Australian Securities & Investments Commission v Maxwell & ors

Australian Securities & Investments Commission v Maxwell & ors - [2006] NSWSC 1052 - NSWSC 2006 case summary — Zoe

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CATCHWORDS : CORPORATIONS - Fundraising - Offers of securities - whether loan agreement was "debenture" within Corporations Act, s 9, and "security" for purposes of Chapter 7 - whether offer to enter into loan agreements was offer of securities for purposes of Part 6D.2 - whether offers to enter into loan agreements required disclosure under Part 6D.2 - conditions of availability of s 708(10) exemption - licensee's satisfaction on reasonable grounds of matters in s 708(10)(b) is condition and requires that licensee sufficiently investigate experience of investor to form relevant opinion - whether advertisement of offers prohibited if disclosure not required by reason of s 708(1) - whether to make singular personal approach to acquaintance is to "publish" a statement referring to an offer - whether Corporations Act s 79 available to impose accessorial civil liability in respect of provisions which are not civil penalty provisions - Carrying on financial services business without a licence - "financial services business" - "financial service" - "financial product advice" - "financial product" - whether loan agreements were financial products - whether by issuing loan agreements, corporation issued, and thereby dealt in, financial products - whether corporation was carrying on a financial services business - whether licensee under old legislation pursuant to transitional provisions was to be treated as if it held an Australian Financial Services Licence under new legislation for purposes of s 708(10) - Misleading and deceptive conduct - where corporations engaged in misleading and deceptive conduct by publishing advertisements and distributing brochures - whether director "knowingly concerned" - where evidence does not implicate director in any relevant conduct after he is shown to have knowledge of matters which falsify representations - Directors duties - whether breached by director authorising, permitting or failing to prevent contraventions by corporation of provisions of Corporations Act (not being civil penalty provisions) - ss 180, 181 and 182 are not concerned with any general obligation owed by directors at large to conduct affairs of company in accordance with law generally or Corporations Act in particular, but with duties owed to company - relevant considerations - whether s 181 duty of good faith is contravened in absence of deliberate conduct known to be not in interests of company - where corporations were closely held proprietary companies in which interests of directors and shareholders were identical, director was young and inexperienced and his role was to provide building and construction expertise while others were responsible for fund-raising role and directors obtained legal and accounting advice - Disqualification orders - when operation of s 206D is attracted - Consent orders - effect of agreement of parties on Court's discretionary powers - Injunctions - whether appropriate to make orders prohibiting respondent from engaging in conduct that is misleading or deceptive or which is likely to mislead or deceive - Declarations of contravention - duplicity - whether declarations of contravention should treat as a single contravention of s 180, and as another single contravention of s 181, whole course of conduct as director of Group of companies over period, rather than particular acts or omissions - whether appropriate to make declarations of involvement (under s 79) in contravention by corporations (being contraventions of provisions which are not civil penalty provisions and do not make provision for accessorial civil liability) - Disqualification orders - relevant considerations.

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ACCC v Frances [2004] FCA 487 Angas Law Services Pty Ltd (in liq) v Carabelas (2005) 53 ACSR 208 ASC v Gallagher (1993) 11 WAR 105; 10 ACSR 43; 11 ACLC 286 ASIC v Vines (2005) 55 ACSR 617 ASIC v Adler (2002) 41 ACSR 72 ASIC v Adler (2002) 42 ACSR 80; [2002] NSWSC 483 ASIC v Australian Investors Forum Pty Ltd (No 2) (2005) 53 ACSR 305 ASIC v Doyle (2001) 38 ACSR 606 ASIC v Elm Financial Services Pty Ltd (2005) 55 ACSR 411; [2005] NSWSC 1020 ASIC v Elm Financial Services Pty Ltd & Ors [2005] NSWSC 1033 ASIC v Elm Financial Services [2005] NSWSC 1065 Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261 Australian Innovation Ltd v Petrovsky (1996) 21 ACSR 218 Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 11 ACSR 785; 11 ACLC 1082; (1994) 15 ACSR 1 BMW Australia Limited v ACCC (2004) 207 ALR 452 Byrne v Baker [1964] VR 443 Chew v R (1991) 5 ACSR 473 Commonwealth Bank of Australia v Friedrich (1991) 5 ACSR 115 Compaq Computer Australia Ltd v Merry (1998) 157 ALR 1 Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438; 16 ACSR 607 Forge v ASIC (2004) 52 ACSR 1 CASES CITED : Furs Ltd v Tomkies (1936) 54 CLR 583; 9 ALJ 419 Giorgianni v The Queen (1985) 156 CLR 473 Hamilton v Whitehead (1988) 166 CLR 121 H.L. Bolton (Engineering) Co Ltd v T.J. Graham & Sons Ltd [1957] 1 QB 159 Hogg v Cramphorn [1967] Ch 254; [1966] 3 All ER 420; [1970] Ch 122 (CA) ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 King v GIO Australia Holdings Ltd (2001) 184 ALR 98 Marchesi v Barnes [1970] VR 434 Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1 North-West Transportation Co Ltd v Beatty (1887) 12 App Cas 589 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 109; 14 ACSR 109 Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 Re Property Force Consultants Pty Ltd (1995) 13 ACLC 1051 Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n; [1942] 1 All ER 378 Sheahan v Verco (2001) 79 SASR 109; 37 ACSR 117 Smithers v Beveridge (1994) 14 ACSR 197 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; (1982) ATPR 40-303 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Vrisakis v ASC (1993) 9 WAR 395; 11 ACSR 162 Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666; (1975) 1 ACLR 219 World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 Yorke v Lucas (1985) 158 CLR 661

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9 As well as obtaining finance through conventional sources from lending institutions, the ProCorp Group solicited members of the public to invest in the ProCorp Projects. On 24 September 2001, Oceanwalk retained Mr Maxwell and BEST to solicit lenders in order to raise funds for the ProCorp Projects. 10 Initially, such investments were in the form of a Loan and Guarantee Agreement, by which the investor agreed to lend money to the particular Project Company carrying on the particular ProCorp Project, and the borrower company agreed to pay a "fixed fee" for the loan, generally between 30% and 40% per annum, and covenanted to repay so much of the principal sum and the fixed fee as remained outstanding at the termination date (which was defined as the earlier of the date of settlement of the sale of the subject property, or the expiry of twelve months from the date of the agreement). At that stage of the evolution of the scheme, it was apparently envisaged that disclosure pursuant to Corporations Act, Part 6.2D, would not be required by reason of the exemption afforded by s 708(1) for personal offers, none of which would result in a breach of the twenty investors/$2 million ceiling. 11 In about September 2002, the structure of the investments was changed. The fourth defendant ProCorp Investments Pty Ltd ("ProCorp"), of which Mr Nahed, Mr Bennett and Troy Fortune were the directors and in which Mr Nahed and Troy Fortune each held 50% of the issued capital, was established for the purpose of raising finance for the ProCorp Projects. Investments thereafter were in the form of a Loan Agreement Execution Deed, which incorporated the terms contained in an Information Memorandum, by which the investor agreed to lend money to ProCorp on the basis that the moneys lent would be invested by ProCorp in a particular nominated ProCorp Project; ProCorp covenanted to repay the principal amount of the loan, or so much of it as remained unpaid, within two years of the date of the agreement, three months of completion of the specific project, or a nominated date, whichever was the earlier; ProCorp agreed to pay interest; and Oceanwalk guaranteed the obligations of ProCorp as borrower. As well as applying to new loans, at least some of the existing loans to the separate Project Companies were re-documented into this form, and backdated. 12 This change in the structure of the investments was apparently intended to expand the scope and scale of permissible fundraising, beyond the 20 investors/$2 million ceiling imposed by s 708(1), by taking advantage of the "experienced investor - financial services licensee" exemption afforded by Corporations Act, s 708(10). To that end, Oceanwalk and the ProCorp Group retained Coakleys to raise funds for the ProCorp Projects, and to act as a Financial Services Licensee for the purposes of s 708(10). Coakley Associates held a Securities Dealers Licence under the former Corporations Law, which had a continuing transitional operation after, but was not a Financial Services Licence under, the Corporations Act 2001.

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13 Investors were sought, chiefly by Mr Maxwell, through the placement of newspaper advertisements and by approaching potential investors. Such advertisements appeared in the Sydney Morning Herald on 13, 20 July 2002, 3, 10, 17, 24, 31 May, 7 and 21 June 2003; and in the Parramatta Sun on 21 November, 5, 12 December 2001, 13, 20 February, 6, 13, 20, 27 March, 10 and 17 April 2003. The advertisements were to the following effect:- Watch your MONEY GROW 30% per annum and NO FEES It's secured & it's guaranteed Belle Developments Group Pty Ltd an established Building Developer require additional funds for New Projects at HOMEBUSH, GOSFORD & LIVERPOOL. $50,000 minimum participation. Ideal for investors, superannuates and self funded retirees Make a move. It's first in first served. For free details phone DON on 02 9760 198 or 0418 641 148 NOW 14 Don, of course, was Mr Maxwell. Ordinarily, potential investors who responded were provided with a promotional brochure (prepared by Mr Maxwell and/or the ProCorp Group), an Offer document (prepared by Coakleys), and an Information Memorandum (also prepared by Coakleys). 15 The promotional brochures contained the following statements:- Each project gives you a Guaranteed Return Percentage of 30% per annum and will be paid within 6 to 12 months before the projected completion date of the project or on completion of project, whichever comes first Capital security is by a Second Mortgage/Caveat which is placed on the Developing Property along with all the Lenders names on it and is guaranteed by the Developing Company and Oceanwalk Projects Pty Ltd An independent financial controller is appointed who reports to each group on a monthly basis (this is an accountant) so that investors are fully aware of all money movements in the project The Independent Financial Controller and a representative of the investors are the signatories on the Development Companies cheque account. 16 The Information Memorandum contained the following statements:- This Information Memorandum has been prepared by ProCorp and is not a prospectus. It has been prepared for excluded offers or invitations which do not require a prospectus or a disclosure document under Chapter 6D of the Corporations Act 2001. It is not required to be lodged or registered with the Australian Securities and Investments Commission. A loan to ProCorp may only be made by the specific party to whom an Offer is made. The specific party to whom an Offer is made is set out in the accompanying Letter of Offer. … This offer is an 'excluded offer' being made by ProCorp through a financial services licensee, Coakley Associates Pty Limited (the "FSL"). An "excluded offer" simply means that no prospectus or disclosure document is required for the offer or invitation for the securities. Pursuant to section 708(10) of the Corporations Act 2001, the financial services licensee must be satisfied on reasonable grounds that you have previous experience in investing in securities which allows you to assess:- · the merits and risks of the offer · the value of the securities being offered · the risks involved in accepting the offer · your information needs in respect to the offer · the adequacy of information given by the person making the offer. If the FSL determines that the above items have been satisfied, they will give to you before, or at the time when, the offer is made a written statement as to their reasons for being satisfied as to those matters. The statement of reasons will be found at the conclusion of the Letter of Offer accompanying this Information Memorandum. All monies lent by you to ProCorp will be initially placed in a Cash Management Trust (CMT). The CMT account will be opened in the name of ProCorp Investments Pty Ltd, and to provide you with further assurance, the FSL will be the co-signatory on the CMT account. The FSL upon being satisfied that the loan monies will be applied in accordance with the purposes of your loan will advance monies progressively to ProCorp's Approved Development Borrowers(s). 17 The Offer document contained an offer by ProCorp to enter into a loan agreement with the potential investor, and included a statement as follows: - Approved Development Borrower(s): Borrowers(s)approved by both FSL and ProCorp for the purposes of on-lending monies for property development projects. 18 In all, between about November 2001 and September 2003, approximately 120 investors entered into loan agreements with ProCorp or one of the specific Project Companies as borrower, and Oceanwalk as guarantor, by which a total of approximately $9.79 million was lent for the ProCorp Projects ("the ProCorp Group Loans"). Of them, approximately 94 investors entered into loan agreements with ProCorp, guaranteed by Oceanwalk, pursuant to which those investors lent a total of $8.11 million to ProCorp for the ProCorp Projects ("the ProCorp Loans").

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31 Thus, in the case of Liverpool, $11,000 was withdrawn and deposited into an account in the name of BEST, Mr Maxwell's company, on or about 16 October 2003; $4,500 was paid to Wayne Maxwell, Mr Maxwell's son, on or about 16 October 2003; $13,500 was paid to Wayne Maxwell on or about 16 October 2003; $17,000 was paid to Coldwell Mortgage Services on or about 29 October; $3,750 was paid to Stephen Edwards on or about 21 November 2003; $7,500 was paid to Raphael Ann on or about 21 November 2003; $51,250 was paid to Tamal and Dr Rina Bhattacharya on or about 28 November 2003; $7,500 was paid to Leslie Moore on or about 21 November 2003; $10,000 was transferred to an account in the name of Homebush Project One on or about 5 December 2003; $2,000 was transferred to an account in the name of Citisquare Pty Ltd, a company controlled by Mr Nahed, on or about 8 December 2003; $1,300 cash was withdrawn on or about 9 December 2003; $15,007.50 cash was withdrawn on or about 9 December; and there was a cash cheque withdrawal of $24,750 on or about 7 January 2004. 32 In the case of Bankstown, $43,395 was paid to BEST on or about 15 October 2003; $10,000 was paid to BEST on or about 16 October 2003; a cash payment of $30,000 was made to Wayne Maxwell on or about 21 October 2003; a cash payment of $15,000 was made to Wayne Maxwell on or about 21 October 2003; $50,000 was paid to J Owen, the vendor of the Homebush Property, on or about 18 November 2003; $50,000 was paid to F & P Smith, investors in the Liverpool project, on or about 20 November 2003; $10,007.50 was withdrawn on 27 November 2003; $5,000 was transferred to an ANZ account in the name of Citisquare on 27 November 2003; and $1,000 was transferred to an ANZ account in the name of Citisquare on 4 December 2003. 33 In the case of Drummoyne, $10,000 was paid to Wayne Maxwell on or about 21 October 2003; $15,000 was withdrawn on 27 October 2003, payable to H Gaziler; $15,000 was withdrawn 30 October 2003, payable to Y and F Huseyin; $15,000 was withdrawn 17 November 2003, payable to S Edwards; $10,007.50 cash was withdrawn on 19 November 2003; $20,000 was withdrawn on 26 November 2003; $6,000 was transferred to an ANZ account in the name of Citisquare on 1 December 2003; and $41,861 cash was withdrawn on 15 December 2003. 34 In the case of Great Northern, $10,000 was paid to BEST on or about 16 October 2003; $50,000 was paid to Bankstown on or about 16 October 2003; and $12,532.49 was paid to Citisquare Pty Ltd on or about 10 November 2003. In the case of Northern Sight, there was a payment of $4,000 to BEST on or about 16 October 2003; a cash withdrawal of $35,000 on or about 17 November 2003; a cash withdrawal of $45,000 on or about 17 December 2003; a cash withdrawal of $25,000 on or about 17 December 2003; and a cash withdrawal of $3,000 on or about 7 January 2004.

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37 The liquidator, Mr Donnelly, has reported that there are deficiencies of liabilities over assets in the Project Companies in the order of many millions of dollars. Although that was not so in the case of ProCorp itself, that was only because the liquidator allocated debts to investors against the relevant Project Company, even where ProCorp was the debtor under the loan documentation. Although investors received some interest payments, they have, for all practical purposes, lost their capital. Notice to Mr Nahed: 38 Mr Nahed has had notice of the proceedings from an early stage. Before he was joined personally as a defendant, on 28 November 2003, he swore an affidavit in support of an application on behalf of the ten corporate defendants that were related to him, to vary the Mareva orders for the purpose of permitting some of the developments to proceed. 39 An affidavit sworn on 23 February 2006 by Philip James Thompson, a Senior Investigator of ASIC and the Team Leader for the investigation of the Schemes, establishes that the Originating Process (and ex parte orders of 16 October 2003) were served on the ten corporate defendants related to Mr Nahed on 16 October 2003. Mr Nahed was joined as a defendant on 17 May 2004. He filed a Notice of Appearance on 26 May 2004. He has been represented in the proceedings by a solicitor, Mr Martin. He filed a defence (to the Second Amended Statement of Claim) on 8 July 2004. Mr Martin advised ASIC that he no longer acted for Mr Nahed on 4 November 2005. 40 On 23 January 2006, ASIC delivered a letter that contained notification of the hearing, and 15 folders comprising its Tender Bundle, to Mr Nahed at his home address. On 2 February 2006, Mr Thompson received a telephone call from Mr Nahed, in the course of which Mr Nahed provided contact details, including a home address and phone number, a business address and phone number, and a mobile phone number. A meeting ensued on 3 February 2006, at which amongst other things Mr Thompson confirmed the hearing date and the requirement that Mr Nahed attend; Mr Nahed indicated that he proposed to consult Mr Martin. 41 There was no further contact prior to the commencement of the hearing on 6 February, when Mr Nahed was called but did not appear. On 10 February, Mr Thompson delivered to Mr Nahed's home address a letter which amongst other things advised that the proceedings had commenced in his absence, had been adjourned for the purposes of permitting a settlement to be negotiated with certain other defendants, and would resume on 20 February, when ASIC would be seeking to proceed against him. An identical letter was delivered to Mr Nahed's business address on 13 February. 42 There was no appearance by Mr Nahed on 20 February, when the case against him commenced, and was adjourned to 23 February. On 21 February, Mr Thompson received an email from Mr Martin requesting information relating to the proceedings, and on the same day Mr Thompson told Mr Martin on the telephone that the hearing in relation to Mr Nahed had commenced on 20 February and had been adjourned to 23 February; Mr Martin responded that he was not at that stage acting, but would inform ASIC of his intentions on 22 February. Late on 22 February, Mr Thompson received a telephone message from Mr Martin to the effect that he did not have instructions to act for Mr Nahed and had been unable to contact him since 21 February. 43 I am satisfied that Mr Nahed had due notice of the hearing and did not appear, and that it is permissible to proceed in his absence, pursuant to UCPR r 29.7(2)(a). Fundraising without a disclosure document:

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(b) publish a statement that: (i) directly or indirectly refers to the offer or intended offer; or (ii) is reasonably likely to induce people to apply for the securities. 45 Sections 727 and 734 are contained within Chapter 6D of the Corporations Act, entitled "Fundraising". Part 6D.2 governs when an offer of securities requires disclosure under the fundraising rules. Section 706 provides that an offer of "securities" needs disclosure under Part 6D.2 unless s 708 says otherwise. 46 Section 700 provides that, in Chapter 6D, "securities" has the same meaning as in Chapter 7. Corporations Act, s 761A, provides that, for the purposes of Chapter 7 of the Corporations Act, "security" means, inter alia, "a debenture of a body". "Debenture" is defined, in s 9, to mean: a chose in action that includes an undertaking by the body to repay as a debt money deposited with or lent to a body. The chose in action may (but need not) include a charge over property of the body to secure repayment of the money … 47 The terms of the loan agreements into which the investors entered with ProCorp (and previously with the Project Companies) included a covenant by the borrower company to repay the principal amount of the loan. That is an undertaking to repay as a debt money deposited with or lent to the borrower. Accordingly, each loan agreement was a "debenture" within s 9, and a "security" for the purposes of Chapter 7 of the Corporations Act, and an offer to enter into such loan agreements was an offer of securities for the purposes of Part 6D.2. It follows that, unless they fell within one of the exemptions afforded by s 708, offers to enter into the loan agreements required disclosure under Part 6D.2. [In the light of these conclusions, it is unnecessary to consider ASIC's alternative allegation that the ProCorp Scheme was a managed investment scheme]. 48 As has been mentioned, the ProCorp Scheme was originally apparently intended to operate under the 20 investor/$2 million exemption afforded by s 708(1), but subsequently under that afforded by s 708(10), which provides as follows:

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49 Coakleys apparently issued some documents, called "Statement of Reasons", in purported compliance with s 708(10)(c). However, of 119 loan agreements identified by ASIC, there was no such "Statement of Reasons" at all in respect of 67, and in another 43 cases, such statements as there were post-dated the relevant loan agreement, so that in those 110 cases the exemption under s 708(10) was not available, by reason of non-compliance with s 708(10)(c), even if there had otherwise been compliance with the requirements of s 708(10). Moreover, the vast majority of the "Statements of Reason" that Coakleys issued do not otherwise apparently satisfy the requirements of section 708(10). Even if Coakleys is to be regarded, for relevant purposes, as a Financial Services Licensee - as, for present purposes, I am prepared, without deciding, to assume, because although Coakleys did not hold a Financial Services Licence, they held a Securities Dealers Licence under the former Corporations Law which Mr Coakley believed entitled him, pursuant to Corporations Act 2001, ss 1430 and 1432, to continue to provide financial services during the "transition period" referred to in s 1431 - Coakleys had not met most of the investors, nor investigated their financial circumstances, and they had no reasonable basis for being satisfied that those investors had previous experience sufficient to allow them to assess the merits of the offer, the value of the securities, the risks involved in accepting the offer, their own information needs, and the adequacy of the information given by the person making the offer. Mr Coakley apparently thought that strict or even substantial compliance with s 708(10) was not required because either the investors may have fallen within the 20 investor/$2 million ceiling, or else they were "transfers" of existing investors to the new structure, which he supposed was covered by s 708(15). 50 This manifestly failed to satisfy the requirements of s 708(10), which imposes stringent requirements and obligations upon the relevant financial services licensee if the exemption is to be available. The licensee's satisfaction on reasonable grounds of the matter referred to in s 708(10)(b) is a condition of the availability of the exemption, and requires that the licensee sufficiently investigate the experience of the investor to form the relevant opinion. As Barrett J has recently said of s 708(10) [ASIC v Elm Financial Services [2005] NSWSC 1065, [10] to [11]]: This is, as I have said, a relatively new provision. There was significant debate about it when its introduction was mooted. It was recognised at the time and must be re-emphasised now that s.708(10) casts particular responsibility upon a financial services licensee. The requirement that the licensee be "satisfied on reasonable grounds" as to the matters stated in s.708(10)(b) is one that must be approached with diligence and care. The licensee has a statutory duty to make inquiry about all matters relevant to the opinion it must form and then, of course, to consider whether, in the factual circumstances, there exist the reasonable grounds for it to be satisfied as to the matters stated. Woolly thinking about some general concept of "sophisticated investor" is entirely misplaced.

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74 The evidence does not establish that, during this period, lenders were given financial advice, at least by Mr Nahed; the only evidence is of dealings with Mr Maxwell, and even that is not shown to have involved "financial advice" as defined. But did Mr Nahed, on behalf of any of the companies, issue a loan agreement? I have found that Mr Nahed executed the two loan agreements dated 3 October 2003 referable to the Strauss investments (on behalf of the borrowers Bankstown and Great Northern), the three loan agreements dated 16 October 2003 referable to the Coombes investments (on behalf of the borrowers Liverpool, Bankstown and Drummoyne), the agreement also dated 16 October referable to the Burke investment (on behalf of the borrower Bankstown), and the agreement dated 12 November referable to the Rothwell investment (on behalf of the borrower Drummoyne). In each case, his signature (and that of the lenders) was witnessed by Mr Maxwell, but it does not follow that all parties signed at the same time, nor that Mr Nahed signed first; indeed I would conclude (having regard to the terms of the loan agreement, and the evidence of Mr Zollner, Mr Coombes and Mrs Kelly) that the usual practice was that Mr Maxwell produced the agreements to the lenders, who signed them, and then Mr Maxwell retained the signed documents, to which Mr Nahed's signature was affixed subsequently. At least, I am not comfortably satisfied that Mr Nahed signed any loan agreement, in or after October 2003, before it had been signed by the lender. 75 Nonetheless, s 761E has the effect that the lenders did not "acquire" their "debentures" until the borrower executed the Loan Agreement, and the relevant financial product was therefore "issued" when Mr Nahed on behalf of the relevant company affixed his signature. The question is whether Mr Nahed thereby provided a financial service, by issuing a financial product, on behalf of the relevant company. The issuer of the debenture was undoubtedly the company, not Mr Nahed [s 761E(4)]. While s 911B is readily capable of application to the situation of an employee of a financial services business providing financial services advice, it is not so amenable to the issue by a corporation of a debenture. Mr Nahed did not issue the debentures on behalf of the companies; rather he was the organ or instrument by which the companies themselves issued the debentures, and in such circumstances the liability if any of a person in Mr Nahed's position would be liability as an accessory for the corporation's contravention, rather than liability as a principal for doing something "on behalf of" the corporation: cf Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 170 (Lord Reid); H.L. Bolton (Engineering) Co Ltd v T.J. Graham & Sons Ltd [1957] 1 QB 159, 172 (Lord Denning MR); Hamilton v Whitehead (1988) 166 CLR 121, 127]. Accordingly, I do not accept that Mr Nahed contravened s 911B as alleged, because he did not issue the debentures on behalf of the companies.

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91 These loan agreements were presented to investors for execution in trade or commerce, and the relevant statements in them were in relation to a financial product and/or financial services, namely the issue of debentures constituted by the resultant loan agreements. I have concluded above that each of them was, in one or more respects, misleading or deceptive or likely to mislead or deceive. By presenting them to potential investors, the relevant companies engaged in conduct in contravention of ASIC Act, s 12DA(1) and/or Corporations Act, s 1041H(1). I would also infer that, had the true facts been known to them, the investors who subscribed after 15 October would not have done so. 92 ASIC alleges that Mr Nahed contravened these provisions as a principal, or alternatively as an accessory. By s 1041I, a person who suffers loss or damage by conduct of another person that was engaged in in contravention of s 1041H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention, whether or not that other person or any person involved in the contravention has been convicted of an offence in respect of the contravention, subject to section 1044B. By s 79, 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. The widest of those concepts is that of being "knowingly concerned" in a contravention, and even that involves (a) knowledge of the essential facts which constitute the contravention which, in the case of provisions such as those in issue here, requires knowledge that the relevant representation is being made and is misleading, and (b) some intentional participation or assistance in the contravening conduct [Giorgianni v The Queen (1985) 156 CLR 473, 494, 501; Yorke v Lucas (1985) 158 CLR 661; Smithers v Beveridge (1994) 14 ACSR 197, 201]. The mere circumstance that a person is a director of a company that engages in contravening conduct is insufficient to establish that he or she is a person involved in it. As Finklestein J explained in Compaq Computer Australia Ltd v Merry (1998) 157 ALR 1, 4-5 [see also King v GIO Australia Holdings Ltd (2001) 184 ALR 98, [7]]:- A contravention of s 52(1) of the Trade Practices Act can occur regardless of whether the corporation is acting honestly or reasonably: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197 ; 42 ALR 1. But where it is sought to make a person liable as an accessory to a contravention of s 52(1) based on s 75B it is necessary to establish that the person has intentionally participated in the contravention. To establish intentional participation it must be proved that the person has knowledge of the essential matters that make up a contravention of s 52(1): see generally Yorke v Lucas (1985) 158 CLR 661 ; 61 ALR 307; Edwards v R (1992) 173 CLR 653 ; 107 ALR 190. In this regard "knowledge" means actual and not constructive knowledge. For example, it would not be sufficient merely to show that the person charged with accessorial liability had shut his eyes to the obvious if that is intended to be a substitute for actual knowledge: Giorganni v R (1985) 156 CLR 473 ; 58 ALR 641. Of course, where there is a combination of suspicious circumstances and a failure to make an inquiry it may be possible to infer knowledge of the relevant essential matters: Pereira v Director of Public Prosecutions (1988) 82 ALR 217 ; 63 ALJR 1 at 3. 93 The only evidence of involvement by Mr Nahed in any of the relevant pre-October 2003 conduct is the suggestion that he may have given Mr Habib a copy of the Information Memorandum. However, for reasons previously explained, I am not comfortably satisfied that Mr Nahed did so. Accordingly I am not satisfied that he engaged in, or was involved in, any of that contravening conduct.

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102 The constitution of the corporation, and concomitantly the identity of those to whom the duty is owed, is of importance because the duties referred to in ss 180, 181 and 182 are not duties owed in the abstract, but duties owed to the corporation. As Clarke and Sheller JJA observed in Daniels v Anderson (at NSWLR 504), the duties imposed by former s 232 (the predecessor of s 180) reflected the concept of negligence at general law, in that a director owes to the company a duty to take reasonable care in the performance of the office. In Vrisakis v ASC (1993) 9 WAR 395, 449-50; 11 ACSR 162, 211-13; Ipp J (as his Honour then was) (with the concurrence of Malcolm CJ) held that although the statutory duty of care and diligence would be contravened if a director had not exercised a reasonable degree of care and diligence in the exercise of his powers or the discharge of his duties, even if there was no actual damage, that could only be so if it was reasonably foreseeable that the relevant conduct might harm the interests of the company - which means the corporate entity itself, the shareholders, and, where the financial position of the company is precarious, the creditors of the company - and, moreover, that in determining whether the relevant duty had been breached, the foreseeable risk of harm must be balanced against the potential benefits which could reasonably be expected to accrue to the company from that conduct [see also ASIC v Doyle (2001) 38 ACSR 606, 641]. As His Honour explained: Under s 229(2), however, there is no reference to damage suffered by the company, and an offence may notionally be committed under that section without any damage having been sustained. The question is merely whether the defendant director has exercised a reasonable degree of care and diligence in the exercise of his powers in the discharge of his duties. Nevertheless, a criminal offence will not have been committed if an omission to take care did not carry with it a foreseeable risk of harm to the company. No act of commission or omission is capable of constituting a failure to exercise care and diligence under s 229(2) unless at the time thereof it was reasonably foreseeable that harm to the interests of the company might be caused thereby. That is because the duty of a director to exercise a reasonable degree of care and diligence cannot be defined without reference to the nature and extent of the foreseeable risk of harm to the company that would otherwise arise.

[97]

104 There are cases in which it will be a contravention of their duties, owed to the company, for directors to authorise or permit the company to commit contraventions of provisions of the Corporations Act. Relevant jeopardy to the interests of the company may be found in the actual or potential exposure of the company to civil penalties or other liability under the Act, and it may no doubt be a breach of a relevant duty for a director to embark on or authorise a course which attracts the risk of that exposure, at least if the risk is clear and the countervailing potential benefits insignificant. But it is a mistake to think that ss 180, 181 and 182 are concerned with any general obligation owed by directors at large to conduct the affairs of the company in accordance with law generally or the Corporations Act in particular; they are not. They are concerned with duties owed to the company. In ASIC v Elm Financial Services Pty Ltd (2005) 55 ACSR 411, Barrett J, in acceding to an application to make orders agreed to by the parties in the context of contraventions not dissimilar to those involved here, accepted that by failing to prevent contraventions by the relevant company, two directors failed in the duties owed by them as officers. And in subsequent proceedings in the same matter, ASIC v Elm Financial Services Pty Ltd [2005] nswsc 1065, his Honour accepted that failures by other directors to take reasonable steps to prevent contraventions by the relevant company were contraventions of s 180(1) and 181(1). Some explanation of his Honour's reasoning appears from yet other proceedings in the same matter, ASIC v Elm Financial Services Pty Ltd & Ors [2005] NSWSC 1033, in which his Honour said:- 4 The agreed facts also show that Mr Kay, as a director or other officer, failed in every such case to take reasonable steps to prevent the contravention and thereby himself contravened ss.180(1) and 181(1). Mr Kay is thus seen to have failed in the proper discharge of the duties owed by him as a director or other officer and, in that way, to have contributed to situations in which persons invited to invest money were denied basic protections and safeguards that the law demands they be afforded.

[100]

106 As to section 181(1), which requires a director or other officer of a corporation to exercise his or her powers and discharge his or her duties in good faith in the best interests of the corporation, and for a proper purpose, in Chew v R (1991) 5 ACSR 473, Malcolm CJ (at 499) summarised the requirements of the duty to act in good faith as including that directors (1) must exercise their powers in the interests of the company, and must not misuse or abuse their power; (2) must avoid conflict between their personal interests and those of the company; (3) must not take advantage of their position to make secret profits; and (4) must not misappropriate the company's assets for themselves. The words "in the best interests of the corporation" emphasise the significance of the relevant constituencies - in particular, the shareholders as a whole, and the creditors in the case of impending insolvency. This duty is imposed not to secure compliance with the various requirements of the Corporations Act, but, as it was at general law, to prevent abuses of directors' powers for their own or collateral purposes. Likewise, the duty imposed by s 182 is intended to forbid directors from abusing their position for their own advantage or the corporation's detriment, and not with securing compliance with the various requirements of the Corporations Act. 107 One of the predecessor provisions of s 181 was discussed by Gowans J in Marchesi v Barnes [1970] VR 434, in terms which emphasise that the section is not concerned with the conduct of a director in relation to creditors or other persons dealing with or concerned with the company or anybody else but the company itself, and that a breach of the obligation to act bona fide in the interests of the company involves a consciousness that what is being done is not in the interests of the company, and deliberate conduct in disregard of that knowledge. His Honour said (at 437): Involved in all this is the conception of "acting honestly in the discharge of the duties of the office of a director". The Full Court in Byrne v Baker ,[1964] VR 443, has attributed the source of the language used in s124(1) (formerly s107(1)) to the judgment of Romer, J, in Re City Equitable Fire Insurance Co Ltd , [1925] 1 Ch 407; [1924] All ER Rep 485, a judgment which in turn refers to the language of Lindley, MR, in Lagunas Nitrate Co v Lagunas Syndicate , [1899] 2 Ch 392, at p. 435; [1895-9] All ER Rep Ext 1349: "act honestly for the benefit of the company they represent". This is the language it has become customary to use in respect of a director's duty in the exercise of his powers or position. "They must exercise their discretion bona fide in what they consider--not what a Court may consider--is in the interests of the company, and not for any collateral purpose" (per Lord Greene, MR, in Smith v Fawcett, [1942] 1 Ch 304, at p. 306). The company in this passage means the company as a whole. This background to the language of the section appears to justify the conclusions, first, that the section is not concerned with the conduct of a director in relation to creditors or other persons dealing with or concerned with the company or anybody else but the company itself; secondly, that it is concerned with the performance of his fiduciary duty to the company; and, thirdly, that to "act honestly" refers to acting bona fide in the interests of the company in the performance of the functions attaching to the office of director. A breach of the obligation to act bona fide in the interests of the company involves a consciousness that what is being done is not in the interests of the company, and deliberate conduct in disregard of that knowledge. This constitutes the element of mens rea in the criminal offence created by the statute. If the term "fraud" is applicable in this situation, it is only so in the sense of a "fraud" on the power". In effect, the common law obligation in respect of acting honestly, as with the common law obligation to act with due diligence has been made a statutory duty, and failure to perform it, provided there is the proper mental element, has been made a criminal offence.

[101]

108 Although, in ASIC v Vines (2005) 55 ACSR 617, Austin J found it unnecessary to resolve a difference of approach, as to the meaning of the words "act honestly" in the predecessors of s 181, which had emerged between Marchesi v Barnes and a less stringent test not requiring subjective dishonesty favoured by King CJ in Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261, his Honour's discussion of the issue shows that the weight of authority firmly favours Marchesi v Barnes:- [1099] His Honour's observations had been taken to mean that a defendant would not be held to have breached the statutory duty of honesty unless it was shown that he or she was conscious that what was being done was not in the interests of the company. Conversely, directors who honestly believed their decision to be in the interests of the company did not contravene this section even though they acted for a purpose that, judged objectively, was not a proper purpose (see Ford's Principles of Corporations Law, Butterworths (looseleaf), at [8065]). Marchesi v Barnes has been followed in several cases: Corporate Affairs Commission v Papoulias (1990) 20 NSWLR 503 ; 2 ACSR 655; Southern Resources Ltd v Residues Treatment & Trading Co Ltd (1990) 56 SASR 455 ; 3 ACSR 207; Feil v Commissioner of Corporate Affairs (1991) 9 ACLC 811 and Fitzsimmons v R (1997) 23 ACSR 355. [1100] A different approach was taken in Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261, where King CJ said (at 272): The section therefore embodies a concept analogous to constructive fraud, a species of dishonesty which does not involve moral turpitude. I have no doubt that a director who exercises his powers for a purpose which the law deems to be improper, infringes this provision notwithstanding that according to his own lights he may be acting honestly. [1101] In Chew v R (1992) 173 CLR 626, Dawson J said (at 642): For my own part I cannot, with respect, equate dishonesty in the context of s 229(1) [the precursor of s 232(2)] with mere impropriety … the use of power for an impermissible purpose, viewed objectively as it should be, may be improper, but it is not necessarily dishonest. Whether the element of dishonesty is adequately encompassed by the remarks of Gowans J in Marchesi v Barnes is something which does not fall for decision in this case, but it is, I think, necessary to give the word ' honestly' in a provision creating a criminal offence a somewhat wider scope than King CJ was prepared to give it in Australian Growth Resources Corp Pty Ltd v Van Reesema . [1102] In Forge v ASIC (2004) 52 ACSR 1, the primary judge concluded that the appellants had breached s 232(2) to the Briginshaw standard, applying King CJ's interpretation of the previous statutory provision in the Van Reesema case (see at [146]). In the NSW Court of Appeal McColl JA (with whom Handley and Santow JJA agreed) referred to the differing approaches to the requirement to "act honestly" taken by Gowans J in Marchesi v Barnes and by King CJ in Van Reesema, but she found it unnecessary to resolve the issue (at [223]-[249]). This was because the primary judge had in fact found the appellants to have been subjectively dishonest. [1103] It is also unnecessary to seek to resolve the differences of approach to the meaning of the words "act honestly" in the present case. ... 109 While the words "act honestly" have not been retained in the current section, the historical origins of the duty, as explained by Gowans J, which led his Honour to equate to "acting honestly" with "acting bona fide in the interests of the company" are equally applicable to the current section. In this context, absence of good faith requires much more than negligence. In my opinion, s 181 is contravened only where a director engages deliberately in conduct, knowing that it is not in the interests of the company. 110 Generally speaking, therefore, ss 180, 181 and 182 do not provide a backdoor method for visiting, on company directors, accessorial civil liability for contraventions of the Corporations Act in respect of which provision is not otherwise made. This is all the moreso since the Corporations Act makes provision for the circumstances in which there is to be accessorial civil liability. Whether there were in this case breaches of the directors' duties - and, in particular, of their duty of care and diligence - depends upon an analysis of whether and to what extent the corporation's interests were jeopardised, and if they were, whether the risks obviously outweighed any potential countervailing benefits, and whether there were reasonable steps which could have been taken to avoid them. 111 The essential issue here is whether, in the context of these corporations, Mr Nahed contravened his duties as a director by permitting, allowing and participating in the various contraventions committed by those companies or any of them. The jeopardy to the companies was the potential incurring of a liability for contraventions of the fundraising, financial services and misleading conduct provisions of the Corporations Act. Those provisions are not civil penalty provisions, so the potential exposure was to criminal conviction and fine, or a compensation order. (The countervailing benefits were the perceived profits to be derived from the developments which the fundraising would facilitate). 112 The relevant circumstances include that these were closely held proprietary companies, in which the interests of the directors and those of the shareholders were identical: the directors were the shareholders. Mr Nahed was not much more than 21 years of age when the schemes were being promoted. He was a builder. His role in the ProCorp Scheme, at least until late 2003, was to provide the building and construction expertise for the developments. The transcripts of the examinations of participants such as Mr Malcolm Fortune, Mr Bennett, Mr Maxwell and Mr Coakley are remarkable for their silence as to any involvement of Mr Nahed in fundraising. The fund-raising role was Mr Malcolm Fortune's, aided by Mr Maxwell and Coakleys. The directors obtained legal advice, and retained Coakleys to provide the appropriate financial advice to ensure that the scheme complied. While, by August 2002, Mr Nahed should have been aware of the concerns expressed by Coakleys in their letter of 30 July 2002, he would also have been aware that lawyers and accountants had been retained to advise ProCorp on compliance issues. 113 Given Mr Nahed's background and the particular skills (building) that he brought to the companies, the apparent distribution of responsibility among the directors of the ProCorp Companies, and the involvement of the lawyers and accountants, upon which he was entitled in the absence of grounds for doubt to rely, I am not persuaded that Mr Nahed ought to have known or ascertained that ProCorp was making, and publishing statements referring to, offers of securities, or carrying on a financial services business, or issuing misleading and deceptive publications, in contravention of the Corporations Act, or was otherwise relevantly in default of his directors' duties. To the contrary, until the intervention of ASIC, he was entitled to suppose that the fundraising activities of ProCorp were being performed in accordance with appropriate legal and accounting advice. In those circumstances, his duty of care and diligence did not require him to do more than he did to ascertain whether the scheme was not compliant, and it follows that, insofar as he permitted, allowed or failed to prevent the various contraventions committed by those companies, that did not involve a breach of his duty of care and diligence as a director of the relevant ProCorp companies. Although his position changed when he became sole director on 27 November 2003, it is not apparent that he authorised, permitted, or failed to prevent any relevant contravention after that date.

[129]

136 When asked to make orders to give effect to an agreement between the parties in situations such as this, although the Court takes into account the agreement between the parties, it is not constrained by the parties' agreement and must exercise its own discretion as to penalty. Barrett J articulated the Court's approach in ASIC v Elm Financial Services Pty Ltd & Ors (2005) 55 ACSR 411; [2005] NSWSC 1020, in a manner which I respectfully adopt, as follows:- 9 The parties have, in each case, agreed the duration of the disqualification. That, however, does not absolve the court of its duty to consider the appropriateness of the penalty in the light of the agreed facts and the surrounding circumstances. This is made clear by the decisions of the Full Federal Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 and, more recently, Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993 (and see, in the present statutory context, Australian Securities and Investments Commission v Vizard (2005) 54 ACSR 395). In the Mobil Oil case (at [51]) the following propositions were seen as emerging from the reasoning in NW Frozen Foods : "(i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the TP Act in respect of a contravention of the TP Act. (ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another. (iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed. (iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC's views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more "subjective" matters. (v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so. (vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court's view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range." 10 There has been some criticism of this approach as involving "platitudes": see per Weinberg J in Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121. And in Vizard (above), the court imposed a higher penalty than that agreed by the partiers and sought by the regulator.

[136]

141 In my opinion it is inappropriate to grant an injunction in those terms. Such an order has the effect of converting a civil liability for contravention of the statutory prohibition into a quasi-criminal one, in respect not only of those particular activities of the defendant which gave rise to the relevant breach, but in respect of all its activities, so that if in another area of its operations it engaged in misleading and deceptive conduct in relation to financial services, even inadvertently, it would commit a contempt of court [see Heydon, Trade Practices Law, [18.910]]. In the context of Trade Practices Act, s 52, orders prohibiting a respondent from engaging in "any conduct that in misleading or deceptive or which is likely to mislead or deceive" are not favoured, and the preferable course is to frame injunctions in terms of what the respondent has done or threatened to do [World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181, 204-205]. The injunction should be expressed in terms which indicate the restrained conduct in a way which enables the defendant to know what as a matter of fact is expected [Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1; BMW Australia Limited v ACCC (2004) 207 ALR 452; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248]. The terms of an injunction should be specific, so that the person subject to it can understand clearly what conduct will amount to a breach of it and what conduct can legitimately be pursued [ACCC v Frances [2004] FCA 487]. In this case, although the proposed injunction is limited to conduct "in relation to financial services", that still leaves open a very wide range of conduct, so that a contravention of the injunction could be inadvertent, and quite unrelated to the contravening conduct established in this case. 142 I have not overlooked Corporations Act, s 1324(6), which provides that the court can grant an injunction whether or not it appears that the respondent intends to engage again or continue to engage in the relevant conduct or has previously engaged in such conduct, nor s 1324(3) which provides that the court may grant an injunction by consent of all parties whether or not it is satisfied that a party has engaged, is engaging or is proposing to engage in contravening conduct. My view that such an injunction is much too wide and inappropriate depends not on the matters that those subsections address, but on the circumstance that it will effectively attach quasi-criminal consequences to what may be inadvertent and unspecific conduct. 143 In my view, other orders proposed - including the disqualifications - provide ample protection of the public interest in respect of the potential future conduct of the defendants. I will not grant this proposed injunction.

[169]

152 ASIC and Mr Maxwell have recorded in a Statement of Agreed Facts (PX03) those facts upon which they ask the court to make orders to which they have agreed. 153 Mr Maxwell has twice been made bankrupt, first on 14 November 1986 (from which he was discharged on 15 November 1989), and secondly on 13 December 1999 (from which he was not discharged until 14 December 2002). On 13 July 1999, he pleaded guilty to and was convicted on ten counts of contravening Crimes Act 1900 (NSW), s 178BA (obtain financial benefit by deception), for which he was on 6 December 1999 sentenced to ten concurrent fixed terms of imprisonment for a period of twelve months to be served by periodic detention. Although not mentioned in PX03, he also at the same time pleaded guilty to and was convicted on twelve counts of offering securities without a prospectus in contravention of Corporations Law, s 1018(1) (the predecessor of Corporations Act, s 727), which prohibited offering securities without a registered prospectus, for which he was placed on a $1000 good behaviour bond for three years. Neither Mr Maxwell nor his company BEST has ever held an Australian Financial Services Licence. 154 Mr Maxwell and BEST were retained to solicit lenders to provide seed capital for the ProCorp projects, for a commission of 10% of the moneys advanced. Between about November 2001 and November 2003 he solicited persons to lend money to ProCorp, Oceanwalk and the ProCorp companies and seed capital for the ProCorp projects. He placed advertisements for ProCorp in the Sydney Morning Herald and the Parramatta Sun. He sent to potential investors the ProCorp information memorandum, the ProCorp offer document, and promotional brochures, which were intended to influence potential investors to lend moneys to the ProCorp group for the ProCorp projects. He had conversations with potential investors in which he made recommendations to influence them to lend money to the ProCorp group and invited them to do so. He provided to prospective investors a proposed loan agreement. 155 After and despite the orders of 15 October 2003, Mr Maxwell continued to solicit persons to lend money to Bankstown (for the Five Dock project), to Drummoyne (for the Drummoyne project), to Great Northern (for the Newport project), to Liverpool (for the Liverpool project), and to Northern Site (for the Ettalong project). 156 Of the ProCorp group loans, Mr Maxwell was responsible for raising a total of $8,122,500, and was paid commission of $812,250. 157 Mr Maxwell admits that he knew, believed and was otherwise aware that the loans were entered into with investors who did not satisfy the requirements of s 708(10), and that the loans were in contravention of the fundraising provisions of the Corporations Act. He also knew, believed and was otherwise aware that the post-October 2003 loans were in contravention of the 15 October orders. 158 Mr Maxwell admits that the ProCorp advertisements, the ProCorp memorandum, the ProCorp information memorandum and the ProCorp offer document were misleading or deceptive or likely to mislead or deceive in several respects, and were made in trade and commerce and in relation to a financial product and a financial service. He also admits that in making the post-October representations he, in trade and commerce in relation to a financial product and a financial service, made representations that were misleading or deceptive or likely to mislead or deceive. 159 Mr Maxwell also admits that from the moneys raised after October 2003, he authorised payments other than for costs of or incidental to the relevant projects. 160 Mr Maxwell played an equivalent role in the Central Development Scheme, in respect of the Waitara and Maroubra properties, for which he solicited persons to lend money, placed advertisements in newspapers, distributed promotional documentation intended to influence potential investors to lend money, had conversations with potential investors in which he made recommendations intended to influence them to lend money and invited them to do so, and continued to do so after the orders of 15 October 2003. Mr Maxwell was responsible for securing all of the Central Development Group loans, and was paid commissions totalling $280,500. 161 Again, Mr Maxwell admits that he knew that the Central Development Group loans, including the post 15 October loans, were entered into in contravention of the fundraising provisions of the Corporations Act, and, as to the post 15 October loans, in contravention of the orders. He also admits that by preparing, issuing, publishing and distributing advertisements and promotional material, including after 15 October 2003, he made representations, in trade and commerce and in relation to a financial produce and a financial service, which were misleading or deceptive or likely to mislead or deceive in various respects. 162 By virtue of his second bankruptcy Mr Maxwell was, pursuant to Corporations Act, s 206B(3), prohibited from managing corporations until 14 December 2002; and by reason of his conviction and imprisonment, he was pursuant to s 206B(1) and (2) prohibited from managing corporations until 6 December 2005. Mr Maxwell admits that his role in relation to the ProCorp projects and the Central Development projects was such that he fell within the definition of an "officer" of Oceanwalk, ProCorp and the ProCorp companies, and Central Development, Wake and Maroubra. 163 Each of Oceanwalk, ProCorp, Alliance, Gosford, Miranda, the ProCorp companies and the Central Development companies failed between 2003 and 2004, and the manner in which they were managed was wholly or partly responsible for their failure. The debts which those companies were unable to pay as and when they fell due included capital and interest owed to 102 persons who had entered into the ProCorp Group loans and the ProCorp loans in respect of loans totalling $9,795,000; the capital and interest owed to 16 persons who had entered into the Bankstown, Drummoyne, Great Northern, Liverpool and Northern Site loans, in respect of loans totalling $1,030,000; the capital and interest owed to 30 persons who had entered into the Central Development Group loans and the Wake loans in respect of loans totalling $3,045,000; and the capital and interest owed to two persons who had entered into the post-order Central Development loans, in respect of loans totalling $245,000. 164 Mr Maxwell has admitted that his conduct in respect of ProCorp, Bankstown, Drummoyne, Great Northern, Liverpool, Northern Site, Central Development, Wake and Maroubra justifies the making of a disqualification order against him. 165 The substantive operative orders proposed in respect of Mr Maxwell are: · A declaration of contravention, pursuant to s 1317E, of Corporations Act, s 180 in respect of the ProCorp Group (par 15) and the Central Development Group (par 16), s 181 in respect of the ProCorp Group (par 17) and the Central Development Group (par 18), and 182 in respect of the ProCorp Group (par 19) and the Central Development Group (par 20); · An injunction, pursuant to Corporations Act, s 1324(1), permanently restraining him from offering securities without a current disclosure document, in contravention of Corporations Act, s 727 (par 23); · An injunction, pursuant to s 1324(1), permanently restraining him from advertising or publishing statements that directly or indirectly refer to an offer or intended offer of securities, in contravention of s 734 (par 24); · An injunction, pursuant to s 1324 and ASIC Act, s 12GD, permanently restraining him from engaging in conduct in relation to financial services which is misleading or deceptive or likely to mislead or deceive in contravention of Corporations Act, s 1041H and ASIC Act, s 12DA (par 25); · An order, pursuant to Corporations Act, ss 206C(1), 206D(1) and 206E(1), disqualifying him from managing corporations permanently (par 26); · An order, pursuant to Corporations Act, s 1317H(1), that he pay compensation of $936,500 to the liquidator of the companies involved in the post-order non-project payments (par 27); · An order, pursuant to s 1317G(1), that he pay a pecuniary penalty of $110,000 (par 28); · An order that he pay the plaintiff's costs agreed in the sum of $55,500 (par 29). 166 As to the s 1317E declarations of contravention, it follows, from acceptance of Mr Maxwell's concession that he was relevantly an officer of the ProCorp companies and the Central Development companies, that the duties imposed by ss 180, 181 and 182 attached to him in that capacity. In distinction from, for example, Mr Nahed, Mr Maxwell was instrumental and central to the contravening conduct. He knew that the ProCorp Group loans (including the ProCorp loans), and the Central Development loans, were in contravention of the fundraising provisions of the Corporations Act. Given his role, and having regard to his concessions in PX03, I am satisfied that in connection with his promotion of the ProCorp Scheme and the Central Development Scheme, Mr Maxwell's conduct, given its intentional character, can be seen as a failure to exercise his powers and discharge his duties in good faith in the best interests of the relevant corporation (in contravention of s 181), and a use of his position to gain an advantage (commission payments) for himself (in contravention of s 182), as well as a failure to use adequate care (in contravention of s 180). Accordingly, having regard to the consents of the parties, I am prepared to make declarations of contravention, pursuant to s 1317E, of Corporations Act, ss 180(1), 181(1) and 182(1), in respect of his conduct as an officer of each of the ProCorp Group and the Central Development Group. 167 I am satisfied, particularly having regard to s 1324(3) and (6), that it is appropriate to grant the injunctions in pars 23 and 24 of the Short Minutes. For the reasons given above, I will not make the order referred to in par 25. 168 So far as the disqualification order is concerned, having regard to Mr Maxwell's admission that his role placed him within the definition of an "officer", and my conclusions that he has contravened a civil penalty provision, namely Corporations Act, ss 180, 181 and 182, s 206C is available. Taking into account not only Mr Maxwell's concession that disqualification is justified and his agreement to a permanent disqualification, but also his admission that he knew that he was engaging in illegal fundraising, and that he had been convicted in criminal proceedings for similar conduct, and for obtaining a financial benefit by deception, in the past, I am satisfied that Mr Maxwell is not a fit and proper person to have the management of a corporation, and that permanent disqualification is justified. 169 As s 206D authorises a disqualification only for up to 20 years it could not support the proposed order for permanent disqualification and accordingly I need not resolve whether it too is available. However, I am also satisfied that Mr Maxwell has, at least twice, been an officer of a body corporate that has contravened the Act while he was an officer and has failed to take reasonable steps to prevent the contravention, and accordingly that the disqualification may be supported also by s 206E. 170 A compensation order pursuant to Corporations Act, s 1317H(1), in respect of the moneys paid after 15 October 2003 for purposes other than the costs of the relevant projects, amounting to $936,500. Such an order can be made if Mr Maxwell has contravened a civil penalty provision, and the damage resulted from that contravention. I am satisfied that the authorisation by Mr Maxwell of the post-order non-project payments was a breach of his duty as an officer of the ProCorp companies and of the Central Development Companies, and that by those funds being paid away from those companies to third parties, the companies suffered loss. I am therefore prepared to make an order to the effect of that proposed in paragraph 27, but I will allocate the amount payable between each of the five corporations concerned, according to the amounts respectively paid from each of them. 171 A pecuniary penalty of $110,000 is proposed. Such an order may be made if a declaration of contravention has been made under s 1317E, and the contravention is of a corporation/scheme civil penalty provision, and the contravention materially prejudices the interests of the corporation or its members, or materially prejudices the corporation's ability to pay its creditors, or is serious. I am satisfied that (a) his promotion of each of the ProCorp Scheme and the Central Development Scheme otherwise than in good faith in the best interests of the relevant corporation, (b) his improper use of his position to gain an advantage for himself by receiving commission payments, and (c) his authorisation of the post-order non-project payments, satisfies those requirements, and I am prepared to impose the agreed pecuniary penalty. In my view such penalties should be allocated to the declared contraventions, and having regard mainly to the amounts involved, I would allocate $80,000 to the contravention in respect of the ProCorp Group, and $30,000 to that in respect of the Central Development Group. 172 Although the remedy primarily pursued by ASIC in these proceedings has been disqualification under s 206C, s 206D and/or s 206E, the vice in the conduct of Mr Maxwell was not so much in the management of corporations, but in his fundraising activities and his provision of "financial services". While s 921A might have afforded an appropriate remedy, the procedural preconditions for its invocation have not been satisfied. However, another remedy is provided by s 1101B, which provides that the court may make such order or orders as it thinks fit if, on the application of ASIC, it appears to the court that a person has contravened a provision of Chapter 7 or any other law relating to dealing in financial products or providing financial services (but only if the court is satisfied that the order would not unfairly prejudice any person). Section 1101B(4) provides some non-exclusive examples of orders that the court may make under subsection (1), including an order restraining a person from carrying on a business, or doing an act or classes of acts, in relation to financial products or financial services, if the person has persistently contravened, or is continuing to contravene a provision or provisions of Chapter 7 or of any other law relating to dealing in financial products or providing financial services. 173 I am satisfied that Mr Maxwell has persistently contravened provisions of Chapter 7 and/or of other laws relating to dealing in financial products or providing financial services. In my view, an order should be made restraining him from carrying on or being engaged in any financial services business, or providing a financial service, within the meaning of Corporations Act, Part 7. 174 As against Mr Maxwell, I will make orders in accordance with Schedule A to this judgment. The Eighth Defendant, Mr Malcolm Fortune 175 The statement of facts agreed between ASIC and Mr Fortune is PX04. 176 Relevantly, Mr Fortune was a bankrupt from 26 May 1997 until 27 May 2000. He was a director of Oceanwalk from 14 November 2000 until it was deregistered on 22 May 2005, and was a director when it went into liquidation on 3 March 2004. Mr Fortune held the position of Chief Executive Officer of Oceanwalk, General Project Advisor and Chief Executive Officer of each of ProCorp, Bankstown, Drummoyne, Great Northern, Homebush, Liverpool, Mansions, Miranda, Gosford, Zepher and Northern Sight; controlled or was involved in the management of each of those companies; and controlled or was involved in the management of the ProCorp projects. 177 Mr Fortune knew that Mr Maxwell and Coakleys were soliciting persons to lend money to ProCorp and the ProCorp companies for the ProCorp projects, and supervised, controlled, managed and otherwise participated in those solicitations. He knew and understood the general nature of the obligations and limitations imposed on fundraising by the Corporations Act, and that the making of the solicitations would contravene those provisions unless the exemption afforded by s 708(10) applied. Mr Fortune knew, expected and believed that the ProCorp promotional documentation was intended to influence potential investors to lend money to ProCorp and the ProCorp companies for the ProCorp projects. Mr Fortune signed the majority of the ProCorp loan agreements on behalf of the guarantor Oceanwalk. He knew that the investors did not satisfy the requirements of s 708(10), and that the ProCorp Group loans and ProCorp loans were entered into in contravention of the fundraising provisions of the Corporations Act. He encouraged Coakleys to provide "statements of reasons" for 63 lenders, knowing that Coakleys had not met those investors and that they did not satisfy the necessary criteria for a proper statement of reasons. Of the ProCorp Group loans, Mr Fortune (and Oceanwalk) was responsible for raising $1,605,000 from 18 investors.

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178 Mr Fortune concedes that his conduct in respect of Oceanwalk, ProCorp, Gosford and the ProCorp companies justifies the making of a disqualification order against him. He also concedes that the manner in which each of Oceanwalk, ProCorp, Gosford, Miranda and the ProCorp companies was managed was wholly or partly responsible for their failure. 179 The substantive orders proposed against Mr Fortune are: · Declarations pursuant to s 1317E of contravention of ss 180 and 181; · An injunction pursuant to Corporations Act, s 1324, permanently restraining him from conducting a financial services business in contravention of s 911A (par 14); · An injunction pursuant to s 1324 permanently restraining him from providing financial services in contravention of s 911B (par 15); · An injunction pursuant to s 1324 permanently restraining him from offering securities without a current disclosure document in contravention of s 727 (par 16); · An injunction pursuant to s 1324 permanently restraining him from advertising or publishing a statement that directly or indirectly refers to an offer or intended offer of securities in contravention of s 734 (par 17); · An injunction pursuant to s 1324 and s 12GD permanently restraining him from engaging in conduct in relation to financial services which is misleading and deceptive or likely to mislead or deceive (par 18); · Disqualification for twelve years (par 19); · A pecuniary penalty pursuant to s 1317G of $200,000 (par 20); · Costs of $50,000 (par 21). 180 The civil penalty provisions that Mr Fortune is said to have contravened are ss 180 and 181. In his case, I am prepared to accept that, given the extent of his admitted knowledge and understanding of the non-compliant nature of the fundraising, his dominant role in the company, and the consequent potential exposure of the company to liability, his conduct was intentional and with knowledge that it placed the corporations in jeopardy, so as to amount to a breach of his duty of good faith, as well as his duty of care and diligence. 181 I am satisfied, having regard also to s 1324(3), that it is appropriate to grant the injunctions in pars 14, 15, 16 and 17. For reasons previously explained I will not grant the injunction referred to in par 18. I am satisfied that in Mr Fortune's case, disqualification is available under s 206C, 206D and 206E, and that having regard to his role, a period of twelve years is not inappropriate. 182 Mr Fortune's role in the ProCorp Scheme was a major one. I am also satisfied, for the purposes of s 1317G(1), that his breach of duty materially prejudiced the interests of the relevant corporations. 183 As against Mr Fortune, I will make the orders in Schedule B. The Twenty-Third Defendant Troy Fortune 184 The statement of facts agreed between ASIC and Mr Troy Fortune is PX06.

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186 He knew of the ProCorp solicitations and their purpose, and supervised, controlled, managed and otherwise participated in them. He knew and understood the general nature of the obligations and limitations imposed on fundraising by the Corporations Act, and that the solicitations would contravene those provisions unless the s 708(10) exemption were available. He knew that Mr Maxwell, Coakley Associates, Oceanwalk, ProCorp and the ProCorp companies sent promotional documentation to potential investors, intended to influence them to lend money for the ProCorp projects. He knew that Mr Maxwell, Coakleys, Oceanwalk and the ProCorp companies, made recommendations and expressed opinions to potential investors intended to influence them to lend money, and invited them to do so. He signed most of the ProCorp loan agreements on behalf of ProCorp, and controlled the bank accounts into which the investment proceeds were deposited, from which they were spent on building, managing and developing the projects. He knew that the investors were not such as would satisfy the requirements of s 708(10), and that the loans were entered into in contravention of the fundraising provisions of the Corporations Act. He knew that the statements of reasons executed by Coakleys could not properly have been given. He concedes that his conduct in respect of the companies of which he was a director justifies the making of a disqualification order against him. 187 The substantive orders proposed against Troy Fortune are: · Declarations pursuant to s 1317E of contravention of ss 180 and 181; · An injunction pursuant to Corporations Act, s 1324, permanently restraining him from conducting a financial services business in contravention of s 911A (par 12); · An injunction pursuant to s 1324 permanently restraining him from providing financial services in contravention of s 911B (par 13); · An injunction pursuant to s 1324 permanently restraining him from offering securities without a current disclosure document in contravention of s 727 (par 14); · An injunction pursuant to s 1324 permanently restraining him from advertising or publishing statements that directly or indirectly refer to an offer or intended offer of securities in contravention of s 734 (par 15); · An injunction pursuant to s 1324 and s 12GD permanently restraining him from engaging in conduct in relation to financial services which is misleading and deceptive or likely to mislead or deceive (par 16); · Disqualification for seven years. 188 Declarations are proposed pursuant to s 1317E of contraventions of s 180(1) and s 181(1). In the case of Mr Troy Fortune, I am prepared to accept that - by reason of his knowledge (1) of the status of the investors and their inability to satisfy s 708(10), (2) that the loans were entered into in contravention of the fundraising provisions of the Corporations Act, and (3) that the statements of reasons executed by Coakleys could not properly have been given - that his conduct fell short not only of his obligations of care and diligence but also of his obligation of good faith, because it involved participation in conduct which he must have known could expose the corporations to jeopardy.

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195 Mr Bennett was not aware of the terms of any agreement between Oceanwalk and Mr Maxwell, nor of the terms of Coakleys' retainer (though he was informed by Malcolm Fortune that Mr Coakley was a licensed securities dealer). He knew of the ProCorp solicitations and their purpose, and understood the general nature of the obligations and limitations imposed on fundraising by the Corporations Act, and that the solicitations would contravene them unless the s 708(10) exemptions were available. 196 Mr Bennett was unaware that advertisements were placed in any publication until informed by an ASIC officer in July 2003 when he took steps to prevent publication of any further advertisements. He knew that promotional documentation was sent to potential investors, which was intended to influence them to lend moneys for the ProCorp projects. He knew that Mr Maxwell, Coakleys, Oceanwalk, ProCorp and the Fortunes made recommendations and expressed opinions to potential investors intended to influence them to lend money, and invited them to do so. He knew that they provided proposed loan agreements containing an invitation to lend money to potential investors. He believed that as a director he was required to supervise and manage the loans, and concedes that he should have been aware that the loans were entered into with investors who did not meet the requirements of s 708(10). He was unaware of Mr Maxwell's involvement, but accepts that as a director he ought to have been aware of it. 197 He concedes that he breached his duties as a director by failing to take proper steps to ensure that the fundraising complied with the Corporations Act and permitting the loans to be made in circumstances where they would not comply, in failing to take proper steps to ensure that representations contained in certain of the promotional documentation were not misleading and deceptive and in otherwise permitting the issue of that documentation in circumstances where he knew or ought to have known that they included representations that were misleading or deceptive. He also admits that the failure of ProCorp and the ProCorp companies was wholly or party attributable to the manner in which they were managed. 198 The substantive operative orders proposed in the short minutes between ASIC and Mr Bennett are:

[187]

215 Mr Kolios was born in 1973. He has a Bachelor of Business Finance and ten years experience in mortgage broking and finance. He had no experience in property development. 216 On 7 July 1999, Mr Kolios was convicted in respect of ten counts of obtaining money by deception, and following an appeal was sentenced to 300 hours of community service. He was made bankrupt on 24 December 2004. At all material times he was a director of and shareholder in Central Development, Wake and Maroubra. 217 In or about mid to late 2002, Mr Kolios - with Mr Skaf and Mr Jammal - decided to establish Central Development, to acquire and develop suitable sites. 218 Mr Kolios was aware that there were provisions in the Corporations legislation that regulated the raising of funds, and concedes that he took no step to inform himself of the precise nature of those obligations, made no adequate inquiry to ascertain whether the Central Development Scheme complied with them, and should have been aware that the scheme contravened them. 219 Mr Kolios was served with the Asset Preservation Orders of 15 October 2003 on 16 October 2003, and read and understood their terms. On 4 November 2003 he gave a personal undertaking to the court that until further order he would not manage any corporation. On 10 November 2003, with Mr Skaf and Mr Jammal, he opened a St George bank account in the name of Maroubra, for the purpose of receiving moneys which they expected to receive. After 15 October 2003 Mr Maxwell, on behalf of Maroubra, solicited loans and obtained two loans. Mr Kolios was aware of those solicitations and the resultant loans, and that the moneys were paid into the St George account, and he signed cheques authorising payments from the St George account. 220 Mr Kolios concedes that he breached his duties as a director, by failing to take proper steps to ensure that the Central Development Scheme's fundraising complied with the requirements of the Corporations Act, failing to take any or proper steps to ascertain and consider the Central Development advertising and promotional documentation and to ensure that it was not misleading and deceptive, failing to take any or sufficient steps to ascertain and consider the Maroubra loan agreements, to ensure that representations contained in them were not misleading and deceptive, and authorising expenditure of moneys obtained by Maroubra pursuant to them. 221 The substantive orders proposed against Mr Kolios are: · Declarations pursuant to s 1317E of contravention of ss 180 and 181; · An injunction pursuant to Corporations Act, s 1324, permanently restraining him from conducting a financial services business in contravention of s 911A (par 15); · An injunction pursuant to s 1324 permanently restraining him from offering securities without a current disclosure document in contravention of s 727 (par 16); · An injunction pursuant to s 1324 permanently restraining him from advertising or publishing a statement that directly or indirectly refers to an offer or intended offer of securities in contravention of s 734 (par 17); · An injunction pursuant to s 1324 and s 12GD permanently restraining him from engaging in conduct in relation to financial services which is misleading and deceptive or likely to mislead or deceive (par 18); · Disqualification for eight years (par 19). 222 The civil penalty provisions that Mr Kolios is said to have contravened are ss 180 and 181. I accept that, given his role in the company, and the consequent potential exposure of the company to liability, his failure to take sufficient steps to ensure that the fundraising was compliant, and his failure sufficiently to supervise Mr Maxwell, constituted a breach of his duty of care and diligence. However, the agreed facts do not support a breach of the duty of good faith according to the Marchesi v Barnes test; they show a failure to take steps that he ought to have taken, but not deliberate conduct known to be not in the interests of the company. 223 I am satisfied, having regard also to s 1324(3), that it is appropriate to grant the injunctions in pars 14, 15, 16 and 17. For reasons previously explained, I will not grant the injunction referred to in par 18.

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224 I am satisfied that while he was an officer of the Central Development companies, the Central Development companies committed numerous contraventions of Corporations Act, s 727, s 734, s 911A, and s 1041H (and of ASIC Act, s 12DA). I am satisfied that disqualification is available under s 206C, 206D and 206E, and that having regard to his record and his role, a period of eight years is not inappropriate. 225 As against Mr Kolios, I will make the orders in Schedule F. The Twenty-Fifth Defendant, Mr Jammal 226 The statement of agreed facts between ASIC and Mr Jammal is exhibit PX10. 227 Mr Jammal is 46 years of age. He has been a structural engineer for 25 years. He was made bankrupt on 11 May 2005. 228 At all material times, Mr Jammal was a director of and shareholder in Central Development, Wake and Maroubra. When he was introduced to Mr Kolios and Mr Skaf in about 2002, he had about five years experience in property development. As between Mr Skaf, Mr Kolios and Mr Jammal, it was agreed that Mr Jammal would focus on the engineering and construction side of the projects, while Mr Skaf and Mr Kolios would focus on arranging finance. He worked from a home/office and visited the offices of Central Development three or five times a week, when his construction expertise was needed or when he was needed in meetings with external parties. 229 Mr Jammal concedes that he breached his director's duties by failing to take proper steps to ensure that the fundraising complied with the fundraising provisions of the Corporations Act, failing to ensure that the representations in the advertisements and promotional documentation were not misleading, and authorising and permitting the expenditure of the moneys obtained after 15 October 2003 pursuant to the Maroubra loan agreement. 230 Mr Jammal says that he contributed $286,000 to the venture as the deposit on the Maroubra property and has not been repaid. He also says that he made further payments totalling about $280,000 on behalf of Central Development, which has not been repaid. 231 The substantive orders proposed against Mr Jammal are: · Declarations pursuant to s 1317E of contravention of ss 180 and 181; · An injunction pursuant to Corporations Act, s 1324, permanently restraining him from conducting a financial services business in contravention of s 911A (par 13); · An injunction pursuant to s 1324 permanently restraining him from offering securities without a current disclosure document in contravention of s 727 (par 14); · An injunction pursuant to s 1324 permanently restraining him from advertising or publishing a statement that directly or indirectly refers to an offer or intended offer of securities in contravention of s 734 (par 15); · An injunction pursuant to s 1324 and s 12GD permanently restraining him from engaging in conduct in relation to financial services which is misleading and deceptive or likely to mislead or deceive (par 16); · Disqualification for eight years (par 17). 232 The civil penalty provisions that Mr Jammal is said to have contravened are ss 180 and 181. Fundraising was the responsibility of Mr Kolios (and Mr Skaf), and not of Mr Jammal. While I am prepared to accept that he breached his director's obligations of care and diligence by failing to take proper steps to ensure that the fundraising complied with the fundraising provisions of the Corporations Act, failing to ensure that the representations in the advertisements and promotional documentation were not misleading, and permitting the expenditure of the moneys obtained pursuant to the Maroubra loan agreement, his conduct has not been shown on the agreed facts to have the same disregard for compliance as that of Mr Kolios, or the Fortunes, and having regard to the scope of his responsibilities as a director, while his conduct is shown to have involved a want of care, it is not shown to have involved a want of good faith. 233 I am satisfied, having regard also to s 1324(3), that it is appropriate to grant the injunctions in pars 13, 14 and 15. For reasons previously explained, I will not grant the injunction referred to in par 16.

[189]

234 I am satisfied that while Mr Jammal was an officer of the Central Development companies, those companies committed numerous contraventions of Corporations Act, s 727, s 734, s 911A, and s 1041H (and of ASIC Act, s 12DA), and that disqualification is available under s 206C, 206D and 206E. However, on the agreed facts, I am unable to accept that Mr Jammal and Mr Kolios merit equivalent treatment. Mr Kolios has a prior record of fraudulent conduct; Mr Jammal does not. Fundraising was the province of Mr Kolios (and Mr Skaf), but not of Mr Jammal. Mr Jammal (and not Mr Kolios and Mr Skaf, so far as the evidence shows) has himself suffered significant financial loss. I do not think a disqualification for longer than three years is justified. 235 As against Mr Jammal, I will make the orders in Schedule G. The Twenty-Sixth Defendant, Mr Skaf 236 The statement of agreed facts between ASIC and Mr Skaf is exhibit PX08. 237 Mr Skaf was born in 1974, and was about 28 years of age at the time of his first alleged contravention. He left school in 1988 after completing year 10 and the School Certificate, and was a panel beater, initially as an apprentice until he obtained his trade certificate in 1994. In 2001 he was injured in an accident that prevented him from working as a panel beater. 238 Mr Skaf was invited by Mr Kolios to join him in the Central Development Group. He had no qualifications in accountancy or finance or the building trades, but received practical experience as a retail finance consultant working with Mr Kolios. At all material times he was a director of and shareholder in each of Central Development, Waker and Maroubra. He says that he saw his role as a director to help out as and when required and that he did not have any particular designated responsibility, and although he was involved in fundraising, Mr Kolios had the main carriage of raising finance. He was present at a meeting between Mr Kolios, Mr Maxwell, Mr Jammal and Mr Burnett, but did not pay attention to the legal advice, leaving it to Mr Kolios and Mr Maxwell to liaise with Mr Burnett on legal issues. 239 Mr Skaf concedes that he breached his director's duties by failing to take proper steps to ensure that the fundraising complied with the fundraising provisions of the Corporations Act, failing to ensure that the representations in the advertisements and promotional documentation were not misleading, and failing to ensure that loans were not solicited after the 15 October 2003 orders, or to ascertain the restrictions which applied to their use. 240 The substantive orders proposed against Mr Skaf are: · Declarations pursuant to s 1317E of contravention of ss 180 and 181; · An injunction pursuant to Corporations Act, s 1324, permanently restraining him from conducting a financial services business in contravention of s 911A (par 13); · An injunction pursuant to s 1324 permanently restraining him from offering securities without a current disclosure document in contravention of s 727 (par 14); · An injunction pursuant to s 1324 permanently restraining him from advertising or publishing a statement that directly or indirectly refers to an offer or intended offer of securities in contravention of s 734 (par 15); · An injunction pursuant to s 1324 and s 12GD permanently restraining him from engaging in conduct in relation to financial services which is misleading and deceptive or likely to mislead or deceive (par 16); · Disqualification for eight years (par 17). 241 The civil penalty provisions that Mr Skaf is said to have contravened are ss 180 and 181. I accept that, given his role in the company, and the consequent potential exposure of the company to liability, his failure to take sufficient steps to ensure that the fundraising was compliant, to ensure that the representations in the advertisements and promotional documentation were not misleading, and to ensure that loans were not solicited after the 15 October 2003 orders, or to ascertain the restrictions which applied to their use, constituted a breach of his duty of care and diligence. However, the agreed facts do not support a breach of the duty of good faith according to the Marchesi v Barnes test; they show a failure to take steps that he ought to have taken, but not deliberate conduct known to be not in the interests of the company. 242 I am satisfied, having regard also to s 1324(3), that it is appropriate to grant the injunctions in pars 13, 14 and 15. For reasons previously explained, I will not grant the injunction referred to in par 16.

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SCHEDULE A - the First Defendant, Donald Richard Maxwell As against the First Defendant, Donald Richard Maxwell, the Court notes the matters recorded in paragraphs 1 to 13 inclusive and 21 and 22 of the document entitled "Short Minutes of Orders between the Plaintiff and the First Defendant" signed by the solicitor for the Plaintiff and by the First Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the First Defendant Donald Richard Maxwell, in contravention of Corporations Act, section 180(1), 181(1) and 182(1), as an officer of the Fourth Defendant ProCorp Investments Pty Ltd, and the ProCorp Companies (as defined in paragraph 73 of the Fourth Amended Statement of Claim), in the period November 2001 to July 2003, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of those corporations and for a proper purpose, and improperly used his position to gain an advantage for himself and detriment to ProCorp and the ProCorp Companies, by: a failing to take any or any proper steps to ensure that the fundraising undertaken through the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, to be made in circumstances where those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take any or any proper steps to ensure that the representations contained in the following documents were not misleading and deceptive: i. the ProCorp Advertisements, as defined in paragraph 82 of the Fourth Amended Statement of Claim, ii. the ProCorp Information Memorandum, as defined in paragraph 84 of the Fourth Amended Statement of Claim, iii. the ProCorp Offer Document, as defined in paragraph 84 of the Fourth Amended Statement of Claim, and iv. the ProCorp Memorandum, as defined in paragraph 84 of the Fourth Amended Statement of Claim; d otherwise permitting the issue of the following document to approximately 81 members of the Australian public, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive:

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i. Oceanwalk Projects Pty Limited, ProCorp Investments Pty Limited and the ProCorp Companies, in the amount of $812,250, as set out in paragraph 117 of the Fourth Amended Statement of Claim, ii. Bankstown Project Two Pty Limited in the amount of $35,000, as set out in paragraph 160 of the Fourth Amended Statement of Claim, iii. Drummoyne Constructions Pty Limited in the amount of $15,000, as set out in paragraph 168 of the Fourth Amended Statement of Claim, iv. Great Northern Constructions Pty Limited in the amount of $10,000, as set out in paragraph 176 of the Fourth Amended Statement of Claim, v. Liverpool Projects Limited in the amount of $27,000, as set out in paragraph 184 of the Fourth Amended Statement of Claim, and vi. Northern Sight Pty Limited in the amount of $12,000, as set out in paragraph 192 of the Fourth Amended Statement of Claim. 2 DECLARES, pursuant to Corporations Act, section 1317E(1), that the First Defendant Donald Richard Maxwell, in contravention of Corporations Act, section 180(1), 181(1) and 182(1), as an officer of Central Development Group Pty Limited, and the Central Development Companies (as defined in paragraph 210 of the Fourth Amended Statement of Claim), in the period November 2001 to July 2003, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of those corporations and for a proper purpose, and improperly used his position to gain an advantage for himself and detriment to Central Development Group Pty Limited, and the Central Development Companies, by: a failing to take any or any proper steps to ensure that the fundraising undertaken through the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, to be made in circumstances where those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take any or any proper steps to ensure that the representations contained in the following documents were not misleading and deceptive: i. the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim, ii. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim, iii. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim, iv. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim, and v. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; d otherwise permitting the issue of the following document to approximately 30 Members of the Australian public, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive: i. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim, ii. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim, iii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim, and

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SCHEDULE B - the Eighth Defendant, Mr Malcolm Fortune As against the Eighth Defendant, Malcolm Fortune, the Court notes the matters recorded in paragraphs 1 to 6 inclusive and 8, 9, 10 and 13 of the document entitled "Consent Orders between the Australian Securities and Investments Commission and Malcolm Fortune the Eighth Defendant" signed by the solicitor for Plaintiff and by the Eighth Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the Eighth Defendant Malcolm Fortune, in contravention of Corporations Act, section 180(1) and 181(1), in the period November 2001 to July 2003, failed to exercise his powers and discharge his duties as an officer of the Third Defendant Oceanwalk Projects Pty Ltd, the Fourth Defendant ProCorp Investments Pty Ltd, and the ProCorp Companies (as defined in paragraph 73 of the Fourth Amended Statement of Claim) with the requisite degree of care and diligence, or in good faith in the best interests of those corporations and for a proper purpose, by: a failing to take any or any proper steps to ensure that the fundraising undertaken through the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, to be made in circumstances where he knew, believed and expected that investments made via those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take any or any proper step to supervise, control and manage the conduct of Donald Richard Maxwell, the First defendant, carried out on behalf of Oceanwalk Projects Pty Ltd, ProCorp Investments Pty Ltd and the ProCorp Companies; d failing to take any or any proper step to ensure that the representations contained in the following documents were not misleading and deceptive: (i) the ProCorp Advertisements, as defined in paragraph 82 of the Fourth Amended Statement of Claim;

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SCHEDULE C - the Twenty-third Defendant, Mr Troy Fortune As against the Twenty-third Defendant, Troy Fortune, the Court notes the matters recorded in paragraphs 1 to 7 inclusive and 11 of the document entitled "Short Minutes of Order between the Plaintiff and the Twenty-third Defendant" signed by the solicitor for Plaintiff and by the Twenty-third Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the Twenty-third Defendant Troy Fortune, in contravention of Corporations Act, section 180(1) and 181(1), in the period November 2001 to July 2003, failed to exercise his powers and discharge his duties as an officer of the Third Defendant Oceanwalk Projects Pty Ltd, the Fourth Defendant ProCorp Investments Pty Ltd, and the ProCorp Companies (as defined in paragraph 73 of the Fourth Amended Statement of Claim) with the requisite degree of care and diligence, or in good faith in the best interests of those corporations and for a proper purpose, by: a failing to take any or any proper steps to ensure that the fundraising undertaken through the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, to be made in circumstances where he knew, believed and expected that investments made via those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take any or any proper step to supervise, control and manage the conduct of Donald Richard Maxwell, the First defendant, carried out on behalf of Oceanwalk Projects Pty Ltd, ProCorp Investments Pty Ltd and the ProCorp Companies, in respect of the ProCorp Projects as defined in paragraph 71 of the Fourth Amended Statement of Claim; d failing to take any or any proper step to ensure that the representations contained in the following documents were not misleading and deceptive: (i) the ProCorp Advertisements, as defined in paragraph 82 of the Fourth Amended Statement of Claim;

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SCHEDULE D - The Twenty-Fourth Defendant, Mr Bennett As against the Twenty-fourth Defendant, Jon William Bennett, the Court notes the matters recorded in paragraphs 1 to 6 inclusive and 10 of the document entitled "Short Minutes of Order between the Plaintiff and the Twenty-fourth Defendant" signed by the solicitor for Plaintiff and by the Twenty-fourth Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the Twenty-fourth Defendant Jon William Bennett, in contravention of Corporations Act, section 180(1), in the period November 2001 to July 2003, failed to exercise his powers and discharge his duties as an officer of the Third Defendant Oceanwalk Projects Pty Ltd, the Fourth Defendant ProCorp Investments Pty Ltd, and the ProCorp Companies (as defined in paragraph 73 of the Fourth Amended Statement of Claim) with the requisite degree of care and diligence, by: a failing to take proper steps to ensure that the fundraising undertaken through the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the ProCorp Loans, as defined in paragraph 109 of the Fourth Amended Statement of Claim, to be made in circumstances where those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take proper steps to supervise, control and manage the conduct of Donald Richard Maxwell, the First Defendant, carried out on behalf of ProCorp Investments Pty Ltd and the ProCorp Companies (in particular Alliance Property Pty Limited, Liverpool Projects Limited, Mansions on Mann Limited and ProCorp Investments (Gosford) Pty Limited), in respect of the ProCorp Projects, as defined in paragraph 71 of the Fourth Amended Statement of Claim; d failing to take proper steps to ensure that the representations contained in the following documents were not misleading and deceptive:

[246]

SCHEDULE F - the Twentieth defendant, Mr Kolios As against the Twentieth Defendant, Jim Kolios, the Court notes the matters recorded in paragraphs 1 to 8 inclusive, and 10, 13 and 14 of the document entitled "Short Minutes of Orders between the Plaintiff and the Twentieth Defendant" signed by the solicitor for Plaintiff and by the solicitor for the Twentieth Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the Twentieth Defendant Jim Kolios, in contravention of Corporations Act, section 180(1) and 181(1), in the period November 2001 to July 2003, he failed to exercise his powers and discharge his duties as an officer of Central Development Group Pty Limited, and the Central Development Companies (as defined in paragraph 210 of the Fourth Amended Statement of Claim) with the requisite degree of care and diligence, or in good faith in the best interests of those corporations and for a proper purpose, by: a failing to take proper steps to ensure that the fundraising undertaken through the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, to be made in circumstances where those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take proper steps to supervise, control and manage the conduct of Donald Richard Maxwell, the First Defendant, carried out on behalf of Central Development Group Pty Ltd, The Wake (Waitara) Pty Limited, and Maroubra Pty Limited, in respect of the Central Development Projects, as defined in paragraph 209 of the Fourth Amended Statement of Claim; d failing to take any or any proper steps to ensure that the representations contained in the following documents were not misleading and deceptive: i. the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim; ii. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iv. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; v. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim; and vi. the Post Order Central Development Loan Agreements, as defined in paragraph 227 of the Fourth Amended Statement of Claim. e otherwise permitting the issue of the following documents to approximately 28 members of the Australian public, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive: i. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim; ii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iii. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; and iv. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim. f otherwise permitting the publication of the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim, to the Australian public at large, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive. g otherwise permitting the issue of the Post Order Central Development Loan Agreements, as defined in paragraph 227 of the Fourth Amended Statement of Claim, to approximately 2 Members of the Australian public, in circumstances where he knew or ought to have known that the contents of that document included representations which were misleading and deceptive.

[254]

SCHEDULE G - The Twenty-Fifth Defendant, Mr Jaul Jammal As against the Twenty-fifth Defendant, Jaul Jammal, the Court notes the matters recorded in paragraphs 1 to 8 inclusive and 12 of the document entitled "Short Minutes of Orders between the Plaintiff and the Twenty-fifth Defendant" signed by the solicitor for Plaintiff and by the Twenty-fifth Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the Twenty-fifth Defendant Jaul Jammal, in contravention of Corporations Act, section 180(1), in the period November 2001 to July 2003, he failed to exercise his powers and discharge his duties as an officer of Central Development Group Pty Limited, and the Central Development Companies (as defined in paragraph 210 of the Fourth Amended Statement of Claim) with the requisite degree of care and diligence, by: a failing to take proper steps to ensure that the fundraising undertaken through the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, to be made in circumstances where those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take proper steps to supervise, control and manage the conduct of Donald Richard Maxwell, the First Defendant, carried out on behalf of Central Development Group Pty Ltd, The Wake (Waitara) Pty Limited, and Maroubra Pty Limited, in respect of the Central Development Projects, as defined in paragraph 209 of the Fourth Amended Statement of Claim; d failing to take proper steps to ensure that the representations contained in the following documents were not misleading and deceptive: i. the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim; ii. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iv. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; v. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim; and vi. the Post Order Central Development Loan Agreements, as defined in paragraph 227 of the Fourth Amended Statement of Claim. e otherwise permitting the issue of the following documents to approximately 28 members of the Australian public, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive: i. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim; ii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iii. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; and iv. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim. f otherwise permitting the publication of the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim, to the Australian public at large, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive. g otherwise permitting the issue of the Post Order Central Development Loan Agreements, as defined in paragraph 227 of the Fourth Amended Statement of Claim, to approximately 2 Members of the Australian public, in circumstances where he knew or ought to have known that the contents of that document included representations which were misleading and deceptive. 2 BY CONSENT ORDERS, pursuant to Corporations Act, section 1324(1), that the Twenty-fifth Defendant Jaul Jammal, by himself, his servants, agents and employees is permanently restrained from conducting a financial services business, in contravention of Corporations Act, section 911A (as amended from time to time).

[260]

SCHEDULE H - The Twenty-sixth Defendant, Mr Roy Skaf As against the Twenty-sixth Defendant, Roy Skaf, the Court notes the matters recorded in paragraphs 1 to 8 inclusive and 12 of the document entitled "Short Minutes of Orders between the Plaintiff and the Twenty-sixth Defendant" signed by the solicitor for Plaintiff and by the Twenty-sixth Defendant, initialled by me this day and placed with the papers, and:- 1 DECLARES, pursuant to Corporations Act, section 1317E(1), that the Twenty-sixth Defendant Roy Skaf, in contravention of Corporations Act, section 180(1) in the period November 2001 to July 2003, he failed to exercise his powers and discharge his duties as an officer of Central Development Group Pty Limited, and the Central Development Companies (as defined in paragraph 210 of the Fourth Amended Statement of Claim) with the requisite degree of care and diligence, by: a failing to take proper steps to ensure that the fundraising undertaken through the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, complied with the fundraising provisions of the Corporations Act ; b otherwise permitting the Central Development Group Loans, as defined in paragraph 228 of the Fourth Amended Statement of Claim, to be made in circumstances where those loans would not comply with the fundraising provisions of the Corporations Act ; c failing to take proper steps to supervise, control and manage the conduct of Donald Richard Maxwell, the First Defendant, carried out on behalf of Central Development Group Pty Ltd, The Wake (Waitara) Pty Limited, and Maroubra Pty Limited, in respect of the Central Development Projects, as defined in paragraph 209 of the Fourth Amended Statement of Claim; d failing to take proper steps to ensure that the representations contained in the following documents were not misleading and deceptive: i. the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim; ii. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iv. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; v. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim; and vi. the Post Order Central Development Loan Agreements, as defined in paragraph 227 of the Fourth Amended Statement of Claim. e otherwise permitting the issue of the following documents to approximately 28 members of the Australian public, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive: i. the Central Development Letter, as defined in paragraph 222 of the Fourth Amended Statement of Claim; ii. the Central Development Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; iii. the Central Development Information Memorandum, as defined in paragraph 222 of the Fourth Amended Statement of Claim; and iv. the Wake Brochure, as defined in paragraph 222 of the Fourth Amended Statement of Claim. f otherwise permitting the publication of the Central Development Advertisements, as defined in paragraph 221 of the Fourth Amended Statement of Claim, to the Australian public at large, in circumstances where he knew or ought to have known that the contents of those documents included representations which were misleading and deceptive. g otherwise permitting the issue of the Post Order Central Development Loan Agreements, as defined in paragraph 227 of the Fourth Amended Statement of Claim, to approximately 2 Members of the Australian public, in circumstances where he knew or ought to have known that the contents of that document included representations which were misleading and deceptive. 2 BY CONSENT ORDERS, pursuant to Corporations Act, section 1324(1), that the Twenty-sixth Defendant Roy Skaf, by himself, his servants, agents and employees is permanently restrained from conducting a financial services business, in contravention of Corporations Act, section 911A (as amended from time to time).

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Judgment (268 paragraphs)

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Cases Cited (29)