In the matter of Idylic Solutions Pty Ltd - Australian Securities and... [2013] NSWSC 106 | Case summary

Supreme Court of NSW|2012-12-17|Before: Ward JA, Commn J

Background 14The events leading up to the proceedings are set out in detail in my principal reasons for judgment and are not repeated here. In these reasons I have adopted the same definitions and abbreviations as those used in my principal reasons. The relevant contravening conduct of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs is set out later in these reasons. By way of brief introduction, however, I note as follows. 15From around 2002, Mr Hobbs promoted in Australia (through FTC and the FTC executives) individual "white label" or generic investment funds that constituted a financial product for which an Australian financial services licence was required. No such licence was held by anyone involved in the operation of the schemes. As a consequence, there was a breach of s 911A of the Corporations Act by Mr Hobbs (as well as a breach by him in his capacity as a de facto director of FTC and shadow director of the relevant corporate administrators, Mr Hobbs having caused or permitted the respective corporations similarly to contravene s 911A of the Act). The financial services in question related to the marketing of the respective individual investment funds through a combination of the sale of FTC subscriptions and the OEM/KLM process. This led to the making of offers and issue of unit certificates, or the confirmation of investments, in this jurisdiction (albeit generally in the name of an IBC that was registered offshore). (There were similar contraventions by Mr Collard and Ms Wu.) 16There was also a breach of s 601ED(5) of the Corporations Act by Mr Hobbs (and others) by reason of the operation within this jurisdiction of the Hobbs Scheme (that scheme comprising the individual managed investment schemes and the process in which FTC and OEM/KLM were engaged in promoting and marketing the individual schemes); the Hobbs Scheme being an unregistered managed investment scheme within the meaning of the Act. 17ASIC established numerous contraventions by each of Mr Hobbs and Mr Collard relating to the making of misrepresentations as to the Hobbs Scheme to potential investors (including misrepresentations specific to one or more of the individual investment schemes); and breaches by them of breaches of duties owed under s 180 and 181 of the Corporations Act (having caused or permitted similar representation contraventions by the corporate administrators to whom such duties were owed); and breaches of s 182 of the Corporations Act in relation to benefits obtained by improper use of their position as directors or officers of various of the corporate administrators to the detriment of the relevant companies. 18Similar contraventions of ss 911A and 601ED(5) and similar representation contraventions in relation to particular investment schemes were found to have been committed by each of Ms Li, Mr Koutsoukos, Mr Wood and Mr Truong (though these findings were relevant only insofar as they were necessary to establish the liability of others in respect of those contraventions, since the proceedings had either been stayed or discontinued against those defendants). 19ASIC established a lesser number of contraventions of one or more of the same statutory provisions by each of Ms Wu (an officer or de facto officer of two of the corporate administrators, Barclaywest and 888 Vanuatu) and Mrs Hobbs (Mr Hobbs' wife and a de facto director or officer of another corporate administrator, Geneva Financial). 20Contraventions were also established of s 911A of the Corporations Act by each of the remaining defendants (being the corporate administrators of the various investment funds), though only ISPL and North Wave were still registered as at the time of the hearing. Relief sought 21In broad terms, the relief that ASIC has sought encompasses: declarations as to the various contraventions as well as disqualification or banning orders restraining particular defendants (Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs) from a range of conduct (operating or promoting the Hobbs Scheme, or any of the individual schemes comprised within that scheme, or any managed investment scheme (registered or unregistered); managing corporations and providing financial services) for various periods (ranging from permanent disqualification to disqualification for a specified period of time); pecuniary penalty orders (pursuant to s 1317G of the Corporations Act) against each of Mr Hobbs, Mr Collard and Mrs Hobbs (not Ms Wu); the winding up of the Hobbs Scheme (and those of the individual schemes comprised therein that have not already been the subject of winding up orders); the appointment of a receiver to any assets located in this jurisdiction of Mr and Mrs Hobbs (in order to investigate whether there are any such assets that were derived from the individual schemes and to the assets of Ms Wu); and costs. 22Consequential orders are sought as to the discharge of various asset preservation and related orders made (and the release from certain undertakings given) during the course of the proceedings; as well as orders to preclude any later revival by the individual defendants of the now deregistered corporate defendants and orders for the discontinuance of the proceedings against those deregistered corporate defendants. 23ASIC seeks that the proceedings remain stayed (presumably indefinitely) as against the second defendant (Ms Li), who is presently in prison in China, so as to be able to rely on the commencement of these proceedings against her within the relevant limitations period(s) should ASIC later be in a position (and consider it appropriate to do so) to press the claims made against her. Relevant Legal Principles 24I set out first the relevant legal principles to be applied when determining whether to grant declaratory relief and to impose disqualification orders and pecuniary penalties before turning to the submissions made as to the relief to be granted in the present case. (i) Declaratory relief 25Section s 1317E of the Corporations Act requires the court to make a declaration of contravention if satisfied (as is the case here) that a person has contravened a civil penalty provision, specifying, among other things, the civil penalty provision that was contravened, the person who contravened the provision, the conduct that constituted the contravention and the corporation to which the conduct related (s 1317E(2)). 26There is no element of discretion in the grant of declaratory relief of this kind. To the extent that the declarations sought by ASIC go beyond those mandated by s 1317E, however, the making of such orders is a matter within the discretion of the court. 27There is no doubt that the court has a wide discretion to grant declaratory relief (Hanson v Radcliffe UDC [1922] 2 Ch 490, at 507; Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421, at 438; Ibeneweka v Egbuna [1964] 1 WLR 219, at 225; Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257; Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10; (1992) 175 CLR 564, at 581, per Mason CJ, Dawson, Toohey and Gaudron JJ; Oil Basins Ltd v Commonwealth (1993) 178 CLR 643 at 649; 117 ALR 338 per Dawson J). In Ainsworth, the plurality (adopting the language of that in Forster v Jododex) said that it was neither possible nor desirable to fetter the inherent discretionary power of superior courts to grant declaratory relief by laying down rules as to the manner of its exercise. 28In Forster v Jododex, it was said that it was necessary that there be a real and not a theoretical question before the Court; that the person raising it must have a real interest to raise it and that there must be someone presently existing who has a true interest to oppose the declaration sought (as judicial pronouncements ought not to be issued unless there are circumstances that call for their making) (at 435-436). Those principles were included with approval in the summary of relevant principles by Lockhart J (with whom Spender and Cooper JJ agreed) in Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663 at 670-671. 29In the present case, the declaratory relief that is sought as a matter of the Court's discretion (i.e. not the declaratory relief that is mandated by s 1317E) does not involve the determination of abstract or hypothetical questions. Where the declaratory relief is directed to conduct of defendants against whom no substantive relief is now sought (such as those against whom the proceedings have been discontinued or stayed) or which are no longer in existence (being deregistered companies), the declarations go to matters relevant to the determination of claims against other defendants which are productive of real consequences for the parties. 30ASIC seeks that further declaratory relief on the basis that, as a regulator exercising its statutory function, it has a real interest in obtaining such relief (referring to the recognition of the regulator's interest therein in Australian Securities & Investments Commission v West [2008] SASC 111 at [207] and Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43 at [271]). Reference was also made to the recognition in Australian Securities & Investments Commission v McDougall (2006) 229 ALR 158 at [55] (the court there citing Australian Softwood Forest Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121 at 125) that the seeking of declarations by regulators serves important law enforcement purposes. 31Insofar as the requirement that there be a proper contradictor to the grant of declaratory relief (Forster v Jododex; Russian Commercial and Industrial Bank [1921] 2 AC 438 at 448; Ainsworth; Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596), in the sense of someone presently existing who has a true interest to oppose the declaration sought is concerned, it is not necessary that the contradictor actually oppose the declaratory relief sought (ACCC v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378; ACCC v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 at [44]). 32In the present case, the allegations as to the various contraventions were opposed throughout the proceedings by Mr and Mrs Hobbs (and, at the close of the hearing, to some extent in the submissions pressed on behalf of Ms Wu). (Though Mr Hobbs was ultimately prepared, as his alternative position, to accept that certain findings of contravention could be made against the various corporate/scheme administrators, Mrs Hobbs continued to press her defence of those allegations against her.) Furthermore, Mr Collard (though entering a submitting appearance in April 2012) was personally in attendance throughout most of the hearing and was in the position of someone with a true interest in opposing the claims against him (as evident by his attempt, albeit unsuccessful, at a late stage of the hearing to withdraw his submitting appearance and reinstate his earlier defence). 33As to the utility of the declaratory relief sought, ASIC concedes that ordinarily the court will not grant declarations that are of little or no utility but refers to Transphere (at 608) for the proposition that, even if the declaratory relief may have only slight utility, the public interest in determining and declaring a contravention of statutory provisions is an appropriate basis for such relief. Although one way that utility may be measured is in terms of the effectiveness of the declaratory relief in quelling the dispute between the parties and preventing further litigation (Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075, at [28] per Brereton J), this is not determinative of the exercise of the court's discretion. 34Mr Halley SC (Senior Counsel appearing for ASIC with Mr Clarke of Counsel at both the hearing and the penalties hearing) submits that there is a public interest in the making of declarations of contravention of the kind now sought on the following five bases. 35First, that this is an appropriate means by which to record the Court's disapproval of the contravening conduct (as was recognised in McDougall at [55]). Second, that this will vindicate ASIC's claim as to the commission of the contraventions in question and may assist ASIC in carrying out its statutory duties and functions as regulator (including as a means of deterrence) (reference there being made to Australian Lending Centre at [272]). Third, that this may assist in clarifying the law (as recognised in Australian Lending Centre at [272])). Fourth, that significant contraventions of law may be exposed through the regulator bringing the decision to the community's attention (Australian Competition and Consumer Commission v Ozdirect Online Brands Pty Ltd [2009] FCA 1604 at [53]). Fifth, that this may serve to warn others of the dangers from the contravening conduct (Australian Competition and Consumer Commission v 1MB Group Pty Ltd (1999) ATPR 41-688, [1999] FCA 313 at [21]), particularly where (as here) the contravening conduct was directed to a large section of the public over a significant period of time. 36Each of those submissions has force in the present case having regard to: the scope (and seriousness) of the conduct comprising the contraventions; the section of the public to whom that conduct was quite clearly directed (financially unsophisticated investors targeted by word of mouth or through relatives and friends of Scheme administrators to whom the prospect of a significant return on their investment would (as Mr Hobbs well appreciated) be likely to prove highly attractive and many of whom (at least in the Li/Collard Schemes) spoke little or no English and hence were unlikely to be in a position to understand the documentation in relation to the investments without assistance); the manner in which at least some of the investment documentation was executed (giving investors little or no opportunity to absorb, or obtain legal or other advice as to, the information provided in the scheme memoranda); the fact that two of the schemes were expressly directed to the investment of superannuation funds; and in circumstances where, in the context of the disqualification orders that have been sought, Mr Halley has drawn to my attention some legal issues on which it appears clarification may be useful. 37ASIC accepts (as recognised in Transphere at 608) that a legitimate and powerful factor against the grant of declaratory relief would be the possibility of embarrassment in a practical sense to a non-party. It is not suggested that the making of the declarations sought in the present case would give rise to such a risk. While I accept that the making of declarations extending the conduct of Ms Li (who has not been in a position to defend the allegations against her), may give rise to some embarrassment, no issue estoppel would arise to preclude a later defence by her of the allegations and it does not seem to me that the making of the declarations is likely to lead to any embarrassment beyond that which would already have arisen by the making of the findings already made in my principal judgment. As to the position of Messrs Koutsoukos, Wood and Truong, in respect of whom these proceedings were discontinued in circumstances where criminal proceedings had been instituted against them, they gave evidence voluntarily in ASIC's case. It was not suggested that the making of declarations relating to their conduct in the present proceedings should be avoided having regard to the existence of those criminal proceedings (the present status of which I am unaware). 38The declarations sought by ASIC have been framed in accordance with the approach adopted by Brereton J in Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373. There, where there had been contraventions of various civil penalty provisions (and both declaratory relief and pecuniary penalties were sought against some of the defendants), his Honour noted that it would generally be inappropriate to make declarations of contravention that treated the relevant course of conduct of the defendants as directors of the relevant group over the whole period of the operation of the schemes both as a single contravention of s 180 and then as another contravention of s 181 ([146]). 39In Maxwell, his Honour was of the view that, generally, there should be a separate declaration of contravention in respect of each act or default (though noting that in the circumstances of the case before him it did not operate to the prejudice of the defendants to treat as one contravention what may have been multiple contraventions). His Honour went on at [148] to say: ... the same conduct should be treated as constituting one contravention only, and not separate contraventions of ss 180 and 181. Sections 180, 181 and 182 of the Corporations Act are intended to give statutory recognition to the general law duties of company directors, and to make available additional sanctions for their breach, but not to create a regime of multiple jeopardy. The same conduct may constitute a breach of the duty to act in good faith as well as of the duty of care and diligence. At general law, what mattered was that the conduct was in breach of a director's duties; and although the same conduct might have been characterised as a breach of more than one of those duties, it constituted only a single breach. Bearing in mind that at least ss 181 and 182 have criminal as well as civil sanctions, and on well-established principles, the same conduct should be penalised only once. I have addressed this by consolidating the proposed declarations of contravention of the different sections into one declaration of contravention. (my emphasis) 40I have adopted that approach in the present case. (ii) Disqualification orders (from managing corporations) sought under ss 206C and 206E 41Insofar as orders are sought against various defendants to disqualify them from managing corporations (either for a period of time or, in the case of Mr Hobbs and Mr Collard, permanently), ASIC invokes the powers conferred by ss 206C and 206E of the Corporations Act. Those sections are as follows: 206C Court power of disqualification - contravention of civil penalty provision (1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: (a) a declaration is made under section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. 206E Court power of disqualification - repeated contraventions of Act (1) On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if: (a) the person: (i) has at least twice been an officer of a body corporate that has contravened this Act while they were an officer of the body corporate and each time the person has failed to take reasonable steps to prevent the contravention; or (ii) has at least twice contravened this Act while they were an officer of a body corporate; or (iii) has been an officer of a body corporate and has done something that would have contravened subsection 180(1) or section 181 if the body corporate had been a corporation; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. 42The power conferred by s 206C of the Corporations Act is thus predicated on the making of a declaration, pursuant to s 1317E of the Act, of contravention by the relevant defendant of a civil penalty provision and the court being satisfied that the disqualification is justified. As already noted, the making of such declarations is mandated by s 1317E where a contravention of such a provision has been found. Since declarations of that kind will now be made, the relevant threshold question is as to whether in the present case the disqualification is "justified". 43The power pursuant to s 206E of the Corporations Act to make such a disqualification order arises where, relevantly, the person has at least twice been an officer of a body corporate that has contravened the Corporations Act (this not being limited to a contravention of a civil penalty provision) and has each time failed to take reasonable steps to prevent the contravention (my emphasis) or the person has, while an officer of the corporation, at least twice contravened the Corporations Act (again, not limited to contravention of civil penalty provisions). Again, it is necessary that the court be satisfied that the disqualification is "justified". 44In Gillfillan v ASIC [2012] NSWCA 370, Sackville AJA noted, at [193], that insofar as s 206C of the Corporations Act empowers the court to disqualify a person from managing a corporation for a period only if it is satisfied that "the disqualification is justified", this means that the court must be satisfied not only that an order for disqualification should be made against the contravenor, but also that the period of disqualification is "justified". 45The reference in ss 206C and 206E to disqualification "for a period that the court considers appropriate" encompasses the making of an order for permanent disqualification (Australian Securities and Investments Commission v Elm Financial Services Pty Ltd (2005) 55 ACSR 544; [2005] NSWSC 1065; Australian Securities and Investments Commission v White (2006) 58 ACSR 261; [2006] VSC 239). 46Here, there have been multiple contraventions by each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs (while directors or officers of different companies) of various provisions of the Corporations Act (satisfying the requirement set out in s 206E(1)(ii)). In addition, s 206E(1)(i) has been satisfied as each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs, in their respective capacities as de facto or shadow directors or officers (in the case of Ms Wu, she was an officer not a director); have at least twice been officers of companies who have contravened the Act and, far from taking reasonable steps to prevent those contraventions by the respective corporations, the individual defendants each played a role in causing or facilitating the contraventions. 47In determining whether disqualification is justified for the purposes of ss 206C and 206E, regard may be had to the person's conduct in the management, business or property of any corporation (not just the corporation committing the contravention (ss 206C(2) and 206E(2)). 48In Gillfillan, it had been submitted that the primary judge had erred (when imposing particular periods of disqualification for non-executive directors of the company), by commencing the analysis required by s 206C(2) of the Corporations Act not by a consideration as to whether disqualification was justified having regard to the individual director's conduct in relation to the management, business or property of any corporation and other appropriate matters but, instead, by comparison with the period of disqualification attributed to another defendant (that then being discounted by applying the parity principle). That approach was found to be in error, not because regard had been had to the penalties to be imposed on other contraveners, but by reference to the manner in which that process of comparison had been carried out. At [194]-[195], Sackville AJA said: The language of s 206C(2) of the Corporations Act gives the court broad scope in determining the matters to take into account in deciding whether a period of disqualification is appropriate for a contravention of the legislation. As the propositions stated by Santow J in ASIC v Adler recognise, the nature of the contravention and its seriousness are critical considerations. But they are not the only relevant matters. The terms of s 206C(2) are wide enough to permit the court to have regard to penalties imposed or to be imposed on other contravenors whose contraventions are the same or at least very similar. However, if the penalty imposed on one contravenor is to be regarded as the yardstick for the penalty to be imposed on another contravenor, care must be taken to identify the points of similarity and difference. If identical penalties are to be imposed, attention should be directed to whether the contravenor's circumstances warrant equal treatment. If the penalty imposed on one contravenor is taken as a comparator for the penalty to be imposed on another contravenor, but adjustments are thought to be necessary, the circumstances that justify and explain the differential treatment should be identified. (my emphasis) 49When Sackville AJA came to approach that exercise afresh, his Honour commenced by first considering the examination of the nature and seriousness of the particular contravening conduct. 50The seriousness of the contravention is to be determined by reference to the degree by which the officer of the relevant corporation has departed from the requisite standard of care and diligence and the potential or actual consequences of the contravention(s) (Vines v ASIC, per Ipp JA (at [229])). 51The importance of general deterrence and the need to uphold proper standards of corporate behaviour are factors in determining whether a disqualification should be imposed and, if so, for what period (in Gillfillan, at [183]; see also Australian Securities and Investments Commission v Beekink (2007) 238 ALR 595 at [83]; Australian Securities and Investments Commission v MacDonald (No 12) (2009) 73 ACSR 638). It is recognised that disqualification itself has a punitive effect and that retribution is one of the objectives of such a provision (Australian Securities and Investments Commission v Forge [2007] NSWSC 1489; Macdonald; Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 at [35]). It is necessary to balance the objectives of general and specific deterrence with the need not unfairly to disadvantage the penalised person or to impose a penalty so large as to overreach what is the necessary object of such an order. Thus, hardship is a relevant factor in determining penalty though it plays a lesser role than that of deterrence (Forem-Freeway, Middleton J at 349-50) citing NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285; Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1996) 23 ACSR 743 at 752 per Merkel J). 52Where, as here, both pecuniary penalties and disqualification orders are sought, the approach by the court should be to consider the issue of disqualification before that of pecuniary penalty. McHugh J in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [48] (having referred to the Explanatory Paper accompanying the first draft of the Corporate Law Reform Bill 1992 in relation to the predecessors to ss 206C and 206E) said: It is expected that in settling an appropriate [civil penalty] order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant's conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. (my emphasis) (See also Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 at [101]; (2011) 284 ALR 734; Australian Securities and Investments Commission v Soust (No 2) [2010] FCA 388 at [20].) 53McHugh J went on to refer to an expectation that the Court would consider imposing a pecuniary penalty only where a disqualification order would provide an inadequate or inappropriate remedy. That said, there is no doubt that the seriousness of the relevant contravention(s) may warrant the imposition in an appropriate case of a pecuniary penalty in addition to a disqualification order. At [330] in Gillfillan, Sackville AJA said: I accept that a pecuniary penalty should be imposed on the appellants only if an order for disqualification is an inadequate or inappropriate remedy: CA Penalty Judgment, at [131], per curiam. However, I think that the seriousness of each contravention warrants an additional pecuniary penalty, even if of a relatively modest amount. While the appellants have correctly submitted that a pecuniary penalty is not required in the interests of personal deterrence, it is necessary to take into account the objective of general deterrence and the need for the court to match the disapproval of conduct involving such a marked departure from the standards to be expected of directors of public companies. (my emphasis) 54The principles and factors to be taken into account by the court in exercising the power of disqualification in the context of the management of corporations were set out by Santow J, as his Honour then was, in ASIC v Adler (No 5) (2002) 42 ACSR 80 (a judgment described by McHugh J in Rich at [48]-[49]) as the leading authority on the reasons for the exercise of the power of disqualification under ss 206C and 206D). (As will be seen below, it is also the yardstick by which disqualification orders under other provisions have been considered by later Tribunals and by this Court.) 55Though these principles have been widely reproduced (and applied) in other cases (see, for example, the authorities listed in Austin and Black's Annotations to the Corporations Act at [2D.206C]), it is useful to set out in full the relevant passage (at [56]) from Santow J's judgment in Adler (since ASIC's submissions are directed to the factors recognised as leading to the varying disqualification periods referred to in that judgment and it may assist the self-represented defendants in this case to understand the way in which those factors have been found to apply to them). Nevertheless, the principles summarised by Santow J are guidelines only; each case turning upon its own considerations (Beekink). In Forge, White J (noting at [106] that Santow J had not purported to lay down three separate and water-tight categories of case leading to disqualification orders) considered that there would inevitably be cases where the appropriate period of disqualification would fall outside any of the periods considered in Adler. 56At [56] in Adler, Santow J noted that his review of the cases on disqualification revealed the making of such orders for periods ranging from life disqualification to three years and went on to say: The propositions that may be derived from these cases include: (i) Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards: Australian Securities and Investments Commission v Hutchings (2001) 38 ACSR 387 at 395 Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 349-50 Australian Securities Commission v Donovan (1998) 28 ACSR 583 at 602 Australian Securities Commission v Roussi (1999) 32 ACSR 568 at 570-1 Re Strikers Management Pty Ltd; Australian Securities Commission v Dimitri (unreported, Fed C of A, Burchett J, No NG 3789 of 1996, 7 May 1997, BC9702133) Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1997) 23 ACSR 743 at 751. (ii) The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office: Australian Securities Commission v Roussi, above, at 570; Re Gold Coast Holdings Pty Ltd; Australian Securities and Investments Commission v Papotto (2000) 35 ACSR 107 at 112. (iii) Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors: Australian Securities Commission v Roussi at 570; Re Gold Coast Holdings Pty Ltd, above, at 112; Re Tasmanian Spastics Association, above, at 751. (iv) The banning order is protective against present and future misuse of the corporate structure: Australian Securities Commission v Donovan, above, at 603. (v) The order has a motive of personal deterrence, though it is not punitive: Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203 at 205; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd, above; Australian Securities Commission v Donovan at 607; Re Tasmanian Spastics Association at 751;42 ACSR 80 at 98. As Austin J noted in Australian Securities and Investments Commission v Vines [2006] NSWSC 760; (2006) 58 ACSR 298 at [35]-[36], this proposition must be read as subject to what was said in Rich v ASIC (infra) such that a disqualification order should now be regarded as involving the imposition of a penalty. (vi) The objects of general deterrence are also sought to be achieved: Australian Securities Commission v Donovan at 602. (vii) In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company: Australian Securities Commission v Donovan at 607. (viii) Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty: Australian Securities Commission v Donovan at 605-7. (ix) In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public: Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd; Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355 at 386; Australian Securities Commission v Forem-Freeway Enterprises; Australian Securities Commission v Roussi at 570-1. (x) It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct: Australian Securities Commission v Donovan at 607; Australian Securities and Investments Commission v Parkes, above, at 386. (xi) A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming: Australian Securities Commission v Forem-Freeway Enterprises at 351. (xii) The eight criteria to govern the exercise of the court's powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess: · character of the offenders; · nature of the breaches; · structure of the companies and the nature of their business; · interests of shareholders, creditors and employees; · risks to others from the continuation of offenders as company directors; · honesty and competence of offenders; · hardship to offenders and their personal and commercial interests; and · offenders' appreciation that future breaches could result in future proceedings. Australian Securities Commission v Roussi at 570-1; Re Gold Coast Holdings Pty Ltd at 111; (xiii) Factors which lead to the imposition of the longest periods of disqualification (that is disqualifications of 25 years or more) were: · large financial losses; · high propensity that defendants may engage in similar activities or conduct; · activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy; · lack of contrition or remorse; · disregard for law and compliance with corporate regulations; · dishonesty and intent to defraud; · previous convictions and contraventions for similar activities. Australian Securities and Investments Commission v Hutchings; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd; Australian Securities Commission v Parkes; (xiv) In cases in which the period of disqualification ranged from 7-12 years, the factors evident and which lead to the conclusion that these cases were serious though not "worst cases", included: · serious incompetence and irresponsibility; · substantial loss; · defendants had engaged in deliberate courses of conduct to enrich themselves at others' expense, but with lesser degrees of dishonesty; · continued, knowing and wilful contraventions of the law and disregard for legal obligations; · lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform; Australian Securities Commission v Forem-Freeway Enterprises; Australian Securities Commission v Donovan; Australian Securities Commission v Roussi; Re Strikers Management Pty Ltd; Re Gold Coast Holdings Pty Ltd. The difficulty with Roussi's case is that disqualification for 10 years was ordered, as this was the period of disqualification that the ASC had sought. Had a longer period been applied for, Einfeld J may have considered giving a longer period: Australian Securities Commission v Roussi at 571; (xv) The factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were: · although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated; · the defendants had no immediate or discernible future intention to hold a position as manager of a company; · in Donovan's case, the respondent had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings; Australian Securities Commission v Donovan; Re Tasmanian Spastics Association. 57In Vines, Austin J (having had regard to the above principles) summarised afresh the factors to be taken into account in determining the period of disqualification for managing corporations (at [43]) as including: whether the defendant now is or will in the future be a fit and proper person to manage corporations; the size of any losses suffered by the corporation, its creditors and consumers; the legislative objectives of personal and general deterrence; contrition on the part of the defendant; the gravity of the misconduct; the defendant's previous good character; prejudice to the defendant's business interests; personal hardship; and the willingness of the defendant to render assistance to statutory authorities and administrators. (iii) Disqualification orders (from other conduct, including the provision of financial services) sought under ss 1101B and 1324 58As well as orders disqualifying the particular defendants from managing corporations, disqualification orders are sought by ASIC against those same defendants to restrain them from carrying on a business in relation to financial products or financial services, or from being involved in the carrying on of a financial services business by someone else, or from the promotion, establishment or carrying on of the business of a registered managed investment scheme (again such orders are variously sought ranging from orders on a permanent basis to those for a period of years). I refer to disqualification orders in respect of conduct of this kind collectively as financial services disqualification orders. Section 1101B 59Section 1101B appears under the heading "Power of Court to make certain orders". Sub-section (1) commences with the sub-heading "Court's power to make orders in relation to certain contraventions" (my emphasis). Under this provision the court is empowered, on the application of ASIC, to make such orders as it considers fit where it appears to the court, relevantly, that a person (a)(i) has contravened a provision of this Chapter [7], or any other law relating to dealing in financial products or providing financial services; ... 60The term "dealing" (relevant when considering what is encompassed by the reference in (a)(i) to an "other law relating to dealing in financial products") for the purposes of Chapter 7 of the Act is defined in s 9 as including conduct of the following kind: (1)(a) applying for or acquiring a financial product; (b) issuing a financial product; (c) in relation to securities or managed investment interests, underwriting the securities or interests; (d) varying a financial product; (e) disposing of a financial product, and, in (2), arranging for a person to engage in such conduct unless the actions concerned amount to providing financial product advice. 61By way of (non-exhaustive) example of the orders that the court may make pursuant to s 1101B (and expressly without limiting sub-section (1)), sub-section 1101B(4) provides that the court may make: (a) 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: (i) a provision or provisions of this Chapter; or (ii) a provision or provisions of any other law relating to dealing in financial products or providing financial services;... 62Austin and Black (at [7.1101B]) note that injunctions have been granted under s 1101B (and its predecessors) restraining unlicensed persons from carrying out a financial services business and restraining the conduct of unregistered managed investment schemes (referring, by way of example, to various cases including McDougall and Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (ACN 106 761 826) (2006) 57 ACSR 553; [2006] VSC 192). 63There is no issue as to the court's power under s 1101B to make the financial services disqualification orders sought against Mr Hobbs and Mr Collard in light of their contraventions of ss 911A and of one or more of ss 1041E, 1041G and 1041H of the Corporations Act. Section 1324 64Section 1324(1) of the Corporations Act is a more general provision permitting the court to grant an injunction preventing a person from contravening the Act on such terms as the court thinks appropriate. It provides, relevantly, that: (1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: (a) a contravention of this Act; or (b) attempting to contravene this Act; or (c) aiding, abetting, counselling or procuring a person to contravene this Act; or (d) inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or (f) conspiring with others to contravene this Act; the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. ... (6) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised: (a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and (b) whether or not the person has previously engaged in conduct of that kind; and (c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind. (my emphasis) 65In Triton Underwriting Insurance Agency (2003) 48 ACSR 249 at [22]), the Court noted that the discretionary jurisdiction conferred by s 1324(1), to make orders where in the opinion of the court it is desirable to do so, turns upon an assessment by the court of the broad concept of what is "desirable". 66The jurisdiction which the court exercises under s 1324 is a statutory jurisdiction, (Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605) and hence the court is not confined by the considerations which would be applicable if it were exercising the traditional equity jurisdiction. Palmer J, in Mauer-Swisse, considering an application for an injunction in relation to a contravention of s 911A of the Act, referred to Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 and Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355, to the effect that s 1324 was drafted with the intent that a court should grant an injunction in circumstances where a court of equity would ordinarily have refused to grant such an injunction; the operative principle underlying s 1324 being for the remedies available to the court to be used in such a way that would serve some utility or purpose within the contemplation of the Corporations Act (such as protecting the community from a real risk of wrongdoing where a person has a propensity to contravene the Act or to mark the disapproval of the court and community with the actions of the defendant) (at [11]). 67That said, s 1324 does not displace the court's equitable jurisdiction (Mauer-Suisse; Parkes) and it has been said that equitable principles represent a sound basis for undertaking a preliminary assessment which should then be reviewed against the statutory role ASIC plays and the wider question of what is "desirable" in the statutory context (Triton Underwriting Insurance Agency at [25]; see also Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362; 20 ACLC 58 in the context of an application for an interlocutory injunction under that section). 68As to the general principles application where injunctive relief is sought under s 1324, Palmer J, in Mauer-Suisse, said (at [36]) in the context of an application for injunctive relief: - amongst the considerations which the Court must take into account in an application for an injunction under s.1324 CA are the wider issues referred to by Austin J in Sweeney and Parkes, and by Davies AJ in Pegasus; they may be gathered under the broad question whether the injunction would have some utility or would serve some purpose within the contemplation of the Corporations Act; (my emphasis) ... - where there is an appreciable - that is, not fanciful - risk of particular future contraventions of the Corporations Act by a defendant, it would serve a purpose within the contemplation of the Corporations Act that the Court grant not only a permanent injunction but, in an appropriate case, an interim injunction restraining such conduct. Section 1324 evinces an intention that the possibly severe consequences and the relative promptness of proceedings for contempt of Court be added to criminal prosecutions as a deterrent to contraventions of the Corporations Act (my emphasis) 69ASIC submits, and I accept, that the Corporations Act is concerned primarily with the protection of the public interest in the prevention of particular conduct (Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 at [109]) and that (as was recognised to be the position in relation to the former Trade Practices Act) the statutory jurisdiction to grant an injunction is essentially a public interest provision. Hence, considerations of public policy are relevant in the exercise of the discretion whether to grant such relief (as explained in ICI Australia Operations Pty Limited v TPC (1992) 38 FCR 248). 70In that regard, ASIC contends that it is appropriate for it, as regulator in the exercise of its statutory functions to take civil proceedings for declaratory and injunctive relief in respect of past events, even if there is no risk of repetition, where the outcome may establish that the conduct complained of was wrongful (and thereby mark the court's disapproval of that conduct) and may deter other wrongdoers (as was said to be the case in Sweeney at [35]). 71Two issues arise in considering ASIC's application for financial services disqualification orders (those being the issues on which it was suggested there was room for judicial clarification). First, there is a question as to the court's power to grant such relief under s 1324 of the Corporations Act (an issue that only has a critical impact in respect of the relief sought against Mrs Hobbs, since s 1101B is clearly an applicable source of power in the case of each of Mr Hobbs, Mr Collard and Ms Wu). Second, it was submitted that there is no authority that expressly addresses the question as to whether the principles identified in Adler in the context of determining orders for disqualification from managing corporations are applicable on an application for financial schemes disqualification orders. I consider each in turn.

Schedule of Representations 1The Scheme Representations (namely, the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim; the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, and the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs (himself or by one or more of Ms Li, Mr Collard, Ms Wu, Mr Koutsoukos, Mr Wood, Mr Truong and FTC) in the period from at least 2004 to 2008 to investors and potential investors in the Hobbs Scheme (through one or other of the individual managed investment schemes). Those representations were, in summary, that: (i) by investing in the Hobbs scheme (and further or alternatively each of the schemes), Mr Hobbs or persons or entities associated with Mr Hobbs could lawfully provide investors with access to offshore investment products and opportunities (the Lawful Investment Representation); (ii) there was no risk of investors losing the principal sum invested in the Hobbs scheme, and further or alternatively each of the schemes (the Principal Protected Representation); and (iii) each investor could generally expect to receive returns in the order of at least 3 to 4% per month on funds invested in the Hobbs Scheme, and further or alternatively each of the schemes (in the case of the Pinnacle Fund, the representation was as to a 30% annual rate of return, which would equate to approximately 2.5% per month (the Investment Returns Representation ). 2The Integrity Plus Representations (namely the Trading Representation, as defined in section 282(a) of the Third Further Amended Statement of Claim; the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim; and the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim) were made in Australia by each of Mr Hobbs and his agents, Mr Wood, Mr Truong, Mr Koutsoukos and PJCB, to potential investors in Integrity Plus in the period from 2004 to 2007. The Integrity Plus Representations were that: (i) the investor's funds would be traded in AA+ rated financial instruments (the Trading Representation); (ii) the capital of funds invested would be protected by US Treasuries (the Capital Protected Representation); (iii) once funds had been invested for at least 12 months, each investor would be able to redeem or withdraw the invested capital upon giving 60 days' notice (the Redemption Representation); and (iv) each investor would receive returns of approximately 4% per month on funds invested on a best efforts basis (the Returns Representation). 3The Super Save Representations (namely, the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim; the representation as to the investments into which investors' funds would be invested, as set out in declaration 13; the representation as to the various funds managers with whom investors' funds would be invested, as set out in declaration 14; the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim; the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim; and the Super Save Returns Representation, as defined in paragraph 285(f) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs, and his agents Mr Wood, Mr Truong, Mr Koutsoukos and ISL, to potential investors in Super Save in the period from 2006 to 2007. The Super Save Representations, apart from the Capital Protected and Redemption representations that were the same as set out above, were that: (i) investor's funds would be invested in AA+ rated financial instruments which were presold (the Investment Representation); (ii) the investor's funds would be invested in equities, currencies, options, factoring, the secondary life insurance market, futures and registered derivatives; (iii) the investor's funds would be invested with various fund managers such as Bond's Viatical Markets, Registered Derivatives, Factoring Funds and Company Debentures, Shares/Options, Initial Public Offerings, Unit Trusts and Currency Trading; (iv) each investor would receive returns of approximately 3.5% per month on funds invested on a best efforts basis (the Super Save Returns Representation). 4The Master Fund Representations (namely, the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim; the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim; and the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs and his agents, Ms Li and Mr Collard and Secured Bond, to potential investors in Master Fund in the period from 2003 to 2008 (and were the same in substance as those representations made to other investors as set out above). 5The First Secured Bond Unit Trust Representations (namely, the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim and the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs and his agents, Ms Li, Mr Collard and Secured Bond, to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004. The Returns Representation was as made to potential investors of other schemes and the substance of that representation has already been noted. The A+ Representation was to the effect that the investor's funds would be invested in A+ registered securities or the underwriting of those securities (the A+ Representation). 6The Profit Representations (namely the Integrity Plus Profits Representation, as defined in paragraph 292 of the Third Further Amended Statement of Claim; the Super Save Profits Representation, as defined in paragraph 293 of the Third Further Amended Statement of Claim; and the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim, were made by Mr Hobbs and various of his agents (as noted below) in Australia to potential investors of the three funds in question. 7The Integrity Profits Representation was made in the period from 4 April 2005 to 14 December 2007 by Mr Hobbs and his agents, Mr Truong, Mr Koutsoukos and PJCB, to investors in Integrity Plus that Integrity Plus was generating profits or sufficient profits to enable the returns each investor received by way of purported profit to be paid to them. 8Similarly, the Super Save Profits Representation (made on or about the dates on which returns were paid to investors - 12 February 2007, 21 to 25 May 2007, 4 June 2007, 20, 22 and 29 August 2007, 20 September 2007 and 22 November 2007) made by Mr Hobbs and his agents, Mr Wood, Mr Truong, Mr Koutsoukos and ISL, to investors in Super Save was that Super Save was generating profits or sufficient profits to enable the returns each investor received by way of purported profit to be paid to them. 9A similar representation was made in relation to the Master Fund (on or about each of 31 May 2005, 28 June 2005, 29 September 2005, 22 December 2005, 4 July 2006, 3 October 2006, 31 October 2006, 27 July 2007 and 27 August 2007) by each of Mr Hobbs, Ms Li, Mr Collard and Secured Bond to investors in Master Fund (namely that Master Fund was generating profits or sufficient profits to enable the returns each investor received by way of purported profit to be paid to them). 10The Shareholder Representations (namely, the representations pleaded at [297] of the Third Further Amended Statement of Claim as to: Barclaywest's involvement in projects that would generate profits for shareholders (declaration 26); the representation that Barclaywest would do a commercial bond to fund a project (declaration 27); the representation that Mr Hobbs would give $200 million, being proceeds from a sale of rights, to Barclaywest (declaration 28); each of which were made in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008; and the 888 Shareholder Representation pleaded at [298] of the Third Further Amended Statement of Claim (that an amount in the order of $207 million would be invested and would generate returns in the order of 100% every 10 days, 50% of which would be paid to 888 Vanuatu) (declaration 29) were made in Australia in 2007 and 2008 by Mr Hobbs and/or his agents (Ms Li and Mr Collard) to potential and existing shareholders of Barclaywest and 888 Vanuatu respectively. Schedule of s 182 Commissions and Payments 1The s 182 Commissions, as defined in my reasons, apart from the monthly payments for research reports referable to reports to be provided by Cadent traders to corporate administrators (which were for a monthly amount of US $600 commencing from around September 2007) were as follows (paid to accounts held by or operated by Mr and/or Mrs Hobbs): NZ $247,145.38 (paid by New World Holdings in the period from 25 September 2006 to 7 February 2008); this aggregate sum comprises 22 separate payments ranging in amounts from as low as $2,238.27 to as high as $31,831.94; NZ $36,966.88 (paid by Ms Reisinger or her husband as agents for New World Holdings) this being the aggregate of a payment of $11,131.45 on 26 July 2006 and a payment of $25,835.43 on 21 August 2006); NZ $105,336.23 (paid by ROF in the period from 23 December 2005 to 22 February 2007); this aggregate sum comprising 7 payments ranging from $263.70 to $44,010.17; NZ $7,846.14 (paid by NCCN on 14 August 2006); NZ $32,952.20 (paid by MLN on 27 December 2007); NZ $7,653.48 (paid by Cadent in the period from 24 January 2006 to 12 September 2007); this being the aggregate of 12 payments ranging from $78.07 to $1,654.23; NZ $7,983.44 (comprising two payments by ROF - one of $830.85 on 12 July 2005 and one of $7,152.59 on 3 August 2005); comprising 2 payments NZ $6,814.43 (paid by NCCN on 8 March 2006). 2The s 182 Payments (the making of one or more of which by the respective companies was the subject of civil penalty contraventions by each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs) were as follows: (i) in relation to PJCB, the Integrity Plus Payments (set out at [154] of the Third Amended Further Statement of Claim) and made variously to Mr Koutsoukos, Mr Wood; Mr Truong; J&B Financial; 888 Vanuatu; Mirage Consulting Services Pty Ltd (a company of which Mr Truong's wife was the sole director and shareholder); Ms Christina Dabbagh (Mr Koutsoukos' wife); Mr Collard; Mr Gregory Stanton; Liu Qiang; Ms Jennifer Trinh (Mr Truong's wife); Mr Clements; Ms Elizabeth Halls and Mr Quintin Johns (relatives of Mr Hobbs); and Geneva Financial, as follows: between 13 September 2005 and 23 November 2007, AU $563,898.46 to Mr Koutsoukos; this being the aggregate of 35 payments in sums ranging from $1,000 to $55,000; between 22 December 2005 and 23 November 2007, US $41,656.25 and AU $842,368 to Mr Wood; this being the aggregate of 57 payments in sums ranging from $3,000 to $50,000; between 14 February 2005 and 23 November 2007, AU $760,050.75 and US $16,747 to Mr Truong; this being the aggregate of 34 payments in sums ranging from $1,200 to $100,000; between 15 February 2005 and 16 November 2007, AU $1,168,248.27 and US $398,000 to J&B Financial; this being the aggregate of 88 transactions in sums ranging from AU $411.29 to US $200,000; on 18 July 2006, US $5,000 to 888 Management Australia; between 29 January 2007 and 26 November 2007, AU $120,459.50 to Mirage; this being the aggregate of 13 payments in sums ranging from $2,887.50 to $14,000; between 22 May 2007 and 23 October 2007, AU $27,283.20 to Ms Dabbagh; this being the aggregate of payments in sums ranging from $2,283.20 to $10,000; on 27 April 2006, AU $20,000 to Mr Collard; between 9 November 2006 and 30 March 2007, AU $110,000 to Mr Stanton; this being the aggregate of 3 payments in sums ranging from $20,000 to $60,000; on 21 September 2007, AU $200,000 to Liu Qiang; on 27 August 2007 AU $50,000 to Ms Trinh; in or about December 2006, NZ $20,000 for the benefit of Mr Clements to Ms Elizabeth Halls and Mr Quintin Johns; on 14 December 2006, NZ $20,000 to Ms Elizabeth Halls and Mr Quintin Johns; on 24 March 2005, US $50,000 to Geneva Financial. (Within the definition of Integrity Plus Payments there are, on my calculations, 244 separate payments.) (ii) also in relation to PJCB, the Additional Integrity Plus Payments (set out at [158], [159] and [162] of the Third Amended Further Statement of Claim); variously to Magny-Cours, Dowker Chiropractic Pty Ltd; David Marchant; SL Lawyers for the purposes of a transaction with Ausmutual Capital Ltd; GH & DJ Clarke Family Trust; Upton Ltd and Fletcher Vautier Moore, as follows: US $200,000 transferred from the Integrity Plus Account to the J&B Financial Technocash Account on 6 November 2006 and then on 8 November 2006 to Magny-Cours; on 24 August 2007, AU $120,000 to Dowker Chiropractic Pty Ltd; on 4 September 2007, US $100,000 to David Marchant; on 17 October 2007, AU $507,500 to SL Lawyers; on 28 November 2007, NZ $100,000 to GH & DJ Clarke Family Trust; on 19 October 2007 AU $1,000,000 to Upton Ltd; on or about 8 March 2006, NZ $20,000 to Fletcher Vautier Moore of which Mr Hobbs directed Fletcher Vautier Moore to pay NZ $10,000 Nelson Bays Holden and NZ $10,000 to be offset against amounts owed by Mr Hobbs and/or Tasman Business to Fletcher Vautier Moore; (I have treated this as one payment although it was ultimately the subject of a direction for on-payment to two accounts); on or about 25 October 2007, NZ $444,000 to Fletcher Vautier Moore (this was paid on behalf of Legend of Bathurst (purportedly by way of loan from Destiny to Legend of Bathurst); to be used for the purchase of a property for his personal use in Nelson, and the remainder was invested in Capital Mortgage Income Trust for the purpose of paying off tax liabilities owed by Mr Hobbs to Inland Revenue (again, I have treated this as one payment though directed to two separate accounts). (the above comprising eight separate payments). (iii) as to both ISL (and ISPL), the Super Save Payments (set out at [176] of the Third Amended Further Statement of Claim made by ISPL as agent of ISL) variously to Mr Wood, Mr Koutsoukos, Mr Truong and J&B Financial as follows: on 12 February 2007 US $50,000 to each of Mr Wood, Mr Koutsoukos; and Mr Truong; (by way of three separate payments ranging from $10,000 to $30,000 to Mr Wood; three separate payments ranging from $8,000 to $27,000 to Mr Koutsoukos; and one payment of $50,000 to Mr Truong); between 21 February 2007 and 14 March 2007 US $91,485 to J&B Financial (in three payments, ranging from $5,000 to $60,485.00). (In all, these comprise ten separate payments. I have counted the ten payments only once, though there is on one view a contravention in respect of each of ISL and ISPL, the reason for this being that payments were made by ISL through its agent ISPL.) (iv) also as to each of ISL and ISPL, the Diligence Discovery payments (the dates and amounts of which have not been separately itemised but which were a small fee per transaction); (v) in relation to Secured Bond, the Master Fund Payments (set out at [190] of the Third Amended Further Statement of Claim) variously to Mr Hobbs; Magny-Cours and Tasman Business; Fletcher Vautier Moore; the R & B Hobbs Family Trust; Ms Li in her personal capacity and by her wholly owned company Shunfu Corporation; Mr Collard in his personal capacity and by his wholly owned company Mr Mac Incorporated; J&B Financial; G P Global; Guo Ping Zhang; Preserved Investments; Hui Qing Wu; Liu Qiang; Excite Holidays; DR & GI Wells; E D Weaver; Nelson Bays Holden; and Vincent Chen, as follows: between 31 May 2005 and 23 February 2007, US $246,141.99 to Magny-Cours; this being the aggregate of 10 payments in sums ranging from $1,775.19 to $140,000; on 14 August 2007, NZ $99,999 to Tasman Business; on 26 May 2005, NZ $62,000 to Fletcher Vautier Moore (for the benefit of Mr Hobbs or Tasman Business); on 1 November 2007, NZ $655,342.45 to Fletcher Vautier Moore for the benefit of Legend of Bathurst; on 15 November 2007, NZ $131,102.44 to Fletcher Vautier Moore for the benefit of Legend of Bathurst; on 7 August 2006, US $99,976 to the R & B Hobbs Family Trust; between 26 November 2004 and 23 May 2008, US $190,492.09 and AU $78,630.41 to Ms Li and Shunfu Corporation; this being the aggregate of 67 payments in sums ranging from $3.50 to $63,953.87; between 29 January 2008 and 19 March 2008, AU $130,886.12 to Ms Li and Shunfu Corporation (by way of purported shareholders' profit in Secured Bond); this being the aggregate of 3 payments in sums ranging from $14,432.32 to $71,038.28; between 22 July 2005 and 14 August 2007, US $27,483 and AU $54,089.02 to Mr Collard and Mr Mac Incorporated; this being the aggregate of 13 payments in sums ranging from AU $49.50 to AU 22,964.32; between 29 January 2008 and 19 March 2008, AU $130,592.05 to Mr Collard and Mr Mac Incorporated (by way of purported shareholders' profit in Secured Bond); this being the aggregate of 3 payments in sums ranging from $14,833.22 to $70,343.32; on 5 March 2007, AU $17,281.18 to J&B Financial; on 5 March 2007, US $45,126.71 to GP Global; on 8 March 2007 US $15,400.15 to GP Global; 2 payments, one of AU $10,000 on 9 May 2006 and one of AU $20,000 on 16 May 2006, totalling AU $30,000 to Guo Ping Zhang; on 14 May 2007, US $15,000 to Preserved Investments; 2 payments, one of US $6,790.92 on 7 March 2008 and one of US $ 6,621.15 on 19 March 2008, totalling US $13,412.07, to Hui Qing Wu (at the direction of Ms Li and Mr Collard); between 29 September 2005 and 8 May 2008, US $12,100.16 to Liu Qiang; this being the aggregate of 5 payments in sums ranging from $636.41 to $6,723.75; on 29 January 2008, AU $44,142.90 to Excite Holidays (to pay for travel expenses of a trip by Mr Hobbs, Mr Collard and Mr Stanton to Chicago); on 21 March 2007, AU $6,214.28 to DR & GI Wells; on 31 January 2007, AU $27,191.50 to E D Weaver; on 19 May 2006, NZ $15,440.40 to Nelson Bays Holden; and on 31 October 2006, AU $1,999.50 to Vincent Chen (Ms Li's former husband). (In all these comprised, on my calculations, 119 separate payments.) (vi) also in relation to Secured Bond, the First Secured Bond Payments (being the payment set out at [200] of the Third Amended Further Statement of Claim - US $39,292 to Magny-Cours on 17 September 2004); (vii) in relation to 888 Vanuatu, the Pinnacle Payments (set out at [208] of the Third Amended Further Statement of Claim) variously to: HLD Corp and/or Suzan Fi Ou; Mr Collard and/or Mr Mac Incorporation; Ms Li and/or Shunfu Corporation; and Mr Hobbs and Tasman Business, as follows: on 21 April 2008, US $47,008.08 to Tasman Business; between 24 August 2007 and 18 April 2008, a total of US $104,719.86 was paid to HLD Corp and/or Suzan Fi Ou (including on 18 April 2008, US $86,253.30, part of which funds were subsequently paid to Ms Ou and Ms Li); this being the aggregate of 3 payments in sums ranging from $3,499.35 to $86,253.30; on 24 August 2007, AU $2,043 to Mr Collard; on 18 April 2008, US $53,314.26 to Mr Collard; between 24 August 2007 and 18 April 2008, US $53,314.26 to Ms Li and US $2,337.45 to Shunfu Corporation; this being the aggregate of 3 payments in sums ranging from US $1,087.15 to US $53,314.26. (the above comprising 9 separate payments). (viii) also in relation to 888 Vanuatu, the 888 Fund Payment (set out at [216] of the Third Amended Further Statement of Claim of US $1,087.15 to Ms Li's wholly owned corporation Shunfu Corporation); (ix) again in relation to 888 Vanuatu, the Diligence Discovery payments (the dates and amounts of which have not been separately itemised); (x) in relation to Geneva Financial, the Prestige Payments (set out at [222] of the Third Amended Further Statement of Claim to ROF, being a net total of US $135,997.78); this comprised of 4 payments ranging from US $10,000 to US $224,966.13 less two credits to the Geneva Financial account of US $189,985 and US $9,000, respectively; (which I have treated as 4 separate payments); (x) in relation to Preserved Investments, the Elite Premier Payments (set out at [239] of the Third Amended Further Statement of Claim - namely, payment of the sum of US $50,000 transferred from the Elite Premier Account to Magny-Cours on 12 February 2003 and the payment of moneys totalling US $ 54,411.50 to Focus Administration Services Ltd between October 2002 and December 2002 - by way of 6 payments in sums ranging from US $2,532.50 to US $ 18,5000); a total of 7 payments in all; (xi) also in relation to Preserved Investments, the Elite Premier Option 2 Payments (set out at [246] of the Third Amended Further Statement of Claim) variously to: Tasman Business; Mrs Hobbs; Mr Robert Hobbs; Ms Li; Mr Collard; Mr Clements; Business Management Services; Tevita Saumakia; Touchpoint Global; Wyart International Ltd; and ROF, as follows: between 4 October 2004 and 10 July 2007, US $55,170.43 to Tasman Business; this being the aggregate of 18 payments in sums ranging from $580.92 to $8,237.49; between 15 August 2006 and 7 December 2006, US $3,129.64 to Mrs Hobbs; this being the aggregate of 5 payments in sums ranging from $322.80 to $1,507.68; between 14 November 2005 and 14 August 2008, US $1,917.56 to Mr Robert Hobbs; this being the aggregate of 4 payments in sums ranging from $174.67 to $938.80; between 26 February 2004 and 23 August 2007, US $29,391.09 to Ms Li; this being the aggregate of 17 payments in sums ranging from $130 to $4,296.27; between 4 October 2004 and 14 June 2005, US $5,008.68 to Mr Collard; this being the aggregate of 3 payments in sums ranging from $762.41 to $1,690.28; between 2 August 2004 and 11 April 2008, US $17,604.57 to Mr Clements; this being the aggregate of 5 payments in sums ranging from $310 to $9,859; between 20 June 2005 and 24 June 2008, US $5,640.24 to Business Management Services; this being the aggregate of 5 payments in sums ranging from $585 to $1,789.50; on 5 November 2008, US $11,330.81 to Tevita Saumakia; on 25 November 2008, USD23,836.98 to Touchpoint Global; on 13 December 2004, US $3,916.91 to Wyart International Ltd; between 21 December 2005 and 25 July 2006, US $8,379.43 to ROF in 2 payments (of $6,515.13 and $1,864.30 respectively). (these comprising, on my calculations, 62 separate payments.) (xii) in relation to Ultimate Investments, the Covered Strategies Payments (set out at [253] of the Third Amended Further Statement of Claim) variously to: Tasman Business and Mr Hobbs by deposit to his company Tasman Business; Magny-Cours; Mr Collard; Ms Li; Mr Wood; Mr Diaz; Mr Parker; Mr Fitzgerald; Dan Aubin; Don Shelby; John Gerrald; Roy Robert Cummings; Rhapsody in Blue Stables; TFH Holdings Ltd; Global Visions Ltd; Golf Oz Tours and Tourism; and Inland Revenue as follows: between 21 October 2003 and 13 March 2006 US $93,020.67 to Tasman Business; this being the aggregate of 15 payments in sums ranging from $1,263.76 to $19,000; between 14 January 2005 and 25 January 2005 US $60,000 to Magny-Cours; in 2 payments of $10,000 to $50,000, respectively; on 15 September 2003 US $17,730.23 to Mr Collard; between 23 October 2003 and 19 March 2004 US $3,643.58 to Ms Li; this being the aggregate of 5 payments in sums ranging from $138.57 to $621.06; on 3 September 2004 AU $20,617.76 to Mr Wood; between 10 November 2003 and 18 February 2004 US $221,510.39 to Mr Diaz ; this being the aggregate of 6 payments in sums ranging from $264.04 to $80,000; between 5 November 2003 and 14 January 2009 an amount of US $141,950 was withdrawn from the Optionz NZ Account and paid out as cash at the direction of Mr Parker; this being the aggregate of 68 payments in sums ranging from $50 to $15,000; between 13 May 2003 and 24 June 2009 an amount of US $158,830 was withdrawn from the Optionz NZ Account and paid to Mr Parker; this being the aggregate of 75 payments in sums ranging from $300 to $20,000; between 14 November 2003 and 27 May 2008 US $2,005 to Mr Fitzgerald; in 2 payments of $500 and $1,505; between 2 July 2004 and 3 November 2008 NZ $7,600 to Mr Fitzgerald; this being the aggregate of 5 payments in sums ranging from $300 to $5,000; on 14 October 2004 NZ $5,000 to ASB-Visa Gold for the benefit of Mr Fitzgerald; on 7 June 2004 US $6,000 to Dan Aubin; on 26 April 2006 US $4,500 to Don Shelby; between 2 September 2003 and 21 June 2005 US $66,789.54 to John Gerrald; this being the aggregate of 9 payments in sums ranging from $300 to $20,000; between 6 January 2004 and 10 August 2006 US $3,000 to Roy Robert Cummings; in 2 payments of $2,000 and $1,000; on 17 May 2006 US $2,500 to Rhapsody in Blue Stables; on 12 December 2006 US $5,000 to TFH Holdings; on 19 March 2004 US $14,271.84 to Global Visions Ltd ; between 29 May 2006 and 12 August 2008 AU $3,927.31 to Golf Oz Tours and Tourism; this being the aggregate of 3 payments in sums ranging from $1,150 to $1,482.31; between 28 June 2004 and 4 April 2005 NZ $42,849.62 to Inland Revenue; this being the aggregate of 5 payments in sums ranging from $4,354 to $12,771.35. (comprising 205 separate payments). (xiii) in relation to Barclaywest, the Enhanced Fund Payments (set out at [263] of the Third Amended Further Statement of Claim) to Mr Hobbs by payments to Tasman Business; Mr Collard by payments to his wholly owned company Mr Mac Incorporated; Ms Li by payments to her wholly owned company Shunfu Corporation or through the Secured Bond Account; Hui Qing Wu; and Iris Wire Trans-Out as follows: on 23 May 2008 US $12,760.88 to Mr Mac Incorporated on behalf of Tasman Business (purportedly by way of shareholders' profit in Barclaywest); on 6 May 2008 US $12,760.88 to Mr Mac Incorporation Mr Collard purportedly by way of shareholders' profit in Barclaywest; on 5 May 2008 US $12,760.88 to Secured Bond for the benefit of Shunfu Corporation purportedly by way of shareholders' profit in Barclaywest; between 11 December 2007 and 9 May 2008 US $24,138.35 was paid to Amazing Glory Hui Qing Wu; in 2 payments of $5,558.85 and $18,579.50; on 21 May 2008 a payment of US $17,517.24 (the payee of which has not been identified beyond the description Iris Wire Trans-Out). (6 separate payments). (xiv) in relation to GP Global, the Best Fund Payments (set out at [273] of the Third Amended Further Statement of Claim) to Mr Hobbs; Ms Li in her personal capacity and by her wholly owned company Shunfu Corporation; Mr Collard in his personal capacity and by his wholly owned company Mr Mac Incorporated; Hong Li; and New Century 2001 Pty Ltd, as follows: on 2 April 2006 AU $10,000 to Ms Li at the direction of Mr Hobbs; on 6 March 2007 NZ $ 19,000 to Water Craft World Ltd at the direction of Mr Hobbs; on 5 June 2007 US $12,600 to Lambretta South at the direction of Mr Hobbs; on 4 February 2008 NZ $1,206.31 to DC Filer Limited t/a Filco Farm at the direction of Mr Hobbs; on 23 June 2005 US $1,959.98 to Ms Li; between 12 August 2005 and 30 January 2008 US $5,097.32 to Shunfu Corporation; this being the aggregate of 24 payments in sums ranging from $1.50 to $570; on 17 January 2008 AU $594.13 to Mr Collard; between 2 April 2006 and 12 June 2008 AU $13,816 to Hong Li; this being the aggregate of 8 payments in sums ranging from $55 to $3,535; on 17 August 2007 US $8,000 to New Century 2001 Pty Ltd. (these comprising 39 separate payments). SCHEDULE of DECLARATIONS and ORDERS

Definitions 1In these declarations and orders, references to the Hobbs Scheme and the individual investment funds (Integrity Plus Unit Trust, Super Save Superannuation Fund, Master Fund, First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Prestige Unit Trust, Smart Money, Elite Premier Unit Trust, Elite Premier Option Two Unit Trust, Covered Strategies Unit Trust, Good Value Fund, Enhanced Fund and Best Fund), as well as reference to companies involved in the schemes (including FTC) have the same meaning as in my reasons for judgment published on 24 October 2012. Cross-references have been included in the headers to the declarations to the paragraphs of my principal reasons in which the findings supporting those declarations are set out.

Declarations in relation to the First Defendant, Mr David Hobbs Unregistered Managed Investment Scheme ([2124];[1917], [1920], [1921]; [2321])

The Court declares that the fourteen individual managed investment schemes, being the schemes defined in paragraph 41 of the Third Further Amended Statement of Claim, which operated in Australia, collectively comprised a single managed investment scheme under the Corporations Act 2001 (Cth) by reason of the matters set out in paragraph 276 of the Third Further Amended Statement of Claim (the Hobbs Scheme).
The Court declares that prior to 2002 the first defendant (Mr Hobbs) created or otherwise developed a financial product within the meaning of Division 3 of Part 7.1 of the Corporations Act 2001 (Cth), being the product defined in paragraph 37 of the Third Further Amended Statement of Claim, which he promoted and offered to retail investors in Australia (referred to in these declarations as the Hobbs financial product)
The Court declares that the first defendant (Mr Hobbs), contravened s 601ED(5) of the Corporations Act 2001 (Cth) in the period from at least 1 July 2004 to December 2007 by being directly involved in the operation of the Hobbs Scheme, by: (a) providing information about the individual managed investment schemes in which investors could invest; (b) making offers to invest in the Hobbs Scheme; (c) issuing unit certificates and confirmation letters to investors; and (d) paying returns to investors. Unlicensed Financial Services ([2323])
The Court declares that the first defendant (Mr Hobbs) contravened s 911A of the Corporations Act 2001 (Cth) in the period between 2002 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Scheme Representations ([2130]-[2249], [2315],[2324]-[2346])
The Court declares that by making the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Integrity Plus Representations ([2130]-[2138], [2176]-[2249], [2250]-[2265], [2315], [2324]-[2346])
The Court declares that by making the Trading Representation, as defined in section 282(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act; (b) s 1041G of the Corporations Act; (c) s 1041H of the Corporations Act; (d) s 12DA of the ASIC Act; (e) s 12DB of the ASIC Act; and (f) s 12DF of the ASIC Act.
The Court declares that by making the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, the first defendant (Mr Hobbs) contravened: ((a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Super Save Representations ([2130]-[2138], [2176]-[2249], [2266]-[2279], [2315], [2324]-[2346])
The Court declares that by making the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the representation that investors' funds would be invested in equities, currencies, options, factoring, the secondary life insurance market, future and registered securities, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the representation that investors' funds would be invested with various fund managers such as Bond's Viatical Markets, Registered Securities, Factoring Funds and Company Debentures, Shares/Options, Initial Public Offerings, Unit Trusts and Currency Trading, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Super Save Returns Representation, as defined in paragraph 285(f) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Master Fund Representations ([2130]-[2138], [2176]-[2249], [2280]-[2290], [2315], [2324]-[2346])
The Court declares that by making the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act; (b) s 1041G of the Corporations Act; (c) s 1041H of the Corporations Act; (d) s 12DA of the ASIC Act; (e) s 12DB of the ASIC Act; and (f) s 12DF of the ASIC Act. First Secured Bond Unit Trust Representations ([2130]-[2138], [2218]-[2249], [2291]-2296], [2315], [2324]-[2346])
The Court declares that by making the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Profit Representations ([2297]-[2303], [2315], [2324]-2346])
The Court declares that by making the Integrity Plus Profits Representation, as defined in paragraph 292 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: ((a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Super Save Profits Representation, as defined in paragraph 293 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Shareholder Representations ([2304]-[2315], [2324]-[2346])
The Court declares that by making the representation that Barclaywest's involvement in projects, including a project in China, would generate profits for shareholders, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the representation that Barclaywest would do a commercial bond to fund a project, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the First Defendant, Mr Hobbs, contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the representation that Mr Hobbs would give $200 million, being proceeds from a sale of rights, to Barclaywest, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth).
The Court declares that by making the 888 Shareholder Representation, as defined in paragraph 298 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Directors' Duties Contraventions - FTC - Sections 180(1) and 181 ([2382]-[2395])
The Court declares that, pursuant to section 1317E(1) of the Corporations Act, the first defendant (Mr Hobbs) as a director or officer of Future Trading Corporation Ltd (FTC), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, 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 the corporation, and for a proper purpose, by: (a) causing or otherwise permitting FTC to be directly involved in the operation of the Hobbs Scheme, in the period from at least 1 July 2004 to December 2007, in contravention of s 601ED(5) of the Corporations Act 2001 (Cth), by: (i) providing information about the individual managed investment schemes in which investors could invest; (ii) making offers to invest in the Hobbs Scheme; (iii) issuing unit certificates and confirmation letters to investors; and (iv) paying returns to investors; (b) causing or otherwise permitting FTC to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2002 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (i) promoting the Hobbs financial product; and (ii) operating the Hobbs Scheme; and (c) causing or otherwise permitting FTC to: (i) make the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (ii) make the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (iii) make the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041G of the Corporations Act 2001 (Cth); (C) s 1041H of the Corporations Act 2001 (Cth); (D) s 12DA of the ASIC Act 2001 (Cth); (E) s 12DB of the ASIC Act 2001 (Cth); and (F) s 12DF of the ASIC Act 2001 (Cth). Director's Duties Contraventions - PJCB, ISL and Secured Bond - Sections 180(1) and 181 ([2382]-[2395])
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) as a director or officer of P.J.C.B. International Ltd (PJCB), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2004 and 2007, 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 the corporation, and for a proper purpose, by: (a) causing or otherwise permitting PJCB to be directly involved in the operation of the Hobbs Scheme, in the period between 1 January 2006 and 31 December 2006, in contravention of s 601ED(5) of the Corporations Act 2001 (Cth), by: (i) providing information about the individual managed investment schemes in which investors could invest; (ii) making offers to invest in the Hobbs Scheme; (iii) issuing unit certificates and confirmation letters to investors; and (iv) paying returns to investors; (b) causing or otherwise permitting PJCB to: (i) make the Trading Representation, as defined in section 282(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; (ii) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; (iii) make the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; (iv) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; and (v) make the Integrity Plus Profits Representation, as defined in paragraph 292 of the Third Further Amended Statement of Claim; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041G of the Corporations Act 2001 (Cth); (C) s 1041H of the Corporations Act 2001 (Cth); (D) s 12DA of the ASIC Act 2001 (Cth); (E) s 12DB of the ASIC Act 2001 (Cth); and (F) s 12DF of the ASIC Act 2001 (Cth).
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) as a director or officer of Idylic Solutions Ltd (ISL), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2006 and 2007, 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 the corporation, and for a proper purpose, by: (a) causing or otherwise permitting ISL to be directly involved in the operation of the Hobbs Scheme, in the period between 7 December 2006 and 6 December 2007, in contravention of s 601ED(5) of the Corporations Act 2001 (Cth), by: (i) providing information about the individual managed investment schemes in which investors could invest; (ii) making offers to invest in the Hobbs Scheme; (iii) issuing unit certificates and confirmation letters to investors; and (iv) paying returns to investors; (b) causing or otherwise permitting ISL to: (i) make the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; (ii) make the representation that investors' funds would be invested in equities, currencies, options, factoring, the secondary life insurance market, future and registered securities, in Australia to potential investors in Super Save in the period from 2006 to 2007; (iii) make the representation that investors' funds would be invested with various fund managers such as Bond's Viatical Markets, Registered Securities, Factoring Funds and Company Debentures, Shares/Options, Initial Public Offerings, Unit Trusts and Currency Trading, in Australia to potential investors in Super Save in the period from 2006 to 2007; (iv) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; (v) make the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; (vi) make the Super Save Returns Representation, as defined in paragraph 285(f) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; and (vii) make the Super Save Profits Representation, as defined in paragraph 293 of the Third Further Amended Statement of Claim; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041G of the Corporations Act 2001 (Cth); (C) s 1041H of the Corporations Act 2001 (Cth); (D) s 12DA of the ASIC Act 2001 (Cth); (E) s 12DB of the ASIC Act 2001 (Cth); and (F) s 12DF of the ASIC Act 2001 (Cth).
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) as a director or officer of Secured Bond Ltd (Secured Bond), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2003 and 2008, 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 the corporation, and for a proper purpose, by causing or otherwise permitting Secured Bond to: (a) make the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (b) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (c) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (d) make the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; (e) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; and (f) make the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim; in contravention of: (i) s 1041E of the Corporations Act 2001 (Cth); (ii) s 1041G of the Corporations Act 2001 (Cth); (iii) s 1041H of the Corporations Act 2001 (Cth); (iv) s 12DA of the ASIC Act 2001 (Cth); (v) s 12DB of the ASIC Act 2001 (Cth); and (vi) s 12DF of the ASIC Act 2001 (Cth). Directors' Duties Contraventions - Section 182 ([2396[-[2406])
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of each of PJCB, ISL, Idylic Solutions Pty Ltd (ISPL), Secured Bond, 888 Management Inc (888 Vanuatu), Geneva Financial Ltd (Geneva Financial), Preserved Investment Group Ltd (Preserved Investments), Ultimate Investments Ltd (Ultimate Investments), Barclaywest Ltd (Barclaywest) and GP Global Ltd (GP Global), in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2005 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to each of those companies by: (a) receiving commissions, fees or other amounts of money in connection with: (i) the operation of the Cadent Accounts; (ii) the purchase, sale, marketing and/or management of US Treasuries for the Corporate Administrators of the Schemes, including bond trading; and (iii) investments by the Schemes with NCCN through Mr Donald Caffray; and (b) receiving payments purportedly to cover costs incurred in distributing "research reports" containing material prepared by the Cadent Traders to the Corporate Administrators; as set out in paragraph 121 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act, that the first defendant (Mr Hobbs), as a director or officer of PJCB, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2005 and 2007, improperly used his position to gain an advantage for himself and others, and caused a detriment to PJCB, by causing or otherwise permitting PJCB to: (a) make the Integrity Plus Payments, as defined in paragraph 154 of the Third Further Amended Statement of Claim; and (b) make the Additional Integrity Plus Payments, as defined in paragraph 163 of the Third Further Amended Statement of Claim and set out in paragraphs 158,159 and 162 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act, that the first defendant (Mr Hobbs), as a director or officer of ISL, in contravention of s 182 of the Corporations Act, in the period between 2006 and 2007, improperly used his position to gain an advantage for himself and others, and caused a detriment to ISL, by: (a) causing or otherwise permitting ISL to make the Super Save Payments, as defined in paragraph 176 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting ISL to make payments to Diligence Discovery Ltd (Diligence Discovery).
The Court declares, pursuant to section 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of ISPL, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2006 and 2007, improperly used his position to gain an advantage for himself and others, and caused a detriment to ISPL, by: (a) causing or otherwise permitting ISPL to make the Super Save Payments, as defined in paragraph 176 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting ISPL to make payments to Diligence Discovery.
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Secured Bond, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2004 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Secured Bond, by: (a) causing or otherwise permitting Secured Bond to make the Master Fund Payments, as defined in paragraph 190 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting Secured Bond to make the First Secured Bond Payments, as defined in paragraph 200 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act, the First Defendant, Mr Hobbs, as a director or officer of 888 Vanuatu, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to 888 Vanuatu, by: (a) causing or otherwise permitting 888 Vanuatu to make the Pinnacle Payments, as defined in paragraph 208 of the Third Further Amended Statement of Claim; (b) causing or otherwise permitting 888 Vanuatu to make the 888 Fund Payment, as defined in paragraph 216 of the Third Further Amended Statement of Claim; and (c) causing or otherwise permitting 888 Vanuatu to make payments to Diligence Discovery.
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Geneva Financial, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Geneva Financial, by causing or otherwise permitting Geneva Financial to make the Prestige Payments, as defined in paragraph 222 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Preserved Investments, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Preserved Investments, by: (a) causing or otherwise permitting Preserved Investments to make the Elite Premier Payments, as defined in paragraph 239 of the Third Further Amended Statement of Claim; (b) causing or otherwise permitting Preserved Investments to make the Elite Premier Option 2 Payments, as defined in paragraph 246 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Ultimate Investments, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2003 and 2009, improperly used his position to gain an advantage for himself and others, and caused a detriment to Ultimate Investments, by causing or otherwise permitting Ultimate Investments to make the Covered Strategies Payments, as defined in paragraph 253 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Barclaywest, in contravention of section 182 of the Corporations Act, in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Barclaywest, by causing or otherwise permitting Barclaywest to make the Enhanced Fund Payments, as defined in paragraph 263 of the Third Further Amended Statement of Claim.
The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of GP Global, in contravention of section 182 of the Corporations Act, in the period between 2005 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to GP Global, by causing or otherwise permitting GP Global to make the Best Fund Payments, as defined in paragraph 273 of the Third Further Amended Statement of Claim.

Declarations in relation to the Third Defendant, Mr David Collard Unregistered Managed Investment Scheme ([2321]) 45. The Court declares that the third defendant (Mr Collard), contravened s 601ED(5) of the Corporations Act 2001 (Cth) in the period from at least 19 March 2007 to 26 July 2007 and 15 August 2007 to 27 September 2007, by being directly involved in the operation of the Hobbs Scheme, by: (a) providing information about the individual managed investment schemes in which investors could invest; (b) making offers to invest in the Hobbs Scheme; (c) issuing unit certificates and confirmation letters to investors; and (d) paying returns to investors. Unlicensed Financial Services ([2323]) 46. The Court declares that the third defendant (Mr Collard), contravened s 911A of the Corporations Act 2001 (Cth)in the period between 2004 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Scheme Representations ([2130]-[2249], [2315], [2324]-[2346]) 47. The Court declares that by making the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 48. The Court declares that by making the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 49. The Court declares that by making the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Master Fund Representations ([2130]-[2138], [2176]-[2249], [2280]-[2290], [2315], [2324]-[2346]) 50. The Court declares that by making the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 51. The Court declares that by making the Capital Protected Representation, as defined in paragraph 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 52. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). First Secured Bond Unit Trust Representations ([2130]-[2138], [2218]-[2249], [2291]-[2296], [2315], [2324]-[2346]) 53. The Court declares that by making the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 54. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). Profit Representations ([2297]-[2303], [2315], [2324]-[2346]) 55. The Court declares that by making the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). Shareholder Representations ([2304]-[2315], [2324]-[2346]) 56. The Court declares that by making the representation that Barclaywest's involvement in projects, including a project in China, would generate profits for shareholders, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 57. The Court declares that by making the representation that Barclaywest would do a commercial bond to fund a project, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 58. The Court declares that by making the representation that Mr Hobbs would give $200 million, being proceeds from a sale of rights, to Barclaywest, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 59. The Court declares that by making the 888 Shareholder Representation, as defined in paragraph 298 of the Third Further Amended Statement of Claim, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). Directors' Duties Contraventions - FTC - Sections 180(1) and 181 ([2382]-[2395]) 60. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the third defendant (Mr Collard), as an officer of FTC, in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, 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 the corporation, and for a proper purpose, by: (a) causing or otherwise permitting FTC to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2002 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (i) promoting the Hobbs financial product; and (ii) operating the Hobbs Scheme; and (b) causing or otherwise permitting FTC to: (i) make the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (ii) make the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (iii) make the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041H of the Corporations Act 2001 (Cth); (C) s 12DA of the ASIC Act 2001 (Cth); (D) s 12DB of the ASIC Act 2001 (Cth); and (E) s 12DF of the ASIC Act 2001 (Cth); and (G) in causing or otherwise permitting FTC to make the Principal Protected Representation and the Investment Returns Representation only, s 1041G of the Corporations Act Directors' Duties Contraventions - Secured Bond - Sections 180(1), 181 and 182 ([2382]-[2395], [2396]-[2406]) 61. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the third defendant (Mr Collard), as a director or officer of Secured Bond, in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2003 and 2008, 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 the corporation, and for a proper purpose, by: (a) causing or otherwise permitting Secured Bond to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2003 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (i) promoting the Hobbs financial product; and (ii) operating the Hobbs Scheme; and (b) causing or otherwise permitting Secured Bond to: (i) make the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (ii) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (iii) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (iv) make the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; (v) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; and (vi) make the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041H of the Corporations Act 2001 (Cth); (C) s 12DA of the ASIC Act 2001 (Cth); (D) s 12DB of the ASIC Act 2001 (Cth); and (E) s 12DF of the ASIC Act 2001 (Cth); and (G) in causing or otherwise permitting FTC to make the Principal Protected Representation and the Investment Returns Representation only, s 1041G of the Corporations Act 62. The Court declares that, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the third defendant (Mr Collard), as a director or officer of Secured Bond, in contravention of section 182 of the Corporations Act 2001 (Cth), in the period between 2004 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Secured Bond, by: (a) causing or otherwise permitting Secured Bond to make the Master Fund Payments, as defined in paragraph 190 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting Secured Bond to make the First Secured Bond Payments, as defined in paragraph 200 of the Third Further Amended Statement of Claim. Directors' Duties - Barclaywest - Sections 180(1), 181 and 182 ([2382]-[2395], [2396]-[2406]1) 63. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard), as a director or officer of Barclaywest, in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, 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 the corporation, and for a proper purpose, by causing or otherwise permitting Barclaywest to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2007 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 64. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard), as a director or officer of Barclaywest, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Barclaywest, by causing or otherwise permitting Barclaywest to make the Enhanced Fund Payments, as defined in paragraph 263 of the Third Further Amended Statement of Claim. Directors' Duties - 888 Vanuatu - Section 182 ([2396]-[2406]) 65. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard), as a director or officer of 888 Vanuatu, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to 888 Vanuatu, by: (a) causing or otherwise permitting 888 Vanuatu to make the Pinnacle Payments, as defined in paragraph 208 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting 888 Vanuatu to make the 888 Fund Payment, as defined in paragraph 216 of the Third Further Amended Statement of Claim.

Declarations in relation to the Fourth Defendant, Ms HuiMin (Nancy) Wu Unlicensed Financial Services ([2323]) 66. The Court declares that the fourth defendant (Ms Wu), contravened s 911A of the ASIC Act 2001 (Cth) in the period between 2006 and 2008, by the provision of financial services within this jurisdiction without an Australian financial services licence, by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Scheme Representations ([2130]-[2249], [2315], [2324]-[2346]) 67. The Court declares that by making the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2006 to 2008, the fourth defendant (Ms Wu) contravened: (a) s 1041H of the Corporations Act 2001 (Cth); and (b) s 12DA of the ASIC Act 2001 (Cth). 68. The Court declares that by making the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2006 to 2008, the fourth defendant (Ms Wu) contravened: (a) s 1041H of the Corporations Act 2001 (Cth); and (b) s 12DA of the ASIC Act 2001 (Cth). 69. The Court declares that by making the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2006 to 2008, the fourth defendant (Ms Wu) contravened: (a) s 1041H of the Corporations Act 2001 (Cth); and (b) s 12DA of the ASIC Act 2001 (Cth). Directors' Duties - Barclaywest - Sections 180(1) and 182 ([2382]-[2395], [2396]-[2406]) 70. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of Barclaywest, in contravention of s 180(1) of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, failed to exercise her powers and discharge her duties with the requisite degree of care and diligence, by causing or otherwise permitting Barclaywest to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2007 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 71. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of Barclaywest, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used her position to gain an advantage for herself and others, and caused a detriment to Barclaywest, by causing or otherwise permitting Barclaywest to make the Enhanced Fund Payments, as defined in paragraph 263 of the Third Further Amended Statement of Claim. Directors' Duties - 888 Vanuatu - Sections 180(1) and 182 ([2382]-[2395], [2396]-[2406]) 72. The Court declares that, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of 888 Vanuatu, in contravention of s 180(1) of the Corporations Act 2001 (Cth), in the period between 2006 and 2008, failed to exercise her powers and discharge her duties with the requisite degree of care and diligence, by causing or otherwise permitting 888 Vanuatu to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2006 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 73. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of 888 Vanuatu, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used her position to gain an advantage for herself and others, and caused a detriment to 888 Vanuatu, by: (a) causing or otherwise permitting 888 Vanuatu to make the Pinnacle Payments, as defined, in paragraph 208 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting 888 Vanuatu to make the 888 Fund Payment, as defined in paragraph 216 of the Third Further Amended Statement of Claim.

Declarations in relation to the Eighth Defendant, Mrs Jacqueline Hobbs Directors' Duties - Geneva Financial - Section 182 ([2396]-[2406]) 74. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the eighth defendant (Mrs Hobbs), as a director or officer of Geneva Financial, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, improperly used her position to gain an advantage for herself and others, and caused a detriment to Geneva Financial, by: (a) as set out in paragraph 121 of the Third Further Amended Statement of Claim: (i) receiving commissions, fees or other amounts of money in connection with: (1) the operation of the Cadent Accounts; (2) the purchase, sale, marketing and/or management of US Treasuries for the Corporate Administrators of the Schemes, including bond trading; and (3) investments by the Schemes with NCCN through Mr Donald Caffray; and (ii) receiving payments purportedly to cover costs incurred in distributing "research reports" containing material prepared by the Cadent Traders to the Corporate Administrators; (b) causing or otherwise permitting Geneva Financial to pay round turn commissions to the First Defendant, Mr Hobbs, in relation to the Geneva Cadent Account, as defined in paragraph 87(c) of the Third Further Amended Statement of Claim and to make the Prestige Payments, as defined in paragraph 222 of the Third Further Amended Statement of Claim.

Declarations in relation to the Corporate Defendants Unlicensed Financial Services ([2323]) 75. The Court declares that the ninth defendant (ISPL) contravened s 911A of the Corporations Act 2001 (Cth) in the period between 2006 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 76. The Court declares that the fourteenth defendant (North Wave Ltd) contravened s 911A of the Corporations Act 2001 (Cth) in the period between 2005 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Orders 3Consequent upon the findings and declarations made in these proceedings, I make the following orders: Against the first defendant (Mr David Hobbs):

Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth) that the first defendant (Mr Hobbs) be permanently disqualified from managing any corporation.
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) be permanently restrained, by himself, his servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) be permanently restrained, by himself, his servants or agents or otherwise, from (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered.
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) be permanently restrained, by himself, his servants or agents or otherwise from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant be permanently restrained, by himself, his servants or agents or otherwise from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth).
Pursuant to s 1317G of the Corporations Act 2001 (Cth), by reason of his contraventions of ss 180(1), 181, 182 of that Act, that the first defendant (Mr Hobbs) pay the Commonwealth pecuniary penalties of $500,000. Against the third defendant (Mr David Collard):
Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be disqualified from managing any corporation from the date of entry of these orders for a period of 20 years.
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered.
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth).
Pursuant to s 1317G of the Corporations Act 2001 (Cth), by reason of his contraventions of ss 180(1), 181, 182, that the third defendant (Mr Collard) pay the Commonwealth pecuniary penalties of $150,000. Against the fourth defendant (Ms Huimin (Nancy) Wu):
Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu) be disqualified from managing any corporation from the date of entry of these orders for a period of four years.
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be permanently restrained, by herself, her servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered.
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth).
Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth). Against the eighth defendant (Mrs Jacqueline Hobbs):
Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be disqualified from managing any corporation from the date of entry of these orders for a period of six years.
Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be permanently restrained, by herself, her servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme).
Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered.
Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth).
Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth).
Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth).
Pursuant to s 1317G of the Corporations Act 2001 (Cth), by reason of her contraventions of s 182 that the eighth defendant (Mrs Hobbs) pay the Commonwealth a pecuniary penalty of $20,000. In relation to the Hobbs Scheme
Pursuant to s 601EE(1) of the Corporations Act 2001 (Cth), that the Hobbs Scheme and, for that purpose, each of the First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Prestige Unit Trust, Smart Money, Elite Premier Unit Trust, Elite Premier Option Two Unit Trust, Covered Strategies Unit Trust, Good Value Fund, Enhanced Fund and Best Fund (the Hobbs Scheme and the said individual investment schemes together referred to as "the Liquidation Funds") be wound up. Note: Proposed Order 29 above was amended when final orders were made as follows: Pursuant to s 601EE(1) of the Corporations Act 2001 (Cth), that the Hobbs Scheme and, for that purpose, each of the First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Prestige Unit Trust, Smart Money, Elite Premier Unit Trust, Elite Premier Option Two Unit Trust, Covered Strategies Unit Trust, Good Value Fund, Enhanced Fund and Best Fund be wound up.
That Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd (together referred to as the Liquidator) be appointed liquidator to wind up the Liquidation Funds. Note: Proposed Order 30 above was amended when final orders were made as follows: That Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd (together referred to as the Liquidator) be appointed liquidator to wind up the Hobbs Scheme and each of the individual investment schemes referred to in Order 29, other than the Pinnacle fund, those funds together being referred to in the following orders as "the Liquidation Funds").
That the Liquidator have the power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with the winding up of the Liquidation Funds, or incidental to the attainment of the winding up of the Liquidation Funds, including: (a) the powers identified in s 477 of the Corporations Act 2001 (Cth) as if each reference there to a company were a reference to the Liquidation Funds; and (b) the power to investigate any deficiency in the Liquidation Funds and to exercise the powers conferred by Division 1 of Part 5.9 of the Corporations Act 2001 (Cth), as if the Liquidation Funds were corporations being wound up.
That the Liquidator convene a meeting of investors in the Liquidation Funds within 16 weeks of the date on which these orders are made.
That the reasonable costs and expenses of the winding up of the respective Liquidation Funds be paid out of the assets of the Liquidation Funds.
That the plaintiff (ASIC) be permitted to give to the Liquidator any books and records of the Liquidation Funds obtained by ASIC pursuant to notices issued under the Australian Securities and Investments Commission Act 2001 (Cth) or voluntarily provided to ASIC or otherwise obtained by ASIC during the course of its investigations in relation to the Liquidation Funds, together with such other documents as ASIC has created from information derived from those books and records.
Pursuant to s 1324B of the Corporations Act 2001 (Cth), that each of the first, third, fourth, eighth, ninth and fourteenth defendants (Mr Hobbs, Mr Collard, Ms Wu, ISPL and North Wave, respectively) provide such assistance and information to the Liquidator as is reasonably requested in the discharge and performance of his or their functions as Liquidator.
That order 12 of the orders made in these proceedings (formerly matter 6021/07) on 20 June 2008 be vacated.
That all amounts held by the Court in relation to this matter, being matter number 2007/258119 (formerly matter 6021/07) (which for the avoidance of doubt includes matter numbers 2007/258010, formerly matter 5864/07, and 2008/280495, formerly matter 4532/08, which were consolidated into 2007/258119 by orders made by the Court on 27 August 2010), together with all accrued interest, be paid to the Liquidator in the capacity of Liquidator of the Liquidation Funds. Note: Proposed Order 37 above was amended when final orders were made as follows: That, subject to the order made on 21 February 2013 on the application of Messrs He and Gao in these proceedings for the payment out of moneys held in Court that are referable to the Pinnacle Fund, all amounts held by the Court in relation to this matter, being matter number 2007/258119 (formerly matter 6021/07) (which for the avoidance of doubt includes matter numbers 2007/258010, formerly matter 5864/07, and 2008/280495, formerly matter 4532/08, which were consolidated into 2007/258119 by orders made by the Court on 27 August 2010), together with all accrued interest, be paid to the Liquidator in the capacity of Liquidator of the Liquidation Funds. In relation to the appointment of a receiver to the assets of various of the defendants:
Pursuant to ss 1323(1)(h) and 1101B of the Corporations Act 2001 (Cth), that Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd be appointed as receiver to: (a) the assets of the fourth defendant (Ms Wu); (b) the assets located in this jurisdiction of the first defendant (Mr Hobbs); and (c) the assets located in this jurisdiction of the eighth defendant (Mrs Hobbs); (those three defendants being referred to collectively as the Receivership Defendants), for the purposes of: (i) identifying, collecting and securing property or proceeds of the Liquidation Funds, or property or proceeds in which the Liquidation Funds have a right or interest, which are in the possession, custody or control of each of the Receivership Defendants; (ii) ascertaining the amount of funds received by each of the Receivership Defendants (Received Funds) as a consequence of promoting, offering and/or operating any one or more of the Liquidation Funds; (iii) recovering the Received Funds; (iv) ascertaining, to the extent necessary for the receiverships or for the liquidation of the Schemes, the following information: (1) the assets and liabilities of the Receivership Defendants; (2) any property purchased or acquired with the Received Funds by each of the Receivership Defendants; (3) any distributions or uses made of the Received Funds by each of the Receivership Defendants.
That Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd, in their capacity as receiver pursuant to order 38, have the powers set out in s 420(1) and (2) of the Corporations Act 2001 (Cth), as if each reference there to a corporation were a reference to each of the Receivership Defendants.
That the reasonable costs and expenses of each receivership be paid out of the assets of the person under receivership.

In relation to the Tenth to Thirteenth and Fifteenth defendants: 41. That each of the first, third, fourth and eighth defendants (Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs) be restrained, by themselves, their servants or agents or otherwise, from taking any steps in relation to the transfer or re-registration, reinstatement or otherwise revival of any of the Tenth to Thirteenth and Fifteenth Defendants (the Deregistered Defendants). As to administrative matters: 42. That the following orders made in matter number 2007/258119 (formerly 6021/07) be vacated: (a) Orders 12 and 13 of the orders made on 14 December 2007; (b) Orders 1 to 3 of the first orders made on 18 December 2007 (concerning Mr Brian Wood) and orders 10 and 11 of the second orders made on 18 December 2007 (concerning Technocash Pty Ltd and Upton Ltd); (c) Order 1 of the orders made on 21 December 2007; (d) Orders 11, 18, 20 and 23 of the orders made on 5 February 2008; (e) Orders 4 and 9 to 12 of the orders made on 7 February 2008; (f) Orders 1 to 3 of the orders made on 15 October 2010. 43. That Mr Collard be released from the undertaking recorded in order 4 of the orders made in matter number 2008/280495 (formerly matter 4532/08) on 18 September 2009. 44. That order 1 of the orders made in matter number 2007/258010 (formerly 5864/07) on 13 December 2007 be vacated. 45. That leave be granted for the discontinuance of the proceedings against the Deregistered Defendants on the basis that there be no order as to costs. As to costs: 46. That the eighth defendant (Mrs Hobbs) pay ASIC's costs of matter 2007/258119 (formerly matter 6021/07) from 5 February 2008 to 10 July 2008. 47. That the first and eighth defendants (Mr and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 (formerly matter 6021/07) from 11 July 2008 to 26 August 2010. 48. That the third defendant (Mr Collard) pay ASIC's costs of matter 2008/280495 (formerly matter 4532/08) from 2 September 2008 to 26 August 2010. 49. That the first, third and eighth defendants (Mr Hobbs, Mr Collard and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 from 27 August 2010 to 12 April 2012. 50. That the first and eighth defendants (Mr and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 from 13 April 2012 to 24 October 2012, save for ASIC's costs of the following applications made by the fourth defendant (Ms Wu): (a) an application dated 27 June 2012 and filed on 3 0 July 2012; (b) an application made on 15 and 16 August 2012; and (c) an application made on 21 August 2012 and that Ms Wu pay ASIC's costs of the applications in (a) to (c) above. 51. That the first and eighth defendants (Mr and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 from 24 October 2012 to date, save for ASIC's costs, including ASIC's costs thrown away, arising out of the service by the fourth defendant on ASIC of Ms Wu's affidavit affirmed on 12 December 2012 and that the fourth defendant (Ms Wu) pay ASIC's costs arising out of the service of that affidavit (including costs thrown away in relation thereto).

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 February 2013

Australian Securities and Investments Act 2001(Cth)

Companies Act 1986(Cth)

(NZ) Securities Industry Act 1980(Cth)

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(2001) 38 ACSR 355 Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561 Australian Securities and Investments Commission v Preston [2005] FCA 1805 Australian Securities and Investments Commission v Soust (No 2) [2010] FCA 388; (2010) 76 ACSR 1 Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 Australian Securities and Investments Commission V West & Anor [2008] SASC 111; 100 SASR 496 Australian Securities and Investments Commission v White [2006] VSC 239; (2006) 58 ACSR 261 Australian Securities Commission v Donovan (1998) 28 ACSR 583 Australian Securities Commission v Nandan(1996) 23 ACSR 743 Australian Softwood Forest Pty Ltd v Attorney-General (NSW) [1981] HCA 49; (1981) 148 CLR 121 Brian Cassidy Electrical Industries Pty Ltd (in prov liquidation) and another v Attalex Pty Ltd [1984] 3 NSWLR 52 Broken Hill Pty Co Ltd v Bell Resources Ltd (1984) 2 ACLC 157 Brookfield Multiplex Ltd v International Litigation Funding Partners Pty Ltd (2009) 180 FCR 11 Caines v Australian Securities and Investments Commission [2012] AATA 289 Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075 Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 322 Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 Gillfillan v ASIC [2012] NSWCA 370 Hanson v Radcliffe UDC [1922] 2 Ch 490 Hawkins (1993) 67 A Crim R 64 Hayes v ASIC [2006] AATA 506 Ibeneweka v Egbuna [1964] 1 WLR 219 ICI Australia Operations Pty Limited v TPC (1992) 38 FCR 248 In the matter of Melinda Scott and Roach Graham Scott Pty Ltd [2012] NSWSC 1643 Jimmy v the Queen [2010] NSWCCA 60 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; (1990) 97 ALR 45 Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362; 20 ACLC 58 McDougall and Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (ACN 106 761 826) [2006] VSC 192; (2006) 57 ACSR 553 Mercedes Holdings Pty Ltd v Waters (No 2) [2010] FCA 472; (2010) 186 FCR 450 Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128 Mill v R [1988] HCA 70; (1988) 166 CLR 59; 83 ALR 1 NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 Oates v Hawkins [2010] NSWSC 491 Ohn v Walton (1995) 36 NSWLR 77 Oil Basins Ltd v Commonwealth [1993] HCA 60; (1993) 178 CLR 643; 117 ALR 338 Old v McInnes and Hodgkinson [2011] NSWCA 410 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; (1998) 152 ALR 83 Pearce v R (1998) 194 CLR 610; 156 ALR 684; [1998] HCA 57 Postiglione v R [1997] HCA 26; (1997) 189 CLR 295 Rahme v R (1989) 43 A Crim R 81 Re Austral Knitting Mills Ltd (1926) 43 WN (NSW) 131 Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257 Re McDougall [2006] FCA 427; 229 ALR 158 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 Russian Commercial and Industrial Bank [1921] 2 AC 438 Seagrim v Australian Securities and Investments Commission [2012] AATA 583 Triton Underwriting Insurance Agency [2003] NSWSC 1145; (2003) 48 ACSR 249 Texts Cited: Austin and Black, Annotations to the Corporations Act Austin and Ramsey, Ford's Principles of Corporations Law (15th edn) Lang Thai, "Statutory injunction - call for amendment to s 1324 of the Corporations Act" (2006) 24 C&SLJ 41 Thomas, Principles of Sentencing 2nd edn 1979 Thomson Reuters, Annotated Corporations Act, 2012 edn Category: Consequential orders Parties: Australian Securities and Investments Commission (Plaintiff) David John Hobbs (First Defendant) Min Hua Li (Second Defendant) David John Collard (Third Defendant) Huimin Wu (Fourth Defendant) Con Koutsoukos (Fifth Defendant) Brian John Wood (Sixth Defendant) Jimmy Truong (Seventh Defendant) Jacqueline Hobbs (Eighth Defendant) Idylic Solutions Pty Ltd ACN 121 960 754 (Ninth Defendant) 888 Management Inc (Tenth Defendant) Geneva Financial Ltd (Eleventh Defendant) Barclaywest Ltd (Twelfth Defendant) Preserved Investment Group Ltd (Thirteenth Defendant) North Wave Ltd (Fourteenth Defendant) G P Global Ltd (Fifteenth Defendant) Representation: J A Halley SC with J R Clarke (Plaintiff) Ms G Hayden, Solicitor for Australian Securities and Investments Commission (Plaintiff) File Number(s): 07/258119

Judgment 1HER HONOUR: On 24 October 2012 I published my reasons for judgment in proceedings brought by ASIC against various individual and corporate defendants in respect of alleged breaches of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Act 2001 (Cth) (Australian Securities and Investments Commission v Hobbs [2012] NSWSC 1276). Those breaches related to the involvement of the defendants, in various capacities, in investment schemes through which investors' funds were pooled for the purpose of investment into the offshore wholesale market. The fourteen individual investment schemes the subject of these proceedings together constituted a single managed investment scheme that was required to be (but was not) registered under the Corporations Act (the Hobbs Scheme). (Had the individual schemes not formed part of a single collective scheme, then only two of the individual schemes (the Integrity Plus and Super Save schemes) would have been required to be registered.) 2After a hearing commencing on 4 July 2012 and concluding (with some adjournments during that period) on 12 September 2012 (at which none of the defendants had legal representation, other than a brief appointment of Counsel on a pro bono basis for the giving of advice on a limited issue to Ms Wu), I found that contraventions had been committed of a variety of statutory provisions, including, in a number of instances, civil penalty provisions of the Corporations Act. I then fixed the matter for a separate penalty hearing (and for submissions as to the other relief sought) on 14 and 17 December 2012. 3Due to the earlier discontinuance of the proceedings against three of the defendants, and the fact that others had been deregistered at various times prior to the hearing (and, indeed, prior to the commencement of the proceedings), substantive relief was sought by ASIC only as against Mr and Mrs Hobbs, Mr Collard and Ms Wu (though some of the declaratory relief that is sought relates to the conduct of the other defendants). Consequential relief to dispose of the proceedings and to facilitate the winding up of the Hobbs Schemes was also sought. 4There was no appearance by Mr and Mrs Hobbs or by Mr Collard during the penalty hearing on 14 and 17 December 2012. (Although there was also no appearance by Ms Wu on 14 December 2012, her husband (Mr Zhang) was in attendance in Court and made some oral submissions on behalf of his wife on that occasion.) ASIC filed affidavit evidence as to its communications with Mr and Mrs Hobbs, Mr Collard and Ms Wu seeking to ascertain their intentions in relation to attendance at the penalty hearing. Mr Collard's response made it clear that he did not intend to attend or be represented at the hearing. As to Mr and Mrs Hobbs, an email communication was sent to my chambers on 14 December 2012 informing the Court that Mr and Mrs Hobbs would not be attending court for health and financial reasons. 5In those circumstances I proceeded on 14 December 2012 to hear ASIC's with its application to seek final relief and orders against Ms Wu and Mr Collard, in their absence. I then stood the matter over to 17 December 2012 for oral submissions in relation to the orders sought against each of Mr and Mrs Hobbs, making directions to allow for medical evidence to be given on Mr Hobbs' behalf, if there were to be an application at that late stage to vacate the penalty hearing on medical grounds (a possibility having regard to the content of some of the written submissions that had been received on his behalf). There was no such application. Accordingly, on 17 December 2012, I proceeded to hear oral submissions as to the penalties to be imposed on Mr and Mrs Hobbs. 6Drafts of the declarations and orders sought by ASIC had been provided in advance to Mr and Mrs Hobbs, Mr Collard and Ms Wu. They were the subject of some amendment during the course of the oral submissions at the penalty hearing on 14 December 2012. Transcript of the oral submissions on 14 December and 17 December 2012 was provided to Mr and Mrs Hobbs at my direction and at no cost to them. Pursuant to directions made at that time, I gave Mr and Mrs Hobbs an opportunity to make further submissions by 21 January 2013 (a date Iater extended at their request to 25 January 2013). Written submissions were served by Mr and Mrs Hobbs pursuant to those directions and, by leave, on 4 February 2013 ASIC served short submissions in reply thereto. 7A complication that had by then arisen, in terms of finalising the relief to be granted in these proceedings, was that on 29 January 2013 I became aware of a facsimile transmission dated 25 January 2013 that had been sent to the Court by two investors in the Pinnacle Fund (Mr Ze Ning He and Mr Feng Gao), seeking the payment to them of moneys held in Court referable to the Pinnacle Fund. I caused each of ASIC, Mr and Mrs Hobbs, Mr Collard and Ms Wu to be notified of, and copied with, that communication and listed the matter for directions on 1 February 2013. I did so because the relief for which Messrs He and Gao were seeking (in their then informal application to the Court) was inconsistent with (and would be rendered futile by) the orders sought by ASIC for the appointment of a liquidator to wind up the Pinnacle Fund (as part of the winding up of the overall Hobbs Scheme) and for the payment to the liquidator of all of the funds held in Court referable to the Hobbs Scheme. 8Pursuant to directions made on 1 February 2013, on 7 February 2013 Messrs He and Gao filed a notice of motion seeking orders under Part 55.11 of the Uniform Civil Procedure Rules 2005 (NSW) for payment to them of the moneys held in Court that are referable to the Pinnacle Fund and joining as respondents to that application each of Mr Hobbs, Ms Wu and the only other investor (according to the s 50 summaries admitted as Ex A in the proceedings) in the Pinnacle Fund (Ms Suzan Ou, both personally and through a company HLD Corporation). That notice of motion was returnable on 11 February 2013. The difficulty with proceeding with the payment out application on that day was that Ms Ou had not been properly served in accordance with the Rules (the documents being sent by express post to an address obtained by reference to identification documents of Ms Ou, the provenance of which was not made clear). There was no evidence of recent attempts to contact Ms Ou in order to ascertain or confirm her current whereabouts (though attempts had been made in the past by reference to a mobile phone number on which she had previously been contactable). I made further directions in relation to service on Ms Ou and stood that application over to 21 February 2013, at the same time listing these proceedings for judgment on the penalty hearing on that day (with a view to hearing the application for payment out of Court and then delivering judgment on the penalty hearing, with any modification of orders as might be necessary having regard to the outcome of the application by Messrs He and Gao). Ms Ou has since served an affidavit in which she indicates her consent to the payment out orders sought (on the basis, as I understand it, that she receive a share of the funds proportionate to her investment to the fund). 9As to the amounts paid into Court, handed up as an aide memoire during the course of the hearing was a list of the amounts paid in (from the various Cadent and Technocash accounts as well as from various of the corporate administrators of the Schemes, totalling AU $19,383,475.20 and US $1,580,593.02). Of those amounts a total of AU $18,953,475.20 has been paid out to the liquidator of the Super Save and Integrity Plus funds and the investors in Procash; and a further US $963,833.74 to the liquidator of the Master Fund. Remaining in Court are the sums of AU $430,000 and US $616,759.28 (together with any interest that may have been accrued thereon). Of that amount a sum in the order of US $215,617.77 is acknowledged by ASIC to be referable to the Pinnacle Fund. This is the amount in respect of which Messrs He and Gao have made their application under Rule 55.11. Summary 10For the reasons set out below, I am of the view that declarations largely in the terms sought by ASIC should be made; that each of the first, third, fourth and eighth defendants should be disqualified on a permanent basis from operating or carrying on the Hobbs Scheme or any other unregistered managed investment scheme and from providing any financial services without an Australian Financial Services Licence; and that, in addition to those disqualification orders:

disqualification orders should be made on a permanent basis against Mr Hobbs from managing any corporation, operating or carrying on any other managed investment scheme (i.e. even if that be registered) and from providing financial services; and he should be ordered to pay the Commonwealth a total penalty of AU $500,000 in respect of his numerous contraventions of ss 180, 181 and 182 of the Corporations Act;
permanent financial services disqualification orders should be made against Mr Collard; as to managing corporations he should be disqualified for a period of 20 years from the date of these orders and he should be ordered to pay the Commonwealth a penalty in total of $150,000 in total in respect of his many civil penalty contraventions;
Ms Wu should be restrained for a period of four years from managing corporations and a period of eight years from providing financial services; and
Mrs Hobbs should be restrained from managing corporations for a period of six years and from providing financial services (and related financial services disqualifications) for a period of eight years; and should pay the Commonwealth the sum of $20,000 in total by way of pecuniary penalty for her various contraventions of s 182 of the Corporations Act. 11There should be costs orders against each of those defendants, limited in the case of Ms Wu and Mr Collard to the period in which they actively contested the claims against them. 12I will make other consequential orders to provide for the winding up of the Hobbs Scheme (and the individual schemes comprised therein) and to dispose of the proceedings. I will make a final determination as to the orders in relation to the Pinnacle Fund after determining the notice of motion by Messrs He and Gao. The orders that are presently in the attached Schedule of Declarations and Orders include those that, but for and subject to the outcome of that application, I propose to make in relation to the Hobbs scheme and component funds, including the Pinnacle Fund. 13For convenience, I set out below a schedule of contents of these reasons. CONTENTS Summary [10] Background [14] Relief sought [21] Relevant Legal Principles [24] Declaratory relief [25] Disqualification orders (ss 206C and 206E) [41] Disqualification orders (ss 1101B and 1324) [58] Section 1101B [59] Section 1324 [64] Scope of s 1324 in light of s 1101B [72] Are the Adler factors applicable? [92] Pecuniary penalties sought under s 1317G [107] Multiple Contraventions [112] Appointment of receiver pursuant to ss 1101B and 1323(1) [117] Reasons Declaratory relief [119] Disqualification/Penalty orders Contraventions [122] Mr Hobbs [124] Mr Collard [126] Ms Wu [128] Mrs Hobbs [129] Identification of contraventions for purpose of imposition of civil penalties [131] Disqualification orders under ss 206C and 206E [160] Seriousness of contraventions Departure from standards expected [161] Potential/actual consequences [169] Disqualification orders under s 1101B and/or 1324 [182] Mr Hobbs Conduct of Mr Hobbs [186] Submissions made as to penalty by Mr Hobbs [193] Mr Hobbs' affidavit/January statement [195] Contrition [197] Mr Hobbs' further arguments as to findings [211] Mr Hobbs' financial position [238] Mr Hobbs' medical condition [243] Impact of the proceedings [249] Mr Hobbs' position as to penalty [265] Character Evidence [275] Should disqualification orders be made against Mr Hobbs? [280] Period of disqualification orders [288] Mr Collard Conduct [318] Mr Collard's submissions [326] Should disqualification orders be made? [340] Period of disqualification [342] Ms Wu Conduct [350] Ms Wu's submissions [356] Should disqualification orders be made? [365] Period of disqualification [368] Mrs Hobbs Conduct [375] Submissions on behalf of Mrs Hobbs [384] Should disqualification orders be made/period [400] Pecuniary penalties [404] Mr Hobbs [407] Mr Collard [438] Mrs Hobbs [449] Appointment of receiver [460] Other orders [470] Costs [479] Conclusion [494]

In the matter of Idylic Solutions Pty Ltd - Australian Securities and Investments Commission v Hobbs

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Judgment (10 paragraphs)

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