Further findings of fact regarding the accessory claims
458 I referred earlier to Mr Gore being the principal promoter of the BVI Scheme. It is convenient to repeat and to elaborate aspects of the development of that Scheme. Much of what follows is drawn from the documentary evidence. In part I have relied on evidence from Mr Adamson and others. I indicate the evidence of Mr Adamson which I do not accept.
459 When Mr Gore was introduced to Mr Burrows in September 2011 and learnt about the businesses of ActiveSuper and Royale, he appreciated very quickly the potential advantages to MOGS if the SMSF investors were a source of funds for its operations and a market for its house and land products. Within a matter of weeks of meeting Mr Burrows, Mr Gore was proposing that Royale raise money from SMSF investors and lend it to MOGS secured by a fixed and floating charge over the assets of MOGS. Shortly afterwards he proposed the establishment of the RCFSG.
460 This led him in turn to arrange for advice to be obtained from Minter Ellison regarding the establishment of an RCFSG Fund in Australia. An email from Ms Erskine-Shaw to Mr Burrows, and copied to Mr Gore dated 6 October 2011, included an attachment identifying the purpose of the meeting at Minter Ellison as being:
• To discuss
• the Parties
• the Proposed Transaction(s)
• the applicable legislation
• the possible Structures
• Short-term
• Long-term.
I am satisfied that Ms Erskine-Shaw sent this email on the instructions of Mr Gore. He was the one who organised the meeting, although others also attended.
461 As noted earlier, Mr Adamson said that the meeting with Minter Ellison on 7 October 2011 involved a general discussion about the establishment of a fund regulated under the managed investment scheme provisions of the Corporations Act. Although there was no direct evidence of what was said at the meeting (Mr Adamson raised a claim of legal professional privilege) it is reasonable to suppose (and I so find) that those present received advice on, amongst other things, the "applicable legislation".
462 Five days after that meeting, Mr Gore proposed the establishment by RCFSG of a fund in the BVI to which potential investors could be introduced through a website. He chaired a meeting on 12 October 2011 at which he explained to the attendees, who included Mr Adamson, Mr Stonehouse and Mr Burrows, that a fund in the BVI "would not be subject to the same regulatory issues as if the fund was set up in Australia". The BVI Scheme was the implementation of this proposal.
463 Mr Gore told Mr Slijderink that his intention was "to avoid the stringent ASIC requirements which would delay the advancement of funds".
464 I am satisfied that a purpose of Mr Gore right from the initial conception of the BVI Scheme was the avoidance of the Australian regulatory regime, and that this was known to Mr Adamson, Mr Stonehouse, Mr Burrows. Ms Gore must also have known of this purpose. This finding as to Mr Gore's purpose supports the inference that he had some knowledge of the Australian law which he sought to avoid.
465 Mr Gore submitted that Mr Burrows had been the prime mover in the establishment of the BVI Scheme and that his own role had been more in the nature of providing assistance. There is some evidence which is consistent with this. Mr Gore pointed out that before October 2009 Mr Burrows had established an overseas investment scheme, as well as overseas bank accounts. This was the scheme to which the US Realty Memorandum related.
466 Mr Adamson said that Mr Gore had told him in 2011 that it was Mr Burrows who did not wish to proceed with the establishment of an Australian fund. Mr Adamson also said that Mr Gore had told him that Mr Burrows had asked him (Mr Gore) to assist in the establishment of a fund overseas which would advance monies to MOGS for its operations. It is not necessary to decide whether Mr Gore did in fact say these things to Mr Adamson as I consider that, even if they were said, they did not reflect the reality of the situation at the time. The evidence indicating Mr Gore's conception and promotion of the BVI Scheme is overwhelming. It is very evident that it was Mr Gore who sought the establishment of an overseas fund which could be a source of finance for MOGS. Mr Burrows was a willing participant but he was not the concept's originator or prime mover.
467 It is pertinent to note in this respect the significant disparity between the corporate experience of Mr Gore, on the one hand, and Mr Burrows, on the other. In 2011, Mr Gore had been, or was a current, director of more than 100 companies, including some who apparently operated businesses associated with finance and investment and some who operated development businesses. Mr Burrows on the other hand was a current or prior director of only three companies (in addition to ActiveSuper and Royale). The fact that Mr Burrows had to ask what Mr Gore meant by "BVI" when Mr Gore first mentioned it is an indication of his lack of sophistication relative to Mr Gore in relation to the establishment of an overseas fund.
468 As early as 14 October 2011, Mr Gore sent to Mr Burrows, Mr Stonehouse, Ms Gore, Mr Adamson and Mr Chant a document entitled "SMSF Resolution Fund Information Memorandum" relating to a pooled investment scheme incorporated in the BVI. It was this Information Memorandum which became the basis for the WPO PPM. The substance of Mr Gore's accompanying email was:
Subject: Information Memorandum First dra[f]t based on conversations and input
… Lots of work to do here guys, let's talk over the weekend. Your feedback is important so please read it carefully. I will not distribute this document to anyone especially in the BVI and States until we have it close. We need to be clear before we seek approval from them.
(Emphasis in the original)
It is implicit in this email that Mr Gore believed that he had contacts in the BVI and in the USA to whom the Information Memorandum could be circulated when it was ready. There is no evidence that Mr Burrows had any such contacts. In his final submissions, Mr Gore acknowledged that he had introduced Mr Burrows to Minter Ellison, to legal counsel in the USA, the BVI and the United Kingdom, as well as to the auditors, Deloittes.
469 An earlier version of the Information Memorandum showed Mr Gore as its author but the version circulated on 14 October 2011, as well as later versions, showed instead that Mr Burrows was the author. Nevertheless, all versions were circulated by Mr Gore or by someone in the MOGS office who, I am satisfied, did so at Mr Gore's direction. In his final submissions, Mr Gore accepted that the evidence established that he had drafted the early versions of the PPMs. I infer that the change in author was made by Mr Gore in a poor attempt to make Mr Burrows' participation in its preparation appear significant and to disguise his own involvement.
470 It was Mr Gore who decided that he and Mr Adamson would travel to the USA and to the BVI in October 2011. He gave Mr Adamson only two days' notice that he would be going. The bookings were made by MOGS at Mr Gore's direction, and before their departure. He had the contacts and made the appointments with the persons they met in the USA and in the BVI. It was Mr Gore who initiated the contact with Forbes Hare in the BVI by his email of 17 October 2011, an extract of which was set out earlier in these reasons.
471 During October and November 2011, Mr Gore himself sent, or caused to be sent by someone at MOGS, numerous emails attaching versions of the draft Information Memorandum or seeking information which could be included in it. Some of the emails were also sent to Mr Stonehouse and Ms Gore. An email of 27 October 2011 from Mr Gore to Ms Gore, Mr Stonehouse, Mr Adamson and Mr Chant attached an Information Memorandum for Worldwide Property and Distressed Investment Opportunities Fund (WWPDIO Fund) and said:
I made these changes on the plane to NYC so they don't include the changes and spelling that Marina made. Rather than me fucking it up by attempting to load them in I thought I could send them back to you and you could do so I don't fuck up wat (sic) Marina has done.
The "Marina" to whom Mr Gore referred was Ms Gore. The email indicates that Ms Gore was providing active assistance in the development of the Information Memorandum.
472 The draft Information Memorandum indicated that the WWPDIO Fund would be a "private investment company incorporated in the British Virgin Islands LLC" and would be offered to, those amongst others, who had a "continuing relationship" with ActiveSuper, Royale and MOGS. Under the heading "Why Are We Based in the British Virgin Islands" the Information Memorandum stated:
The BVI was chosen as the corporate headquarters for the WWPDIO Fund (1) after careful consideration of the foundation shareholders. It was determined that the BVI could during the term of the fund provide a stable backdrop to the implementation of the business strategies being proposed to be deployed from the fund. The BVI is recognised globally as a financial services powerhouse with some of the world's largest and most dynamic companies based in or working out of the BVI.
(Spelling corrected)
I infer that it was Mr Gore who drafted this passage.
473 An indication that Mr Gore was aware that the making of offers of shares may be regulated is seen in an email from Mr Gore to Mr Burrows on 17 October 2011. In this email, which had the subject heading "The Private Offering Exemption Under Arizona Securities Law", Mr Gore attached an article, apparently downloaded from the internet, with the title "The Private Offering Exemption Under Arizona Securities Law". The attachment related to the circumstances in which a private offering exemption under Arizona securities law would apply, indicating that it was available only for offerings made by issuers, without any advertising or general solicitation, to a limited number of sophisticated investors with access to information which would ordinarily be included in the registration statement. The article dealt with this subject in considerable detail. In his accompanying email, Mr Gore said:
Mate I have highlighted the areas you need to review. DO NOT TAKE THIS UP WITH ANYONE SPECIFICALLY ANYONE IN THE USA AT THIS STAGE. I have a 8.10am meeting and will come and see you after that. Been on the phone tonight to the USA Attorneys and the story is clear. Have resolution and plan but need to discuss. MUST ACT TO RESOLVE.
DON'T PANIC STAY FOCUSED.
PRINT AND DELETE.
(Emphasis in the original)
474 I infer from this document that Mr Gore had become aware that Mr Burrows had not complied with Arizonan law in relation to his investment of SMSF investors' money in the LLCs or in property in Arizona. He had drawn this to Mr Burrows' attention and was providing further detail as well as reassuring him that he had a plan to resolve the consequences of Mr Burrows' non-compliance. The significance for present purposes is that it serves to indicate that both Mr Gore and Mr Burrows must have been conscious that there were, or were likely to be, regulatory requirements relating to the offering of shares in the companies to be established to the SMSF investors.
475 Mr George joined Mr Gore and Mr Adamson for the meetings with lawyers in Los Angeles and with Mr Santos of Forbes Hare in New York. Although there is no evidence of how that occurred, it must have been arranged by Mr Gore and it seems likely that he arranged for MOGS to pay the associated costs.
476 In a meeting with the firm Osiris in the BVI on 28 October 2011, Mr Gore made a "whiteboard presentation". Mr George and Mr Adamson were in attendance. Mr Gore explained that he represented Mr Burrows and Mr Gibson who were establishing 40 SMSFs a month or 10 funds each week, that Mr Burrows and Mr Gibson believed that as much as AUD$100 million could be raised from the SMSFs, and that there was a synergy between the business of Mr Burrows and Mr Gibson and Realestatestock.com.au. The Osiris representatives explained the services which they could provide in connection with a fund. During the course of the meeting, Mr Gore asked the Osiris representatives to incorporate a company with the name Worldwide Property Opportunities with Mr Adamson as director. Mr Gore told Mr Adamson that he would need to be a director until Mr Burrows was appointed.
477 Two days later, Mr Gore, Mr George and Mr Adamson met Mr Santos and others at the offices of Forbes Hare. Mr Santos recommended Caledonian Fund Managers and Beacon Fund Managers in lieu of Osiris. They discussed processes and procedures for establishing entities in the BVI and the regulatory regime surrounding closed ended funds in the BVI.
478 On 1 November 2011, Mr Gore obtained the agreement of both Mr Burrows and Mr George to the latter being made a director of the proposed fund in the BVI. Mr Gore told Mr George that he would receive a base salary of $30,000.
479 In another meeting with Forbes Hare on 1 November 2011, Mr Gore told Mr Santos that Mr Burrows had demanded to be the person in control of the funds and the bank accounts. Mr Santos then recommended the establishment of a company in the BVI to hold the majority of the management shares of the WPO as well as an investment manager. Mr Gore instructed Forbes Hare to take the necessary steps to incorporate an investment manager and told Mr Santos that Mr Adamson and Mr George would be its directors. This became Cayco. Mr Adamson said that, when told that he would be a director of Cayco, the following interchange occurred:
Mr Adamson: If I'm to act as a director of Cayco, what would I have to do?
Mr Santos: You would be required to attend the BVI annually to attend board meetings and approve the accounts for the fund once those accounts have been audited. Where the fund asks for advice then you would be required to give it advice. By give it advice it will be necessary for you to either give advice directly or arrange for external accountants and/or lawyers to provide advice to the fund.
Mr Adamson: OK.
Mr George: OK.
Mr Adamson then deposed:
[282] I said I was willing to act in the role as a director of Cayco because based on my discussions with Jose Santos I understood that I would not be required to have a day to day hands on role in the business and management of the fund.
480 I consider this account to be implausible and do not accept it. Mr Adamson was in 2011 an experienced lawyer especially in matters concerning corporate law. He must have known in some detail the duties of a director of a company. In that context it is improbable that he would have asked the question just outlined and even more improbable that he would have accepted the answer of Mr Santos as a statement of his duties. I had the firm impression that this aspect of Mr Adamson's evidence was an attempt to diminish his own responsibility for the later conduct of Cayco.
481 In the same meeting, Mr Gore gave instructions to Mr Santos for the establishment of a second fund, saying words to the effect that:
I also want to establish a second fund on behalf of Jason Burrows. Jason Burrows has previously raised monies in the States. He wants the second fund to be audited and wants to be able to issue share certificates.
Mr Gore told Mr Santos that the fund should be named "Syndicated Property Group Arizona" and that Mr George and Mr Adamson were to be the commencing directors. This company became SPG.
482 Later in the same meeting, Mr Gore gave instructions for the establishment of four new companies. Those companies became WWPDAF, SMBLA, NOEB and ESY.FC. Mr George and Mr Adamson must have been willing participants as they owned and were directors of SMBLA and ESY.FC respectively.
483 Mr Adamson's evidence indicates that Mr Gore reported his activities to Mr Burrows by telephone each night. In one telephone call on 1 November 2011, Mr Gore handed the phone to Mr Adamson. Mr Burrows then instructed him to prepare a share transfer agreement for the transfer of the shares held by him in the LLCs to SPG, to provide the draft agreement to him for review and further instructions, and, in addition, to provide a copy of the draft to Mr George. However, even before that telephone call, Mr Gore had already instructed Mr Adamson to prepare a share sale agreement for the transfer of Mr Burrows' shares in the LLCs. The fact that it was Mr Gore who gave that instruction to Mr Adamson before he received the instruction from Mr Burrows is indicative of the extent of Mr Gore's involvement.
484 Mr Adamson provided a draft share transfer agreement to Mr Burrows on 2 November 2011 and indicated that he would provide a copy to Mr George when Mr Burrows was ready for that occur. Mr Adamson's draft did not identify the proposed purchaser. On Mr Burrows' instructions, Mr Adamson provided a copy of the draft agreement to Mr George the same day and Mr George sent it to Mr Bruce at Forbes Hare, saying that he would like to discuss the draft with him. A revision prepared by Mr Bruce identified SPG as the purchaser of Mr Burrows' shares in the LLCs.
485 It is evident from the number of emails to and from Mr Adamson and from his own evidence concerning telephone conversations which he had with Mr Burrows that he was involved to a significant extent in the preparation and finalisation of the share sale agreement between Mr Burrows and SPG in relation to the shares in the LLCs. In an email of 11 November 2011 to Mr Bruce and copied to Mr Burrows and Mr George, Mr Adamson described himself as "instructed to assist Mr Burrows to complete this matter" and forwarded copies of the executed copy of the share sale agreements.
486 It is apparent that some of the MOGS defendants were conscious of some of the restrictions imposed by Australian law in relation to SMSFs. On Sunday, 6 November 2011, Mr Adamson sent to Mr Bruce and Mr Santos at Forbes Hare a summary which he had obtained of the investments permissible for SMSFs, as well as Australian Taxation Office brochures. The particular documents were not in evidence. Mr Adamson was reluctant to acknowledge that Mr Santos had asked him whether any Australian law might apply to the creation of a fund in the BVI or to the offering of securities in the fund, saying only that he was responding to a specific question about whether a SMSF could invest in the proposed fund. I considered that that evidence was implausible.
487 Mr Adamson also referred to a conversation which he had had with Ms Gore before February 2012 in which she had asked him whether or not it was possible for "people" to invest in "the PPMs". He denied being asked by Ms Gore in that conversation whether or not the proposed "transactions" were regulated by Australian law. Again, I found this evidence implausible, it being unlikely that Ms Gore would have asked only such a precise question. It is more probable that Ms Gore would have been asking generally about any restrictions or requirements imposed by Australian law.
488 From early November 2011, Mr Burrows pressed Mr Adamson and Forbes Hare for the issue of share certificates in SPG to the SMSF investors. He said that he would provide a client list so that this could be done and explained that the SMSF investors needed the share certificates in order to satisfy the audit requirements for SMSFs.
489 On 7 November 2011, Mr Burrows sent to Mr Adamson a list of SMSF clients in respect of whom share certificates relating to shares in SPG should be issued. He sent further lists on 16 November 2011, 28 November 2011, 9 December 2011 and 23 January 2012. Each list was an attachment to an email. Mr Adamson forwarded these lists on to Forbes Hare.
490 In his email of 11 November 2011, Mr Adamson asked Forbes Hare to confirm that they could now send the share certificates being sought by Mr Burrows. In fact there was some delay in the share certificates being issued because Forbes Hare took the view that they should have the share sale agreements reviewed by lawyers in the USA and that share certificates in SPG should not be issued until they had the executed versions.
491 Forbes Hare commenced sending share certificates to Mr Adamson on 23 November 2011. Mr Adamson then forwarded those certificates on to Mr Burrows. Mr Burrows had to sign and date the certificates. He asked Mr Adamson what date he should use for this purpose. Mr Adamson referred that query to Forbes Hare saying "I do not want to suggest anything that will not be consistent with your records".
492 On 15 November 2011, Mr Santos sent to Mr Adamson by email, copied to Mr Gore, a revised draft of the SPG PPM. His email included the following:
I would ask that you review the PPM thoroughly and fill in any missing information having regard to any potential Australian disclosures and restrictions that will need to be incorporated into the PPM. In addition, both the investment strategy and investment objectives of the Fund need to be enhanced with direct input from your Client. Consider whether there should be also a tax disclosure specifically relating to Australia.
493 Page 4 of the attached draft PPM contained a notation in bold that Australian counsel were to provide the appropriate terminology for the restrictions on investment which should be disclosed in the PPM in addition to those contained in the draft relating to the USA and to the UK. Mr Adamson acknowledged in his cross-examination that he had understood on receiving the email that he was being asked to provide that detail. He said that he had not done so and that that proposed section was later deleted "in part … by me". This was because "the PPM was not going to be registered in any jurisdiction". Mr Adamson said that he did provide a copy of Mr Santos' email to Mr Burrows. The evidence on this topic is significant as it indicates that the attention of Mr Burrows, Mr Adamson and Mr Gore was drawn to the prospect of restrictions on the persons to whom the PPM could be provided, and that Mr Adamson, at least, considered the question of "registration" in Australia.
494 Mr Burrows, Mr Gibson, Mr Adamson and Mr Smerdon attended a meeting with Mr Gore at MOGS' office on 15 November 2011. Mr Smerdon said that Mr Gore discussed the "proposed new BVI fund structure", saying that funds raised by Royale would be placed into a BVI fund account and then loaned to MOGS or its subsidiaries for the purpose of construction finance. Mr Gore told Mr Burrows and Mr Gibson that MOGS could not offer mortgages because its properties were "optioned" but that security could be offered by way of a fixed and floating charge over the assets of MOGS which would include project building sites. He also said that Mr Stonehouse and Ms Gore would provide guarantees, in their capacity as directors of MOGS. I consider it improbable that Mr Gore would have proposed these guarantees without first having discussed the matter with Mr Stonehouse and Ms Gore.
495 A meeting of the directors and executives of MOGS was held on 21 November 2011. The attendees included Mr Stonehouse, Ms Gore and Mr Adamson as directors and Mr Gore and Mr Chant as consultants. The minutes of the meeting recorded that "the proposed resolution funding was discussed and it was noted that RES should prepare for seven build commencements during December 2011". From this, I infer that Mr Gore and/or Mr Adamson had reported on the developments in relation to the BVI fund and the likely availability of finance from that source.
496 During November and December, work on finalising the WPO PPM continued. Mr Gore was actively involved as is evidenced by his emails relating to revisions through this period. Mr Gore's email of 12 December 2011 attaching a "final version" of a PPM for the WPDIO Fund Ltd was sent to Mr Stonehouse, Ms Gore, Mr Adamson and Mr Chant. Mr Gore said in the email:
Final version of the document for your review. If it is not issued this week no further funds will flow. I am sure you are all aware of that and on top of those matters relating to the business but I thought I should raise it with you.
It is evident that Mr Gore was attempting to impress on the addressees the urgency of the situation as he perceived it.
497 The attached PPM related to WPO and was entitled "Prospectus". It too included the notation that Australian counsel were to provide the appropriate terminology relating to restrictions on distribution of the PPM in Australia.
498 On 13 December 2011, Mr Stonehouse sent an email to Ms Gore, Mr Adamson, Mr Chant and Mr Gore under the heading "Re Royale and SMSF property sales". The subject of the email concerned MOGS tightening financial position. Mr Stonehouse said that he wished to raise three points with the Board of MOGS "for review and discussions URGENTLY". The three matters were commissions, building contracts and current commitments, and "set up cost". In relation to "set up cost", Mr Stonehouse said:
I understand we have committed money to set up cost but it is important we have clear guidelines to this expenditure which is now in excess of 500K.
What I want to understand better is how we are going to fund these plans. Whilst [I] agree with the direction and the plans themselves I think it is important we have the funds to cover these expenses so that Royale and SMSF sales can be accommodated without putting our business at risk. This is an imperative to moving forward.
Funds need to flow more consistently and more in line with the needs rather than the other way. We need a plan so Xmas doesn't become a disaster.
Let's talk URGENTLY this morning.
499 Although Mr Adamson was cross-examined about this email and the Board meeting which followed, there was no direct evidence as to the nature of the "set up cost" to which Mr Stonehouse referred. ASIC submitted that it was a reference to the cost of establishing the BVI Scheme. Mr Kirby disputed that characterisation and submitted that Mr Stonehouse must have been referring to the establishment costs in relation to MOGS acquisition of properties and construction of houses. I consider the ASIC submission to be correct. Mr Stonehouse seems to have encompassed the costs being incurred by MOGS in its own business under the headings "Commissions" and "Building Contracts". It also seems unlikely that Mr Stonehouse would have used the terminology "I understand we have committed money to set up cost" in relation to the costs of MOGS' own business. He knew what MOGS' commitments were in that respect, as is indicated by the terminology he used under the headings "Commissions" and "Building Contracts". The reference to "Royale and SMSF sales" is, in my view, a reference to both the expected source of funds and the expected source of sales which were contemplated as part of the BVI Scheme. In context, Mr Stonehouse is expressing a concern that the substantial sums which MOGS was expending in relation to the BVI Scheme may put MOGS' core business at risk.
500 Mr Stonehouse's statement that he agreed with the direction and plans relating to the BVI indicates that he had at least a general understanding of the Scheme and its elements.
501 Mr Adamson did recall the meeting at which Mr Stonehouse's email was discussed, but provided very little detail regarding its content. I had the impression that Mr Adamson was not being completely forthcoming in this aspect of his evidence. Given the urgent nature of Mr Stonehouse's concern, I would have expected him to have a much greater recall of what was said at the meeting. I think it likely that Mr Gore did at the meeting provide some detail to those present of the progress in the establishment of the BVI Scheme, but cannot be more particular than that. This is one of the matters which have caused me concerns about the reliability of all of Mr Adamson's evidence.
502 Mr Stonehouse's concerns had an effect. On the following day, Mr Gore sent an email to Mr Burrows under the subject heading "CASH" in which he pressed Mr Burrows for an advance of $300,000 saying, amongst other things:
Mate I have put myself in the shit with this but I'm looking to you to help me out. I don't know what you can do but I need a hand as my board (even Markey) are belting me pretty hard coming into Xmas.
I infer that Mr Gore was by this letter importuning Mr Burrows for a further advance from the funds invested by SMSF investors pursuant to the US Realty Memorandum. The evidence did not disclose what, if any, response Mr Burrows made to this request but I consider it probable that he would have sought to accommodate Mr Gore's request, if it was possible.
503 Based on the absence of email communications, it seems that relatively little may have been done during January 2012 to further the development of the WPO PPM. However, on 19 January 2012 Mr George sent to Mr White at Deloittes a draft of the WPO PPM. Mr White responded on 24 January 2012 with an email containing a number of requests. Three of the requests were:
• Copy of the Australian legal opinion showing that SMSFs may invest into this type of structure.
• Will there be any related party transactions between the Fund and its directors/IM or Investment Advisors?
• Who are the ultimate beneficial owners of the Investment Manager? Is there any kind of related party connection with any of the entities that will be able to introduce business to the Fund, OR with any entities that will receive investment from the Fund?
504 Mr White's questions about related party transactions were pertinent. Mr George provided a copy of Mr White's email to Mr Gore on 25 January 2011. Although Mr Adamson recalled discussion on the first of the quoted questions, he could not otherwise assist with evidence as to the manner in which a response had been provided to Mr White. He said only that he thought Mr George had responded. Again, I was concerned about the completeness of Mr Adamson's evidence on this topic. Given the intended purpose of the WPO Fund, I conclude that none of Mr Gore, Mr Adamson or Mr George would have been willing to provide a frank response.
505 It is evident, however, that Mr Gore appreciated the need to respond to Deloittes quickly. He sent two emails to Mr Adamson, Mr Burrows and Mr George on the topic on 29 January 2012.
506 Deloittes also sent a similar but not identical request for information regarding SPG. By an email of 31 January 2012, Mr Gore reported to Mr Burrows and Mr Adamson the manner in which Mr George had attempted to respond to Deloittes' questions in relation to SPG.
507 On 29 January 2012, Mr Gore sent an email to Mr Burrows, Mr Adamson and Mr George. In this email he emphasised the need to get the auditors "to sin (sic) off on the company" as, amongst other things, "all super accounts will become vioded (sic) as they are not auduted (sic) investments and SPGA will not comply with the law and all investors' funds will be subject to being voided. … I can't get a PPM issued without auditors listed. And right now we ont (sic) have one because I can't get them the information." Mr Gore attached to the email two slightly different drafts of the WPO PPMs.
508 On 30 January 2012, Ms Gore sent by email to Mr Gore a copy of his email of 12 December 2011, which Mr Gore then sent on to Mr George, Mr Adamson and Mr Burrows.
509 Until early February 2012, Mr Burrows and ActiveSuper had been transferring monies raised pursuant to the US Realty Memorandum since 19 October 2011 to MOGS. However, on 6 February 2012 a change in the arrangements occurred. On that day, Mr Mey, the Group Accounts Manager of MOGS, sent an email to Mr Gore (copied to Mr Adamson) under the subject heading "GFC09 Funds". Mr Mey said:
Craig - upon direction from Mark Adamson, please have the funds transferred to the following account.
510 Mr Mey then gave details of a bank account in the name of GFC09 Pty Ltd. Mr Adamson acknowledged that he had given a direction to the effect set out in Mr Mey's email and said that he had done so at the request of Mr Gore that same day.
511 Mr Gore then forwarded Mr Mey's email to Mr Burrows and said:
Call me when you get out of the meeting. I'm getting Mark to provide an authority to transfer INTO THIS ACCOUNT. It is not an inconsistency as this company paid the monies across to MOGS to cover the shortfalls. I am told this is the correct accounting that will be signed of (sic) in the BVI.
Please advise when the transfer today has been done and the amount as discussed.
512 In his cross-examination, Mr Adamson said that he did not know what Mr Gore meant by the reference "to cover shortfalls". But he claimed that at some time in the past GFC09 had paid monies across to MOGS, saying that this had occurred at a time when the ATO had issued notices to MOGS' banks, freezing its accounts. He was however, unable to provide any detail as to when this had occurred, or other detail. I considered that Mr Adamson's evidence on this topic was marked by evasion and that he did not wish to acknowledge what was apparent on the face of the emails, namely, that he had been personally involved in directing that monies advanced by the LLCs to MOGS under the loan agreement be applied other than for the purpose of MOGS business and, accordingly, other than in accordance with the formal lending arrangements.
513 During February and March 2012, there were numerous emails between Mr Gore, Mr Burrows, Mr George, Mr Chant and others regarding the development of SPG, WPO and their respective PPMs. On 24 February 2012, Mr Chant, Mr Burrows and Mr Burrows' partner flew to the BVI. Mr Gore, Ms Gore, their infant and a nanny followed on 28 February 2012. Mr Chant stayed in the BVI for about four weeks. He said that during that time he "attended regular meetings and attended to email communications in an attempt to finalise the structure of the BVI Share Offer and open the opportunity for public investment". The contents of the numerous emails occurring during that period confirmed this part of Mr Chant's evidence. Mr Chant also said that Mr and Ms Gore and Mr Burrows attended meetings during the first week or so that he was in the BVI but that thereafter they did not stay.
514 There is evidence as to Ms Gore's purpose in travelling to the BVI. Mr Adamson said that, in a conversation before February 2012, Ms Gore had told him that she wanted to do two things:
One, she wanted to go to the BVI to make sure that what was being set up over there was appropriate. And two, she wanted to confirm that - or to enquire that what was being proposed in Australia could be done.
Later, Mr Adamson said:
We had a general discussion as to whether or not persons could invest in the PPM. It wasn't a request for legal advice, it wasn't a detailed discussion, it was a general discussion as to whether or not persons were entitled to invest in a PPM could invest in a PPM. And then following on from that, Marina wanted to go to the BVI to make sure that the businesses in the BVI were properly structured businesses and were with people of real value.
That evidence, which I accept, is sufficient by itself to warrant a finding as to Ms Gore's purpose.
515 I note, in addition, that in her s 19 examination Ms Gore said that she had gone to the BVI because "I wanted to see what this was all about … I wanted to meet the auditors, the accountants, the solicitors" in relation to WPO. She said that she left the BVI "quite happy" having met the auditors Deloittes and the solicitors Forbes Hare.
516 In early March, 2012, Mr Adamson gave instructions to Evans Ellis to prepare an advice concerning the appropriateness of investment by SMSFs in SPG. Evans Ellis provided that advice on 6 March 2012 and, as noted earlier, Mr Gore provided a copy to Mr Burrows that same day. The evidence regarding the obtaining of this advice is an indication that the attention of those involved was drawn to the need for compliance with Australian regulatory requirements.
517 During the first part of March 2012, work also continued in the preparation of loan agreements, compliance manuals and other documents relating to the establishment of SPG and WPO and of the Cayco website. Numerous people were involved, including Ms Gore. On Sunday, 11 March 2012, she sent to Ms Erskine-Shaw at MOGS the graph showing the cyclical nature of real estate values which was ultimately incorporated into the WPO PPM. Ms Gore asked Ms Erskine-Shaw to convert it to high resolution and, on the following day, forwarded it to Mr Chant telling him that it was the graph which Mr Gore wished to have included on the website. Ms Gore was also one of the several recipients to the emails from Ms Boyd at Deloittes and Mr Gore relating to the finalisation of the Cayco website, including emails on 17 March 2012 and 18 March 2012.
518 The proposed final forms of the WPO PPM and its Lending Policies Summary, Compliance Plan Summary, Acquisitions Guide Summary, Compliance Plan for Manager and the latest draft of the Lending Policies Manual were sent to Deloittes on 17 March 2012, asking for any final comments so that the PPM could be launched on 19 March. However, further revision occurred during the following week.
519 It is not necessary at this stage to make further findings regarding the various steps culminating in the establishment of SPG, WPO and the distribution of their respective PPMs. It is apparent that there was a rush of activity in the week before the launch of the SPG PPM on 8 March 2012 and again before the launch of the WPO PPM on 23 March 2012.
520 It is also evident that Mr Gore was anxious to get access to the monies to be raised under the PPMs as soon as practical. In an email of 22 March 2012 to Mr Chant, Mr Gore said:
I don't wanrt (sic) RC or AS to accumilate (sic) applications. They must be sent within 24 Hrs of receipt. What I am doing at the moment is getting them to send [them] dailt (sic).
What we want to maintain is inflow of funds. That is consistant (sic) transfers and to maintain that we need to have the administrator implement a strict policy in this regard. So whatever applications they receive they must be sent in within 24 Hrs and funds transferred with in 24Hrs from then.
I would like to see the template letters they are proposing to send to applicants.
I am satisfied that the references to RC and AS were to Royale and ActiveSuper respectively.
521 I also note, that on 8 March 2012, Mr Gore said in relation to the finalisation of the SPG PPM and its posting to the Cayco website, "we are going live today" (in an email to Mr Burrows, Mr Adamson and others); that on 18 March 2012 in an email to Mr George, Ms Gore, Mr Adamson and Mr Chant, Mr Gore said (prematurely) in relation to the WPO PPM "we have lift off"; and that on 26 March 2012, to Mr Gibson and Mr Chant, Mr Gore said in relation to the WPO "let's start selling".
522 In about March or April 2012, Mr Adamson told Mr Slijderink that Mr and Ms Gore intended that monies invested pursuant to the PPMs would be "shifted" to Ms Gore's US company and then transferred to MOGS, so that she could transfer them more quickly. Mr Slijderink queried the legitimacy of such an arrangement, and suggested to Mr Adamson that he ensure that monies were not paid to Ms Gore's account and that he should remove himself as a director. This evidence is admissible against Mr Adamson. I note that Mr Adamson did resign as director in April 2012.
523 On 10 May 2012, there was a significant meeting in the boardroom of MOGS. Mr Gore, Ms Gore, Mr George, Mr Stonehouse, Mr Burrows, Mr Chant and Mr Adamson attended. The purpose of the meeting was to execute the loan agreements and guarantees relating to the loans of funds from WPO and/or SPG and/or Cayco. Mr Adamson said that Mr Gore told those present that the documents were the loan agreements and guarantees which MOGS was prepared to sign and that Ms Gore and Mr Stonehouse would sign as guarantors. The execution of the documents did not proceed immediately as Ms Gore wished to speak to Mr Gore, Mr Stonehouse and Mr Adamson before doing so. She expressed concerns about signing a personal guarantee. Mr and Ms Gore, Mr Stonehouse and Mr Adamson withdrew for 15-20 minutes. Mr Adamson said that Ms Gore had a second concern namely, signing a guarantee without knowing that a lender had met all its obligations. The evidence did not disclose the discussion between Mr and Ms Gore, Mr Stonehouse and Mr Adamson but ultimately Ms Gore agreed to sign the guarantees. All those present then proceeded to sign the documents, which were positioned around the Board table. The loan agreements, described as "Facility Agreements" were between MOGS and/or one of its subsidiaries, on the one hand, and subsidiaries of WPO, on the other (WPO SPV1 Ltd, WPO SFV2 Ltd, WPO SFV3 Ltd, SPO SFV4 Ltd, WPO SFV5 Ltd, WPO SFV6 Ltd, WPO SFV7 Ltd, WPO SFV8 Ltd and WPO SFV9 Ltd). They provided for loans to MOGS or its subsidiaries of amounts ranging between $505,000 and $4,200,590. Once the loan agreements and guarantees had been signed, Mr George packed them into a suitcase and left. Copies of the loan agreements have been provided to ASIC but the present whereabouts of the guarantees is not known to it. Duplicates have not been located.
524 Mr Chant deposed that, in about June 2012, Mr Gore told him that he was interested in having the Arizonan properties owned by the LLCs sold and asked him to obtain a current indicative valuation. Mr Chant said that he obtained a valuation indicating that the Arizonan properties had a value "in the range of US$700,000" and that he passed that information onto both Mr Gore and Mr Burrows. Exercising the caution in relation to Mr Chant's evidence to which I referred earlier, I accept that evidence.
525 The properties owned by the LLCs were in fact sold in November 2012 for US$0.61 million but there has been no accounting for the proceeds of sale. There is evidence that Mr George at least had a hand in those sales.
526 In his final submissions, Mr Gore referred to an invoice from Forbes Hare dated 20 May 2012 relating to its work in connection with the establishment of WPO. The invoice does not identify Forbes Hare's client but was sent to Mr Chant and Mr George. Mr Gore noted that the invoice contained reference to himself only twice (both on 3 March 2012) whereas there were numerous references to attendances on Mr Chant, or work performed on the instructions of Mr Chant. Mr Gore submitted that by March 2012, Mr Chant was acting on the direction of Mr Burrows so that Forbes Hare invoice could be taken as an indication that it was, in effect, Mr Burrows who was giving the relevant instructions to Forbes Hare and not himself.
527 Mr Chant's evidence was that, although he had an initially commenced as a consultant to MOGS in September 2011, he had commenced working at the ActiveSuper/Royale offices in February 2012 on compliance issues.
528 As noted earlier, Mr Chant spent a considerable amount of time in the BVI and was a point of contact for the instructions to Forbes Hare. Accordingly it is not surprising that there are frequent references to him in the Forbes Hare invoice.
529 I do not accept Mr Gore's submission that the references to Mr Chant can be understood as indicating that it was Mr Burrows, and not Mr Gore, who was directing the establishment of SPG and WPO. That suggestion is belied by the extensive email communications between Mr Gore and Mr Chant (and others) during the period of the establishment of each of the Funds. It is very evident that Mr Gore was exercising supervision of Mr Chant's activities. This is consistent with what Mr Gore told Mr Slijderink in a meeting with Mr Adamson in late December 2011, namely, that Mr Chant was being groomed to work for the off-shore funds, as this would give Mr Gore control of the funds, without Mr Burrows knowing. Mr Gore was confident that Mr Chant would act in accordance with his wishes.
530 I reject Mr Gore's submission that it was Mr Burrows who was responsible for the establishment of the Funds and that his role was that of a mere assistant from time to time.
531 The findings which follow are based on these findings of fact and on the findings of fact set out earlier in these reasons.