(1) A person who is disqualified from managing corporations under this Part commits an offence if:
(a) they make, or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(b) they exercise the capacity to affect significantly the corporation's financial standing; or
(c) they communicate instructions or wishes (other than advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation) to the directors of the corporation:
(i) knowing that the directors are accustomed to act in accordance with the person's instructions or wishes; or
(ii) intending that the directors will act in accordance with those instructions or wishes."
8 The difficulty is that the court does not have jurisdiction to make an order that the first defendant desist from doing the things mentioned in s.206A(1), whether for a specified period or at all. There is no power under the Corporations Act for the court to make an order forbidding a person to be a director or secretary of corporations generally or compelling a person to desist from all acts of management and administration in relation to corporations. There is a power under each of ss.206C, 206D, 206E and 206F, exercisable by the court upon application made by ASIC, to "disqualify a person from managing corporations" for a period determined in accordance with the particular section. But the only consequence of such an order of disqualification is to subject the person in respect of whom it is made to the s.206A regime which makes it an offence for a disqualified person to do any of the things concerning management and administration of corporations mentioned in s.206A(1). A disqualification order under any of the sections mentioned does not, of its own force, operate to restrain the person concerned from engaging in any conduct. Its sole effect is to bring the person within s.206A.
9 The offence created by s.206A(1) is stated to be an offence of strict liability. This means that what the Criminal Code (Cth) calls "fault elements" are not part of the offence and that the defence of "mistake of fact" under s.9.2 of that Code is not available. Section 206A(2B) does, however, say that it is a defence to a contravention of s.206A(1) if the person concerned has permission under s.206F or s.206G which includes leave to manage the particular corporation in question. There is thus a special statutory scheme, complete with its own mental elements and mechanisms for dispensation.
10 It would be inconsistent with this scheme of regulation, in which a declaration by the court under s.1317E may lead on to the court's making an order of disqualification under s.206C the effect of which is to cause conduct otherwise lawful to be an offence under s.206A(1), for the court simply to make an order prohibiting the doing of the things which, if done, would amount to the offence. The Corporations Act does not allow any such order to be made; nor does any established head of equitable jurisdiction. While an injunction may lie where conduct will entail contravention of a statutory prohibition, the position in the present context is that there is no statutory prohibition (in the form of creation of an offence) unless and until both a s.1317E declaration and a s.206C order have been made by the court. The foundation for the grant of a final injunction therefore does not exist in this case.
11 Since, on this analysis, the court has no power to grant an injunction in the same terms as the proffered undertaking, the constraints discussed in the Thomas Australia Holdings case mean that it will not accept that undertaking.
12 What I have said is not intended to call into question the parties' intention and desire to settle the proceedings. It is not the function of the court to impede settlements. On the contrary, parties to litigation are encouraged to resolve their differences wherever possible so that negotiated outcomes may be achieved and resources can be used in other directions. The problem here is solely with the proposed manner of settlement.
13 Alternatives are, no doubt, available. There might, as in the cases before Bryson J and White J mentioned at the beginning of these reasons, be a proposal that the court make consent declarations and orders under ss.1317E and 206C. An alternative might be acceptance of the proposed undertaking by ASIC rather than by the court. There may be other available courses. The various courses potentially available will no doubt have pros and cons from the perspectives of the parties. The court does not, of course, advocate the adoption of any of them.
14 In relation to the first of these alternatives, I have given some consideration to the question whether the material the parties have already put before the court will enable it to assess the circumstances sufficiently to warrant the making of a declaration of contravention and a disqualifying order by consent. My view at the moment is that it will not. ASIC's claims and the basis for them are clear. The first defendant has filed points of defence which, as to all relevant ingredients, traverse ASIC's allegations. Both sides have filed extensive affidavit evidence with even more extensive annexures and exhibits. These materials in the "raw" and voluminous form in which they currently exist provide no ready basis for ascertaining even the basic facts. I do not consider that the first of the possible approaches is likely to be productive unless and until the parties are able to put before the court material in the way of agreed facts sufficient to permit in this case the course that was followed by both Bryson J and White J.
15 As to the second possibility, I note the terms of s.93AA of the Australian Securities and Investments Commission Act 2001 (Cth):
" Enforcement of undertakings
(1) ASIC may accept a written undertaking given by a person in connection with a matter in relation to which ASIC has a function or power under this Act.