ASIC v RICH & ORS

-IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5934/01 IN THE MATTER OF ONE.TEL LIMITED (IN LIQUIDATION) AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v. RICH & 3 ORS JUDGMENT 1 HIS HONOUR: These reasons relate to the application made by the plaintiff and the second defendant Mr Bradley William Keeling for agreed declarations and orders effectively disposing of the proceedings as between those parties. Mr Keeling joined with ASIC in a Statement of Agreed Facts which I received in evidence and which is the basis on which I have acted. 2 ASIC commenced these complex proceedings in December 2001 and after several amendments ASIC's claim appears in the Second Further Amended Statement of Claim (2FASC). The first, second and third defendants Mr Rich, Mr Keeling and Mr Greaves were founding directors of One.Tel Ltd. Mr Rich and Mr Keeling together held the office of Joint Managing Director through One.Tel's business life from March 1995 to 17 May 2001, and Mr Greaves was a non-executive director for most of that period. The fourth defendant Mr Silbermann was a director from 30 July 1997 for the rest of One.Tel's business life; he held the office of Finance Director. Mr Rich, Mr Greaves and Mr Silbermann are not parties to the proposed orders or to the Statement of Agreed Facts which was put before me. The Statement of Agreed Facts is not their document and what I now treat as facts are not in any way related to their positions. Only Mr Keeling's conduct has come under my consideration. It would be an error, and it would be quite unfair, to suppose that I have said or implied anything about the circumstances or conduct of any other defendant. 3 The relevant events when they happened were breaches of the Corporations Law but remedies provided by the Corporations Act, which commenced on 15 July 2001, are available in respect of contraventions of the Corporations Law which took place earlier; see s.1400 of the Corporations Act. 4 One.Tel Ltd was listed on the Australian Stock Exchange (ASX) from not long after it was founded in 1995 until 2001. It went into voluntary administration on 29 May 2001 and into liquidation, upon a decision made by creditors in the administration, on 24 July 2001. It began business in May 1995 as an Optus GSM Service Provider in Australia. Its business expanded greatly and included operations in the United Kingdom and several other countries; it came to have 2.4 million customers world-wide including over 500,000 in the United Kingdom. One.Tel came to do business reselling Optus Mobile Phone Services, reselling Telstra Local and Long Distance International calls, reselling Telstra Internet Services, selling pre-paid phone cards for long distance calls; and set about but did not complete constructing a mobile phone network of its own. A huge expansion of activities and liabilities was involved in constructing the network, including contracts committing expenditure of more than $1.1 billion with Lucent Technologies. The Group associated with One.Tel employed 3000 persons throughout the world and had many subsidiaries. In 1999 News Ltd and Publishing and Broadcasting Ltd made investments of around $1 billion in One.Tel. 5 One.Tel experienced huge trading losses and reductions in net realisable value in 2001 up to 29 May 2001. During this period One.Tel incurred a net trading loss of at least $92 million; a figure to which I return. In these months the net liquidity position of One.Tel worsened by very large amounts; from a deficiency of $24.5 million on 28 February 2001 to a deficiency of $98.7 million on 29 May 2001. The deficiency in liquidity precipitated the failure of One.Tel's business but was not the only expression of its failure. 6 In 2FASC there are allegations at length spelling out the responsibilities of Mr Keeling as a Joint Managing Director. Many responsibilities were alleged including responsibility to properly assess the financial position and performance of the group and to detect and assess any material adverse development; and to take reasonable steps to ensure that directors were fully informed of all material financial information, including information about the adequacy of the cash reserves and One.Tel's actual financial position and performance. 2FASC referred to Mr Keeling's obligation to act with the degree of care and diligence which reasonable persons would have exercised as directors. 7 2FASC and the Statement of Agreed Facts establish in detail the deterioration which occurred in the financial position and performance of the One.Tel Group from 1 January 2001 onwards. By 28 February 2001 One.Tel actually required a cash injection of at least $270m to continue its existing operations and meet current and reasonably foreseeable liabilities, and the requirement for a cash injection was at least $287m by 31 March 2001. One.Tel would also incur additional indebtedness to Lucent Technologies of approximately $365m for capital works relating to the construction of the network. The circumstances leading to and constituting this deterioration in One.Tel's financial position are set out at great length in a Schedule to 2FASC. Mr Keeling ought to have known the true position, but did not; he wholly misunderstood the facts of One.Tel's financial position and performance throughout the period from about the end of January until about the end of April 2001 (if not later). As a result he was not able to and did not ensure that the Board or for that matter he himself was aware of One.Tel's financial circumstances and its deterioration throughout the period, and he did not take reasonable steps either to apprise himself of those circumstances or to ensure that the Board was aware of them. Mr Keeling has acknowledged that these failures constituted contravention of his duty of care and diligence imposed by s.180 of the Corporations Law. 8 Mr Keeling caused or permitted to be made, without correction or qualification, two public statements about One.Tel's financial position and performance which were entirely incorrect; one on 27 February 2001 and one on 4 April 2001. These were public announcements, they were communicated to ASX, the information in them was altogether incorrect and objectively there was no reasonable factual basis for them, as Mr Keeling ought to have known. It was Mr Keeling's duty to notify to ASX the actual circumstances as to the financial position and performance of the One.Tel Group shortly after the end of each month from January onwards, but he did not know those circumstances and did not comply with this duty. 9 The extent and effects of the collapse of the One.Tel group are indicated by information contained in a report of the liquidator of One.Tel Ltd dated 14 November 2002. The liquidator estimated that there would be a shortfall to creditors of $240m and that each creditor would receive only 25 to 30 cents in the dollar. 10 I have given a short summary of the Statement, and have regard to the whole Statement. The admissions were extensive, but there were non-admissions and denials of some of the allegations against Mr Keeling in 2FASC. At a number of places in 2FASC allegations were made against Mr Keeling in more stringent terms than the facts accepted by ASIC in the Statement of Agreed Facts. ASIC did not admit the sufficiency or correctness of his non-admission and denials, but the only facts adverse to him upon which I act are those which he has admitted. 11 Remedies of the kinds which ASIC and Mr Keeling have joined in putting forward for me to award are obviously appropriate. These remedies are not slight matters. With Mr Keeling's consent I have been asked to make a series of declarations and orders under s.1317E of the Corporations Act establishing his failures in respect of One.Tel's financial circumstances in January, February, March and April, including his failures to recommend, month by month from about 28 February 2001 onwards, that the One.Tel Group cease to trade or appoint an administrator unless a large cash injection was obtained. I have also been asked to make further declarations establishing contraventions of subs.180(1) relating to failing to monitor management, to take reasonable steps to assess One.Tel's financial position and performance and to take reasonable steps to assess properly material adverse developments; and failing to put the Board into the position to act in those ways. Then there are further declarations relating to failures to ensure the establishment of appropriate systems to produce financial information which was accurate and reliable, failure to maintain cash reserves at a level which ensured liquidity, and failure to take reasonable steps to employ an appropriately qualified finance director. Then there are declarations relating to contraventions of s.180 in relation to media releases in February and April, and failures to make appropriate notifications to ASX. 12 After these declarations I was then asked to make an order pursuant to ss.206C and 206E of the Corporations Act that Mr Keeling be prohibited from managing corporations for ten years. A further order would require him to pay compensation to One.Tel of $92m. There are other ancillary orders relating to staying enforcement of the disqualification for two months, paying ASIC $750,000 costs, and other subsidiary matters. 13 I should mention two qualifications which are parts of the agreed orders. Paragraph 20 of the Agreed Declarations and Orders submitted to me was as follows: "Note that it is agreed between ASIC and Mr Keeling that the declarations and orders to which Mr Keeling is consenting will not constitute full satisfaction of ASIC's claims made in these proceedings and that ASIC is at liberty to pursue its claims against the other defendants and any other persons." Paragraph 20 reflected advertence to difficulties exposed by the decision of the High Court in Baxter v. Obacelo Pty Ltd (2001) 76 ALJR 114. 14 During the course of argument some concerns were expressed by counsel for Mr Rich and Mr Silbermann about possible adverse effects on those defendants of the orders proposed to be made against Mr Keeling. Thereafter ASIC and Mr Keeling asked me to add the following words as a preamble to the Agreed Declarations and Orders: The Court makes the following declarations and orders noting: (a) that they are intended to be operative only between the plaintiff and the second defendant and are not intended to be binding on or in any way affect any other defendant in the proceedings; (b) that in particular the declarations concerning the conduct that constituted the contraventions of the Corporations Act are not binding upon or conclusive evidence of facts against any other defendant in the proceedings. 15 Some of the declarations state circumstances of Mr Keeling's conduct which are circumstances in which Mr Rich or Mr Silbermann had some part. Counsel for the first and fourth defendants Mr Rich and Mr Silbermann opposed the making of the orders and opposed disposition by the Court of the proceedings against Mr Keeling at the present time and in the manner which ASIC and Mr Keeling propose. These submissions referred to s.1317E(2) and s.1317F of the Corporations Act, which are: SECTION 1317 DECLARATION OF CONTRAVENTION IS CONCLUSIVE EVIDENCE 1317(2) [Content of Declaration] A declaration of contravention must specify the following: (a) the Court that made the declaration; (b) the civil penalty provision that was contravened; (c) the conduct that contravened the provision; (d) the conduct that constituted the contravention; (e) if the contravention is of a corporation/scheme civil penalty provision - the corporation or registered scheme to which the conduct related. SECTION 1317F DECLARATION OF CONTRAVENTION IS CONCLUSIVE EVIDENCE 1317F A declaration of contravention is conclusive evidence of the matters referred to in subsection 1317E(2) 16 Counsel contended that the declarations sought may have legal or practical effect on other parties who do not consent to them, and for that reason they ought not to be made without a hearing on the merits. He contended that the Court should not give its imprimatur to agreed declarations of fact where the facts which, on their face the declarations establish are actually hotly in dispute; the Defences filed by Mr Rich and Mr Silbermann, which they have verified, dispute many of the matters dealt with in the proposed declarations. By way of illustration, counsel contended that if the declarations were made they would establish that the financial circumstances of the One.Tel Group referred to as the January Circumstances, and so on for each month until April, actually exist in fact, and that s.1317E(2) and s.1317F have the effect of making the declaration conclusive evidence of the facts declared in them relating to the January circumstances, and so on for each month. 17 Counsel also contended that, whether or not s.1317F makes such a declaration conclusive evidence as against Mr Rich and Mr Silbermann of any facts, those facts would be seen to be obtaining the Court's imprimatur or token of approval of their correctness when the Court made the declarations. He referred to possible litigants other than ASIC of whom it might be anticipated that they may rely or seek to rely on s.1317F to contend that the declarations against Mr Keeling were conclusive evidence of some facts. Possible sources of contentions of that kind include the liquidator of One.Tel in proceedings against directors alleging insolvent trading, and proceedings by particular creditors who may decide to act without the liquidator and claim remedies for insolvent trading. He also pointed to the possibility that an insurer or alleged insurer of Messrs Rich and Silbermann may seek to place some similar alliance on the declarations as conclusive evidence in litigation relating to the extent of insurance available to them. Counsel suggested that there are other persons whose interests were in some way affected by the collapse of One.Tel, such as other former directors and potential investors. 18 In my opinion the only matter calling for real consideration is the possible operation of s.1317F. Principles of res judicata and issue estoppel have no application other than between ASIC and Mr Keeling, or persons whose interests are so closely related to theirs as to be in privity with them. Section 1317F makes evidence conclusive where it is evidence of matters referred to in subs.1317E(2). The declarations will be conclusive evidence, even in proceedings in which Mr Keeling has never been or is no longer a party, or at a hearing in which he is does not take part, that Mr Keeling contravened s.180 of the Corporations Law, and of the conduct of Mr Keeling which constituted contravention. It is conceivable that those may be relevant facts in some future litigation, although I am unable to explore this possibility. The only matter which could be conclusively established is matter mentioned in terms in subs.1317E(2), such as matter relating to conduct of Mr Keeling which constituted a contravention. The proposed declarations contain statements of circumstances of Mr Keeling's conduct, as is indispensably necessary to identify the conduct. I do not think that it would be correct, or that it would be reasonably arguable that circumstances so referred to would be conclusively established for the purposes of establishing the circumstances of anyone else's conduct. It could not be rationally supposed that part of the facts relating to Mr Keeling's conduct could be severed out and used for the proof of some matter of which Mr Keeling's conduct was not an element. That exercise would not be within the range of facts of which a declaration is, by s.1317F and subs.1317E(2)(d), made conclusive. 19 While I cannot guard effectively against insubstantial arguments being put in some future case, I am of the view that the availability of conclusive evidence about the conduct of Mr Keeling imposes no risk on any other person such as Mr Rich or Mr Silbermann that the circumstances of his conduct might be held to have been conclusively established. No reasonable person would regard facts as objectively established against Mr Rich or Mr Silbermann by the position achieved in Mr Keeling's litigation. There is no rational basis for a fear that a Court addressing claims against them would misunderstand the position, or would treat the declarations to which Mr Keeling had consented as establishing anything. Mr Keeling is exposed to reliance on declarations adverse to him in other litigation which his conduct is relevant. It could be supposed as a possibility that Mr Rich and Mr Silbermann, or persons in their positions, might come to see some advantage in relying on the declarations. It cannot however be supposed that the declarations could ever be available against them. 20 In my view the proposed declarations would not create any real difficulties for Mr Rich or Mr Silbermann, in the present proceedings or in any other proceedings, and it would not be appropriate for me to postpone making orders to which Mr Keeling has consented until after the whole controversy has been resolved. That would not be a practical course, as there can be no predicting how long resolution might take; quite possibly a significant part of the ten years' disqualification which is contemplated. In my opinion the proposed orders, with the qualifications I have earlier set out, sufficiently clearly establish, as is otherwise quite obvious, that Mr Rich, Mr Silbermann and their conduct are simply not dealt with in these declarations, which have nothing to do with them. 21 The admitted facts show disturbingly serious failures in a person holding office as Managing Director of a large company listed on ASX, on whose due compliance with the duties of a director depended interests, of various kinds but all significant, of thousands of persons as creditors, investors and employees of One.Tel and companies associated with it, and also of more than 2 million persons who were to some degree involved as customers in the business destiny of One.Tel. All of these persons had something to lose, at the least in terms of inconvenience and for thousands of them much more, if the business failed. Taken together the breaches of duty which Mr Keeling has acknowledged have brought about a commercial enormity, a corporate collapse on a very large scale in the context of the Australian economy. The remedies which Mr Keeling has joined in proposing that the Court should award against him are also impressive. Rare indeed is so ample an acknowledgment of failure, and rarer still is acknowledgement of failure accompanied by submission to such ample amends. I regard ASIC as the guardian of the public interest with respect to financial remedies, and accept its decision that an award of $92m is appropriate. I take it that that decision is based on a fuller knowledge and understanding of the losses which Mr Keeling's failure have caused then I am able to form on the material in evidence, although that material does indicate that an award of many millions of dollars is in the appropriate scale. I have been concerned to address whether a period of ten years, suspended for two months, is an appropriate period of prohibition from managing corporations. Selection of the appropriate period is not within the control of the parties or of ASIC. It was this aspect of the orders which caused me to reserve my decision and extend my consideration; in other respects I readily accept what the parties propose. 22 Mr Keeling is 47 years of age. Mr Keeling's early business experience was primarily in marketing. He has held management positions in companies for about 20 years; the earliest mentioned in the Statement of Agreed Facts is that he was Marketing Director of the Franklin Mint in the early 1980s. He was Managing Director of Strathfield Car Radios from 1991 to 1995 and then in 1995 became the Co-Founder and Joint Managing Director with Mr Rich of One.Tel Ltd. A prohibition from a managing corporations will interrupt the main course which his career has followed for over 20 years. He made the following expressions of contrition in the Statement of Agreed Facts. Mr Keeling expresses his contrition and regret for what he acknowledges to constitute a serious failure over a number of months to discharge a number of his core responsibilities as a director, including the quite fundamental obligations of taking reasonable steps to be aware of the company's true financial position and circumstances, and to ensure that the board was informed of those matters.

Mr Keeling acknowledges that this dereliction of his duty has caused serious damage and loss to many members of the community including: (a) thousands of employees who lost their jobs; (b) One.Tel's numerous creditors; and (c) PBL and News, who as shareholders lost all of their extremely substantial investment in the company.

Mr Keeling also acknowledges and expresses his contrition and regret for the damage which his breaches of duty are apt to have done to investor and public confidence in the reporting integrity of major publicly listed companies. 23 During the hearing Mr Keeling made the following statement which was read out by his counsel in the course of an address. The settlement of this action between Bradley Keeling and ASIC has been reached because Mr Keeling believes it provides the most efficient and effective way of ensuring a return to One.Tel's creditors and save legal costs for both parties.

During the last days of One.Tel, Mr Keeling worked closely with One.Tel's then administrators, Ferrier Hodgson, to ensure the impact of One.Tel's collapse on its customers and employees was minimised. During that time, and subsequently, he has consistently co-operated with the liquidator, Mr Steve Sherman and ASIC to assist them in their endeavours, particularly with regard to maximising possible returns to One.Tel's creditors.

Mr Keeling denies that he ever deliberately misled One.Tel's board and the market but he admits that he failed to take appropriate action to apprise himself of the true financial position of the company during the period February to May 2001 when the company's condition deteriorated rapidly.

He feels a sense of deep personal regret over the impact that the collapse of One.Tel has had on so many people's lives and sincerely hopes that all parties, both regulatory and individual, continue to recognise the importance of delivering a maximum return to creditors as the collection and distribution of assets progresses.

Mr Keeling has been working towards today for over a year. His objective has always been to ensure an orderly sale of assets for the benefit of One.Tel's creditors. It was this objective, in part, that drove his decision in January 2003 to voluntarily place three companies associated with him into the hands of an independent administrator.

He is now greatly relieved to have finally concluded negotiations with ASIC. 24 In addition to these expressions, the admissions he has made and his joining in and consenting to remedies including declarations which spell out the enormity of his failures is itself a striking indication to me of his contrition; his contrition goes beyond expression and is strikingly reinforced by his submission to remedies. His contrition is further expressed in his positive co-operation with ASIC. A hearing of the proceedings can be expected to take place in 2004. Mr Keeling has come to terms with ASIC at an intermediate stage in the litigation, and his co-operation at this time has reduced in a significant way the amount of legal costs and attention imposed on ASIC and the requirement for use of the Court's time. His admissions and acceptance of responsibility have been made in a clear and public manner. This is not something that anybody could ever live down; it will follow him for the rest of his life. I accept the sincerity of Mr Keeling's expressions of contrition. Contrition is a significant matter when considering whether future breaches of duty are likely, and what protection against future breaches the public interest requires. 25 Disqualification is directed both at protection of the public and also at the operation of disqualification as a penalty on the person disqualified. In this case disqualification is the only penalty proposed; there is no proposed pecuniary penalty. Power of disqualification is created by s.206C. Section 206E also applies as the Statement of Agreed Facts and the declarations establish that Mr Keeling contravened the Act more than twice while Joint Managing Director. I set out s.206C and s.206E: SECTION 206C COURT POWER OF DISQUALIFICATION- CONTRAVENTION OF CIVIL PENALTY PROVISION

206C(1) [Power of Court] On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: (a) a declaration is made under section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; (b) the Court is satisfied that the disqualification is justified. 206C(2) [Relevant circumstances] In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. SECTION 206E COURT POWER OF DISQUALIFICATION- REPEATED CONTRAVENTIONS OF THE ACT

206E(1) [Power of Court] On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if:

(a) the person: (i) has at least twice been an officer of a body corporate that has contravened this Act while they were an officer of the body corporate and each time the person failed to take reasonable steps to prevent the contravention; or (ii) has at least twice contravened this Act while they were an officer of a body corporate; or (iii) has been an officer of a body corporate and has done something that would have contravened subsection 180(1) or section 181 if the body corporate had been a corporation; and (b) the Court is satisfied that the disqualification is justified.

206E(2) [Relevant circumstances] In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. 26 Counsel took me to a number of decisions in which courts have addressed appropriate periods of disqualification. The guidance which I can obtain from other decisions is limited, as each decision is closely related to its own facts, the facts in such cases tend to be highly complex and the circumstances of each person under consideration are special to that person. In Re HIH Insurance Ltd(in prov liq) and HIH Casualty & General Insurance Ltd (in prov liq) ; ASIC v. Adler &Anors [2002] 42 ACSR 80 Santow J. at para 56 pp97-99 reviewed the reported cases to that time and propositions that may be derived from them. His Honour's review illustrates fully the variety of considerations to which regard has been paid and the wide range of outcomes. His Honour derived from earlier cases propositions to the effect that "(v) The Order has a motive for personal deterrence, though it is not punitive: … (vi) The objects of general deterrence are also sought to be achieved: …". I must respectfully say that I find a distinction between motives of deterrence and a punitive motive as difficult, in practical terms impossible to sustain. The punitive impact of such an order must be recognised; Courts apply punitive measures with care, avoid excessive measures and have regard to the circumstances of individuals. No-one should be sacrificed to the public interest. 27 The conditions of the power to disqualify Mr Keeling from managing corporations in s.206C(1) and also in s.206E(1) have been fulfilled. If the Court is to make an order of disqualification the terms of each section point out three stages each of which is discretionary: (1) the stage in para.(1)(b) - "the Court is satisfied that the disqualification is justified", (2) the decision to make an order of disqualification and (3) decision on the period that the Court considers appropriate.

These closely related discretions must be addressed together. Decision can only be made by the Court, and cannot be delegated to anyone else; it cannot be delegated to the parties, which would in effect happen if the Court adopted an agreed form of consent orders without giving genuine consideration to what the Court should do. The fact that parties join in proposing a discretionary order to be made by consent is a consideration favouring a discretionary decision to make it; this is a particularly powerful consideration when ASIC, which for relevant purposes is a guardian of the public interest, has consented. However decision is for the Court, not for the parties. The approach to the Court made by the parties in the present case has accorded with what I have said; they have not claimed to control the Court's decision. 28 Relevant to consideration of the appropriate period of disqualification are the high office which Mr Keeling held and the broad extent of his responsibilities in terms of value of assets, complexity of activities and number of people within the range of adverse effects of breaches of duty. There is also the continuation over more than four months, really from the beginning of 2001 until One.Tel went into administration, of a series of failures affecting a fundamental aspect of the duties of a director and of a managing director, and the life-blood of commerce, that is the financial capacity of the company and its true financial experience. If disqualification is considered as a measure for protection of the public, keeping Mr Keeling away from managing corporations for ten years is a powerful protection indeed, particularly considering his age at 47 years and the stage of his career at which the disqualification falls. While not impossible, it would be a striking phenomenon if, after ten years of disqualification, he ever attained management responsibilities again, and if he did it is to be expected that great care would be used by anyone who decided to give them to him. It would be unrealistic to suppose that he may have any future career as director of companies listed on ASX. 29 Severe though the expression is, I have to say that the admitted facts show incompetence. To be Managing Director of a public company, and not to know or find out, by a margin of tens of millions of dollars, its current cash position, or by a margin of hundreds of millions of dollars its needs for cash, reveal incompetence of a high order. It is also important to say that the facts show nothing in the nature of dishonesty or other moral failing. His practical expressions of contrition and the financial remedy which he has submitted to favour amelioration of the disqualification, and favour selection of a period which will leave to him some prospect that, late in his career, he may again participate in the management of companies. I do not think it would be right to impose a term of disqualification which, in practical terms, would close off forever a return to the kind of management occupation he has followed for the last two decades. 30 There is in my view not much to be gained from considering or attempting to classify periods of disqualification which have been imposed in other cases. Breach of the Corporations Act can take many forms, the circumstances of breaches can take many forms, and the same is true of the outcomes, the number of persons and the value of the interests affected; and the personal circumstances of persons in breach can also vary very greatly. Having regard to his personal circumstances, including his age, and to the enormity of the events, Mr Keeling was exposed to the possibility of a very lengthy disqualification, possibly somewhat longer than ten years, if the facts now established by agreement had been established at a contested hearing. Even so however it is unlikely that a period of disqualification would have been imposed so long as to close off, in terms of practicality, the possibility that he would ever again take part in the management of a corporation. By entering into the consent orders Mr Keeling has reduced his exposure to the risk of a longer disqualification, and this has been a considerable advantage to him. 31 ASIC's joining in the proposed orders is a large factor supporting my decision to accept that ten years is an appropriate qualification. ASIC is relevantly a guardian of the public interest, and is in a good position to appraise the practicalities of the litigation and what part they should have among considerations in favour of accepting this outcome. It has been no slight matter for Mr Keeling to accept the outcome either; and his acceptance of it also has a place in my considerations. Conduct such as that of Mr Keeling in acknowledging his breaches, expressing appropriate contrition and agreeing to be subject to remedies including judgment for an enormous sum, ought to be recognised when it occurs and given encouragement by accepting some moderation in what must be a severe outcome. 32 This is a subject on which precision is impossible. My conclusion is that the period of disqualification of ten years is appropriate and I will adopt it and make the orders sought.

Last Modified: 03/21/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.