Mr Bannon submitted that the conduct which constituted the contraventions of the Corporations Law (Cth), s 232 was the failure to sign the ballot paper and I should confine my considerations to that act.
12 I do not regard myself as so circumscribed and I do not read the passage as indicating that Cooper J thought the relevant consideration was so circumscribed. The contraventions in question were a failure to act honestly in the exercise of the powers and the discharge of the duties of a director of NRMA and the making of improper use of such position to gain an advantage. Failure to sign the poll paper was the result of that conduct. It is the likelihood of repetition of conduct of a similar sort and not the likelihood of a repetition of the result of that conduct which I regard as the relevant consideration.
13 So far as prior corporate conduct is concerned, evidence was received in the substantive proceedings in the form of testimonials which are relevant in these proceedings as well. Three further testimonials were in evidence in the current proceedings, one from a solicitor and family friend, one from a director of NRMA Insurance Group Limited ("NIGL") and the other from a director of both NRMA and NIGL. The evidence is against my drawing the conclusion that, in the past, the defendant failed to act honestly in the exercise of powers and in the discharge of duties as a director of companies or made improper use of his position as such a director to gain an advantage.
14 It was submitted that the incident in question was an aberration and that the defendant remains a fit and proper person to manage a corporation within the terms of the Corporations Law (Cth), s 1317EA(4).
15 Lack of contrition is a matter to be taken into account according to a number of the authorities analysed by Santow J in Adler. Mr Bannon relied upon the above quoted passage from Donovan to ground the submission that acceptance of responsibility was an alternative to contrition and the defendant at all times accepted responsibility for his failure to sign the ballot paper. I do not read Cooper J's judgment as suggesting that an acceptance of responsibility for conduct excludes the relevance of contrition. When I asked whether, if I formed a different view of what contrition meant, was any contrition offered to the court, Mr Bannon responded that the defendant did not come to the court to resile from the evidence he had given. The defendant regretted the fact that the poll paper was not signed and regretted the trouble that had occurred. Mr Bannon indicated that there were consequences for a defendant who gave different evidence on a subsequent occasion.
16 In my reasons for judgment in the substantive proceedings, I found that the defendant deliberately omitted to sign the poll paper, he had the deliberate intent to disenfranchise those members of NRMA who had appointed him proxy and directed that he vote against resolution 6 and he sought, deliberately, to override the intent of the members of NRMA which he knew to be against passing resolution 6 as a special resolution. Contrary to those findings, the evidence of the defendant, from which he does not resile, was that his failure to sign the poll paper was not deliberate but an inadvertent mistake and he did not deliberately breach any obligation he owed. I find that the defendant lacks contrition for his conduct and there is a likelihood of repetition of the impugned conduct. Nonetheless, I accept the tension that exists when a matter is the subject of appeal and there is perceived to be some significance in a resolute continuance of a denial of events found by the primary judge.
17 I take into account the many testimonials of the service the defendant has rendered to the community by service on many boards of directors both commercial and charitable. The affairs of NRMA have been the subject of much publicity in the past. I accept that the publicity associated with the judgment in the substantive proceedings has had an irreparable effect upon the defendant's reputation and career. There is no doubt in my mind that the defendant and his family have suffered considerably as a result, not only from the partial deprivation of income that has resulted from the publicity, but also from the personal hurt occasioned by these events and the publication of them. These considerations have considerable weight, in my judgment.
18 Mr Bannon sought to confine the act of dishonesty to the deliberate non-signing by the defendant of the poll paper. Mr Pembroke submitted that the defendant's failure to sign was premeditated. While I did not make such a finding in the substantive proceedings, I did conclude that the cumulative effect of my findings negated an honest omission on the part of the defendant to sign the poll paper. I regard premeditation as a reasonable description of that cumulative conduct: the request of Mr Hullah as to how one could fail to acquit one's responsibilities, the direction to split onto separate poll papers the votes directed to the chairman as proxy alone, the knowledge before the meeting that instruments appointing proxies with instructions to vote against resolution 6 spelt the doom of the resolution, the details of which are set out in my reasons for judgment in the substantive proceedings.
19 It was submitted that the defendant placed the unsigned poll paper into the ballot box and, as a matter of law, the ballot paper should have been counted and I should take this matter into account in these proceedings. I have found that the defendant knew that a failure to sign the poll paper would cause the returning officer to fail to count it. What is being put is tantamount to a submission that there was no failure to vote. That is a matter for an appellate court and not one which I should take into account in these proceedings. In my judgment the defendant failed to vote as directed by those members of NRMA who appointed him proxy. Furthermore, the submission contains the misapprehension to which reference has already been made. The failure to sign the poll paper was the result of the conduct in question and was not the impugned conduct.
20 It was submitted by Mr Bannon that there is a proposition in criminal law that a futile conspiracy cannot be a criminal act. I was referred to Haughton v Smith [1975] AC 476, Director of Public Prosecution v Nock [1978] AC 979 and Vereker v Rodda (1987) 18 FCR 83 at 93. Whether or not the authorities go so far, I do not regard them as relevant to my considerations. I have found that the defendant acted dishonestly and that feature remains whether or not the ultimate result of that conduct was futile.
21 It was submitted that my decision created a genuine controversy between the obligation of a director to vote as proxy and the provisions of the Corporations Law (Cth), s 250A which might be thought to be a code and the fact that my decision was not free from legal controversy should be taken into account in these proceedings. Again, I reject the submission on the basis that that is a matter for an appellate court and not for me.
22 Mr Pembroke submitted that persons who occupy high office in the business community in whom great trust is placed must expect condign punishment when that trust has been dishonestly breached (R v Pantano (1990) 49 A Crim R 328 at 330, R v Halabi (NSWCCA, 17 February 1992, unreported) at 4-5. I was also referred to the Crimes Act 1900 s 344A with respect to an attempt to commit a crime and to R v Irusta [2000] NSWCCA 391 at par [41],[44]. These are criminal cases and, while the current proceedings possess some features common to the criminal law, I prefer to base my judgment on the issues referred to in Adler and those referred to above.
23 The community is entitled to except high standards of probity from directors of public corporations in which the community is invited to invest. This is particularly so of the chairman of a board of directors who is regarded as holding a pre-eminent position in the organisation. The defendant as President of NRMA was in a position similar to the chairman of a board of directors. Furthermore, this was not a case of thwarting the vote of an institutional investor in a public company. Any motorist in New South Wales is entitled to become a member of NRMA. Membership entitles one to a vote in common with every other member. By deliberately failing to sign the ballot paper, the defendant intended to disenfranchise 3,973 individual members of the company.
24 Notwithstanding the testimonials, I am not satisfied that the defendant is a fit and proper person to manage a corporation and I am satisfied that contraventions of the Corporations Law (Cth), s 232(2) and s 232(6) were serious. It remains for consideration whether or not I should exercise my discretion under s 1317EA(3).
25 Notwithstanding the damage that the defendant has already suffered to his reputation and career and the personal suffering to him and his family, notwithstanding the lack of consequence in the defendant's action of deliberately failing to sign the poll paper and notwithstanding the loss to the community from the deprivation of his services, I am of the view in weighing up the factors that I should exercise my discretion against the defendant. In the interests of the protection of the public and as a deterrence both personal and general I have decided that I should prohibit the defendant from managing a corporation for a period of 5 years and I should order the defendant to pay to the Commonwealth a pecuniary penalty of $20,000. I propose to make no order as to costs. I propose to dismiss the remainder of the originating process.
26 Costs with respect to an application by the defendant for discovery of the entirety of the transcripts of evidence taken by the plaintiff from potential witnesses in the substantive proceedings under the Australian Securities and Investments Commission Act 2001 (Cth) were reserved. The plaintiff resisted making the entirety of the transcripts available to the defendant's solicitors. Some of the examinees appeared on the application and joined in that opposition. I ordered discovery of the full transcripts.
27 The plaintiff opposed the ordinary result that costs should follow the event on the basis that it was obliged to protect the confidentiality of the examinees under the Australian Securities and Investments Commission Act 2001, s 127(1) which required the plaintiff to take all reasonable measures to protect from unauthorised use or disclosure, information given to it in confidence in, or in connection with, the performance of its functions or the exercise of its powers. On the other hand, s 25(1) provided that the plaintiff might give a copy of a written record of examination to a person's lawyer if the lawyer satisfied the plaintiff that the person was carrying on or was contemplating in good faith a proceeding in respect of a matter to which the examination related. It was submitted that in resisting discovery, the plaintiff was acting in accordance with the overriding requirement of s 127(1). Reference was made to the judgment of Brennan J in Johns v Australian Securities Commission (1992-1993) 178 CLR 408 at 425. What his Honour there said, however, was that s 25(3) gave a limited authority to give a copy of a written record of an examination only if it be for a purpose consistent with s 127. Section 127(2) provided that the disclosure of information as required or permitted by a law of the Commonwealth was taken to be authorised use and disclosure of the information. In my view that includes disclosure under s 25(3).
28 It was open to the plaintiff, in my judgment, to exercise its limited authority under the Australian Securities and Investments Commission Act 2001, s 25(3) and grant the solicitor for the defendant a copy of the entire transcripts in question. The normal result would be that the defendant is entitled to an order with respect to the reserved costs.
29 In the substantive proceedings, the plaintiff was substantially successful with respect to the matters the subject of my first declaration and, notwithstanding the making of my second declaration, the defendant was substantially successful with respect to it because of the relief granted. The normal rule would be that the plaintiff is entitled to the costs associated with the first declaration and the defendant is entitled to the costs associated with the second declaration. Considerations of the time taken with respect to separate issues might be used to determine the outcome. In the circumstances, however, I consider it appropriate that each party bear its own costs.
30 I direct the parties to bring in short minutes of orders in accordance with these reasons for judgment.