16 In order to consider this matter, it is first necessary to have regard to some of the factual background as disclosed by the evidence.
17 The defendant has graduate degrees in economics and law and was admitted as a solicitor of the Supreme Court of New South Wales in July 1989. After working as a solicitor for some years, he gained an MBA from the University of Pennsylvania in 1994 and then returned to work in Sydney in what I might generally describe as the "investments industry", and in particular in mergers and acquisitions. Ultimately, he was headhunted by Alesco Corporation Limited ("Alesco"). On 27 November 2003, the defendant was appointed to the position of group general manager - automotive by Alesco, reporting to the chief executive officer. The defendant gave evidence that during the course of an interview with the then CEO, Mr Kevin Clarke and Mr Sean Wareing, the chairman of the board of Alesco, he was told that whilst he had undoubted mergers and acquisitions experience he had no operational experience.
18 A letter dated 27 November 2003 addressed to the defendant under the hand of Mr Clarke, CEO, indicated that the defendant's responsibilities "will comprise providing strategic direction to and day-to-day management of the Automotive Division of Alesco." It named three businesses within that group and indicated that the general manager or divisional manager of each of the businesses would report to the defendant. He was also to be appointed to the "Board of the shared services committee which oversees the group shared services."
19 Within that part of the letter which covered a number of conditions of employment, there was contained the following:
Alesco has in place a Code of Conduct as well as other policies covering areas such as trade practices, OH&S and environment, which you are expected to familiarise yourself with and adhere to. These policies are available on the company's intranet or through our General Counsel at head office.
20 There was also a reference to "authority levels" although the document setting out those levels was not attached to the letter.
21 In a meeting with Mr Clarke on 19 January 2004, the defendant was given a document which referred to "authority levels group executives". It set out various authority levels for expenditure and other matters that were indicated to be possessed in turn by the board, the CEO, the group general manager and a divisional general manager.
22 Significantly, there was a reference to "OH&S". This indicated that the group policy framework was within the authority of the board, detailed divisional policy was within the authority of the group general manager and procedures were within the authority of the divisional general manager. No specific authority was given in this area to the CEO.
23 I interpolate that there is no mention in this document, or any document that replaced it, of a position of deputy CEO. This was said by the defendant to be significant, for reasons that I shall later refer to.
24 It is appropriate at this stage to say something about the structure of Alesco, as revealed by the evidence in the proceedings.
25 A general understanding of the business of Alesco may be gained from its annual reports. It is listed on the Australian Stock Exchange. I take by way of example information contained within the 2006 Annual Report. That discloses that Alesco has a business model of "managing a diverse portfolio of businesses with strong industrial brands, in niche or specialist markets…." There were total sales of about $600 million during the year derived from four Divisions housing more than 50 industrial brands throughout Australia and New Zealand with more than 2,000 employees overall. The Construction and Mining Division contains the Marathon and Parchem business as well as two further businesses acquired during that year, namely Concrete Technologies and Flextool. The Garage Doors and Openers Division is comprised of the B&D business. The Kitchen and Laundry Division is comprised of the Parbury and Robin Hood businesses. Parbury provides laminates, engineered stone, doors, cabinet hardware and accessories for use in kitchens. Robin Hood has a range of canopy hoods, range hoods, laundry tubs and ironing centres for supply within kitchens and laundries. The Scientific and Medical Division contains the business Biolab, which is a provider of scientific instruments and other consumables for use in industrial, environmental and medical markets. The Division also includes the Promedica business, which is a supplier of medical and surgical products to the hospital and health care industry.
26 The defendant said that shortly after he commenced employment with Alesco he was given the task by Mr Clarke of becoming involved in the potential acquisition, at that stage, of the B&D business. He said that he was "quite involved" in that acquisition until May 2004. Later throughout 2004, the defendant became involved in the sale of two businesses within the Automotive Division, which were completed on 31 December 2004.
27 Early in 2005, Mr Clarke had a conversation with the defendant in which he told him that he was performing well and that he was to be appointed to a position of deputy CEO, effective on 1 February 2005. A letter from Mr Clarke to the defendant dated 31 March 2005 confirmed the appointment and referred to "a number of areas of increased responsibility" being direct responsibility for the Scientific and Medical, Construction and Mining Divisions and the Robin Hood business, appointment to the role of chairman of the triple S committee, retention of the position on the board of B&D and "your appointment to the board of all subsidiary companies that form part of your span of control." The letter also indicated a desire to have the defendant become involved "generally in the strategic issues facing the organisation and you are invited to attend all Alesco board meetings."
28 The defendant said that he spent most of his time focussing on acquisitions but that the general managers of the three named Divisions reported to him. The defendant gave evidence that he was involved in the acquisition of Concrete Technologies in the latter part of 2005 and the acquisition of Flextool in December of that year. The defendant was also involved in the acquisition of a company, Promedica, in May 2006. Whilst the defendant was deputy CEO, he was also involved in proposals to acquire a number of other companies that did not proceed, although he had spent a great deal of time working on them.
29 In March 2005, Mr Robert Paul became the general manager of the Parbury Division and at that stage the Division was split so that the Parbury business, which included Dekorform, was retained and the Robin Hood business was split from it. In about May 2005, the defendant said he was asked by Mr Clarke to become involved in the Parbury business, a significant part of which was a contract with Wilsonart, a company based in the US, which supplied certain materials to Parbury. He was also asked to attend the meetings of the Parbury Division and report about that Division to the executive committee of Alesco. Thereafter he attended monthly meetings of the executive committee of Parbury and reported on those meetings to the executive committee of Alesco.
30 I have previously described, in general terms, the business activities of the Parbury Division. It was conducted via the corporate entity, Parbury Pty Ltd, a wholly owned subsidiary of Alesco. Dekorform was, in turn, a wholly owned subsidiary of Parbury Pty Ltd. Within its business, Parbury processed medium density fibreboard into doors. Dekorform undertook the same processes, but manufactured mouldings. On the evidence, the business of Dekorform was conducted at its own site.
31 There is in evidence the minutes of a number of executive committee meetings of the Parbury Division. A meeting held on 17 March 2005 was chaired by Mr Kevin Clarke, the then CEO of Alesco and among the other attendees was Mr Rob Paul, who was the divisional general manager. Items discussed included the financial performance of the Division, working capital, business development issues and the like. Included was a reference, under OH&S, to two lost time injuries for the month of March.
32 An executive committee meeting held on 17 May 2005 was chaired by the defendant who was
formally welcomed and introduced to the Parbury executive team members. The meeting's format was discussed and it was agreed to continue under the same format with Justin and Alan Fonseca invited monthly to receive the presentation from the Parbury executive team.
Presentations were made to the meeting by the general manager, Mr Rob Paul, and in addition there was a sales manager's report, a finance report, a marketing report and a supply chain report. There is also in evidence minutes of a number of subsequent meetings covering the period up to June 2006.
33 In general terms, these meetings appear to have been chaired by the defendant and attended by Messrs Thompson and Fonseca from Alesco "head office", as well as Mr Rob Paul and others from the Parbury Division. In general terms, there were reports from Mr Paul, the general manager, a finance report, a national sales manager's report, a marketing report and a supply chain report.
34 From time to time there was mention at these meetings of occupational health and safety matters in terms, predominately, of lost time injuries. There is also some indication that the defendant occasionally contributed to discussion about a number of matters.
35 Specifically, the general manager's report of August 2005 refers to a lost time injury, which occurred within the Parbury business on 18 August that year. It occurred when two employees were cleaning and moving slabs of Silestone. An employee was injured when three slabs fell on him.
36 The minutes of the meeting indicate that a prevention plan was put into place, that the Parbury OH&S policy and associated manual was to be updated to include reference to the prevention plan and that "safety audits including the generation of risk management reports to be performed in all branches housing Silestone."
37 I should stress that the evidence in the proceedings was to the effect that the Silestone incident was confined to the Parbury business and was not associated in any way with the business activities of Dekorform.
38 There is reference in the minutes of these Parbury Division business review meetings, from time to time, to the Dekorform business, but solely with respect to its overall business performance.
39 There was also admitted into evidence the minutes of a number of monthly management meetings of the Parbury division. These are minutes of meetings held on 19 July, 25 August and 8 December 2005. There were no attendees at any of these meetings by any representative of Alesco. Mr Brydson attended, presumably as a representative of the Dekorform business. There is a reference in the minutes of each of these meetings to occupational health and safety matters, which indicate, in my opinion, that those matters were being dealt with at the Parbury Divisional level. There is no reference in the minutes of any of these meetings to any necessity of any referral of any matter to Alesco executives. There is only one reference to the defendant and that is the need to attend to certain matters "2 days before meeting with Justin Ryan."
40 Evidence of the manner in which the OH&S activities of the Parbury Division were carried out is provided by an email from Rob Paul to a number of persons including Mr Brydson at Dekorform on 4 March 2005. Ms Rafferty, the general counsel for Alesco, had circulated to a number of persons, including members of the executive committee of Alesco, information about a Workplace Fatalities Bill 2004, which was to amend the Act. That was in turn circulated by Neil Freeland, the then divisional general manager of Parbury to Rob Paul, who in turn forwarded it by the email of 4 March 2005 to Mr Brydson of Dekorform. It indicated that the recipients of the email should "sit down and review our current situation. Warren can you take the lead and organise a meeting related to the current topic and have all the necessary people and current activities related to OH&S in attendance. We need to ensure compliance and reporting activities are updated and in line with the new standards"
41 A further email from Mr Paul to Peter White of Parbury, dated 25 August 2005, made reference to the previous material and asked Mr White to "ensure we have all the issues covered off in the new handbook currently under review."
42 It may be deduced from this evidence, which is consistent with other evidence given in the proceedings, that the responsibility for OH&S matters within the Parbury Division in general and within Dekorform in particular was put into effect at that level and that, having regard to material of this kind, it might be reasonably assumed that those responsible appeared to be cognisant of their obligations and, in the case of Mr Paul, proactive in taking steps to bring about compliance.
43 There is also in evidence the minutes of a number of meetings of the executive committee ("Exco") of Alesco. That committee was comprised of the senior executives of Alesco and was chaired, initially, by Mr Clarke, and later by the defendant.
44 Whilst there are matters raised at these meetings that indicate that the members of Exco, including the defendant, were conscious of OH&S matters, there is nothing contained in any of the minutes that is indicative of any particular OH&S problem and, in particular, of any problem associated with Dekorform. There is an indication that there were OH&S policies and procedures in place and that there was also in place a methodology to enable lost time injury frequency rates ("LTIFR") to be reported upon.
45 At the meeting held on 29 November 2005, the chairman, Mr Clarke,
noted that Parbury was to review its LTIFR and OH&S incidences particularly in relation to its handling of Silestone. Given that Mr Paul was absent from the meeting, the chairman asked Mr Ryan to follow up with Mr Paul and to report back at the next meeting.
46 The Silestone incident was confined to the Parbury business. The notation in the minutes is consistent with the management of the Parbury Division being entrusted to Mr Rob Paul and is indicative only of a communication role to be undertaken by the defendant.
47 The defendant was adamant that whilst he reported on the Parbury Division, he did not report specifically on Dekorform or the business of Dekorform. He was concerned substantially with the Wilsonart contract within the Parbury business and the sales performance of the Parbury Division as a whole. He also said that Mr Clarke had told him that Dekorform was a well-run, profitable business with a good management team.
48 My understanding of the role of the executive committee of Alesco is corroborated by the evidence of Mr Clarke. He said that that committee
comprised the heads of the five divisions plus the company secretary, the CFO, there may have been others, but those certainly were present and it was held on a monthly or six-weekly basis and the objective of that committee was to manage things that were of a group nature so rather than specific to an individual company so to the extent that there were general matters that were wanting to be implemented throughout the organisation that applied to every business, then those matters would be discussed at that meeting.
49 It was the evidence of the defendant that none of the subsidiary companies held meetings of directors at which directors physically attended. All of the decisions taken by directors of subsidiary companies were effected by way of circulating resolutions.
50 After he was appointed to the board of directors of Alesco on 1 October 2005, the defendant was asked to sign a consent to act as a director of those subsidiaries of which he was not already a director. This included Dekorform. He said that he had signed that document and that thereafter he was under the impression that he was a director of Dekorform and, indeed, subsequently signed documents as if he were a director of that company.
51 The defendant gave evidence about such involvement as he had with the business of Dekorform, utilising his 2005 diary for that purpose. He said that on 10 October 2005, he attended a meeting associated with the B&D business in Revesby. After the meeting, he called Mr Brydson, the then general manager of Dekorform and attended the Dekorform premises. By that time, a public announcement had been made that the defendant would succeed Mr Clarke as CEO when Mr Clarke retired on 31 May 2006. He walked around the plant with Mr Brydson. He said that he did not thereafter visit the Dekorform factory until July 2006.
52 Mr Brydson, in his evidence, confirmed that the defendant had only visited him at the Dekorform factory on the one occasion. There was evidence given by another witness, a Mr Owen, to the effect that the defendant may have visited the Dekorform factory two to three times before the accident, but this is inconsistent with that given by the defendant and Mr Brydson and I prefer their evidence.
53 Mr Brydson was the manager of Dekorform with particular responsibility concerning sales. He reported to the general manager of the Parbury Division. Mr Brydson stated that the defendant was not part of the management structure of Dekorform and noted that he did not attend Parbury executive monthly meetings.
54 In his evidence about the defendant's position within the Alesco organisation, Mr Wareing said that the defendant sat above and apart from the management of the Parbury Division. In terms of occupational health and safety responsibility, Mr Wareing said that this fell to the general manager of the Division. It was the defendant's responsibility to make sure that the general manager complied with his responsibilities.
55 In terms of overall occupational health and safety compliance within the Alesco group and its Divisions, it was the evidence of Mr Wareing that these were matters that were reported on to the Alesco board by Ms Rafferty, the Alesco general counsel.
56 The defendant said that he was significantly involved in the preparation of the financial reports of Alesco for the end of the financial year, which was 31 May 2006. He worked closely with Mr Neil Thompson who had commenced work as chief financial officer in January 2006. During that period also he was involved in learning as much as he could about all aspects of the various businesses within the Alesco group in preparation for him assuming the role as chief executive officer.
57 From January to May 2006, the defendant said that he spent a significant amount of time preparing himself to become chief executive officer dealing with major institutional shareholders and analysts. He said he had never previously been the CEO of a public company. Between March and May 2006, the defendant said he was also involved in preparing incentive programs for the management team and structuring remuneration.
Was the defendant a director of Dekorform?
58 Notwithstanding that the defendant had signed a number of documents purporting to be signed in his capacity as a director of Dekorform, it was his position, as submitted by senior counsel on his behalf, that, in fact, Alesco had never appointed the defendant as a director of Dekorform and that, in effect, the defendant was not a director of Dekorform.
59 The constitution of Dekorform was in evidence. Cl 3 deals with directors. The directors in office at the time of the adoption of the constitution are said by cl 3.1 to continue in office subject to the constitution. The appointment of a director at a point of time after the adoption of the constitution of Dekorform is provided for in cl 3.2. This states that "the Holding Company may by notice to the Company appoint a person to be a Director, either to fill a casual vacancy or as an additional Director." "Holding Company" is defined as meaning Alesco Corporation Limited.
60 Accordingly, the appointment of a director requires, firstly, that that appointment be undertaken by Alesco. This will require some action on the part of that company, either by the directors or by a person or persons who might be delegated by the directors for that purpose. Secondly, notice of appointment must be given by Alesco to Dekorform.
61 The defendant was, until shortly before the commencement of the hearing of these proceedings, under the impression that he was and had been duly appointed a director of Dekorform. Apart from evidence to this effect given by the defendant, there are a number of documents tendered into evidence that are supportive of this state of affairs.
62 On 29 September 2005, the defendant signed a consent to act as director addressed to the directors of Alesco notifying his consent to act as director of that company and listed subsidiaries, including Dekorform Pty Ltd. It was said that the consent form would be tabled at the next meeting of directors, presumably of Alesco.
63 The defendant, together with Kevin Franklin Clarke and Robert Mark Paul, signed a circulating resolution of directors of Dekorform granting a power of attorney and approving of its execution. The copy circulating resolution is undated but the power of attorney is dated 12 October 2005 and it may be inferred that the circulating resolution was signed shortly prior to that date.
64 On 25 May 2006, the defendant signed a circulating resolution of the directors of Dekorform relating to a deed of cross guarantee. The other persons who signed as directors were Messrs Clarke and Paul.
65 The same three persons signed a circulating resolution of the directors of Dekorform. That resolution purported to pass two resolutions. The first, under the heading "The appointment of director", was to the effect "that the consent to act as a director of Neil Thompson circulated with this resolution be accepted effective 31 May 2006." The second, under the heading "Resignation of director", was to the effect "that the resignation of Kevin Franklin Clarke circulated with this resolution be accepted effective 31 May 2006."
66 Not only does this document evidence the fact that the defendant considered himself a director of Dekorform on or about 31 May 2006, but, strangely, the circulating resolution of the directors of Dekorform prima facie purported to appoint a new director and to accept the resignation of an existing director. There does not appear to be any date that indicates the effective date of the constitution of Dekorform which was tendered into evidence in the proceedings. If that constitution pre-dated the circulating resolution to which I have just referred, which was made on or around 31 May 2006, then it would indicate a course of action inconsistent with that provided for in the constitution.
67 The only evidence concerning the creation of the constitution of Dekorform is Exhibit AP which consists of a memorandum from the General Counsel/Company Secretary of Alesco dated 7 May 2002. Attached to it is a minute of a resolution of members of Dekorform by which a special resolution was passed replacing the memorandum of articles of association of that company with a "new constitution" which, it may be assumed, is the constitution that the parties by consent tendered into evidence. The resolution was signed by a person purporting to be an authorised representative of Parbury Building Products Pty Ltd, the sole shareholder of Dekorform.
68 There is other documentation that is indicative that the Alesco group regarded the defendant, at all material times, as being not only a director of Alesco itself but also of its subsidiaries, including Dekorform.
69 A company search of ASIC records relating to Dekorform, conducted on 20 September 2006, shows the defendant as having been appointed a director on 1 October 2005 and as remaining a director as at the date of the search. A later search of ASIC records of Dekorform, carried out on 11 July 2008, shows the defendant as remaining a director as at that date. This is prima facie evidence that the defendant was a director of Dekorform during those dates; see s 1274B of the Corporations Act 2001 (Commonwealth).
70 The defendant sought to establish that he had not been appointed a director pursuant to the constitution of Dekorform and was, accordingly, not a director of that company. It was asserted that that evidence would be sufficient to rebut the prima facie evidence constituted by the ASIC return and would establish circumstances whereby the Court could not be satisfied beyond a reasonable doubt that the defendant was a director of Dekorform.
71 The defendant called as a witness Sireen Shaqawi. She had been employed by Alesco since June 2008 as an assistant company secretary. She described her principal duties as maintaining the company registers, preparation and filing of ASIC documents, obtaining signatures for those documents, assisting with the preparation of board papers, managing the Alesco share plans and "general duties with relation to the company, secretarial duties."
72 Ms Shaqawi carried out certain searches of part of the computer records of Alesco and some physical records of Alesco. Under cross-examination, she explained that on 13 May 2009 she received a telephone call from the defendant who asked her to look at the company register of Dekorform for documents that related to his appointment to the board of that company. He did not tell her what documents to look for. She said that she checked "the register" for any such documents and found a consent to act form that he had signed. In some way unexplained, Ms Rafferty the company secretary of Alesco was present and she asked Ms Shaqawi to search again particularly, it seems, for a circulating resolution appointing the defendant as a director of Dekorform. In her evidence, Ms Shaqawi did not identify whether that was a circulating resolution of Dekorform or Alesco. Ms Shaqawi then said that she showed a document which she had found, being a consent to act document, to Ms Rafferty who did not take the document but took the company register, being the physical register, away with her. That register had the consent to act document within it.
73 On 14 and 15 May 2009, Mr Ryan, by email, requested Ms Shaqawi to search the computer records of Alesco, which include the registers of Parbury and Robin Hood, in connection with documents which contained his name. She searched using the words "Justin Ryan" because she said that in her experience that would also throw up documents containing the word "Ryan".
74 Specifically, Ms Shaqawi, in cross-examination, said that she had not been asked to look for any documents that reflected any delegation by the board of Alesco of its powers nor had she ever looked for any authorities that may have been given to Mr Clarke by way of delegation.
75 Ms Shaqawi located, as a result of these searches, a resignation by the defendant as a director of Parbury dated 1 August 2008 and a memorandum of the resolution signed by one director, Mr Neil Thompson, undated, accepting that resignation effective 1 August 2008.
76 On 9 June 2009, Ms Shaqawi received further instructions from Ms Rafferty and the defendant, probably separately, to broaden her searches to cover all Alesco subsidiaries and in addition to search a compactus which contained all of the physical records of Alesco and its subsidiaries. She conducted two network searches of the Alesco computer records and every physical document within the compactus. All of these searches were directed to looking for any document that contained a reference to the defendant.
77 In more general terms, it was the evidence of Ms Shaqawi that there was stored within the Alesco computer system documents that were created for the purpose of recording matters which were necessary for the production of documents to be filed with ASIC and which would otherwise be utilised for the secretarial purposes of Alesco and its subsidiaries. Apart from the consent to act as a director of Alesco and its subsidiaries, including Dekorform, signed by the defendant on 29 September 2005, Ms Shaqawi was unable to locate within any of the computer and physical records which she searched any circulating resolutions for Alesco or Dekorform or consents to act as a director for Parbury relating to the defendant.
78 It may be concluded that the searches undertaken by Ms Shaqawi were carried out on all of the material stored in the Alesco computer system over a period of time that would throw up any document that was indicative of the appointment of the defendant as a director of Dekorform, including such documentation as was kept concerning Alesco and such documentation as was kept concerning Dekorform. The only relevant document that she was able to locate was the consent to act form, to which reference has already been made.
79 These searches conducted twice on the Alesco computer system were supplemented by the physical search which Ms Shaqawi carried out on the company registers. Her evidence was that she found two documents which were not stored on the computer system. One was a circulating resolution relating to Concrete Technologies Pty Ltd that had been prepared by lawyers, Mallesons. The other was a document relating to a company then known as Ambatron Pty Ltd, which later became B&D Limited. That document was dated 1999 and was part of the records acquired by the group which owned the B&D business and which was later acquired in turn by Alesco. The document was therefore created during the defendant's previous employment within the B&D business before acquisition by Alesco.
80 Ms Shaqawi gave evidence that Ms Rafferty had asked her to search for any circulating resolutions by which the defendant may have been appointed a director of Dekorform. It was said by the defendant that this evidence indicated that Ms Rafferty was of the opinion that this was a means by which a director of Dekorform could be appointed.
81 This apparent understanding of Ms Rafferty was shared by two other persons who gave evidence. Mr Sean Wareing is the chairman of the board of directors of Alesco. He was initially appointed a director of Alesco (then known by another name) in 2000 and became chairman later that year. Mr Wareing said that he first learnt in about June or July 2009 that directors of subsidiary companies within the Alesco group needed to be appointed by the main board itself. Prior to that time there had not been in force any procedure for the giving of notice by Alesco to subsidiaries that a person had been appointed a director. In cross-examination, Mr Wareing said that prior to May or June 2009, the appointment of directors to the boards of subsidiaries of Alesco was something undertaken by Mr Clarke as the chief executive officer. He said it was "not a function that was being performed by the board."
82 Mr Clarke gave evidence that he commenced work at Alesco in 1995. He had never seen a written notice from Alesco to a subsidiary company appointing a director. Neither would he have expected to see such a notice.
83 I now return to the circulating resolution of directors of Dekorform signed by Messrs Clarke and Paul and the defendant on or about 31 May 2006 which purported to accept the consent to act as a director of Neil Thompson under the heading "Appointment of director" and the resignation of Mr Clarke, both effective 31 May 2006. This is indicative of a practice that was inconsistent with the provisions of the constitution of Dekorform to which I have previously referred.
84 The defendant relied on cl 13.5 of the constitution which stated that "The provisions of the Corporations Act that applies replaceable rules are displaced by this constitution and accordingly do not apply to the company." Accordingly, by reason of s 201G of the Corporations Act, the inherent power of the shareholders of Dekorform to appoint directors by ordinary resolution in general meeting was displaced and the only way in which the defendant could have been validly appointed a director of Dekorform was by notice given by Alesco to that company pursuant to cl 3.2 of the constitution. It was submitted that the evidence of Ms Shaqawi established that there was no record of any such notice having been given and that it was not surprising that no such notice existed because, consistent with the evidence of Messrs Wareing and Clarke and consistent with the procedure followed in the circulating resolution of directors of about 31 May 2006, the use of such notices was not part of the practice of the board of directors or other senior executives of Alesco.
85 In essence, the prosecutor submitted that the Court would be slow to accept the evidence of Ms Shaqawi. Firstly, Alesco and the defendant conducted themselves at all times as though the defendant had been appointed a director of Dekorform in 2005 and remained, for all purposes and at all relevant times, a director of that company. There is, as I have referred to, ample evidence to support such a contention. This evidence, the prosecutor submitted, is suggestive that as a matter of fact Alesco did appoint the defendant as a director of Dekorform and that various notices and documents issued by Alesco for distribution to subsidiaries were sufficient notice to this effect. An example is provided by a memorandum from Ms Rafferty addressed to "the HR committee" dated 23 May 2006 dealing with the retirement of Mr Clarke as chief executive officer. That memorandum concludes:
As a result of Kevin's departure, I have arranged for Kevin to resign from all Alesco subsidiary boards effective 31 May 2006. Justin has been appointed a director of all Alesco subsidiary boards, together with the appropriate general manager or Neil Thompson (as the case requires)….
86 The prosecutor submitted: "The Court would infer from the totality of the evidence that there was a practice or policy that Alesco maintained control over its subsidiaries through the appointment of the CEO and deputy CEO and the manager of the relevant Division to those companies over which executive power was to operate. Appointments as directors of the subsidiaries were neither haphazard nor whimsical."
87 The prosecutor also submitted that although Ms Shaqawi gave evidence of the searches that she did conduct, there may have been other areas where she should have searched for documents such as the computers of individual directors. It was possible, it was said, that other documents might exist either now or at the time that the defendant thought that he was appointed to the board of Dekorform. Furthermore, the prosecutor submitted that the Court should be slow to accept the evidence of Ms Shaqawi that indicated that in filing documents with ASIC proclaiming the defendant to be a director of Dekorform, Ms Rafferty and Alesco were arguably in breach of provisions of the Corporations Act which were criminal in nature. The prosecutor drew attention to the provisions, for example, of s 188 amongst others.
88 The prosecutor also submitted that the Court should be slow to accept the evidence of Ms Shaqawi alone in circumstances where the defendant had not called Ms Rafferty to give evidence.
89 Finally, the prosecutor referred the Court to a number of provisions of the Corporations Act which deal with the impact of irregularities and the effectiveness of acts of directors. These include, relevantly, ss 1322 and 210M of the Corporations Act.
90 As the defendant submitted, none of the provisions of the Corporations Act which deal with the effect of irregularities in the conduct of meetings or the affairs of corporations impact upon the invalidity itself of the appointment of directors. There are provisions that will save the conduct and actions of persons invalidly appointed as directors of a corporation, particularly for consequences upon third parties, but none of them, in their terms, has the effect of declaring that the appointment of a person as a director whose appointment has been sought to be effected in a manner inconsistent with the constitution of the corporation, is nevertheless valid, or taken to be valid for purposes that would include a consideration as to whether the defendant was a director of Dekorform for the purpose of these proceedings.
91 In the same way, a course of conduct of the kind adopted by Alesco, its board members and senior executives which is inconsistent with the provisions of the constitution of Dekorform is not sufficient per se to create a valid regime for the appointment of the defendant as a director if what is done is inconsistent with the provisions of the constitution. See, generally, Williams J in the High Court of Australia in Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1. At pp 33 - 34, his Honour distinguishes between a defective appointment and circumstances in which no appointment as a director has been made.
92 In terms of the lack of evidence from Ms Rafferty, which the prosecutor asserted may well have been of interest, the evidence of Ms Shaqawi was directed to searches that she carried out. In the absence of any evidence that any such searches had been conducted personally by Ms Rafferty, any evidence that she might have been able to give concerning the presence or absence of relevant documents would not have been of assistance to the Court. Accordingly, I do not draw any inference unfavourable to the case that the defendant seeks to make out in this regard by reason of the failure of the defendant to call Ms Rafferty to give evidence.
93 This now leads to a consideration of the totality of the evidence, and as to whether or not the defendant's submission that it is sufficient to create a doubt about his appointment as a director such as to allow me to conclude that it has not been established beyond a reasonable doubt that he was, on the relevant date, a director of Dekorform should be accepted. The relevant date is, of course, that which is referred to in the charge, namely 3 July 2006. In my opinion, the totality of the evidence consisting of that given by Ms Shaqawi, complemented by the oral evidence of Messrs Wareing and Clarke and the presence of the circulating resolution of Dekorform concerning the purported appointment of Neil Thompson as a director effective 31 May 2006 is indicative that there was a course of action pursued at the relevant times by the board of directors and senior officers of Alesco concerning the appointment of directors of subsidiary companies and in particular Dekorform which was inconsistent with the provisions of the constitution of Dekorform. This course of action is corroborated by the lack of any documentation recorded within the comprehensive Alesco computer system and recorded within the physical records of Alesco, which would identify the use of notices to subsidiaries of the kind contemplated by the Dekorform constitution together with some conduct on the part of Alesco formalising the appointment the defendant as a director.
94 Accordingly, I conclude that I am not satisfied beyond a reasonable doubt that the defendant was a director of Dekorform as contemplated by its constitution on 3 July 2006.
95 Such a finding does not, necessarily, dispose of the proceedings. The prosecutor relied on the definition of "director" contained in s 9 of the Corporations Act 2001, which extended to persons who were not validly appointed as a director of a corporation pursuant to its constitution. This extended statutory definition was to be applied, as the prosecutor asserted, to the provisions of s 26(1) of the Act. The defendant vehemently opposed both these arguments and it is necessary to deal with them.
Was the defendant a director of Dekorform as that word is defined in s 9 of the Corporations Act 2001?