert that the attitude adopted by the ATO had resolved the valuation question. On the contrary, it asked Mr Joubert whether he still wanted what he had asked for.
Mr Joubert’s answer to the case made against him may be summarized as follows: First, he relies upon s.545(1) of the Act which provides that subject to the section, a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property. That section has often been referred to in the courts, and affords an important protection to a liquidator without funds. The arrangement which I have found Mr Joubert had, which enabled him to send out invoices for work done and to be paid, presumably extended to the costs of appropriate investigative work. Otherwise the arrangement may have been a corrupt one. If Mr Joubert ceased to investigate the 2010 sales made by Provenzano because he was without funds, one would have expected him to notify creditors and ASIC of that fact in April 2010 but he did not do so. That he appreciated the need to investigate the transactions is apparent from the communications which he did send to CAP Accounting, Ms Foster and Piero Provenzano and which he may have sent to Salvatore Provenzano. His statement says that he became unenthusiastic about accepting referrals from CAP Accounting because he became concerned about the integrity of those he was dealing with, although he does not consistently indicate when in 2010 that occurred.

Mr Jones SC, during the sanctions hearing and after I had notified the parties of the findings made in the first section of this review (including all preceding paragraphs of these reasons, and such dishonesty findings as I made at paragraphs 162 above together with the findings at paragraphs 174-176 and 178 below) drew my attention to the document of “January 2010” an internal document of Mr Joubert described as a “File Review”. In relation to Aleksandra Holdings, Mr Joubert there wrote: “Foster also director of Endeavour & World of Timber ??”. He submitted that I should have regard to the fact that Mr Joubert was not cross-examined on paragraphs 7.60-7.62 of his statement of 16 October 2017. That statement read as follows at paragraphs 7.58-7.63:
7.58     In relation to my DIRRI the subject of paragraph 130 of the [ASIC’s Further   Amended Statement of Facts and Contentions], I again do not have a   specific recollection of my state of mind at the time of the preparation of the                 DIRRI, or of how I came to prepare an amended DIRRI on 12 January   2010.
7.59     I appreciate that, given that I had signed an amended DIRRI in respect of   [World of Timber] by 25 November 2009, I must have been aware by then                that Karen Foster was a director of both [Endeavour Cleaning] and [World                  of Timber] and that that relationship had to be declared.
7.60     It appears to me that, although I had been told that there were three   companies to be liquidated in my initial meeting with Mr Cassaniti, because                 [Aleksandra Holdings] was only sent to me some time later I did not draw   the connection at the time that this was the third of the three companies   that Mr Cassaniti had referred to.
7.61     I appear to have had a meeting with Mr Cassaniti in December 2009 before   signing the DIRRI. I believe I was made aware at that stage that Mr   Cassaniti was a shareholder of [Aleksandra Holdings]. I believe that my   state of mind was such that I regarded [Aleksandra Holdings] as a different              company to the previous referrals given Mr Cassaniti’s involvement. I   believe my state of mind may have been that I regarded this as a unique   company given David Cassaniti’s connection to it.
7.62     I also note that the DIRRI was signed on 17 December 2009, and it is very   possible that given that time of the year (which is traditionally a busy time   of year for liquidators) the pressures of work at the time resulted in me not                  paying as much attention as I ought to have to the ASIC reports obtained   by my office.
7.63     However, I can confidently state that I did not consciously conceal any   relationship with Ms Foster and I was not recklessly indifferent to whether   my DIRRI was accurate or not.
The paragraphs of Mr Joubert’s statement to which Mr Jones SC refers are unpersuasive as answers to an allegation of dishonesty. They are in a number of respects in the form of submissions, rather than evidence. They do not explain the matters to which I have drawn attention at paragraphs 51-53 above. Paragraph 7.59 of Mr Joubert’s statement appears to recognise in part what I have found in paragraphs 51-53 above.
Nor do I find the contents of the “File Review” of January 2010 to be a sufficient reason not to maintain the findings I have made at paragraphs 51-53 and 162-169 above. The document seems to record a decision to send out an amended DIRRI relating to Ms Foster. As I said in paragraph 166, it is not likely that it was sent out. If Mr Joubert decided in January 2010 to correct an erroneous DIRRI of December 2009, then unless he changed his mind again, it seems very likely that he would have made sure that it went out. Indeed a hesitant state of mind may be suggested by the words “Does not have not [sic] to creditors of Foster’s other liquidations”.
It does not seem to me that the “File Review” of January 2010 demonstrates that Mr Joubert was not conscious in December 2009 that his DIRRI was not false. The failure to send it out may indeed tend to show the contrary.
As to the causes of failure of the various companies, I have stated reasons why the evidence which he gave about the basis on which he stated his opinions is difficult to square with the probabilities and have stated my conclusions about that evidence. Nevertheless, he said enough in his documents to show that his own expressed opinions of the causes of failure were not likely to be soundly based and I have not been able to identify any motive for him to have stated opinions as he did. In particular, if he wished to mislead a reader about the causes of failure, he is likely to have realised that he would not succeed in doing so because his own sources of knowledge were slight. The passage of time may have lessened his ability to make clear the basis on which he relied in stating the causes of failure. I would hesitate to treat a cavalier approach to the discharge of his duties as sufficient to support an allegation of dishonesty. On the whole I am not prepared to make findings of dishonesty as to this matter.
As to the failure to disclose payments received in the Form 524 reports for World of Timber and Zagoonda, the allegations of dishonesty stem from Mr Joubert’s certification of the accounts and the allegation that he must have been conscious of the payments received. I have made findings of lack of due care and diligence in relation to those liquidations and also in relation to Endeavour Cleaning. The failures of duty were repeated in all three liquidations. The sums of money involved were not large, and no motive for failing to disclose them is apparent. While it appears clear that Mr Joubert acted carelessly in certifying the accounts, I am not satisfied that his certification was dishonest.
As to the Provenzano annual report, Mr Joubert’s failure to investigate the asset sales to the trust seems to me to be a motive for him to have failed to mention in the annual report the circumstances of that sale as known to him. It seems to me that his failure to give an account about the asset sale and the unresolved questions relating to it was both deliberate (in that it was something requiring to be mentioned to his knowledge) and dishonest.
Mr Jones SC sought to re-agitate this matter during the sanctions hearing. He submitted that the fact that the entitlement to claim an input tax credit was linked to whether the purchase was a creditable acquisition and the value of the taxable supply. Whether or not the ATO obtained evidence of value is not apparent, and the contrary may be implicit in the fact that the ATO notified Mr Joubert, as I have noted in paragraph 132 above that the conclusion of its investigation should not prevent him from “pursuing money for the machinery from the trust” and fails to take account of the other matters I have referred to in paragraphs 133 and 134. Furthermore Mr Jones SC’s submissions depend on no evidence given by Mr Joubert and ask me to infer that he knew matters about ATO audit procedures, when he may well not have done so. Notwithstanding the further submissions of Mr Jones SC during the sanctions hearing, I maintain the findings I have made about Provenzano including that made in paragraph 176.
As to the failure to disclose indemnities and payments received, while I have rejected Mr Joubert’s assertion that, properly understood, the arrangements he had with the referring accountants were not indemnities within the meaning of the Code, I am not prepared to reject his evidence that at the time of the declarations, he believed that the expectation or understanding he had did not amount to an indemnity, because as he saw it, they did not amount to an enforceable obligation. I do not make findings of dishonesty in this regard. Similarly, for reasons mentioned in paragraph 85 above, I do not make findings of dishonesty in relation to the matter of payments.
SANCTION - FINDINGS
As to sanction, I have now heard both parties.
ASIC submits that the Tribunal should affirm the Board’s decision that the registration of the applicant as a liquidator is to be cancelled. In particular it submits that this so having regard to the number of contentions proved against the applicant, the findings of dishonesty, the extent of his negligent conduct, the absence of remorse or acceptance of his failing and the questionable evidence of improvements in his practice. It submits that within the meaning of s.1292 of the Act, the applicant has failed to carry out adequately and properly the duties of a liquidator, and that he is not a fit and proper person to remain registered as a liquidator.
ASIC referred to statements of principle affecting these proceedings by the Full Federal Court in Albarran v Companies Auditors and Liquidators Disciplinary Board [2006] FCAFC 69; (2006) 151 FCR 466; 233 ALR 37 at [44] and [45] as follows:
[44] The purpose or object of the inquiry undertaken by the board, in exercising the power conferred by s 1292(2), is not the ascertainment or enforcement of any legal right, but the determination whether, in the view of the board, taking into account past failures of duties, a defeasible right should continue into the future. No punishment is imposed by reason of any conclusion that duties or functions have not been carried out or performed adequately and properly. Rather, upon being satisfied of past failures of duty, the board is empowered to deal with the continued existence of a statutory right. The only consequence of the making of an order under s 1292(2) is that the registration of the liquidator ceases, either permanently or for so long as a suspension may be in force. If a failure to carry out or perform duties or functions properly and adequately constitutes a contravention of the Corporations Act or of any other provision, that is not the matter, relevantly, for the board to decide. Even if the board were to conclude that there had been a failure to carry out and perform relevant duties and functions adequately and properly, and even if it be the fact that that failure constituted a contravention of the law, the punishment of that contravention would be a matter for an entirely different tribunal, namely, a court exercising an entirely different species of power, namely, judicial power.
[45] The exercise of power under s 1292(2)(d) does not turn on the Board being satisfied as to a legal standard. It may be that the failure to carry out and perform a relevant duty or function is an offence. However, that is not what the Board is called upon to determine by the terms of s 1292. The question of the adequacy and propriety of the carrying out or performance is to be judged by the Board by making an evaluative or subjective determination. Having made that evaluative or subjective determination, the Board will consider whether the rights of the registered liquidator as to the future are to be changed by the exercise of the power under s 1292(2) in the light of all the considerations before it that are considered relevant.
The submissions of ASIC (and also those of Mr Joubert) embraced as correct the summary provided by Deputy President Tamberlin in Hill and Members of the Companies Auditors and Liquidators Disciplinary Board and Australian Securities & Investments Commission [2015] AATA 245 at [18]:
[18] The relevant legal principles which are applicable to the circumstances of this case are briefly summarised below:
(a)The principal purpose of the proceedings is protective rather than punitive and the guiding principle is protection of the public;
(b)The protection of the public includes ensuring that those who are unfit to practise do not continue to hold themselves out as fit to practise;
(c)The protection of the public includes deterrence;
(d)It also includes the maintenance of a system under which the public can be confident that practitioners will know that breaches of duty will be appropriately dealt with and that the regulatory regime applicable to auditors is effective in maintaining high standards of professional conduct.
(e)The impact of the Board’s orders on the practitioner is to be given limited consideration, as the prime concern of the Board is the protection of the public;
(f)Relevant matters include the respondent’s recognition and acceptance of the breaches of duty, attitude to compliance generally and willingness to improve. Genuine acceptance of failure, contrition and remorse are necessary requirements to rehabilitation; and
(g)If a respondent is not considered fit and proper, suspension is not appropriate unless the Board can be confident that the respondent would be fit and proper after the period of suspension.
Those principles also appear to me to be correctly stated. ASIC stressed the importance of general deterrence in a matter such as this and the need to maintain a system under which the public can be confident that practitioners will know that breaches of duty will be appropriately dealt with.
At the time of the Board’s decision, s.1292(9) provided as follows:
…
(9) Where, on an application by ASIC or APRA for a person who is registered as an auditor, as a liquidator or as a liquidator of a specified body corporate to be dealt with under this section, the Board is satisfied that the person has failed to carry out or perform adequately and properly any of the duties or functions mentioned in paragraph (1)(d), (2)(d) or (3)(d), as the case may be, or is otherwise not a fit and proper person to remain registered as an auditor, liquidator or liquidator of that body, as the case may be, the Board may deal with the person in one or more of the following ways:
(a)by admonishing or reprimanding the person;
(b)by requiring the person to give an undertaking to engage in, or to refrain from engaging in, specified conduct;
(c)by requiring the person to give an undertaking to refrain from engaging in specified conduct except on specified conditions;
and, if a person fails to give an undertaking when required to do so under paragraph (b) or (c), or contravenes an undertaking given pursuant to a requirement under that paragraph, the Board may, by order, cancel, or suspend for a specified period, the registration of the person as an auditor, as a liquidator or as a liquidator of a specified body corporate, as the case may be.
The Board’s findings did not include consideration of ordering the lesser sanctions mentioned in s.1292(9), presumably because the Board did not contemplate making any of those orders. The findings I have made in some respects are more serious than those made by the Board, particularly the dishonesty findings which I have made. Some of the findings I have made are also more specific than those of the Board and my findings take account in a number of respects of intervening events.
ASIC made submissions directed to the question of the choice between an order of cancellation of registration and an order of suspension of registration. Those submissions were framed by reference to earlier Board decisions which drew, by analogy, upon earlier appellate decisions in relation to legal practitioners. In Law Society of NSW v McNamara (1980) 47 NSWLR 72, the New South Wales Court of Appeal heard an appeal from the Statutory Committee of the Law Society. The Court unanimously allowed the appeal, but for different reasons. Reynolds JA discussed whether a suspension of the solicitor rather than an order removing his name from the rolls was appropriate. He said:
…an order for suspension must be based upon a view that at the termination of the period of suspension the practitioner will no longer be unfit to practice because, subject to the limitation imposed on the issue of a practicing certificate, his name will then be on the roll of solicitors and he may resume his practice.
In Ziems v The Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279; [1957] ALR 620, the High Court discussed a choice between the suspension and disbarment of a barrister. Dixon CJ, who dissented as to the actual result of the appeal, held that it is open to the Supreme Court to suspend a barrister from practice. His Honour added:
But, even so, it is probably a better course in most cases where room exists for the belief that time may give the barrister a title to resume his place at the Bar to allow him to re-apply at a subsequent time and offer positive evidence of the grounds upon which he then claims to be re-admitted.
As with legal practitioners, an order terminating the registration of a liquidator does not, as such, prevent the practitioner from applying for fresh registration if he can then demonstrate his fitness to practice again and otherwise comply with the regulatory regime then applying.
ASIC also suggested that the findings of dishonesty in professional practice which I have made directly went to the question whether Mr Joubert is a fit and proper to be a registered liquidator.
ASIC stressed that at the sanctions hearing before the Board, the applicant accepted that at the time of the events complained of, he was not fit and proper to have been registered. He then expressed contrition and suggested that he had learned from his mistakes. The Board found that he had not been and still was not a fit and proper person to remain registered and before the Tribunal, despite the applicant having indicated to the Tribunal when applying for a stay of the Board’s order that the Board’s findings were not to be put in issue, he contested a number of those findings, and now denied that he had previously not been a fit and proper person to be registered.
I say at once that I do not draw much from the fact that Mr Joubert gave changing evidence about these matters. What is important is the objective significance of the findings I have made rather than the admissions once made by the applicant before the Board, or when he applied to this Tribunal for a stay. While the applicant sought to defend his conduct before the Tribunal, he expressed a degree of contrition for what he had (on his own case) done or failed to do, and asserted that steps had been taken to improve his practice’s procedures, which he accepted were previously deficient.
As to the seriousness of his conduct, ASIC submitted that:
… The seriousness of the Applicant's conduct is demonstrated by the following:
(i)     his conduct occurred during the liquidations of five separate companies from the period 15 October 2009 with the [Endeavour Cleaning] liquidation to 6 February 2012 with the deregistration [Provenzano];
(ii)    his failures that occurred in each liquidation covered wide ranging conduct of the liquidation;
(iii)    the Applicant's failures were common to and repeated in a number of liquidations and was systemic it was not an aberration or "one-off' behaviour;
(iv)   none of the liquidations were complex and there were no mitigating factors or circumstances for his failure or misconduct;
(v)    The merely amplifies the serious significant and extensive nature of his failures in this misconduct, which not only related to many different aspects of the liquidation but found him lacking in the performance of the most fundamental, basic standard and rudimentary tasks the liquidator is required to perform in the discharge of his duties when conducting a liquidation; and
(vi)   Some of the failures in the [Provenzano] and [Aleksandra Holdings] liquidations occurred after the review by ASIC in July 2011; …
Mr Jones SC submitted that I should find that Mr Joubert has learned his lesson and ought to be allowed to remain registered. He referred to a number of remarks in my earlier findings to changes which Mr Joubert has made to his practice, and submitted that ASIC led no evidence to the contrary of those assertions. As to that, I should repeat that ASIC called evidence of multiple current systemic failures by Mr Joubert’s firm. Mr Joubert responded to such evidence by evidence to the effect that insofar as those failures were capable of remedy, he had forthwith after learning of Ms Flunder’s statement, taken steps to ensure that they were remedied. ASIC also submitted that steps taken by Mr Joubert to correct past failures had not included evidence of any outside audit.

The present proceeding is concerned with the position today in the light of all the evidence before the Tribunal. On the other hand it is right to say that the contentions of ASIC direct close attention to five particular liquidations and it is the action and inaction of Mr Joubert in those matters only which has been the focus of the ASIC contentions in these proceedings, and I have made findings about each of those contentions. Some of the contentions are less serious than others.
The findings which I have made which seem to me to be most serious are (in the same order as dealt with in these reasons):
·those concerning the curious role played by Ms Foster in four of the liquidations and the failure to disclose that there was a relationship with her in the first three (or at least the second and third) liquidations;
·the failure to follow up demands for the attendance of directors to attend his office in the Provenzano liquidation;
·the bringing to a premature end of the investigations of the machinery sale to related parties in the Provenzano matter and the failure to give an account of those matters in the annual report, together with a failure to seek funds on a realistic or commercially attractive basis from creditors for the investigation of that sale;
·the repeated use of formulaic templates containing inaccurate information in annual reports; and
·the dishonesty findings.
The other (less serious) findings of failures which I have made, taken together, mean that there are a plethora of additional respects in which Mr Joubert has fallen below the standards of his profession.
In Gould at [102] Lindgren J analysed s.1292(2) of the Act, and held that the words “or is otherwise not a fit and proper person to remain registered as a liquidator” show that the provision takes it for granted that a failure to adequately and properly perform the duties of a liquidator will, without more, demonstrate that the liquidator is not a fit and proper person to remain registered as a liquidator. He observed that consistently with this understanding, the expression “the duties of the liquidator” directs attention not to a specific duty, or even to two or more specific duties, but to the duties in general of a liquidator. His Honour added that of course, whether a registered liquidator has failed to perform adequately and properly the duties in general of a liquidator will be decided by reference to his or her failure to perform specific duties.
Lindgren J also said that both in determining whether the liquidator has failed adequately and properly to perform his duties, and in determining the question whether he or she is fit and proper to remain registered, what is required is an assessment, evaluation and judgment of the liquidator’s conduct. I approach the question before me on that basis. The findings which I have made have involved a close assessment of the contentions made by ASIC.
Especially because of the more serious findings to which I have referred and because of the number of less serious adverse findings I have made, I find that within the meaning of s.1292(2) of the Act, he has failed to carry out or perform adequately or properly the duties of a liquidator. This is so notwithstanding that there has been improvement in Mr Joubert’s practice, affecting the less serious findings I have made.
Because of the contentions made in these proceedings, the findings I have made mostly relate to matters which are now historical. They relate to creditors’ voluntary windings up, conducted by a registered liquidator. When he did or omitted to do those things, he was not inexperienced and had been employed in the industry for quite some time, although his actual registration was recent. A creditors’ voluntary winding up may be carried out by a person who is not a registered liquidator, but that does not mean that the standards applicable to a registered liquidator carrying out such work were inapplicable.
The fact that only five liquidations have been studied in detail means that no findings can be made about the extent to which Mr Joubert has engaged in similar conduct since those liquidations, or in any other liquidations. Some other liquidations were looked into by ASIC in 2011 and I have no evidence about them from either party. There has been, so far as the evidence indicates, only an external consideration by ASIC of the compliance by Mr Joubert with his reporting obligations, and that led to Ms Flunder’s report. I have not directed any response by Mr Joubert to evidence of later investigations by ASIC which was tendered on the day before the sanctions hearing, too late for Mr Joubert to respond to it.
Mr Rubenstein has a ten per cent share in Mr Joubert’s firm and he had no connection with any of the liquidations which are in issue here. I make no criticism of evidence he has given before the Tribunal. He entered into partnership with Mr Joubert during the pendency of a stay ordered by this Tribunal and with the knowledge that his partnership would come to an end if Mr Joubert ceased to be registered. His participation in the firm as a partner may well have been beneficial, but the scope of this review relates to a time prior to his involvement in the affairs of the firm. He is even at the present time a minority partner.
The more serious matters to which I have referred in paragraph 195 above also satisfy me that Mr Joubert is not a fit and proper person to remain registered as a liquidator. I have particularly in mind the need to protect the public, the need for deterrence and to maintain public confidence in registered liquidators. In some of the less serious matters of contention which I have found established, there is reason to think that Mr Joubert’s practices have improved since the relevant conduct.
Mr Joubert obtained a stay, subject to conditions, of the Board’s decision. The conditions may have been onerous to him but allowed his registration to continue. Entering into partnership with Mr Rubenstein allowed him to mitigate the consequences of the conditions to some extent. The impact of any sanction on Mr Joubert is a consideration of less importance than the public interest.
DECISION
I am to review the Board’s decision, not its reasons, but I have had some regard to the fact that the Board came to a similar opinion on evidence before it, and that its composition included one registered liquidator. Its decision was that Mr Joubert’s registration as a liquidator should be terminated, and I believe that to be the correct or preferable decision having regard to all the circumstances which have been the subject of my findings. The reviewable decision will be affirmed.

I certify that the preceding 205 (two hundred and five) paragraphs are a true copy of certain findings made herein by Deputy President B W Rayment

...........................[sgd]................................................
Associate
Dated: 19 April 2018

Date(s) of hearing: 28-30 November, 1, 4-5, 7-8 December 2017 &
9 April 2018

Counsel for the Applicant: Mr M Jones SC

Solicitors for the Applicant: Clyde & Co

Solicitors for the Respondent: Australian Government Solicitor

Counsel for the Other Party: Ms P McDonald SC & Mr P Russell

Solicitors for the Other Party: Australian Securities and Investments Commission

Date(s) of hearing:	28-30 November, 1, 4-5, 7-8 December 2017 & 9 April 2018
Counsel for the Applicant:	Mr M Jones SC
Solicitors for the Applicant:	Clyde & Co
Solicitors for the Respondent:	Australian Government Solicitor
Counsel for the Other Party:	Ms P McDonald SC & Mr P Russell
Solicitors for the Other Party:	Australian Securities and Investments Commission