Sixth respondent
21 The sixth respondent did not give evidence so that the ability of the Court of draw a Jones v Dunkel inference applies also in his case.
22 In his submissions he denied any breach of the Act, stating his belief that Greenstar operated in a legal manner and that he had been working within the law. He denied ever having any intention to mislead or deceive people in the Greenstar program. He said he had been following the orders of the fifth respondent, believing in what was being done.
23 His submissions have to be considered with respect to the admixture of fact and submission and the presence of admissions in the same way and for the same reasons as those of the fifth respondent. I accept the submission for the applicant that nothing said in closing by the sixth respondent challenged or sought to minimise the extent of his involvement.
24 Nevertheless, the sixth respondent appeared as a person who considered he had acted with integrity and honesty and without any intention to commit the offences sought to be brought against him on the basis of his accessorial liability. The significance of that needs to be considered against the legal requirements for such liability.
25 It is important for the purposes of this proceeding to note that it was said in Yorke v Lucas at 666 in the reasons for judgment of Mason ACJ, Wilson, Deane and Dawson JJ:
"It is, of course, established that contravention of [s52] does not require an intent to mislead or deceive and even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or is likely to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228; Parkdale Custom Bult Funriture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197."
That being the case in respect to the principal offence by the corporation, accessorial liability cannot be different in that respect.
26 The same reasons for judgement (at 667) make apparent that for accessorial liability to be established within par (a) of s 75B (the same words as appear in s 80(1)(a)) on the basis of aiding, abetting counselling or procuring the contravention it is necessary to establish an intentional aiding, abetting, counselling or procuring. This requires that it must be established that the person said to be the subject of the accessorial liability must have knowledge of the essential matters which go to make up the offence. The High Court said in relation to Lucas: "whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason be said to have intentionally participated in the contravention." The findings of the primary judge in that case were that Lucas had acted exactly in accordance with the instructions and information given to him as managing director by a director of Treasureway. This latter company had been found to have engaged in conduct which was both misleading and deceptive by falsely representing the average weekly turnover of the business during a period preceding the sale. The primary judge found that Lucas did not know of, suspect or have reason to suspect the inaccuracy of the turnover figures and that he had in no way acted recklessly or deliberately abstained from asking questions or pursuing enquiries.
27 Brennan J in separate reasons in Yorke v Lucas at 677 addressed the point here under consideration as follows:
"But s.75B(a) does require knowledge of the acts constituting the contravention and of the circumstances which give those acts the character which s.52 defines, namely, "misleading or deceptive or…likely to mislead or deceive." As the net of civil liability for a contravention does not catch those who would not be caught if s.52 created an offence, honest ignorance of the circumstances which give a representation a misleading or deceptive character or the character of a representation which is likely to mislead or deceive is inconsistent with civil liability under s.75B(a). The operation of s.75B(a) in conjunction with s.52 may be incongruous, for s.52 throws a strict liability on a corporation, but s.75B(a) does not extend liability for a s.52 contravention to a person who procures the corporation to engage in contravening conduct if that person is honestly ignorant of the circumstances that give that conduct a contravening character.
28 On liability arising pursuant to par (c) of s 75B of the Act, the joint reasons state at 670 that there can be no question that a person cannot be knowingly concerned in a contravention if he does not have knowledge of the essential facts constituting the contravention. The paragraph so far as it applies to a party requires that there be an intentional participation with the necessary intent being based upon knowledge of the essential elements of the contravention.
29 I have set these elements of the reasoning in Yorke v Lucas out in some detail because they inform the consideration of this respondent as well as others who, like him, did not give evidence and relied upon statements from the bar table that they were unaware of the element of contravention as alleged in relation to their conduct. If the present respondent had given evidence and stated his ignorance of essential facts, that would have opened his state of knowledge to cross-examination so that the Court could make findings of fact based on what the evidence properly disclosed. In the absence of such evidence, the Court has only the evidence brought for the applicant of the sixth respondent's collective and individual involvement in the events at issue. Despite his statements from the bar table, there is not present in respect of this respondent any evidence such as that given by Lucas in Yorke v Lucas.
30 The case brought against the sixth respondent is that for the purposes of s 80(1)(e) actual knowledge may be inferred from the circumstances proven at trial: Compac Computer Australia Pty Ltd v Merry (1998) 157 ALR 1; HECEC Australia Pty Ltd v Hydro-Electric Corporation (1999) ATPR 46-196; Williams v FAI Home Security (No 2) [2000] FCA 726.
31 The Court, in both Compac Computer and in Williams v FAI, relied upon the decision of the High Court in Pereira v Director of Public Prosecutions (1989) 82 ALR 217 where the High Court stated, at 219-220:
"Even where, as with the present charges, actual knowledge is either a specified element of the offence charged or a necessary element of the guilty mind required for the offence, it may be established as a matter of inference from the circumstances surrounding the commission of the alleged offence. However, three matters should be noted. First, in such cases the question remains one of actual knowledge: Giorgianni v R (1985) 156 CLR 473 at 504-7; 58 ALR 641; He Kaw Teh (CLR at 570). It is never the case that something less than knowledge may be treated as satisfying a requirement of actual knowledge. … Finally, where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available. All that having been said, the fact remains that a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer's shorthand, be referred to as wilful blindness." (Emphasis added).
32 It is then submitted that the sixth respondent had sufficient knowledge of the essential elements of the third and fourth respondents' contraventions of ss 57, 61(1) and 61(2) of the Act given:
(a) the third and fourth respondents' primary activity, if not sole activity, was managing and promoting the Greenstar Scheme (which contravened the pyramid selling and referral selling provisions of the Act);
(b) the sixth respondent was a director of the fourth respondent and participated in the fourth respondent's affairs as a director; and
(c) the sixth respondent's personal involvement with the Greenstar Scheme, including attending, presenting and promoting the Greenstar Scheme at various meetings, and via various websites.
33 The sixth respondent as a director of the fourth respondent, took part in its activities, including the ongoing promoting of the Greenstar Scheme in contravention of ss 61(1), 61(2) and 57 of the Act. By virtue of these matters it is said the sixth respondent had actual knowledge of the falsity of the representations.
34 Alternatively, it is submitted that the sixth respondent had sufficient knowledge of the fourth respondent's activities such that they should have been suspicious and should have made inquiries, for example, about the existence of the Greenstar Card or the source of the fourth respondent's revenue. The failure to make any or any proper inquiry in these circumstances is said to be sufficient to sustain an inference of knowledge by them as to existence of the representations and their falsity.
35 Further and alternatively it is submitted that the sixth respondent has aided and abetted the third and fourth respondents' contraventions of the referral selling provisions of the Act (ss 61(1), 61(2) and 57) and of the misleading and deceptive conduct provisions (ss 52, 58(a), 53(aa), 59(2), 53(c) and 53(g)).
36 There is evidence the sixth respondent took part in promoting the Greenstar Scheme to varying degrees. It is said that if the Court finds that he was directly or indirectly, knowingly concerned in or a party to the contraventions of the Act within the meaning of s 80(1)(e), then he must have also aided and abetted such contraventions of the Act within the meaning of s 80(1)(c).
37 Additionally it is submitted that the sixth respondent was a director of the third respondent. As such he had an obligation to know the general, if not specific, activities of the third respondent. The principal, if not sole activity, of the third respondent, was to promote the Greenstar Scheme, the principal elements of which contravened ss 61(1), 61(2) and 57 of the Act.
38 It is submitted that any director of the third respondent exercising minimum obligations of a director must have become aware of the elements of the Greenstar Scheme. In fact, each of the individual directors took some part in the management of the third respondent. Therefore, each of the individual directors were, or should have been aware for the purposes of s 80(1)(c), of the essential elements of the fourth respondent's contraventions of both the referral/pyramid selling provisions of the Act and of the misleading and deceptive conduct provisions.
39 It is not necessary here to make specific findings concerning the particulars of the involvement of the sixth respondent as alleged because the evidence is uncontroverted and so must be accepted. The relevant evidence has been identified in the written closing submissions for the applicant. That evidence raises the case against the sixth respondent. The onus moved to him to negate the inferences open from that evidence that he was knowingly concerned in and was a party to the contraventions of Pt V of the Act and that he aided and abetted their commission. His statements from the bar table cannot do that. In the absence of any evidence for the sixth respondent the Court finds on the evidence that the case for the applicant is made out against him in each of the above contended respects.