The primary judge's decisions
74 The primary judge delivered his principal reasons where he decided issues of liability (Australian Securities and Investments Commission v ActiveSuper Pty Ltd (In Liq) (2015) 235 FCR 181) before deciding the question of relief in his second set of reasons (Australian Securities and Investments Commission v ActiveSuper Pty Ltd (In Liq) (No 2) (2015) 106 ACSR 302 (the relief reasons)). The principal reasons are detailed and what follows is substantially a summary of the findings that his Honour made relating to the liability of Mrs Gore.
75 Mrs Gore was a director of MOGS Pty Ltd and a company associated with her was one of its shareholders. Her husband, Craig Gore (Mr Gore), worked as a consultant to MOGS. As at 2011, he had extensive corporate experience having been a director of over 100 companies.
76 Mark Adamson was a shareholder and, between 23 May 2011 and 23 April 2012, a director of MOGS. He was a lawyer who worked for Evans Ellis Lawyers and he performed a considerable amount of legal work for MOGS. From about August 2011, MOGS paid directly Mr Adamson's and his secretary's salaries, as employees of the law firm, as well as the firm's overheads for its Gold Coast office, which was in the same premises as MOGS' offices.
77 Graeme Stonehouse was also a director of MOGS and a company associated with him was one of its shareholders.
78 MOGS was a property developer that, principally, sold house and land packages to both non-SMSF and SMSF investors. In the second half of 2011, MOGS began to target sales to SMSFs and, by late that year, such sales accounted for over 50% of its business. MOGS engaged financial planners who dealt directly with the investors. Its business model involved it, or one of its subsidiaries, acquiring and then selling land to an investor on the basis that, for a non-SMSF investor, MOGS would co-ordinate the construction of a home on the land by a builder with whom MOGS had agreed the price. Initially, the non-SMSF investor would pay the purchase price of the land and then progress payments for the construction work. MOGS sought to achieve a profit of between $20,000 and $30,000 on each property.
79 However, because a superannuation fund could not borrow to finance construction of a building, MOGS only sold completed homes to SMSFs. Accordingly, when selling to SMSF investors, MOGS had to finance both the land acquisition and construction costs. As MOGS' sales to SMSFs became an increasingly significant part of its business in the second half of 2011, its need for finance also increased. That was because it had to acquire the land and construct the house before completion could occur under its agreement with the SMSF investor. Usually, that process took about six months. MOGS found it difficult to raise the necessary finance and often was unable to make payments as and when they were due.
80 His Honour found that MOGS' financing requirements and difficulties in the second half of 2011 largely explained the desire of those involved with MOGS to make use of funds invested by SMSFs in shares issued pursuant to the two PPMs in issue on this appeal, namely those PPMs issued by Syndicated Property Group Ltd (SPG) (the SPG PPM) and Worldwide Property Opportunities Ltd (WPO) (the WPO PPM), as well as funds raised by investments in a venture pursuant to what his Honour called the US Realty Memorandum. The latter US Realty Memorandum was an earlier fundraising, in which Mrs Gore was not a participant, but from the proceeds of which she and MOGS derived benefits. Each of SPG and WPO was incorporated in the BVI in late 2011.
81 On 23 November 2010, Mr Gore entered into a personal insolvency agreement with a trustee under Pt X of the Bankruptcy Act 1966 (Cth) under which he had to ensure that, relevantly, the recently incorporated GFCO9 Pty Ltd paid the trustee $1 million as an annual fee for three years by equal monthly instalments for the benefit of his creditors. On about 9 May 2011, MOGS and GFCO9 entered into a consultancy agreement under which MOGS agreed to pay GFCO9 a "base fee" of $2 million annually for the provision of Mr Gore's services and Mr Gore had to be available to manage and co-ordinate the pursuit of, substantively, MOGS business as a property developer. The "base fee" for Mr Gore's services was a very significant liability for MOGS, which only had net assets at 30 June 2011 and 2012 respectively of $29,000 and $150,000. As his Honour found, the consultancy agreement was not at arm's length and, in order for MOGS to meet its obligation to pay the annual "base fee", it had to increase its income considerably. Of course, GFCO9 and Mr Gore needed MOGS to do so in order for him to meet his obligation under the personal insolvency arrangement.
82 His Honour found that Mr Gore exercised considerable control and influence over MOGS' affairs in the latter part of 2011 and early part of 2012. He also found that Mr Gore was the driving force behind the establishment of SPG, WPO and a Cayman Islands company, Cayco Management Ltd, that had been incorporated in January 2012. Mr Gore was made bankrupt on 18 April 2012.
83 Jason Burrows controlled ActiveSuper Pty Ltd and he also, together with Justin Gibson, exercised considerable control over Royale Capital Pty Ltd. In late 2010 Royale distributed the US Realty Memorandum to some SMSF investors promoting it as an investment opportunity. That document was entitled "US Deals Invest Now" and recommended that SMSFs to whom it was marketed acquire shares in an American company that would be formed to purchase "distressed" real estate in the United States with a view to it realising a profit after five years. Over 185 SMSF investors took up that "opportunity" and paid ActiveSuper a total of about $3.1 million for investment in it. His Honour found that only about $455,000 of that sum came to be invested in 14 properties in Arizona by four limited liability companies incorporated in the United States (the LLCs). No shares in the LLCs or any other entity were ever issued to any of the SMSF investors in respect of their investments.
84 On 12 September 2011, Mr Gore met Mr Burrows for the first time. Mr Gore then learnt that ActiveSuper was establishing about 10 new SMSFs each week. He told Mr Burrows that he was not aware of the "gold mine" on which he (Mr Burrows) was sitting. Mr Gore was not a man to let others sit idly on such treasures. He saw, as the primary judge found, the opportunities for MOGS to obtain money to finance its operations, as well as to sell properties to ActiveSuper's and Royale's SMSF clients.
85 By the first week of October 2011, Mr Gore had suggested that Royale could raise the $4 million in finance that MOGS needed and lend it to MOGS, secured by a fixed and floating charge over MOGS' assets and personal guarantees from its directors. On 7 October 2011, Mr Gore, Mr Adamson and Mr Burrows, among others, had a meeting with Minter Ellison Lawyers, at which they discussed establishing a fund that would be regulated under the managed investments scheme provisions in the Corporations Act.
86 However, the primary judge found that by 12 October 2011 Mr Gore had come to the view that a fund not regulated by Australian law was preferable. At a meeting around this time at which, among others, Mr Adamson, Mr Stonehouse, Mr Burrows and Mr Gibson were present, Mr Gore suggested establishing a fund in the BVI. His Honour found that Mr Gore's purpose from the inception of his scheme was to use entities in the BVI (the BVI scheme) to avoid the Australian regulatory regime and that Mr Adamson, Mr Stonehouse and Mr Burrows knew this. He inferred that "[Mrs] Gore must also have known of this purpose".
87 On 14 October 2011, Mr Gore sent an email to Mrs Gore, Mr Adamson and others with a draft PPM for a pooled investment scheme established in the BVI. That draft became the basis for the WPO PPM. Mr Gore's covering email said that there was a lot of work to be done and that the addressees and he should talk on the forthcoming weekend. Mrs Gore's biography in the October 2011 draft PPM recorded that she was currently completing an executive MBA course at Bond University. The draft evolved considerably over the subsequent months. His Honour found that:
Some of the emails were also sent to Mr Stonehouse and Ms Gore. An email of 27 October 2011 from Mr Gore to Ms Gore, Mr Stonehouse, Mr Adamson and Mr Chant attached an Information Memorandum for Worldwide Property and Distressed Investment Opportunities Fund (WWPDIO Fund) and said:
I made these changes on the plane to NYC so they don't include the changes and spelling that Marina made. Rather than me fucking it up by attempting to load them in I thought I could send them back to you and you could do so I don't fuck up wat (sic) Marina has done.
The "Marina" to whom Mr Gore referred was Ms Gore. The email indicates that Ms Gore was providing active assistance in the development of the information memorandum. (emphasis added)
88 In fact, his Honour mistranscribed the emphasised passage in the email. The actual words in the email did not include the word "and" in the passage emphasised. Rather, Mr Gore wrote "they don't include the changes in spelling that Marina made". Mr Gore's spelling and capacity to express himself in grammatical English was not his forte, as his Honour's notation of "sic" in the quoted passage from Mr Gore's email showed.
89 Nonetheless, apart from her visit to the BVI in 2012, referred to at [104]-[105] below, there was little evidence of Mrs Gore participating in the development of the PPMs. Mrs Gore used that evidentiary gap to argue that his Honour was wrong to infer that since each of Mr Adamson, Mr Stonehouse and Mr Burrows knew that Mr Gore's purpose in conceiving the BVI scheme was to avoid the Australian regulatory regime, she "must also have known of this purpose". However, it is not relevant to the issues in this appeal whether she knew that this was her husband's purpose or not. That is because his Honour stated that he would not have been prepared to make a finding that Mrs Gore knew that the offers did require disclosure under Pt 6D.2 of the Corporations Act, had it been necessary for him to do so. ASIC did not raise a contention on the appeal that his Honour should have found that Mrs Gore knew the offers needed disclosure.
90 His Honour found that from mid October 2011 Mr Gore pursued two strategies for MOGS first, to borrow moneys raised by the use of the US Realty Memorandum, and, secondly, to develop funds in the BVI that could be a source of finance for MOGS.
91 On 19 October 2011, the LLCs entered into an agreement to lend MOGS $1 million. Mrs Gore and Mr Stonehouse signed that agreement on behalf of MOGS.
92 By 24 October 2011, Mr Gore and Mr Adamson were flying to the BVI where they stayed until 9 November 2011. They met there with Jose Santos, a member of Forbes Hare, a law firm in the BVI and, an associate of Mr Gore, Jeffrey George. They instructed Mr Santos to incorporate WPO, which occurred on 31 October 2011. The next day, Mr Gore instructed Mr Santos to establish a second fund vehicle that was registered in the BVI on 2 November 2011 and it later came to be called SPG. WPO and SPG appointed the accountancy firm, Deloitte, as their auditor. Mr Santos also recommended that an investment manager be appointed for the two fund vehicles which later led to the incorporation of Cayco in the Cayman Islands on 31 January 2012.
93 SPG acquired the shares in the four LLCs from Mr Burrows in mid-November 2011. Around 9 November 2011 Mr Gore and Mr Adamson returned to Australia and after this work began in developing the SPG PPM and the WPO PPM.
94 The issues in this appeal centre on the role that Mrs Gore had in, first, the use of the SPG PPM and WPO PPM as fundraising documents and, secondly, the making in each PPM of the representation that the moneys invested by Australian SMSFs pursuant to it, in the future, would be used for the purchase of property by its issuer, WPO or SPG, respectively.
95 On 15 November 2011, Mr Gore met with Mr Burrows, Mr Gibson, Mr Adamson and a Mr Smerdon (Mr Smerdon had introduced Mr Gore to Mr Burrows and Mr Gibson). Mr Gore discussed the proposed BVI fund structure and said that funds raised by Royale would be placed in a BVI fund account and then lent to MOGS or its subsidiaries to provide construction finance. Mr Gore said that MOGS could not give mortgages over its properties because they were "optioned". Instead, Mr Gore said, MOGS could offer a fixed and floating charge over its assets to the lender as security. He said MOGS' assets would include the project building sites. Mr Gore also said that both Mr Stonehouse and Mrs Gore, as directors of MOGS, would provide guarantees.
96 The primary judge found that it was improbable that Mr Gore would have suggested that guarantees would be given without having first discussed that matter with Mr Stonehouse and Mrs Gore. As Mrs Gore argued, it is difficult to reconcile his Honour's finding about this postulated discussion with her reaction to having to sign the guarantees six months later on 10 May 2012, that is described at [124] below.
97 The minutes of a meeting of MOGS' directors and executives on 21 November 2011 at which, among others, Mrs Gore, Mr Gore, Mr Adamson and Mr Stonehouse attended, recorded that "the proposed resolution funding was discussed and it was noted that RES [an acronym for MOGS' business name and internet address 'realestatestock.com.au'] should prepare for 7 build commencements during December 2011". His Honour inferred that one or both of Mr Gore and Mr Adamson had reported on the developments relating to the BVI fundraising plans and the likely availability of finance for MOGS from that source.
98 Around 22 November 2011, the LLCs and MOGS entered into a deed of variation of the 19 October 2011 loan agreement to increase the facility to $1.47 million. Mrs Gore and Mr Stonehouse executed that deed on behalf of MOGS. Between 21 October 2011 and 28 November 2011, MOGS received $1,075,000 under this facility and some of that was paid to GFCO9.
99 Mr Gore and others continued working on finalising what became the WPO PPM during November 2011, December 2011 and January 2012. The only additional emails from this period that involved Mrs Gore, to which his Honour or the parties on appeal referred, were those to which I refer below. The first was an email dated 12 December 2011 from Mr Gore to Mrs Gore, Mr Stonehouse, Mr Adamson and Steve Chant (an employee of MOGS) that Mrs Gore forwarded back to her husband without comment on 30 January 2012. Mr Gore's 12 December 2011 email stated:
Final version of the document for your review if [sic] it is not issued this week no further funds will flow. I am sure you are all aware of that and on top of those matters relating to the business but I thought I should raise it with you. (emphasis added)
100 The attachment was headed "Prospectus" and included a note that Australian counsel were to provide appropriate terminology relating to restrictions on the PPM's distribution in Australia.
101 Early on 13 December 2011, Mr Stonehouse sent an email to Mr and Mrs Gore, Mr Adamson and Mr Chant headed "Royal [sic] Capital and SMSF property sales" for the MOGS board to review and discuss "URGENTLY". The email raised three issues, namely commissions, building contracts and set up costs. Mr Stonehouse noted that, first, MOGS was due to pay 10 commissions of $15,000 in December 2011, and another 10 in January 2012 and there was "a plan to ramp it up for February to 20 a month". He observed there was a need for careful planning and to "know where the funds are coming from to fund these plans". Secondly, he noted that MOGS had "committed to 11 houses in Whyalla to accommodate the SMSF sales and Royal[e]" for a total expenditure of $1.47 million over the forthcoming three months. He also noted that 10 more houses were to be built in Gympie involving a liability of $1.7 million over the next four months, with 10 more per month from then onwards. He said that "[w]e need to have things in place to accommodate these actions". Thirdly, under the heading "set up cost" he wrote:
I understand we have committed money to set up cost but it is important we have clear guidelines to this expenditure which is now in excess of 500K.
What I want to understand better is how we are going to fund these plans. Whilst [I] agree with the direction and the plans themselves I think it is important we have the funds to cover these expenses so that Royal[e] and SMSF sales can be accommodated without putting our business at risk. This is an imperative to moving forward.
Funds need to flow more consistently and more in line with the needs rather than the other way. We need a plan so Xmas doesn't become a disaster. (emphasis added)
102 His Honour found that Mr Stonehouse's reference in the email to "set up costs" related to the cost of establishing the BVI scheme and that he was concerned that the level of expenditure on it was putting MOGS' core business at risk. The primary judge also found that a meeting occurred at which Mr Stonehouse's email was discussed and that Mr Gore was likely to have provided some detail to those present about the position regarding the implementation of the BVI scheme. His Honour found that Mr Stonehouse's statement in the emphasised part of his email, that he agreed with the direction and plans relating to the BVI scheme, showed that he had at least a general understanding of the scheme and its elements. However, the primary judge ultimately found that the evidence did not warrant a finding that Mr Stonehouse knew that the two PPMs contained the misleading representation.
103 Mr Stonehouse's concerns about MOGS' dire cash flow position appeared to have been well founded, for on the next day, 14 December 2011, Mr Gore sent an email to Mr Burrows. The email, headed "Cash", pressed Mr Burrows for an advance of $300,000. There was no evidence of what, if anything, came of that request.
104 Matters progressed slowly until February 2012. Mrs Gore's next involvement with the BVI scheme, other than her email of 30 January 2012 referred to at [99] above, was when she decided to accompany Mr Gore, with their infant and nanny, on an expensive trip to the BVI that commenced on 28 February 2012. During their first week in the BVI, Mr and Mrs Gore attended meetings with, among others, Mr Burrows, Mr Chant and professionals there who were advising on the proposed structure and documentation for the BVI scheme.
105 His Honour made these findings:
There is evidence as to Ms Gore's purpose in travelling to the BVI. Mr Adamson said that, in a conversation before February 2012, Ms Gore had told him that she wanted to do two things:
One, she wanted to go to the BVI to make sure that what was being set up over there was appropriate. And two, she wanted to confirm that - or to enquire that what was being proposed in Australia could be done.
Later, Mr Adamson said:
We had a general discussion as to whether or not persons could invest in the PPM. It wasn't a request for legal advice, it wasn't a detailed discussion, it was a general discussion as to whether or not persons were entitled to invest in a PPM could invest in a PPM. And then following on from that, Marina wanted to go to the BVI to make sure that the businesses in the BVI were properly structured businesses and were with people of real value.
That evidence, which I accept, is sufficient by itself to warrant a finding as to Ms Gore's purpose. (emphasis added)
106 In my opinion, Mrs Gore's purpose appeared from those findings to have been to satisfy herself of the legality and appropriateness, both in the BVI and Australia, of using a fundraising scheme operated from the BVI and that the proposal was not a sham. Mrs Gore had an interest in those matters by reason of her position as a director of MOGS and its need for funds. The primary judge's finding of her purpose is reinforced by Mr Adamson, in early March 2012, giving instructions to his firm, Evans Ellis, to prepare an advice to Forbes Hare, who were acting for SPG, concerning whether it was appropriate for Australian SMSFs to invest in SPG. Evans Ellis gave Forbes Hare advice on that topic on 6 March 2012. His Honour found that Mr Gore provided Mr Burrows with a copy of the advice on the same day.
107 ASIC's oral and written submissions asked us to infer, from the email address used to send that advice to Mr Burrows, that Mrs Gore either saw or sent it. ASIC did not file a notice of contention, yet it asked the Full Court to consider many documents to support new findings that ASIC argued should be made on appeal or about which his Honour had not made findings. It is not appropriate to conduct an appeal in that way or to invite an appellate court to make new findings to support the ultimate result arrived at in the trial without a notice of contention that articulates clearly what additional or other finding or findings the primary judge should have made: cf Fox v Percy (2003) 214 CLR 118 at 125-126 [23] per Gleeson CJ, Gummow and Kirby JJ.
108 I am not prepared to interfere with the primary judge's specific finding that Mr Gore sent Mr Burrows the 6 March 2012 email attaching Evans Ellis' advice. His Honour had the benefit of hearing the full trial and receiving a significant amount of documentary evidence, coupled with oral evidence, to inform his fact finding. Only selected parts of the record at trial were before the Full Court, being the portions that the parties chose to include in the appeal papers based on the notices of appeal and cross appeal. His Honour's detailed judgment made a limited number of specific findings as to Mrs Gore's relevant involvement in the contraventions alleged against her. The issues on the appeal are whether those findings were open or should not have been made.
109 It was common ground at the trial that Mrs Gore had seen the SPG PPM. Indeed, she sent an email to Mr Burrows, a director and the chief executive officer of SPG, as the document stated, on 8 March 2012 in which she wrote "See attached final version", referring to the attached SPG PPM that stated its issue date as 6 March 2012. That document stated prominently that it had not been registered in the United States of America and was not directed to persons in the United Kingdom. It also stated that the shares had "not been registered under the laws of any country or jurisdiction". It asserted that the investment objective was "to take advantage of the significant downturn in property values particularly in the United States and Australia" and that the base currency of the SPG fund was, and the shares were to be offered in, Australian dollars. The SPG PPM stated that it provided "a significant opportunity for investments into the real estate markets" for SMSFs. It said that the SMSF market was "the fastest growing financial market in Australia".
110 On 8 March 2012, the SPG PPM was finalised and posted on the Cayco website. In an email that Mr Gore sent that day to Mr Burrows, Mr Anderson and others he said "we are going live today". Royale almost immediately began to market investment in SPG to SMSF investors. His Honour found that in the preceding week there had been a rush of activity before the launch of the SPG PPM.
111 His Honour found that in the first part of March 2012, Mrs Gore was involved in work that progressed the preparation of loan agreements, compliance manuals, other documents relating to the establishment of the funds to be administered by SPG and WPO and the website of Cayco.
112 On 11 March 2012, Mrs Gore sent Ms Erskine-Shaw, an employee of MOGS, a graph that showed fluctuating values for homes. Mrs Gore asked Ms Erskine-Shaw to prepare a high resolution version of the graph for the Cayco website. The graph was included in the final version of the WPO PPM. The next day Mrs Gore forwarded to Ms Boyd of Deloitte, who was assisting in developing the Cayco website, the version of the graph that Ms Erskine-Shaw had sent back to Mrs Gore. Mrs Gore also sent it to Mr Chant on 12 March 2012, saying that the graph was the one that Mr Gore wanted on the website.
113 SMSF investors began applying for shares pursuant to the SPG PPM on 14 March 2012.
114 Mrs Gore was also a copied addressee of emails of 16, 17 and 18 March 2012 that Ms Boyd exchanged with Mr Gore, Mr Adamson, Mr Chant, Mr George and others relating to development of the Cayco website. Importantly, his Honour found that Mrs Gore had been provided with copies of the draft WPO PPM on 17 and 18 March 2012 and that these were not relevantly different to the final version.
115 On 18 March 2012, Mr Gore sent an email to Mrs Gore, Mr Adamson, Mr Chant and Mr George saying, inaccurately as it happened, that "we have lift off" in relation to the WPO PPM. In fact, the WPO PPM was only finalised on 23 March 2012. It contained, as had earlier drafts, a prominent statement in block letters at the foot of the first page of its text that:
The securities described in this PPM … have not been registered or qualified for offer or sale to the public under the securities laws of any country or jurisdiction. (emphasis added)
116 The fund and shares in it were denominated in Australian dollars. The WPO PPM also said that:
the Fund has identified a unique opportunity for Australian Self Managed Superannuation Funds ("SMSFs") to access residential and commercial property developments not normally available to SMSFs.
117 Additionally, the application form in the WPO PPM stated that:
The Subscriber understands and agrees that neither the Fund [being WPO] nor the Shares are listed with or approved by any securities regulatory authority in any jurisdiction. (emphasis added)
118 On 23 March 2012, Royale commenced almost immediately marketing investment in WPO to SMSF investors and SMSF investors began subscribing for shares pursuant to the WPO PPM.
119 The primary judge found that the marketing of both the SPG and WPO PPMs was successful and, from 14 March 2012, ActiveSuper and Royale transferred money to SPG and WPO sourced from SMSF investors. SPG and WPO transferred some of those receipts (totalling over $500,000) to a bank account of Cayco.
120 On 18 April 2012, Mr Gore became a bankrupt.
121 On 20 April 2012, Cayco transferred $69,200 to a United States bank account of Mrs Gore's with Wells Fargo. His Honour made no finding about why Mrs Gore might have received this sum. However, prior to 10 May 2012, none of SPG, WPO or Cayco had entered into any loan agreements with anyone.
122 At Mr Gore's direction, given in late March or early April 2012, Mr Adamson and Mr Chant travelled to the BVI to finalise loan agreements and they began doing so with Forbes Hare from about 18 April 2012.
123 23 April 2012 was the last date that his Honour found that any conduct or contravention of the Corporations Act involving the raising of money from the SPG PPM had occurred. By that date, ActiveSuper and Royale had received 53 subscriptions for shares pursuant to the SPG PPM. Those subscriptions raised about $1,020,000.
124 Importantly, on 10 May 2012, Mr Gore met in MOGS' boardroom with Mrs Gore, Mr George, Mr Stonehouse, Mr Adamson, Mr Burrows and Mr Chant. The purpose of the meeting was the execution of loan agreements and guarantees relating to loans by SPG, WPO and Cayco. Mr Gore told the meeting that the documents were loan agreements and guarantees that MOGS was prepared to sign and that Mrs Gore and Mr Stonehouse would also sign as guarantors. His Honour found:
The execution of the documents did not proceed immediately as Ms Gore wished to speak to Mr Gore, Mr Stonehouse and Mr Adamson before doing so. She expressed concerns about signing a personal guarantee. Mr and Ms Gore, Mr Stonehouse and Mr Adamson withdrew for 15-20 minutes. Mr Adamson said that Ms Gore had a second concern namely, signing a guarantee without knowing that a lender had met all its obligations. The evidence did not disclose the discussion between Mr and Ms Gore, Mr Stonehouse and Mr Adamson but ultimately Ms Gore agreed to sign the guarantees. All those present then proceeded to sign the documents, which were positioned around the board table. (emphasis added)
125 The various loan agreements were between MOGS or one of its subsidiaries, as borrower, and subsidiaries of WPO, as lender, for loans of various amounts between $505,000 and $4,200,590. Once the documents had been signed, Mr George packed them into a suitcase and left. His Honour found that while copies of the loan agreements had been provided to ASIC, the whereabouts of the guarantees and any duplicates were unknown. Thus, there was no direct evidence of the terms of the guarantees.
126 As noted above, the last receipt complained of under the SPG PPM had occurred on 23 April 2012. His Honour did not make findings relating to SPG or its subsidiaries entering into any loan agreements or guarantees with MOGS or any of its subsidiaries.
127 By 12 June 2012, ActiveSuper and Royale had received 69 subscriptions by investors for shares pursuant to the WPO PPM. Those subscriptions raised about $1.38 million.
128 The primary judge found that all, or nearly all, of the funds raised by SPG were provided to MOGS after ActiveSuper had transferred them from SPG's bank account to WPO's bank account. MOGS treated the payments as loans to it as, indeed, the events of 10 May 2012 and the execution of documentation on that date demonstrated was the reality. His Honour made no specific findings as to how MOGS dealt with the total of $2.4 million raised from Australian SMSFs through both PPMs.
129 Thus, the primary judge found unfulfilled the representation in each PPM that money invested by Australian SMSFs pursuant to each of the SPG and WPO PPMs, in the future, would be used for the purchase of property by SPG or WPO respectively. That was because an advance or loan to MOGS could not be a purchase of property by SPG or WPO. The representation was as to a future matter and so the representor had to have reasonable grounds for making it by force of s 769C(1) of the Corporations Act.
130 Moreover, the primary judge found that, at the time that each PPM was published on Cayco's website and provided to SMSF investors, "everyone involved contemplated, that the funds subscribed would be made available to MOGS and or its subsidiaries".
131 The primary judge held that s 1324(1) of the Corporations Act operated independently of s 79 to confer a power on the Court to grant an injunction to restrain a person from engaging in accessorial conduct. He reasoned that s 79 did not impose any liability and was only definitional. He said that the question of "whether s 79 is available in relation to ss 727 and 911A does not arise because the expression "involved in a contravention" is not used in either provision".
132 His Honour said that s 1324(1) was a remedial provision and its application was not confined to accessories who had "contravened the primary proscription". He held that s 1324(1) did not use the expression "involved in a contravention", unlike s 79, and that other provisions of the Corporations Act used that expression:
to establish a means of civil recovery when being involved in a contravention is not itself a contravention of the primary proscription (for example, ss 670E, 1022B, 1041I, 1043L and 1073D) and to authorise the making of other forms of remedial orders in like circumstances (for example, ss 920A, 1324B and 1325). These circumstances do not depend upon the accessory being liable as a contravenor of the primary provision. Indeed, if they did, the very wording would be unnecessary. (emphasis added)
133 His Honour identified three elements necessary to establish a contravention of s 727(1), namely, first, the principal made, or distributed, an application form for an offer of securities, secondly, the offer needed disclosure to investors under Pt 6D.2 and, thirdly, a disclosure document for the offer had not been lodged with ASIC. He held that the principal had to negative the second element. His Honour did not identify separately the mental elements necessary to establish a contravention of s 727(1).
134 The primary judge found that the relevant principles governing accessorial liability (citing Giorgianni v The Queen (1985) 156 CLR 473 and Yorke v Lucas (1985) 158 CLR 661) were as follows:
(a) in order for a person to be knowingly concerned in a statutory contravention, the person must have been an intentional participant, with knowledge of the essential elements constituting the contravention;
(b) it is not necessary that a person with knowledge of the essential elements making up the contravention also know that those elements do amount to a contravention;
(c) actual knowledge of the essential elements constituting the contravention is required, but, imputed or constructive knowledge is insufficient.
135 His Honour considered whether, having regard to s 706, ASIC had to prove that, for an accessory to be liable, the accessory had to know that, first, no exemption to ss 708 and 708AA applied to the offer and, secondly, that the offer needed disclosure to investors under Pt 6D.2. He concluded that ASIC did not have to establish that the alleged accessory knew that none of the exemptions in ss 708 and 708AA was applicable to the offer. Next, he considered the decision of the Full Court in Rafferty v Madgwicks (2012) 203 FCR 1. That case concerned what intention an alleged accessory had to have in order to be found liable for being knowingly concerned in a contravention of s 51AD of the Trade Practices Act 1974 (Cth), which provided that a "corporation must not, in trade or commerce, contravene an applicable industry code". The Franchising Code of Conduct (Cth) was such a code. The Full Court held that it was not necessary for the alleged accessory to know that the Franchising Code applied to two agreements that contravened s 51AD in order to be found liable. They held that the alleged accessory had only to know that the agreements were franchising agreements to be liable under s 51AD on the basis of being knowingly concerned in a principal's contravention of the Franchising Code. Here, the primary judge concluded that ASIC did not have to prove that the alleged accessory knew that an offer needed disclosure under Pt 6D.2 in order to establish that the accessory was knowingly involved in a principal's contravention of s 727. That was because he found that Rafferty 203 FCR 1 was "relevantly indistinguishable". However, he did so after first observing that:
there is some incongruity in holding that a contravention of s 727(1) by a primary contravenor involves three elements and that an accessory must have knowledge of each but then concluding that knowledge of only two will be sufficient. This seeming incongruity is not resolved by reference to the principle that it is not necessary for an accessory to know that the conduct in question amounts to a statutory contravention.
136 The primary judge found, and made declarations when granting relief (as further explained below), that Mrs Gore was knowingly concerned in two contraventions of each of:
s 727(1) and (2), during the period commencing no later than 13 March 2012 and concluding on or about 23 April 2012, by, first, Mr Burrows and SPG and, secondly, ActiveSuper, Royale, Mr Gibson and Cayco. The contraventions were, in the case of Mr Burrows and SPG, the making of offers and, in both cases, the distributing of application forms for offers of securities, namely shares in SPG, when such offers required disclosure to investors under Pt 6.2D of the Corporations Act and no disclosure document had been lodged with ASIC (Orders 3 and 4);
s 1041H of the Corporations Act and s 12DA of the ASIC Act, during the period commencing no later than 25 March 2012 and concluding on or about 12 June 2012, by each of ActiveSuper, Royale, Mr Burrows, Mr Gibson, SPG and Cayco. That contravention was engaging in conduct that was misleading or deceptive or likely to mislead or deceive by making a representation that moneys invested by Australian SMSFs pursuant to the SPG PPM, in the future would be used by SPG for the purchase of property (Order 16).
137 His Honour made corresponding declarations of Mrs Gore's accessorial contraventions in respect of WPO for the period commencing no later than 25 March 2012 and concluding on or about 12 June 2012 (Orders 5, 6 and 17).
138 Mrs Gore did not contend on this appeal that his Honour erred in making those declarations about the principal contravenors. His Honour found, and Mrs Gore did not dispute, that she knew at the relevant times that offers for shares in SPG and WPO were being made and application forms for those offers were being distributed. However, she challenged his Honour's findings that, first, she had played an active role in the development of the two PPMs and the establishment of the Cayco website and, secondly, that she had familiarised herself with the elements of the BVI scheme and knew that the PPMs were to be provided to investors.
139 His Honour found that Mrs Gore had seen the final version of the SPG PPM (which was not in issue) and she had been provided with copies of drafts of the WPO PPM on 12 December 2011, 17 and 18 March 2012 (which was also not in issue), as well as having been copied in on emails dealing with the finalisation of that document and others associated with it. His Honour found that the final version of the WPO PPM was not relevantly different from the drafts copied to Mrs Gore on 17 and 18 March 2012.
140 Next, his Honour found in relation to the s 727 contraventions:
Ms Gore's involvement in the establishment of SPG and WPO was so extensive that she must, as a matter of fact, have known that neither document was lodged with ASIC. I reach that finding having regard to the Briginshaw standard of proof. I consider it highly probable that Ms Gore had learnt from Mr Gore or others that a principal purpose for the establishment of the funds in the BVI was to avoid compliance with the Australian regulatory regime. That is especially so given the express statements in the SPG PPM that the fund's shares would not be registered under the United States Securities Act 1933 and that distribution to persons in the United Kingdom was restricted without there being any reference to the counterpart position in Australia. Given the close review of the PPMs which Mr Gore required of Ms Gore, it is improbable that the possible relevance of the Australian regulatory regime escaped her attention. This is especially so given the care and attention she evidenced by travelling personally to the BVI to obtain assurance about the implementation of the scheme. The plain intention to market the funds to SMSF investors in Australia makes it probable that Ms Gore must have considered whether or not the funds were to be "registered" in Australia and that she had been told that the documents were not to be so "registered". This inference can be drawn with greater confidence given Ms Gore's absence from the witness box, despite her being in the courtroom for the greater part of the trial: Jones v Dunkel (1959) 101 CLR 298 at 308; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11, (2011) 243 CLR 361 at [63]-[64].
However, I would not have been prepared to make a finding that Ms Gore knew that the offers did require a disclosure under Pt 6D.2 of the Corporations Act, had it been necessary to do so. The evidence is not sufficient to support that inference, especially having regard to the Briginshaw standard. (emphasis added)
141 Finally, his Honour found in relation to Mrs Gore's being knowingly concerned in the principals' contraventions of s 1041H:
I am also satisfied that Ms Gore had the requisite knowledge. She had been actively involved in the preparation and finalisation of the PPMs, and the development of the Cayco website on which the PPMs were published. Ms Gore knew that the monies raised pursuant to the PPMs were being advanced to MOGS and disbursed at its discretion. She gave some of the directions with respect to that disbursal. A very strong inference arises from the evidence that Ms Gore knew at relevant times that the monies were not to be invested in real estate. Amongst other things, Ms Gore had executed in December 2011 loan agreements relating to the provision of funds to MOGS. Ms Gore was also a signatory to the loan agreements entered into on 10 May 2012 providing for the advance of monies to MOGS.
The inference that Ms Gore had the relevant knowledge can be drawn with even more confidence by reason of the Jones v Dunkel inference arising from her failure to give evidence. (emphasis added)
142 The primary judge found that Mr Stonehouse was not involved "in an active way" in establishing SPG or WPO or in developing their PPMs. His Honour found that, while Mr Stonehouse knew that shares in SPG and WPO were being offered to Australian SMSF investors, because of the limited nature of his involvement he did not have actual knowledge that each PPM had not been lodged with ASIC. As with Mrs Gore, his Honour was not satisfied that Mr Stonehouse knew that the offers required disclosure under Pt 6D.2 of the Act. He also found that there was no evidence that Mr Stonehouse had ever been provided with a draft or copy of the SPG PPM.
143 His Honour found that while Mr Stonehouse had been provided with early drafts of the WPO PPM in October and December 2011, the final version of that document was significantly different from those drafts. Accordingly, the primary judge was not satisfied that the early drafts of the WPO PPM, that Mr Stonehouse had received, contained the misleading representation as to the use of the money to be raised that was conveyed in the final WPO PPM. And he found that there was no evidence that Mr Stonehouse had ever been provided with a draft or final version of the SPG PPM. His Honour found that Mr Stonehouse had a general knowledge of what the BVI scheme involved, including in relation to SPG and WPO. However, his Honour was not satisfied that ASIC had proved that Mr Stonehouse knew that the PPMs contained the misleading representation.
144 His Honour found that the contraventions of ss 727, 1041H of the Corporations Act and s 12DA of the ASIC Act that Mrs Gore had committed were serious. He found that she had been a significant participant in the establishment and development of the BVI scheme and was a personal beneficiary of it. He found that her involvement in those contraventions had had a detrimental effect on a large number of SMSF investors, including those with limited savings, whose investments appeared to have been wholly lost. The primary judge determined that there was a real chance that Mrs Gore would engage in similar forms of activity in the future if she were not restrained by injunction from doing so.