Australian Securities & Investments Commission v Citrofresh International Ltd

Federal Court of Australia|2007-11-30|Before: Goldberg J

REASONS FOR JUDGMENT 1 This proceeding relates to two letters sent to the Company Announcements Office of the Australian Stock Exchange ("the Stock Exchange") by the first defendant Citrofresh International Ltd ("CIL") of which the second defendant Mr Ravi Narain was at relevant times managing director and chief executive officer. 2 The plaintiff, Australian Securities and Investments Commission ("the Commission"), alleged that the contents of those letters were misleading and deceptive in a number of respects and contained misrepresentations by CIL. The Commission alleged that by sending the letters to the Stock Exchange, CIL engaged in conduct in relation to a financial product or a financial service in contravention of the provisions of s 1041H of the Corporations Act 2001 (Cth) ("the Act"). The Commission further alleged that by reason of his participation in the drafting and preparation of the first letter in the manner alleged, his approval of the contents of the letter, his direction to CIL's company secretary to send the first letter to the Stock Exchange, the sending of the first letter to the Stock Exchange and the fact that both letters contained his name as one of two persons to contact for further enquiries, Mr Narain engaged in conduct in relation to a financial product or a financial service in contravention of s 1041H of the Act. CIL consented to orders being made against it and the proceeding continued against Mr Narain who denied the allegations made against him by the Commission. 3 CIL is a public company whose shares are listed on the Stock Exchange. It carries on the business of a supplier of products, including disinfectant products containing the substance known as "Citrofresh". Citrofresh is an organic biocide and is the active ingredient in a number of disinfectant, sanitising and cleaning products. It has been used as a food sanitiser. 4 On 25 August 2005, Mr Narain received a report, commissioned by a company associated with Mr Narain, from Retroscreen Virology Ltd ("Retroscreen") entitled "Evaluation of the virucidal activity of a Flavonoid compound against Urbani SARS virus, Influenza A virus, Human Rhinovirus and Human Immunodeficiency Virus". The report noted in a summary that "Citrofresh exhibits significant virucidal activity against all four viruses tested." The report described Citrofresh in the following terms: "Citrofresh is a wholly natural organic compound derived from the extracts of citrus fruit. Due to its synergistic activity created from the Flavonoid complex and naturally occurring organic acids, the compound has had significant impact in the food, pharmaceutical and biotechnology industries, by acting as an effective pesticide, disinfectant, anti‑bacterial and anti‑fungal agent." The results of a number of tests carried out on Citrofresh were set out in detail in the report. 5 Australian Rickettsial Reference Laboratory Foundation Ltd was asked by Mr Narain to verify Retroscreen's report. It evaluated Retroscreen's testing and on 25 September 2005 it reported to Mr Narain that Retroscreen's results: "… are very conclusive to determine the effective concentration of Citrofresh® against enveloped and non‑enveloped viruses and suggest that equal or less than 5% concentration and equal or less than 5 minutes contact time will be sufficient to eliminate all of these viruses from surfaces." 6 On 27 September 2005 CIL sent a letter to the Company Announcements Office of the Stock Exchange which was expressed to be an "ASX Release" ("the 27 September letter") and was headed: "Test Results Confirm Citrofresh is Effective Against Four Major Virus Types including HIV & Avian" In the letter CIL announced that its "Citrofresh organic bioflavonoid compound" had been tested by Retroscreen Virology Laboratory against four different RNA viruses. 7 The letter continued: "In a landmark result, Retroscreen Virology confirmed that 'Citrofresh exhibits significant virucidal activity against all four viruses tested'. The study concluded the efficacy of Citrofresh against both enveloped and non‑enveloped viruses and suggested that equal or less than 5% concentration and equal or less than 5 minutes contact time is sufficient to eliminate all of the viruses. VIRUS NAME COMMON NAME TYPE OF VIRUS HIV‑1 Virus HIV/AIDS Double Stranded RNA Virus) [sic] Human Influenza A Virus Influenza Enveloped Single Stranded RNA Virus Urbani SARS Virus SARS Enveloped Single Stranded RNA Virus Human Rhinovirus Cause of Common Colds Non‑Enveloped, Single Stranded RNA Virus

8 There was then set out in the letter under the heading "Results" sections in relation to each of the four viruses described in the table. In the section headed "Human Immunodeficiency Virus - 1 (HIV‑1)" the following text was set out: "HIV is one of the most serious viral diseases of our time, with an estimated 40 million people infected with the virus. HIV/AIDS is the fastest growing threat to human development today. The World Health Organization (WHO) reports that the number of women living with HIV has risen in each region of the world over the past two years, with the steepest increases in East Asia being 56%. The global AIDS epidemic killed 3.1m people in 2003. We believe that we can now offer a global solution to reduce and eventually stop the spread of this disease using Citrofresh. (emphasis added) A report issued in 2003 by the Centre for Infectious Disease and Control ("CDC") stated: "that an 'ideal' microbicidal product would have to be effective against multiple STD's, including HIV. It should be safe to use several times daily, fast acting, acceptable to users, affordable, colourless, odourless, easy to store and to use, easy to obtain, and available in a variety of preparations, including with or without a contraceptive component. None of the compounds currently in development meet these ideal standards and experts say it is unlikely that any one product will meet them all. The immediate priority is to develop a microbicidal product that would provide protection against HIV." The CDC further noted that the principal problem is the multitude of STD's. Dr Robert Johnson, a medical epidemiologist with the Division of STD Prevention at the CDC notes that "there isn't a single drug that can treat all STD's. The viral agents cannot be treated. Coming up with a regimen is problematic." The ability of Citrofresh to be both a broad spectrum biocide (including efficacy against HIV) and to meet the ideal 'criteria' as noted by the CDC provides Citrofresh with a unique market opportunity. CTF will market a range of "Barrier Protection" products to be used in the first instance for Men's Health (post intercourse spray or lotion) and subject to the results of trials on efficacy; [sic] we will then introduce a vaginal biocide to the market. (emphasis added) In terms of potential market application the following United Nations view highlights the need for an effective biocide, Citrofresh would fit this criteria: Ř Worldwide, an estimated 250 million new cases of STDs occur annually. Ř Postcoital STD treatment could also be helpful for couples who use condoms as a means of STD prevention but experience condom breakage or slippage, similar to emergency contraception when used to prevent pregnancy when a couple experiences condom failure. Ř In reality, the use of Citrofresh as a postcoital application will act as an "invisible condom" for the prevention of STD's including HIV. This is a significant development for the global health markets and for communities that through social custom, religious belief or sexual practice; do not use condoms for disease protection. (emphasis added) Ř It should be further noted that with the withdrawal of Nonoxly‑9 from the market due to concerns that it increases susceptibility to HIV and STD's, a huge market gap has appeared. CTF intends to take full advantage of this market opportunity. The ability to use Citrofresh as a postcoital application will have a significant impact on reducing the transmission of HIV and STD's. The CDC and the WHO now acknowledge that the development of an HIV vaccine has been problematic and that in the medium term the only mechanism for controlling the spread of AIDS will be an effective biocide. (emphasis added) To secure a quick an [sic] effective path to market, Citrofresh is undertaking discussions with several market leaders for the distribution of the Men's Health product range. Collaboration is also being sought by CTF to undertake further trials for applications in the Women's Health market segment i.e. a vaginal biocide." 9 The letter then set out text relating to the other three viruses identified in the table. The following text appeared under the "Conclusion": "Citrofresh is an effective virucidal agent that can target HIV, Urbani SARS, Human Influenza A and Human Rhinovirus. This reinforces both Derm‑e‑San and Citrofresh generally as world leading products in this market. The company considers the results of the Retroscreen study, a major milestone in its strategy of further validating the efficacy of its product. Emergency disease control and prevention is a primary objective of government organizations world‑wide and Citrofresh provides a non‑hazardous, non‑toxic and effective solution that deal [sic] with these problems. (emphasis added) The business of preventing the spread of viruses is a multi‑billion dollar market. CTF intends to take full advantage of this opportunity by delivering non‑toxic alternatives and providing a safe solution of the world's future." 10 The text of the 27 September letter was approved by Mr Narain who participated in the preparation and drafting of the letter and he directed CIL's company secretary to send it to the Stock Exchange. 11 On 28 September 2005, CIL sent a further letter to the Stock Exchange expressed to be an "ASX Release" in which it referred to the announcement on the previous day, clarified a number of points and provided additional information on the Retroscreen report and CIL information. The announcement stated that: " … Citrofresh® has not been developed as a vaccine and is not claiming to be a cure for any of the viruses noted in the Retroscreen report. Citrofresh® is a topical application and its current use is as a disinfectant. The application of Citrofresh as a product is to impact on the transmission of viruses and bacteria. This is consistent with the products [sic] current use as a Hospital Grade disinfectant and hand sanitizer". The letter also stated that the studies conducted by Retroscreen were in vitro laboratory trials. 12 On 29 September 2005 in response to a request from the Stock Exchange CIL sent a letter to the Stock Exchange ("the 29 September letter") which stated, inter alia: "Citrofresh is not is not [sic] a vaccine nor cure for Human Immunodeficiency Virus (HIV1) … CTF announced on the 27 September 2005 that it will develop a product that will target Men's Health. The statement was clear and unequivocal that the product will be marketed as a postcoital treatment … CTF was also clear and unequivocal in the announcement of 27 September 2005 that trials on efficacy would need to be conducted to develop a vaginal biocide … CTF believes that an equally valid and more accessible market for Citrofresh® is for use as a penile sanitizer pre or post intercourse …" That letter, as did the 27 September letter, contained the name of Mr Narain as one of two persons to contact for further enquiries. 13 Between 1 September 2005 and 26 September 2005, CIL shares traded on the Stock Exchange between $0.20 per share and $0.25 per share. On the morning of 27 September 2005 at the commencement of trading on the Stock Exchange CIL shares opened at $0.22.5 per share. Shortly after the 27 September letter was sent to the Stock Exchange and released to the market, CIL shares traded on the Stock Exchange as high as $0.70 per share and were trading at $0.53.5 per share when the Stock Exchange applied a trading halt at 3.29pm on 27 September 2005. 14 At the close of trading on 28 September 2005 the price of CIL shares on the Stock Exchange had dropped to $0.35.5 per share and at the close of trading on 30 September 2005 the price of CIL shares on the Stock Exchange had dropped to $0.29.5 per share. 15 The drafting of the 27 September letter evolved in the following manner. CIL had retained two consultants to advise it in relation to corporate governance, marketing, business and public relations matters and the preparation of company announcements. One consultant was Mr Sam Taylor from Axis (Vic) Pty Limited and the other consultant was Mr Haydn Wright from Teraform Advisory Pty Ltd. 16 After Mr Narain received the report from Australian Rickettsial Reference Laboratory Foundation Ltd ("the Rickettsial report") on 25 September 2005, he sent copies of it and the Retroscreen report to Mr Taylor. On the next day, 26 September 2005, Mr Narain, Mr Taylor, Mr Wright had a three‑way telephone conference call in the morning about the preparation of a company announcement in relation to the subject‑matter of the reports. Mr Narain asked Mr Taylor and Mr Wright to prepare an announcement to be made by CIL. 17 At 1.42pm on 26 September 2005, Mr Taylor sent an email to Mr Narain attaching a draft of the proposed release. That draft made provision for comments by Mr Wright in relation to "HIV and mens' health". Mr Taylor, Mr Wright and Mr Narain met at Mr Narain's office at about 3.00pm. Mr Taylor and Mr Narain prepared the table on the front page of the announcement and moved the section regarding Retroscreen to the end of the document. 18 At 4.48pm on 26 September 2005 Mr Wright sent an email to Mr Narain enclosing text to be included in the release. Mr Taylor and Mr Narain pasted that text into the announcement. Mr Wright included the words, "we can now offer a non‑toxic solution to reduce and eventually stop the spread of this disease using Citrofresh". Mr Narain and Mr Taylor inserted the words "we believe" before this sentence and made a number of other alterations. 19 At 5.35pm on 26 September 2005 Mr Narain sent an email to Mr Taylor, Mr Wright, Mr Jeff Hanlon, CIL's company secretary, Mr Ron Gajewski, a director of CIL, Mr Andy Michael, a director of CIL and Mr Mathew Walker, a director of CIL, enclosing the latest draft of the announcement. The email stated: "Latest announcement I will be releasing to the market tomorrow. Should there be any obvious corrections or comments to be added, please let me know by 10.00am at the latest as I will be releasing this to the market at 10.30am …" 20 It is important to note that in this email Mr Narain was not seeking the approval or authorisation of the Board of CIL to the making of the announcement. Rather, he was inviting them to correct or comment on any mistakes in the announcement. Mr Narain said that the whole purpose of sending the announcement to the Board was to gain the approval of the Board members. I do not accept that explanation. It is inconsistent with the contemporaneous documentation. The email sent at 5.35pm is more likely to record accurately the reason why Mr Narain sent the announcement to the Board members. 21 At 9.49pm on 26 September 2005 Mr Taylor sent an email to Mr Narain in the following terms: "Ravi, Just a couple of minor changes after re‑reading.

the first paragraph looked a little thin so I thought of beefing it up (with more background on Retroscreen etc.).
I have moved the results heading
Its important we discuss that Retroscreen found Citrofresh 'non‑toxic'.
Avian last paragraph - changed order so it reads better Cheers, Sam." At 9.24am on 27 September 2005 Mr Wright sent an email to Mr Narain stating: "Please call to discuss". There was attached the proposed announcement with some changes. In particular, Mr Wright inserted the words, "In reality, the use of Citrofresh as a postcoital application will act as an 'invisible condom' for the prevention of STD's including HIV". 22 At 11.09am on 27 September 2005 Mr Narain sent an email to Mr Wright, Mr Taylor and the members of the CIL's Board and its company secretary which stated "Announcement to be released this morning". The announcement was attached. It contained further text added and altered by Mr Narain but Mr Narain says he did not insert the word "global" before the word "solution" in the first paragraph of the announcement set out in par [8] above. 23 At 11.27am on 27 September 2005 Mr Narain sent an email to Mr Hanlon, CIL's Company Secretary enclosing a "Last Version" of an announcement relating to the signing of a distribution agreement in relation to the South African market. 24 At 11.29am on 27 September 2005 Mr Narain sent an email to Mr Hanlon enclosing the form of the announcement to be sent to the Stock Exchange. At 11.50am Mr Hanlon sent an email to Mr Narain confirming that the announcement had been sent to the Stock Exchange. This announcement was the 27 September letter. 25 After the CIL share price rose, CIL requested a trading halt in its shares which the Stock Exchange implemented. CIL made a further announcement the following day: par [11] above. 26 The Commission contended that this sequence of events shows that Mr Narain was deeply involved in the preparation of the announcement; he combined the drafts from the two consultants, added to the drafts in significant respects, told the Board what he was going to do with the announcement and directed that it be sent to the Stock Exchange.

THE COMMISSION'S CLAIMS 27 The Commission alleged that: (a) two of the statements contained in the 27 September letter constituted representations of existing fact which were false; (b) three of the statements contained in the 27 September letter constituted a representation with respect to a future matter and that Mr Narain had no reasonable grounds for making the representations; (c) the letters did not disclose to the Stock Exchange, or to the public, a number of issues which were material to the matters disclosed in the letters and were also material to the prospects of commercial success for CIL, material to its business prospects, relevant to its share price and were matters that should have been disclosed in the letters in order to avoid the letters being misleading or deceptive or likely to mislead or deceive. 28 The first statement in the 27 September letter of which the Commission made complaint was the statement that CIL: "can now offer a global solution to reduce and eventually stop the spread of [human immunodeficiency virus] ("HIV")] using Citrofresh". The Commission claimed that this statement constituted a representation of existing fact to the Stock Exchange and the public, namely that CIL could, as at 27 September 2005, offer a global solution to reduce and eventually stop the spread of HIV. 29 The Commission contended that this statement was false in that: (a) CIL could not, as at 27 September 2005, offer a global solution to reduce and eventually stop the spread of HIV; (b) as a disinfectant, Citrofresh could only have a minimal impact on the spread of HIV; (c) for a product to be marketed in Australia as a solution to the reduction and eventual cessation of the spread of HIV, that product was required to be licensed by the Therapeutic Goods Act ("TGA") [under Parts 3‑2, 3‑3 and 5‑1 of the TGA], and as at 27 September 2005 CIL had no such licence for any product; (d) for a licence to be obtained from the TGA for the marketing in Australia of any product as a solution to the reduction and eventual cessation of the spread of HIV, the results of in vivo testing of the product were required to be submitted to the TGA, and as at 27 September 2005 no such testing had been carried out on any product containing Citrofresh. 30 The second statement contained in the 27 September letter of which the Commission made complaint was the statement that: "Citrofresh provides a non‑hazardous, non‑toxic and effective solution that deal [sic] with emergency disease control and prevention for HIV, human influenza A virus, SARS virus and human rhinovirus".

31 The Commission claimed that this statement was false in that: (a) as at 27 September 2005 it had not been established that Citrofresh provided a non‑hazardous, non‑toxic and effective solution that deals with emergency disease control and prevention for HIV, human influenza A virus, the SARS virus and the human rhinovirus; (b) as a disinfectant, Citrofresh could only have a minimal impact on control and prevention for HIV, human influenza A virus, the SARS virus and the human rhinovirus; (c) for a product to be marketed in Australia as providing a non‑hazardous, non‑toxic and effective solution that deals with emergency disease control and prevention for HIV, human influenza A virus, the SARS virus and the human rhinovirus, that product was required to be licensed by the TGA and as at 27 September 2005 CIL had no such licence for any product; and/or (d) for a licence to be obtained from the TGA for the marketing in Australia of any product as providing a non‑hazardous, non toxic and effective solution that deals with emergency disease control and prevention for HIV, human influenza A virus, the SARS virus and the human rhinovirus, the results of in vivo testing of the product were required to be submitted to the TGA, and as at 27 September 2005 no such testing had been carried out on any product containing Citrofresh. 32 The third statement contained in the 27 September letter of which the Commission made complaint was the statement that: "[CIL] will market a range of 'Barrier Protection' products to be used in the first instance for Men's Health (post intercourse spray or lotion)". 33 The Commission claimed that this statement constituted a representation to the Stock Exchange and the public with respect to a future matter and that CIL and Mr Narain had no reasonable grounds for making it. 34 The fourth statement contained in the 27 September letter of which the Commission made complaint was the statement that: "The use of Citrofresh as a postcoital application will act as an 'invisible condom' for the prevention of STD's including HIV". 35 The Commission claimed that this statement constituted a representation to the Stock Exchange and the public with respect to a future matter and that CIL and Mr Narain had no reasonable grounds for making the representation. 36 The fifth statement contained in the 27 September letter of which the Commission made complaint was the statement that: "The ability to use Citrofresh as a postcoital application will have a significant impact on reducing the transmission of HIV and STD's". 37 The Commission claimed that this statement constituted a representation to the Stock Exchange and the public with respect to a future matter and that CIL and Mr Narain had no reasonable grounds for making the representation. 38 The Commission also claimed that the 27 September letter did not disclose to the Stock Exchange or the public that: (a) Citrofresh was a disinfectant and not a vaccine; (b) the tests that had been carried out on Citrofresh by Retroscreen Virology Laboratory were in vitro and not in vivo; (c) further in vivo tests were necessary before Citrofresh could be marketed for use as a pre‑coital or post‑coital application designed to prevent STDs. The Commission claimed that each of these items of non‑disclosure was: (a) material to the matters that were disclosed in the 27 September letter and the 29 September letter; (b) material to the prospects of commercial success for Citrofresh; (c) material to CIL's business prospects; (d) relevant to CIL's share price; (e) a matter that should have been disclosed in the 27 September letter and the 29 September letter in order to avoid the letter being misleading or deceptive or likely to mislead or deceive. 39 The Commission claimed that by making the statements referred to in pars [28] and [30] above, Mr Narain engaged in conduct in relation to a financial product or a financial service that was misleading or deceptive or likely to mislead or deceive contrary to s 1041H of the Act. 40 The Commission further claimed that: · by making the statements referred to in pars [32], [34] and [36] above without reasonable grounds Mr Narain engaged in conduct in relation to a financial product or a financial service that, by operation of s 769C of the Act, was misleading or deceptive or likely to mislead or deceive contrary to s 1041H of the Act; · by the non‑disclosures referred to in pars [38] above, Mr Narain engaged in conduct in relation to a financial product or a financial service that was misleading or deceptive or likely to mislead or deceive contrary to s 1041H of the Act. 41 The Commission contended that by acting in breach of s 1041H, Mr Narain is liable to a declaration against him under s 1101B of the Act. 42 The Commission sought specific remedies against Mr Narain. It claimed that Mr Narain was involved in each of CIL's contraventions of s 1041H of the Act in his capacity as a director of CIL and while exercising his powers as a director to authorise or carry out the conduct which caused CIL to contravene s 1041H of the Act. The Commission claimed that he did not exercise his powers as a director of CIL with the degree of care and diligence that a reasonable person would exercise if that person were a director of CIL, and so put CIL into jeopardy as a result of publishing the letters. It followed, submitted the Commission, that Mr Narain contravened s 180(1) of the Act. The Commission sought pecuniary penalties against Mr Narain and a declaration under s 1317E of the Act. It also sought that Mr Narain be disqualified from managing corporations for a period to be determined by the Court.

EVIDENCE OF PROFESSOR WESSELINGH 43 The Commission led evidence from Professor Steven Wesselingh, Director of the MacFarlane Burnet Institute for Medical Research and Public Health, Professor of Microbiology and Medicine at Monash University and a Professorial Fellow in the Department of Microbiology and Immunology at the University of Melbourne. Professor Wesselingh's field of expertise is in relation to infectious diseases. At the time of the hearing Professor Wesselingh said he was leaving the MacFarlane Burnet Institute to take‑up the position of Dean of Medicine at Monash University. 44 Professor Wesselingh was asked to address a number of questions. The first question he was asked to address was whether the Retroscreen Report and the Rickettsial report provided a scientific basis for five statements. These were the statements, with one exception, of which the Commission made claims in this proceeding. The first statement was the statement set out in par [28] above, namely, that CIL: "can now offer a global solution to reduce and eventually stop the spread of HIV using Citrofresh." 45 In relation to this statement Professor Wesselingh said: "There is no evidence provided that Citrofresh could act in any way other than as a disinfectant. A disinfectant cannot offer a global solution to reduce and eventually stop the spread of HIV. No evidence has been provided to demonstrate that Citrofresh has novel or innovative role in offering a new global solution to reducing and eventually stopping the spread of HIV." 46 The second statement was a re‑arrangement of the statement set out in par [30] above, namely that: "Emergency disease control and prevention is a primary objective of government organizations world‑wide and Citrofresh provides a non‑hazardous, non‑toxic and effective solution that deal [sic] with these problems." 47 In relation to this statement Professor Wesselingh said: "The data presented indicate that Citrofresh could be a moderately effective disinfectant but this provides no novel, innovative solution or support for emergency disease control." 48 The third statement addressed by Professor Wesselingh was a re‑arrangement of the statement set out in par [32] above, namely that: "Citrofresh has (or will in the foreseeable future have) the ability to market a range of 'Barrier Protection' products to be used in the first instance for Men's Health (post intercourse spray or lotion)." 49 In relation to this statement Professor Wesselingh said: "Barrier protection is a term utilised to describe the use of a condom or other 'barrier' to prevent direct contact occurring between the male genitals and/or ejaculate and the female genital mucosa. There is no scientific evidence presented, either in the Retroscreen Report or in the second Rickettsial Letter, that indicates a basis for use of Citrofresh as a barrier protection product. The statement suggests that in the first instance Citrofresh would be used as a post intercourse spray or lotion. This is not what would be considered by experts as barrier protection but would be considered post intercourse cleaning of the penis. There is no evidence that cleaning of the penis post intercourse reduces the spread of HIV from male to female or female to male." 50 The fourth statement addressed by Professor Wesselingh was the statement set out in par [34] above, namely that: "The use of Citrofresh as a postcoital application will act as an 'invisible condom' for the prevention of STDs including HIV". 51 Professor Wesselingh gave the same answer to this statement as he did in relation to the third statement. 52 The fifth statement addressed by Professor Wesselingh was the statement set out in par [36] above, namely that: "The ability to use Citrofresh as a postcoital application will have a significant impact on reducing the transmission of HIV and STDs". 53 In relation to this statement Professor Wesselingh said: "This again goes to the issue of postcoital application as opposed to applications of gels or microbicides that have anti‑HIV activity prior to sexual intercourse. There is no evidence that postcoital application of gels or other products with anti‑HIV activity either on the penis or vaginally will have any significant impact in reducing the transmission of HIV or other STDs." 54 Professor Wesselingh also addressed the statement contained in the 27 September letter that: "An equally valid and more accessible market for Citrofresh is for use as a penile sanitizer pre or post intercourse". 55 In relation to this statement Professor Wesselingh said: "The Retroscreen Report and the second Rickettsial Letter do indicate that Citrofresh has moderate activity against HIV … 'Sanitization' of the penis prior to sexual intercourse or post intercourse therefore will not reduce the transmission of HIV from male to female, as it will have no impact on the infectivity of the ejaculate. In addition, cleaning of the penis pre or post intercourse will have no impact on the transmission of HIV from female to male as the contact of HIV with susceptible tissues on the penis occurs during intercourse and cleaning afterwards is too late. …" Professor Wesselingh disagreed with Australian Rickettsial Reference Laboratory Foundation Ltd's conclusion in par [5] above. He said that there was no evidence provided in the two reports that Citrofresh could act in any way other than as a disinfectant, and that a disinfectant cannot offer a global solution to reduce and eventually stop the spread of HIV.

ISSUES FOR DETERMINATION 56 The following issues arise for determination: (a) did Mr Narain engage in conduct in relation to a financial product or a financial service within the meaning of s 1041H of the Act; (b) did Mr Narain's conduct expose him to liability as a principal under s 1041H of the Act; (c) were the statements relied upon by the Commission misleading or deceptive or likely to mislead to deceive; (d) were the non‑disclosures relied upon by the Commission such as to result in conduct that was misleading or deceptive or likely to mislead or deceive; and (e) did Mr Narain by his conduct contravene s 180 of the Act. 57 The Commission submitted that: · Mr Narain was intimately involved in the drafting, approval and authorisation of the 27 September letter; · his conduct caused the making of false and misleading representations by CIL; · he was the principal human agent through which CIL acted in making the representations in the 27 September letter; · he was therefore a "person" who engaged in conduct in relation to a financial product that was misleading and deceptive or likely to mislead and deceive. 58 Mr Narain made the following submissions: (a) the 27 September letter was not an announcement notice, or conduct "in relation to" a financial product or a financial service. There was no contravention of s 1041H; (b) Mr Narain did not himself engage in conduct in relation to the 27 September letter, other than as a director of, and on behalf of, CIL. Contrary to the Commission's submissions, he was not the principal human agent through which CIL acted in making the representations in the 27 September letter alleged by the Commission. In short, Mr Narain did not personally contravene s 1041H; and (c) the representations in the 27 September letter alleged by the Commission were not misleading or deceptive or likely to mislead or deceive. 59 The expressions "financial product" and "financial service" are defined in Divs 3 and 4 of Pt 7.1 of the Act. Section 763A(1) provides: "For the purposes of this Chapter, a financial product is a facility through which, or through the acquisition of which, a person does one or more of the following: (a) makes a financial investment (see section 763B); (b) manages financial risk (see section 763C); (c) makes non‑cash payments (see section 763D). This has effect subject to section 763E.

Section 766A(1) provides: "For the purposes of this Chapter, subject to paragraph (2)(b), a person provides a financial service if they: (a) provides financial product advice (see section 766B); or (b) deal in a financial product (see section 766C); or (c) make a market for a financial product (see section 766D); or (d) operate a registered scheme; or (e) provide a custodial or depository service (see section 766E); or (f) engage in conduct of a kind prescribed by regulations made for the purposes of this paragraph." 60 Section 1041H provides: "(1) a person must not, in this jurisdiction, engage in conduct, in relation to a financial product or financial service, that is misleading or deceptive or is likely to mislead or deceive. (2) The reference in subsection (1) to engaging in conduct in relation to a financial product includes (but is not limited to) any of the following: (a) dealing in a financial product; (b) without limiting paragraph (a): (i) issuing a financial product; (ii) publishing a notice in relation to a financial product; … (3) Conduct: (a) that contravenes: (i) section 670A (misleading or deceptive takeover document); or (ii) section 728 (misleading or deceptive fundraising document); or (b) in relation to a disclosure document or statement within the meaning of section 953A; or (c) in relation to a disclosure document or statement within the meaning of section 1022A; does not contravene subsection (1). For this purpose, conduct contravenes the provision even if the conduct does not constitute an offence, or does not lead to any liability, because of the availability of a defence.

DID Mr NARAIN ENGAGE IN CONDUCT "IN RELATION TO" A FINANCIAL PRODUCT OR A FINANCIAL SERVICE? 61 The first issue which arises for determination is whether the conduct alleged by the Commission was conduct engaged in "in relation to a financial product or a financial service". The Commission's case was that the making of the announcements in the 27 September letter and the 29 September letter constituted misleading or deceptive conduct in relation to listed shares in CIL in contravention of s 1041H of the Act, as the announcements were likely to, and did in fact, affect trading in shares in CIL and the price of these shares. 62 Mr Narain submitted that the 27 September letter (and, by implication the 29 September letter) did not, of itself, concern or relate to the issue of financial products, that the announcement was not about a financial product but was rather about the physical product Citrofresh itself. In short it was not a statement that was in relation to, or was related to, shares in CIL. 63 Mr Narain submitted that s 1041H dealt with the mischief of false statements in product disclosure statements, prospectuses and circulars concerning share issues and other securities and that ss 1041E and 1041F were sections which caught announcements in relation to subject‑matter such as the 27 September letter. There are a number of provisions in Div 2 of Pt 7.10 which prohibit different types of conduct such as market manipulation (s 1041A), false trading and market rigging (ss 1041B and 1041C), false or misleading statements (s 1041E) and inducing persons to deal in financial products (s 1041F). But it does not follow if particular conduct falls within one of the provisions in Div 2, such as s 1041E, that the conduct cannot fall within any of the other provisions, such as s 1041H. This is made clear by s 1041J which provides: "Subject to any express provision to the contrary, the various sections in this Division have effect independently of each other, and nothing in any of the sections limits the scope or application of any of the other sections." 64 The context and the Part of the Act, in which s 1041H is found, is therefore of little assistance in determining the scope and reach of s 1041H. The fact that s 728 of the Act prohibits the making of misleading or deceptive statements in disclosure documents or prospectuses is of no assistance in construing s 1041H. Section 1041H was introduced into the Act by the Financial Services Reform Act 2001 (Cth). The revised Explanatory Memorandum for the Bill for that Act provided in par [4.37] that: "A general prohibition on misleading and deceptive conduct will apply to dealings in financial products and provision of financial services. The provisions in the Corporations Act and other applicable legislation will be harmonised to provide a single regime with respect to conduct in relation to financial products." That provision supports the proposition that in order for conduct to be "in relation to" a financial product, it must on its face have a connection or relationship with the financial product. 65 The critical question is whether Mr Narain engaged in conduct "in relation to" a financial product. Subsection 1041H(2)(b)(ii) provides that "engaging in conduct" in subs 1041H(1) includes, but is not limited to "publishing a notice in relation to a financial product". Mr Narain challenges the proposition that he engaged in conduct personally, otherwise than as an officer of CIL, which gave rise to a personal contravention of s 1041H. (I consider this issue later in these reasons). But accepting for the moment that he did act personally in relation to the conduct alleged, that is by making the announcements in the letters sent to the Stock Exchange, it is still necessary to answer the question whether that conduct was "in relation to" a financial product, namely listed shares in CIL. 66 The expression "in relation to" has been the subject of judicial consideration in a number of different contexts. A consistent theme running through the case is that the expression "in relation to" gathers its meaning from the context in which it appears and the purpose for which it appears: see, eg, Oceanic Life Ltd v Chief Commissioner of Stamp Duties (1999) 168 ALR 211 at 225, per Fitzgerald JA. The words "in relation to" have a very wide meaning, but like the expression "in respect of", they do not extend to "any relationship however tenuous": Technical Products Pty Ltd v State Government Insurance Office (Queensland) (1989) 167 CLR 45 at 51; The Workers' Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642 at 653‑654. See generally, D C Pearce and R S Geddes, Statutory Interpretation in Australia (6th ed, 2006), pp 359‑367 and the cases there cited. 67 Each case which has considered the interpretation and scope of the expression "in relation to" is limited in its precedential value by the context in the relevant statute in which it appears. Nevertheless the approaches taken in some of those cases provide useful analogues for the context presently under consideration. 68 In Tooheys Limited v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602, the High Court was concerned to interpret provisions of the Stamp Duties Act 1920‑1956 (NSW) which provided for the levying of duty on instruments, subject to exemptions, inter alia "relating to the services of apprentices, clerks and servants". The majority of the High Court held that the instrument under consideration was not an instrument "relating to the services of apprentices, clerks and servants" so as to be exempt from duty. Dixon CJ said at 614: "When the exemption clause speaks of an instrument relating to the services of apprentices, clerks, and servants, I understand it as meaning primarily an instrument dealing with the relationship of master and apprentice, master and clerk or master and servant. It may affect one term or all the terms of the relationship. It may govern or regulate the relationship or it may affect it less directly perhaps and still relate to it. But it is that with which it must deal." Taylor J said at 620‑621: "There can be no doubt that the expression 'relating to' is extremely wide but it is also vague and indefinite. Clearly enough it predicates the existence of some kind of relationship but it leaves unspecified the plane upon which the relationship is to be sought and identified. That being so all that a court can do is to endeavour to seek some precision in the context in which the expression is used. With this in mind it may be said with some certainty that an examination of the language of the exempting provision shows that it does not admit of its application to an instrument merely because it makes a reference to the existence of a relationship of master and servant between the parties to it, or still less, because it refers to the existence of a master and servant relationship between persons who are not parties to it. It is, I think, not open to argument that 'relating to', in the context in which it appears, is equivalent to 'referring to' and the 'relationship' must be based upon some more substantial ground. It is, in my opinion, equally clear that the relationship must appear upon an examination of the instrument itself for it is the character of the instrument which is the material question and this cannot be resolved by an examination of extraneous matters in order to determine the purpose of the parties. In other words the condition for the operation of the exempting provision is that the instrument must 'relate' and not merely that a relationship of some kind can be made to appear by a consideration of the motive or purpose which has brought it into existence." Taylor J considered a line of authority which was said to provide support for a contrary proposition to that in the last sentence quoted. Taylor J concluded that the line of authority did not support a contrary proposition but rather was authority for the proposition that (at 622): "the vital question is whether the instrument 'relates' and not whether it may be 'related' by an examination of extraneous circumstances". 69 In Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472, Hill J was concerned to interpret s 6(2)(b)(ii) of the Trade Practices Act 1974 (Cth) which confined the operation of s 60 of that Act to conduct which took place in the course of or in relation to trade or commerce between Australia and places outside Australia. Hill J said at 487‑488: "It may be accepted that there will always be a question of degree involved where the issue is the relationship between two subject matters. The words 'in relation to' are wide words which do no more, at least without reference to context, than signify the need for there to be some relationship or connection between two subject matters: see Smith v Commissioner of Taxation (Cth) (1987) 164 CLR 513 at 533 per Toohey J and PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 328 per Toohey and Gummow JJ. But the phrase is both 'vague and indefinite': see per Taylor J in Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 at 620. Like the phrase 'in respect of', the phrase 'in relation to' will not, at least normally, apply to any connection or relationship no matter how remote: see Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 51 per Dawson J. The extent of the relationship required will depend upon the context in which the words are used. As Beaumont and Lehane JJ said in Joye v Beach Petroleum NL (1996) 67 FCR 275 at 285 in discussing a number of the cases dealing with 'relates to': ' ... it will depend upon context whether it is necessary that the relationship be direct or substantial, or whether an indirect or less than substantial connection will suffice.' (References omitted.)" 70 In Joye v Beach Petroleum NL (1996) 67 FCR 275, the Full Court of the Federal Court said at 285: "The relevant question here, whether the 'matter' is one 'relating to' a winding up, is concerned with the existence of a relationship. It does not raise a question of characterisation. Of the phrase 'relating to', Taylor J said, in Tooheys Ltd v Commissioner of Stamp Duties (1961) 105 CLR 602 at 620: ' ... the expression ... is extremely wide but it is also vague and indefinite. Clearly enough it predicates the existence of some kind of relationship but it leaves unspecified the plane upon which the relationship is to be sought and identified. That being so, all that a court can do is to endeavour to seek some precision in the context in which the expression is used'" Taylor J went on to say (at 620) that 'relating to' in the context there considered was not the 'equivalent of 'referring to'; the 'relationship' must be based upon some more substantial ground'. Other decisions of the High Court have acknowledged that, ordinarily, 'relates to' is a wide term, and that it will depend upon context whether it is necessary that the relationship be direct or substantial, or whether an indirect or less than substantial connection will suffice (see Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 338 per Brennan J, at 347 per Dawson J, at 354 per Toohey J and at 370 per McHugh J; PMT Partners Pty Ltd (In liq) v Australian National Parks & Wildlife Service (1995) 69 ALJR 829 at 835‑836 per Brennan CJ, Gaudron and McHugh JJ and at 845‑846 per Toohey and Gummow JJ; Re Jarman; Ex parte Cook (1996) 70 ALJR 550 at 553 per Brennan CJ and Gaudron J and at 556 per Kirby J. Tooheys' case has been followed in this Court (see, eg, Secretary, Department of Foreign Affairs and Trade v Boswell (1992) 36 FCR 367 at 374 per Hill J and at 383 per Cooper J). In our view, there is nothing in the present context to suggest that the term 'relating to', where used in s 580 and when picked up by s 581(4), was not intended to have a wide operation or that an indirect, but relevant, connection would not be a sufficient relationship for present purposes." 71 The analysis and propositions considered in these cases must be approached with caution as context is all important in considering the proper interpretation and reach of general expressions such as "in relation to". Nevertheless I consider that these cases provide useful guidance as to scope and proper interpretation of the expression "in relation to" in s 1041H. 72 The Commission submitted that the conduct in issue was "in relation to" a financial product because it was conduct that was likely to have, and did in fact have, an impact on trading in CIL's shares. But that submission does not identify a relationship between the contents of the letters and the price or market value of shares in CIL. No such relationship appears on the face, or in the contents, of the letters. 73 The context in which s 1041H appears suggests that subs (1) is to have a wide operation. So much can be gleaned from subsec (2) and the varied types of conduct specified which do not limit the scope of s 1041H(1). Nevertheless there must be some ostensible connection or relationship on the face of the conduct, that is, a connection or relationship on the face of the letters with shares in CIL. To adopt and adapt the words of Dixon CJ in Tooheys Limited v Commissioner of Stamp Duties (NSW) (supra), the letters do not deal with shares in CIL. I also adopt and adapt the words of Taylor J in the same case: the relationship between the contents of the letters relied upon by the Commission and shares in CIL does not appear upon an examination of the letters themselves. As Taylor J said, and I accept, it is the character of the letters which is the material consideration. The contents of the letters on which the Commission relies do not relate to shares in CIL. 74 The consequence is that the Commission's allegations in relation to the 27 September letter and the 29 September letter and their contents do not demonstrate a contravention of s 1041H. The letters and the statements in them relied on by the Commission are not notices, statements or representations "in relation to" shares and securities in CIL, that is to say, in relation to financial products or financial services. Rather they are notices, statements or representations "in relation to" CIL itself or to a product manufactured, distributed and sold by CIL. The allegations might otherwise raise for consideration whether other provisions of the Act, such as s 1041E, might have been contravened, but the Commission has only alleged a contravention of s 1041H.

DID Mr NARAIN'S CONDUCT EXPOSE HIM TO LIABILITY AS A PRINCIPAL UNDER S 1041H OF THE ACT? 75 I turn to the Commission's submission that Mr Narain personally engaged in the conduct alleged and therefore personally contravened s 1041H(1). Mr Narain's response was that if company officers and employees act as the company in furtherance of company activities, it is only the company that engages in the relevant conduct. He relied upon Pico Holdings Inc v Voss [2004] VSC 263. 76 The conduct relied upon by the Commission is the sending of the two letters containing misleading and deceptive statements to the Stock Exchange. Mr Narain did not send those letters himself. Mr Hanlon, CIL's company secretary sent the 27 September letter. There is no evidence that Mr Narain participated in the drafting or the sending of the 29 September letter. The only evidence relied upon by the Commission in support of its allegation that Mr Narain personally engaged in the conduct of preparing and sending the 29 September letter is that the letter contained the name of Mr Narain as one of two persons to contact for further enquiries. That is an inadequate factual basis for finding that Mr Narain engaged in the conduct of either preparing or sending that letter to the Stock Exchange. 77 I am not satisfied that Mr Narain personally engaged in any conduct relating to the preparation or sending of the 29 September letter. 78 The 27 September letter raises different issues. I am satisfied that Mr Narain participated in the preparation and drafting of the letter, that he approved of its contents and that he authorised and directed that it be sent to the Stock Exchange. However, he was not the author or creator of all the statements in the letter which the Commission claims are misleading or deceptive. Nevertheless he adopted them and approved of them being contained in the letter which he authorised and directed CIL's company secretary to send to the Stock Exchange. 79 The fact that he has participated in the preparation and drafting of the letter, approved of its contents and authorised and directed its transmission to the Stock Exchange in his capacity as, and in the course of his employment as, chief executive officer of CIL does not of itself mean that he has not also undertaken that course of conduct personally. Whether Mr Narain has engaged in conduct personally as well as engaging in that conduct as an agent, officer or employee of CIL depends upon a finding as to the conduct said to be in contravention of s 1041H. In the present case the relevant conduct said to be engaged in, in contravention of s 1041H, is not the preparation, creation or drafting of the 27 September letter, the approval of its contents or the direction that it be sent to the Stock Exchange. The act of sending the letter to the Stock Exchange was not undertaken by Mr Narain personally; it was undertaken personally by CIL's company secretary and it was undertaken by CIL. 80 The claim made against Mr Narain is one of direct personal liability, not accessorial liability or indirect liability. The Commission has not relied upon the provisions of s 79 of the Act which provides: "A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention." 81 There is considerable authority for the proposition that an officer or an employee of a company may be directly liable or directly responsible for an act or conduct he undertakes even though he carries out the act or undertakes the conduct as an officer or employee of a company. 82 So much was decided in Houghton v Arms (2006) 225 CLR 553 where the High Court considered the scope of s 9(1) of the Fair Trading Act 1999 (Vic) which provided that: "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive".

The High Court, in substance, rejected the argument that if employees of a company act only as the company, it is the company which engages in the relevant conduct caught by s 9(1) and not the individuals who undertook that conduct. The High Court said at 566: "The appellants are fixed with the findings by the primary judge respecting the conduct in which they engaged, being certain acts and omissions. As indicated earlier in these reasons, these were 'in trade or commerce'. Why then are the appellants not persons who contravened the prohibition imposed by s 9 of the FT Act? As a general proposition, and as Lord Rodger of Earlsferry stressed in Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] [citation omitted], …in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee. There is no good reason for treating the text of s 9 any differently and, in particular, for construing the section as if it read '[a] person, as principal, must not ...'. 83 In Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] [2003] 1 AC 959 the House of Lords held that the managing director of a company who made fraudulent representations in the course of his employment could not escape personal liability on the ground that he was acting within the scope of his employment and was committing the fraud on behalf of his employer. The Court of Appeal had accepted the submission that the managing director committed no deceit because he made the representation on behalf of the company and it was relied upon as a representation by the company. The House of Lords regarded that fact as irrelevant. Lord Hoffman, with whom the other members of the House of Lords agreed, said, at 968: "Mr Mehra made a fraudulent misrepresentation intending SCB to rely upon it and SCB did rely upon it. The fact that by virtue of the law of agency his representation and the knowledge with which he made it would also be attributed to Oakprime would be of interest in an action against Oakprime. But that cannot detract from the fact that they were his representation and his knowledge. He was the only human being involved in making the representation to SCB (apart from administrative assistance like someone to type the letter and carry the papers round to the bank). It is true that SCB relied upon Mr Mehra's representation being attributable to Oakprime because it was the beneficiary under the credit. But they also relied upon it being Mr Mehra's representation, because otherwise there could have been no representation and no attribution."

Lord Rodger delivered a concurring judgment and said at 974: "Where someone commits a tortious act, he at least will be liable for the consequences; whether others are liable also depends on the circumstances. Here, as the facts make plain and as Cresswell J specifically found, 'all the ingredients of the tort of deceit are made out against Mr Mehra (and Oakprime)'. In other words Standard Chartered have proved all that is required to make Mr Mehra - and through him Oakprime - liable in deceit. That being so, there is no conceivable basis upon which Mr Mehra should not indeed be held liable for the loss that Standard Chartered suffered as a result of his deceit. If he had been a mere employee of Oakprime and had done the same things and written the same letters on behalf of the company in that capacity, it could never have been suggested that Mr Mehra was not personally liable for his fraudulent acts. His status as a director when he executed the fraud cannot invest him with immunity." 84 A similar approach was taken by a Full Court of the Federal Court in Arktos Pty Ltd v Idyllic Nominees Pty Ltd (2004) ATPR 42‑005 at 48,795: "The authorities show that a director of a corporation who acts on its behalf in the course of trade or commerce also acts himself or herself in trade or commerce and, if the corporation is liable under a State Fair Trading Act for their conduct, they also attract primary liability under the same statute: [citations omitted]". 85 Mr Narain submitted that Houghton v Arms (supra) did not support the Commission's case as it concerned the direct and co‑existing liability of an employee and corporate principal under the provisions of the Fair Trading Act 1999 (Vic), the operation of which is specifically excluded by s 1041K of the Act. I do not consider that Houghton v Arms (supra) should be read so restrictively and in such a limited way. The High Court's analysis and construction of s 9 of the Fair Trading Act 1999 (Vic) (par [82] above) applies with equal force to s 1041H of the Act. 86 Mr Narain contended further that Pico Holdings Inc v Voss (supra) was authority for the proposition that if company officers and employees act as the company in furtherance of company activities, it is only the company that engages in the relevant conduct. I do not read Pico Holdings Inc v Voss (supra) as standing for that proposition. In that case Mandie J made a specific finding that Mr Voss had not acted personally in the signing of the relevant promissory note. His Honour said at [157]: "This is not a case where the precise conduct of an alter ego of the company constitutes conduct both of the company and of the individual. In this case, the representation is expressly made in writing in the Promissory Note by Dominion Capital and not by Mr Voss ('Maker hereby represents to Payee …'). Mr Voss did not make and did not purport to make that representation. The conduct of Mr Voss was participatory and was constituted by signing (on behalf of Dominion Capital) and sending (on behalf of Dominion Capital) the Promissory Note. It was the representation and conduct of the company and not of Mr Voss that was false and misleading. Unlike the case of Hamilton v Whitehead, the representation was not made by an individual in dual capacities; it was made by the company. Furthermore, approaching the matter from the point of view of the inducement to Pico and Pico's reliance on the representation, it seems to me that Pico was not induced by and did not rely upon any relevant representation or conduct of Mr Voss in advancing the money. What Pico relied on, and what Mr Hart said that he relied on, was the written terms of the document." [Citations omitted] 87 Nevertheless it is still necessary to establish that Mr Narain personally engaged in the relevant conduct of which the Commission complained, that is, that he personally engaged in the conduct of publishing the announcement and making the misrepresentations said to be contained in it. As I have noted earlier, although Mr Narain participated in the preparation and drafting of the 27 September letter and although he instructed the company secretary of CIL to send it to the Stock Exchange, he did not personally publish the letter. CIL sent it to the Stock Exchange through the medium of its company secretary. Nor did he personally make the misrepresentations relied upon by the Commission in the same manner as Mr Mehra did to the Standard Chartered Bank (par [83] above). Houghton v Arms (supra) is an example of a different situation where the individual employees of the company, Messrs Houghton and Student, personally made the relevant misrepresentations. So also in Arktos Pty Ltd v Idyllic Nominees Pty Ltd (supra) where Mr Price, a director the respondent company had personally made the misrepresentation relied upon by the applicant against the company and Mr Price. So also in Standard Chartered Bank v Pakistan National Shipping Corporation [No 2] (supra) where Mr Mehra, the managing director of Oakprime Ltd, signed the letter containing the false statement. 88 The Commission's case is that Mr Narain personally and directly engaged in the conduct relied on, not that he was an accessory to it, or knowingly engaged in it such as to attract accessorial liability within s 79 of the Act. Mr Narain may have been engaged personally in the conduct of the preparation and drafting of the 27 September letter but he was not personally engaged in sending it to the Stock Exchange. That conduct was engaged in by CIL and the person who transmitted it to the Stock Exchange. That was not Mr Narain. Insofar as the 27 September letter was sent by a person to the Stock Exchange it was sent by Mr Hanlon, CIL's company secretary, not by Mr Narain. 89 The fact that both the 27 September letter and the 29 September letter contained the name of Mr Narain as one of two persons to contact for further enquiries does not carry with it a finding or implication that Mr Narain personally transmitted them to the Stock Exchange. 90 It follows that Mr Narain did not engage in conduct that was misleading or deceptive or likely to mislead or deceive within s 1041H(1). I have already found that the conduct relied upon by the Commission was not conduct "in relation to a financial product or a financial service". The result is that the application, as against Mr Narain, should be dismissed. It is therefore unnecessary to make any findings as to the statements in the 27 September letter and the 29 September letter and their contents or as to any liability of Mr Narain under s 180 of the Act. 91 The order of the Court will be that the application by the Commission, insofar as it seeks orders against Mr Narain, be dismissed with costs. I certify that the preceding ninety‑one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

Counsel for the Plaintiff: Mr M R Pearce S.C. with Mr A T Broadfoot

Solicitor for the Plaintiff: Australian Securities and Investments Commission

Counsel for the Second Defendant: Ms F M McLeod S.C. with Ms J E Treleaven

Solicitor for the Second Defendant: Russell Kennedy

Date of Hearing: 29, 30 and 31 August 2007

Date of Judgment: 30 November 2007

Financial Services Reform Act 2001(Cth)

Trade Practices Act 1974(Cth)

Fair Trading Act 1999(Vic)

At a glance

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Judgment (17 paragraphs)

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Legislation Cited (4)

Cases Cited (14)

Cited By (8)