Inspector James v Ryan

Corporations Act 2001- s 9, s 124, s 128, s 129, s 188, s 201G, s 210M, s 1322, LEGISLATION CITED: Interpretation Act 1987 - s 33 Occupational Health and Safety Act 2000 - s 3, s 8(1), s 10(2), s 26

Australian Securities and Investments Commission v Adler and ors (2002) 168 FLR 253 Corporate Affairs Commission v Drysdale (1978) 141 CLR 236 Dean v Hiesler [1942] 2 All ER 340 Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 GJ Coles v Retail Trade Industrial Tribunal (1987) 7 NSWLR 503 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Harris v S (1976) 2 ACLR 51 Inspector Aldred v Herbert and ors [2007] NSWIRComm 170 CASES CITED: Inspector Gregory v S&P Jackson Pty Ltd and Scott Jackson [2009] NSWIRCom 158 Inspector Wayne James v Sunny Ngai and ors [2007] NSWIRComm 203 Inspector Ken Kumar v David Aylmer Ritchie [2006] NSWIRComm 323 Metal Manufacturers Pty Ltd v Lewis (1988) 13 NSW LR 315 Nacomp Technology Australia Pty Ltd v Graich [2001] NSWCA 120 Powercoal Pty Ltd & Peter Lamont Foster v Industrial Relations Commission of New South Wales & Rodney Dale Morrison [2005] NSWCA 345; 145 IR 327 PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 R v Olbrich [1999] HCA 54; 199 CLR 270 R v Scott (1990) 20 NSWLR 72 Waugh v Kippen [1986] HCA 12; (1986) 160 CLR 156

HEARING DATES: 4, 9, 11, 12, 15 - 19 June, 31 August, 8, 9, 14, 15, 17, 18 September, 12, 22, 27, 28 October, 18 & 19 November 2009

Mr M Joseph SC with Mr D Chin of counsel (Prosecutor) Solicitor: Legal Group LEGAL REPRESENTATIVES: WorkCover Authority of New South Wales

Mr L Robberds QC with Mr R Crow of counsel (Defendant) Solicitor: Bilbie Dan Solicitors

Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 (in the alternative pursuant to s 10(2)) by operation of s 26 of the Occupational Health and Safety Act 2000

1 The defendant in these proceedings, Justin James Ryan, is charged by the prosecutor, Inspector Wayne James of the WorkCover Authority of New South Wales, with two breaches of the Occupational Health and Safety Act 2000 ("the Act"), which are framed as alternative charges. The defendant comes to be charged with these offences by reason of the provisions of s 26(1) of the Act, which is in the following terms: 26 Offences by corporations - liability of directors and managers

(1) If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each director of the corporation, and each person concerned in the management of the corporation, is taken to have contravened the same provision unless the director or person satisfies the court that:

(a) he or she was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or

(b) he or she, being in such a position, used all due diligence to prevent the contravention by the corporation. 2 As will be seen, it is alleged that a corporation, namely Dekorform Pty Ltd ("Dekorform"), breached s 8(1) or in the alternative s 10(2) of the Act and that the defendant was a director of Dekorform. In these circumstances, the defendant "is taken to have contravened" the same provisions of the Act unless he is able to satisfy the Court of either of the matters referred to in s 26(1)(a) or (b). 3 Relevantly, ss 8(1) and 10(2) of the Act are in the following terms: 8 Duties of employers

(1) Employees An employer must ensure the health, safety and welfare at work of all the employees of the employer. That duty extends (without limitation) to the following: (a) ensuring that any premises controlled by the employer where the employees work (and the means of access to or exit from the premises) are safe and without risks to health,

(b) ensuring that any plant or substance provided for use by the employees at work is safe and without risks to health when properly used,

(c) ensuring that systems of work and the working environment of the employees are safe and without risks to health,

(d) providing such information, instruction, training and supervision as may be necessary to ensure the employees' health and safety at work,

(e) providing adequate facilities for the welfare of the employees at work. …

10 Duties of controllers of work premises, plant or substances …

(2) A person who has control of any plant or substance used by people at work must ensure that the plant or substance is safe and without risks to health when properly used. 4 The charges brought against the defendant are contained within an application for order filed in the Court on 30 June 2008. For present purposes, I shall confine my consideration to the matters that relate to the alleged contravention of s 8(1) of the Act. The charge is that the defendant, being a director of Dekorform, is deemed to have contravened s 8(1) of the Act in that: DEKORFORM PTY LTD [ACN 000 639 252] being an employer, on 3 July 2006, at 5-7 Ladbroke Street, Milperra in the State of New South Wales ("the premises") failed to ensure the health, safety and welfare at work of all its employees, and in particular, Wayne Hogden and Michael Hughes ("the employees"), contrary to section 8(1) of the Occupational Health and Safety Act 2000.

(a) At all material times Dekorform Pty Ltd [ACN 000 639 252] ("Dekorform") was a body corporate with its registered office located at Level 24, 45 Clarence Street, Sydney in the State of New South Wales.

(b) At all material times Justin James Ryan was a director of Dekorform

(c) At all material times, Dekorform was an employer and employed persons at the premises.

(d) At all material times Dekorform employed Wayne Hogden as Production Manager and Michael Hughes as a machinist at the premises.

(e) Dekorform failed to ensure that plant, namely a Paul Maschinenfabrik GmbH & Co Multirip Circular Saw (Model K34G/1500, machine number 8944950) ("machine"), provided for use by the employees at work was safe and without risks to health when properly used, in that: (i) Dekorform failed to maintain and/or replace the machine's internal rollers and sleeves to ensure that the length of the rollers had a uniform diameter;

(ii) Dekorform failed to ensure that the machine was not operated, or could not be operated, while the external anti-kickback fingers were in a raised position;

(iii) Dekorform failed to maintain and/or ensure the operation of an electrical interlock mechanism to prevent the saw shaft from turning while the external anti-kickback fingers were in a raised position;

(iv) Dekorform failed to maintain and/or ensure the presence and operation of internal anti-kickback fingers.

(f) Dekorform failed to ensure that systems of work and the working environment of the employees were safe and without risks to health in that Dekorform failed to ensure that, whilst operating the machine, the employees were at a safe distance and angle from and in relation to the in-feed table of the machine.

(g) Dekorform failed to provide such information, instruction, training and supervision as was necessary to ensure the employees' health and safety at work, in particular in relation to the operation of the machine.

(h) Dekorform failed to undertake any, or any adequate, risk assessment to identify the risks associated with operating the machine, including an assessment of the risk of "kick back" of materials being fed into the machine.

As a result of the said failures, Wayne Hogden and Michael Hughes were placed at risk of injury and Mr Hogden was fatally injured. 5 In the course of the proceedings, the defendant did not contest that Dekorform had breached s 8(1) of the Act in the manner alleged by the prosecutor. The proceedings were defended essentially on two bases, namely whether he was a director of Dekorform and whether he was in a position to influence the conduct of Dekorform in relation to its contravention of s 8(1). I observe that the onus is on the prosecutor to establish that the defendant was a director of Dekorform at the relevant time and that that onus needs to be established to the criminal standard, namely beyond a reasonable doubt. However, the defendant bears the onus of establishing that he was not in a position to influence the conduct of the corporation in relation to its contravention of s 8(1) but need only establish this on the balance of probabilities. 6 In considering the defence which the defendant sought to raise under s 26(1)(a), it is necessary to establish whether the corporation contravened s 8(1) and if so the nature and extent of the contravention. It is only when one identifies the manner in which s 8(1) was contravened that the Court is able to assess whether the defendant has made out any defence available under s 26(1)(a). 7 Because the defendant did not seriously contest for the purpose of the hearing that there had been a breach by Dekorform of the provisions of s 8(1) of the Act, it is not necessary that I discuss in any detail the relevant evidence that was adduced by the prosecutor covering this aspect of the proceedings. I find that the prosecutor has established that Dekorform was, at all relevant times, a corporation and an employer. 8 There was evidence that Brian Hughes, a machinist employed by Dekorform, was on 3 July 2006 operating a circular saw identified in the charge brought against the defendant at the premises named in the charge, those premises being occupied by Dekorform. The evidence established that Mr Hughes was operating the machine by manually pushing a timber board from the in-feed section. The machine failed to cut the timber board in the required manner and Mr Hughes sought assistance from Wayne Hogden, who was the production manager employed by Dekorform. Mr Hogden, while attempting to assist Mr Hughes, manually fed another timber board into the machine which ejected it so that it kicked back into Mr Hogden's stomach, fatally injuring him. 9 There was evidence that some weeks before this incident, a number of employees had encountered difficulty with the machine. A decision had been taken by the manager of Dekorform, Mr Lindsay Brydson, that certain rollers on the machine needed to be replaced and that this would be attended to at the next annual Christmas closedown. 10 After the incident, the internal rollers of the machine were inspected by a mechanical engineer who noted wearing along the lengths of the top rollers and wearing in certain other areas which resulted in any piece of board being inserted into the machine being skewed and catching against the sides or teeth of the rotating blades of the machine. Furthermore, the machine was fitted with external anti-kickback fingers but these had been raised and an electrical interlock mechanism, which would have prevented the machine from operating whilst these anti-kickback fingers were raised, had been rendered inoperative. If this equipment had been utilised, it would have prevented the kickback of the piece of board and the death of Mr Hogden. In addition, another employee of Dekorform, Mr Glenn Campbell, who was a leading hand/supervisor, found a set of internal anti-kickback fingers nearby which had been removed from the machine. If they had been in place, they would have functioned as an anti-kickback device and would, again, have prevented the incident occurring. 11 The manufacturer had issued instructions prohibiting employees from standing in line with the in-feed table of the machine to avoid an operator being struck by a piece of timber being ejected but the employees of Dekorform were not aware of this. In the same way, there was evidence that Dekorform had no formal documented training processes or competency assessments for employees concerning the safe operation of the machine, its training of employees was substantially provided by "on the job" training, there was no occupational health and safety manual provided to the employees and, although a safety procedure for the operation of the saw had been available at some stage and placed on the side of the machine, it was missing on the day of the accident. 12 It followed, on the evidence, that the relevant employees were not aware of the prohibition imposed by the manufacturer against modifying or disabling any safety device on the machine, standing in line with the in-feed table and were not aware of the effect on the operation of the machine of the wearing of the rollers. 13 I find, on the basis of the evidence adduced in the proceedings, which I have summarised albeit briefly, that Dekorform breached the provisions of s 8(1) of the Act in each of the ways particularised in [e], [f], [g] and [h] of the particulars of charge. 14 This, therefore, constitutes the contravention of the Act which in turn will be the subject of the assessment as to whether the defendant is able to satisfy the Court that the defence available under s 26(1)(a) has been made out. 15 In considering these matters, it will be necessary in due course to take into account the allegations made by the prosecutor, as established in the evidence, that some of the omissions that constitute the contravention had existed prior to the date of the incident itself. I shall return to this aspect later in these reasons for judgment. General factual background

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?

96 The part of s 9 of the Corporations Act 2001 dealing with the definitions of "director" is in the following terms: 9 Dictionary

" director " of a company or other body means: (a) a person who: (i) is appointed to the position of a director; or

(ii) is appointed to the position of an alternate director and is acting in that capacity; regardless of the name that is given to their position; and

(b) unless the contrary intention appears, a person who is not validly appointed as a director if: (i) they act in the position of a director; or

(ii) the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes.

Subparagraph (b)(ii) does not apply merely because the directors act on advice given by the person in the proper performance of functions attaching to the person's professional capacity, or the person's business relationship with the directors or the company or body.

Note: Paragraph (b)--Contrary intention--Examples of provisions for which a person referred to in paragraph (b) would not be included in the term "director" are: * section 249C (power to call meetings of a company's members)

• section 205B (notice to ASIC of change of address).

… 97 For the purpose of this discussion, I shall avoid reference to paragraph (a) of the definition because, as I have held, I do not regard the defendant as having been appointed to the position of a director of Dekorform in the manner contemplated by the constitution for the reasons which I have earlier set out. 98 The provisions of paragraph (b) refer to a person who has not been validly appointed as a director in circumstances where either sub-paragraphs (i) or (ii) apply. 99 There is, in my opinion, evidence that the defendant acted in the position of a director of Dekorform and, accordingly, to that extent the provisions of paragraph (b) would result in him being regarded, for the purpose of s 9 of the Corporations Act, as a director of that company. However, those three occasions, on the evidence, were the occasions upon which the defendant signed documents purporting to be a director of Dekorform, namely the circulating resolution of directors and the power of attorney on or about 7 October 2005, a deed of cross guarantee on 25 May 2006 and a circulating resolution accepting the resignation of Mr Clarke and appointing Mr Thompson on or about 31 May 2006. 100 On each of those occasions, the defendant acted in the position of a director and was, accordingly, a director for the purpose of the s 9 definition. However, as the defendant submitted, that does not necessarily render him a director on any other occasion because there is no evidence that he acted as such on any other occasion. There is certainly no evidence that on 3 July 2006, the defendant performed any act or engaged in any conduct in circumstances where it would follow that paragraph (b)(i) of the s 9 definition applied. 101 The defendant submitted that the provisions of this paragraph only applied in the circumstances where a person acted in the position of a director and that they did not apply at any other time when the person was not so acting. There appears to be no decided case located either by the prosecutor or the defendant that has dealt with the tenure of any person who is a director of a company solely by reason of the provisions of paragraph (b)(i) of the definition. The circumstances of such a person are to be contrasted with the circumstances of someone who is appointed to a position for a particular period or for a particular purpose. This provision may also be contrasted with that contained within paragraph (b)(ii) of the definition. It is arguable that such a person, as referred to in paragraph (b)(ii), may continue to be regarded as a director for the purpose of the definition for so long as there is a course of conduct in which that person exercises the form of control that is described. 102 Of course, it is possible also that a person who falls within paragraph (b)(i) may also engage in a course of conduct that would enable a court to conclude that whilst so engaged the person was, over a period of time, a director for the purpose of the definition. However, there is simply no evidence in these proceedings that there was any such course of conduct. Indeed, the evidence was to the contrary. Such activities as the defendant undertook in relation to Dekorform were undertaken in his capacity as deputy chief executive officer and later chief executive officer of Alesco, the ultimate parent company of Dekorform. On the evidence, his particular involvement with Dekorform, in circumstances where it could be said that he acted "in the position of" a director, was confined to the signing of the three documents to which I have referred. 103 The prosecutor submitted: "There is considerable evidence that the defendant in his various roles was involved in the management of Dekorform." The prosecutor gave by way of example the defendant's attendance at Parbury Divisional meetings, the fact that he was the deputy CEO of Alesco, that he was a director of Parbury, that he was on the executive committee of Alesco and later its chairman, that he was on the board of Alesco or alternatively attended meetings of the board of Alesco and had some involvement in OH&S issues concerning Parbury (but not Dekorform). 104 In my opinion, none of these matters goes in any relevant way to establishing any conduct on the part of the defendant that would indicate that he was performing or carrying out any duties or responsibilities associated with those that would ordinarily be undertaken by a director of Dekorform. Nor would any of these activities indicate that the defendant was closely involved or, indeed, involved at all in the day-to-day management of the business of Dekorform. 105 These conclusions would also militate against any suggestion that the defendant in some way came within the provisions of paragraph (b)(ii) of the definition. There is no evidence that the other directors of Dekorform were accustomed to act in accordance with the defendant's instructions or wishes and there is no evidence that the defendant issued any instructions or wishes to the other directors of Dekorform in their capacity as directors of Dekorform about any matter that involved Dekorform. 106 The prosecutor also relied on a line of authorities which refer to de facto officers and de facto directors. 107 There is a discussion about de facto officers by McHugh JA (as his Honour then was) in the New South Wales Court of Appeal in GJ Coles v Retail Trade Industrial Tribunal (1987) 7 NSWLR 503. His Honour raised for consideration the application of the de facto officers principles in the context of those proceedings. The majority (Kirby P, as his Honour then was, and Hope JA) disagreed that those principles had any application to the proceedings. Nevertheless, their Honours did not call into doubt the observations of McHugh JA concerning the de facto officers principles. What is made clear in the judgment of McHugh JA is that the de facto officer principle attaches to the "acts" of persons who purported to exercise the duties of an office without being lawfully appointed to that office. The emphasis, as I have said, is on the "acts" of such a person. Accordingly, it may be deduced that it is only when such a person performs such "acts" that he or she may attract the application for that principle. Even if such a common law principle was applicable in the circumstances of these proceedings, the principle would only result in the affording of some protection to the interests of the public and others and, at its highest, would only accord some "official" status to the defendant on such occasions as he purported to act as a director. As I have previously indicated, these are confined, on the evidence, to the signing of the three documents to which I have referred. There is simply no evidence of any circumstances that would justify the application of such a principle, assuming that it applied, on 3 July 2006. 108 In deference to the extensive submissions made by the prosecutor in this regard, I should refer briefly to the decision of the High Court of Australia in Corporate Affairs Commission v Drysdale (1978) 141 CLR 236. The prosecutor sought to rely on the several judgments of the High Court in these proceedings in some way as sustaining his argument that the defendant was a de facto director of Dekorform and accordingly amenable to prosecution, assuming that the Court determined that he had not been validly appointed as a director of that company. 109 In my opinion, this case does not offer any support to the prosecutor. It concerned the interpretation of the provisions of the then s 124 of the Companies Act 1961 (NSW) which required a director to act honestly and use reasonable diligence "in the discharge of the duties of his office." All members of the Court (Gibbs, Mason, Murphy and Aickin JJ) in separate judgments held or agreed that the word "director" where used in s 124 included a person who occupied the position of director, whether validly appointed or not, as well as someone who was validly appointed. Furthermore, the definition of "director" in s 5 of that Act referred to any person "occupying the position of director of a corporation by whatever named called…." 110 There is a discussion in the judgments of Mason J and Aickin J concerning de facto officers but these discussions do not, in my opinion, advance the matter any further than the references which I have already made. 111 I should add for completeness that the prosecutor relied on a number of provisions of the Corporations Act including ss 128, 129, 210M and 1322. All of these provisions validate certain conduct of directors and others and of the corporation. They do not, however, purport to validate the appointment as a director of a person who has not been validly appointed a director. The meaning of "director" in s 26(1)

112 The prosecutor asserted, and the defendant denied, that the meaning of "director" in s 26(1) of the Act was not confined to a person who was duly appointed to that position in accordance with the constitution of a corporation but extended to include the definition of "director" under the Corporations Act or, alternatively, de facto directors being directors at law. 113 This is, essentially, a matter of statutory construction. The construction of s 26 of the Act is to be undertaken having regard to the provisions of s 33 of the Interpretation Act 1987, which is in the following terms: 33 Regard to be had to purposes or objects of Acts and statutory rules

In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object. 114 This in turn directs attention to the purpose or objects underlying the Act. These are to be found in s 3 of the Act, which is in the following terms: 3 Objects

(a) to secure and promote the health, safety and welfare of people at work,

(b) to protect people at a place of work against risks to health or safety arising out of the activities of persons at work,

(c) to promote a safe and healthy work environment for people at work that protects them from injury and illness and that is adapted to their physiological and psychological needs,

(d) to provide for consultation and co-operation between employers and employees in achieving the objects of this Act,

(e) to ensure that risks to health and safety at a place of work are identified, assessed and eliminated or controlled,

(f) to develop and promote community awareness of occupational health and safety issues,

(g) to provide a legislative framework that allows for progressively higher standards of occupational health and safety to take account of changes in technology and work practices,

(h) to deal with the impact of particular classes or types of dangerous goods and plant at, and beyond, places of work. 115 It will be observed that the objects of the Act are carried out in a number of ways. Predominantly, these include the creation of absolute or strict obligations on employers and others whose activities affect the health, safety and welfare of people at work. A breach of those obligations is accompanied by a criminal sanction. 116 In the case of obligations imposed on corporations, the Act is concerned to ensure that the criminal sanctions are extended, in appropriate circumstances, to persons who exercise some influence or control over the conduct of the corporation. These matters were adverted to by Spigelman CJ in the New South Wales Court of Appeal in Powercoal Pty Ltd v Industrial Relations Commission of New South Wales [2005] NSWCA 345; 145 IR 327. (Mason P and Handley JA agreed in the reasons for judgment of Spigelman CJ). In considering his Honour's judgment, it should be borne in mind that it was directed to the provisions of s 50 of the Occupational Health and Safety Act 1983, the predecessor to s 26, and, more importantly, was directed to those provisions dealing with a person "concerned in the management of the corporation" rather than a director. 117 In referring to the objects of the Act and the approach to construction, Spigelman CJ said, at [116]: [116] The objects of the Act, and the general nature of the duties imposed by the Act, suggest that Parliament did not intend to give the language of s50(1) a narrow, let alone a technical, meaning. The purposive approach to interpretation required at common law, and now by s33 of the Interpretation Act 1987, suggests that the words "management of the corporation" should not be read down so as to apply only to central management. 118 Furthermore, his Honour said that a court applying s 50 was "concerned with a person who has a level of complicity in the commission of the offence by the corporation…." In describing complicity in the commission of an offence, his Honour commented: "Such complicity arises in a context where persons in a managerial role could have taken steps to ensure that the objects of the Act are achieved." (At [112]). 119 In considering the proper approach to construction, I shall also take into account that s 26 is a penal provision, as did Spigelman CJ in Powercoal (see [106] and [107]). 120 When referring to the reference to "director", his Honour commented that: "The reference to directors does focus attention on persons associated with the central management of the corporation." 121 In some cases, the application of s 33 of the Interpretation Act to a particular part of an Act may be difficult or, indeed, inappropriate. In Metal Manufacturers Pty Ltd v Lewis (1988) 13 NSWLR 315, the New South Wales Court of Appeal was dealing with the application of the provisions of s 556 of the then Companies (New South Wales) Code. That section created criminal liability where a company incurred a debt. If immediately before the time the debt was incurred there were reasonable grounds to expect the company would not be able to pay all of its debts as and when they became due or there were reasonable grounds to expect that if the company incurred the debt it would not be able to pay all its debts as and when they became due, then in certain circumstances any person who was a director of a company or took part in its management at the time the debt was incurred was guilty of an offence. Furthermore, the section created civil liability in that that person or those persons would become liable for the payment of the debt. 122 In construing the provisions of the section, Mahoney JA (as his Honour then was) referred to the difficulty of endeavouring to construe the provisions of such a section in the context of the approach mandated by s 33 of the Interpretation Act. His Honour said: But to see the key to the meaning of a section in the policy or purpose of the legislation is, in my opinion, to take a less than sophisticated view of the art of the parliamentary draftsmen. In many cases, the interpretation of a provision is difficult, not because the policy or purpose of the legislation is not clear, but because the section is directed, not simply to effecting that policy or purpose, but to achieving a compromise between it and other considerations. In the present case, the evil and the remedy are clear. The draftsmen sought to prevent the improper incurring of debts and to do so by imposing criminal and civil liability on relevant directors. The difficulty that arises in the interpretation of s 556(2) arises because, having the mischief and the remedy clear, the draftsman had to determine the "true reason" of the remedy chosen, that is, how far he should apply it without infringing the rights of otherwise innocent directors. I do not think that policy or purpose are of assistance in determining whether a director should be responsible for all debts incurred by his managing director or only for those to which he has given a particular authority or consent. (At p 326) 123 Similarly, I have reservations about endeavouring to construe s 26(1) on the basis that it is consistent with the purpose or object of the Act that as many persons as possible be made prima facie liable for prosecution of a breach of the Act where a company of which they are a director is guilty of a contravention. 124 In this context also it is appropriate to take into account that the Act does not itself create any particular obligations or impose any particular duties or responsibilities on directors of companies who may be employers, in occupation of premises and the like. The obligations, whether they be absolute or strict, are imposed on the company. The sole purpose of s 26(1) is to expose directors to prosecution for the same contravention as that committed by the company. Seen in this way, this also provides the basis for resisting the submissions of the prosecutor that s 26(1) should be construed broadly so as to expose each and every director of a company to prosecution on each and every occasion that there is a contravention by the company of a provision of the Act, save for the limited circumstances which the prosecution submitted would allow a defence to be raised under s 26(1)(a) or (b). 125 The prosecutor asserted that the word "director" where used in s 26 should be construed broadly so as to ensure that persons who might otherwise be caught within its terms could not avoid liability because of some failure to ensure that they were not validly appointed as a director. Indeed, it has been suggested by the prosecutor that unless a broad construction of "director" was applied, there might be a temptation by persons to seek to avoid criminal liability under the Act by arranging that they not be validly appointed as directors. This latter reasoning does not, in my opinion, constitute any proper or appropriate approach to construction of a legislative provision unless, perhaps, in the context of a provision designed to avoid non-compliance such as evasion of taxation and the like. 126 The defendant submitted that "it is not an object or purpose of the Act to deem as many people as possible to be criminally liable for contraventions of it … in any event, s 26(1) also attaches liablity to persons concerned in the management of a corporation. Persons who have not been formally appointed as a director but are in a position to influence the conduct of a company in relation to its contravention of the Act and have engaged in conduct sufficient to make them de facto directors, will be persons concerned in the management of the corporation" and liable to prosecution accordingly. I agree. It is not necessary to strain the language of s 26 to bring about a result that is consistent with the objects of the Act. 127 I have previously referred to the need to take into account the penal nature of the provision. This leads to a consideration of R v Scott (1990) 20 NSWLR 72, a decision of the New South Wales Court of Criminal Appeal. The judgment of the Court was delivered by Gleeson CJ (as his Honour then was), Hunt and Allen JJ agreeing. Mr Scott had been charged with a breach of the provisions of the Crimes Act, which made it an offence for, inter alia, an officer of a body corporate or public company to fraudulently take or apply for his own use or benefit any of the property of that body corporate or company. Mr Scott was an employee of a public company but not otherwise a director, officer or member. "Officer" was defined in the then Companies (NSW) Code as including, inter alia, an employee of a corporation. At the trial, the jury had been directed that the fact that the defendant was an employee of the company was sufficient to render him an officer for the purpose of the provision of the Crimes Act. 128 The Court of Criminal Appeal held that this direction was wrong in law. 129 Gleeson CJ said that the word "officer" where used in that provision of the Crimes Act should reflect "the ordinary and natural meaning of the word." (At p 77). His Honour said that there was no justification for simply transposing a definition from the Companies Code to the Crimes Act unless there was some provision in either piece of legislation that would justify such a course. 130 At p 77, his Honour said: It is, of course, a perfectly permissible process of reasoning to take into account the provisions of the Companies (New South Wales) Code which define aspects of the relationship between a person and a company for the purpose of reaching a conclusion as to whether that person is an officer of the company. Thus, in R v Shacter [1960] 2 QB 252, when a question arose whether an auditor was a "public officer" of a public company for the purposes of the Larceny Act 1861 (UK) regard was had to the provisions of the Companies Act 1948 (UK) for the purpose of identifying the duties of an auditor. That, however, is different from treating a definition in the companies legislation as fixing the meaning of an undefined term found in the Crimes Act . Rather, it involves treating the companies legislation as a source of information disclosing material relevant to the determination of the issue which arises under the Crimes Act . 131 In the course of his Honour's judgment, he referred to the decision of the King's Bench Division in Dean v Hiesler (1942) 2 All E R 340. That case concerned the prosecution of a person who was alleged to have been the director of a company that breached a provision of a UK Regulation, such breach constituting a criminal offence. The Regulation contained a provision that where a person convicted of an offence is a body corporate every person who, at the time of the commission of the offence, was a director or officer of the body corporate, shall be deemed to be guilty of the offence unless he proves that the offence was committed without his knowledge. (At p 340) The particular person charged with the breach of the Regulation by reason of being a director of the company had not, in fact, been appointed a director in that no resolution had ever been passed by the company appointing him as such. However, that person had signed a notification, forwarded by the company to a registrar of companies, which contained notification of his directorship as required by the relevant Companies Act (UK). Furthermore, the defendant was found to have "attended at the company's offices and signed letters, cheques and documents as a director of the company." The appeals bench of the King's Bench Division upheld the decision of a magistrate that the defendant, not having been appointed a director of the company, was not, in fact, a director at the material time and that, therefore, the offence was not made out. 132 In the course of his judgment, Viscount Caldecote LCJ said: I observe, first of all, upon this question, that we are not construing the language of the definition section of the Companies Act, 1929. What has to be decided is whether, following the terms of the Defence (General) Regulations, this respondent was a director of Wooltex Co., Ltd. Clearly he was not a director in the ordinary sense of the term. It is quite true he acted as a director: he signed letters and cheques and documents and, more particularly, he signed a return in which it appeared that he had been appointed a director of the company, and he signed as a director. That is said by the appellant to be enough, because it is said that under the Companies Act, 1929, "a director" includes anyone who is in the position of a director, and that this man, by the acts which he performed and the duties which he took upon himself, had come into the position of a director and, therefore, must be treated as a director although, in fact, he was not a director. It is quite true, of course, that this man usurped or performed some of the duties of a director, and it may be that to that extent, he was in the position of a director, but I think that what the court here has to determine is whether the man was a director in fact, and has not to consider what is the precise meaning and effect of the definition contained in the Companies Act , 1929, s 380. We have been referred to a number of sections in the Companies Act , 1929, which say what a director must do, and what the effect of invalidating his appointment may be with regard to acts which he performed while he was purporting to be a director, but we come back, in my judgment, to this simple question, whether the man in question was a director of the company. The answer, which I think is the right answer, is that which the magistrate has given, that, in spite of the fact that he performed some of the duties of a director and even described himself as a director, he was not in fact a director of the company. That seems to me all that it is necessary to say in order to decide this case. (At p 341). 133 Tucker J said: I agree. In this case we are being asked to interpret the Defence (General) Regulations, reg. 91. That regulation has the force of a penal statute, and, in my view, should be construed strictly. It shifts the onus in cases where the person convicted is a body corporate. In those cases it shifts the onus on to every person who, at the time of the commission of the offence was a director or officer of the body corporate to prove his innocence, and, if he fails so to do, he renders himself liable to the penalties imposed by the regulations, including, in certain cases, imprisonment. In this penal statute the words in question are "every person who, at the time of the commission of the offence, was a director." In my view this must mean every person who, at the material time, held the office of director, that is, who had been validly appointed a director in accordance with the provisions of the Companies Act , 1929. The interpretation which we are invited to put upon this regulation by counsel for the appellant is that, for the purposes of the regulation, a "director" must be held to include a person who is acting as a director or purporting to fill that office. If it had been thought necessary or desirable to include such persons within the purview of this regulation, appropriate words could have been used to effect that purpose, but, in my view, such words not having been used, the natural and restricted interpretation is the only one which can be put upon it, and I agree that the magistrate came to a correct decision. 134 Birkett J agreed in the judgments of their Lordships. 135 In my opinion, it is appropriate to adopt and apply the approach of the King's Bench Division in Dean v Hiesler in all the circumstances of these proceedings, including the fact that the Act establishes a penal code, albeit that it is necessary to take into account the beneficial objects and purpose of that Act. 136 I observe, also, that if the legislature had wished to include persons other than those who were directors at law within the provisions of s 26(1), that section of the Act could have been framed accordingly. There are other instances where occupational health and safety legislation is framed in this manner. The defendant referred me to a number of such provisions. S 37 of the Health and Safety at Work etc Act 1974 (UK) is in the following terms: 37 Offences by bodies corporate

(1) Where an offence under any of the relevant statutory provisions committed by a body corporate is proved to have been committed with the consent or connivance of, or to have been attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate or a person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

(2) Where the affairs of a body corporate are managed by its members, the preceding subsection shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate. 137 In similar vein are the provisions of s 52 of the Occupational Health and Safety Act 1985 (Vic), 52 Offences by bodies corporate

(1) Where an offence against this Act committed by a body corporate is proved to have been committed with the consent or connivance of, or to have been attributable to any wilful neglect on the part of, an officer of the body corporate or person purporting to act as such an officer, that officer or person is also guilty of that offence and liable to the penalty for that offence.

(2) When in any proceedings under this Act it is necessary to establish the intention of a body corporate it is sufficient to show that a servant or agent of the body corporate had that intention.

(3) In sub-section (1) " officer " in relation to a body corporate means - (a) a director secretary or executive officer of the body corporate;

(b) any person in accordance with whose directions or instructions the directors of the body corporate are accustomed to act; or

(c) a person concerned in the management of the body corporate. s 55 of the Occupational Health, Safety and Welfare Amendment Act 1987 (WA), 55 Offences by bodies corporate

(1) Where a body corporate is guilty of an offence under this Act and it is proved that the offence occurred with the consent or connivance of, or was attributable to any neglect on the part of, any director, manager, secretary or other officer of the body, or any person who was purporting to act in any such capacity he, as well as the body corporate, is guilty of that offence.

(2) Where the affairs of a body corporate are managed by its members, subsection (1) shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate. and s 180 of the Northern Territory of Australia Work Health Act 1986: 180 Offences by bodies corporate

(1) Where an offence against this Act committed by a body corporate is proved to have been committed with the consent or connivance of, or to have been attributable to a wilful neglect on the part of, an officer of the body corporate or person purporting to act as such an officer, that officer or person is also guilty of that offence and liable to the penalty for that offence.

(2) When in proceedings under this Act it is necessary to establish the intention of a body corporate, it is sufficient to show that a servant or agent of the body corporate had that intention.

(3) In subsection (1) "officer", in relations to a body corporate means - (a) a director, secretary or executive officer of the body corporate;

(b) any person in accordance with whose directions or instructions the directors of the body corporate are accustomed to act; or

(c) a person concerned in the management of the body corporate. 138 The prosecutor undertook research of existing and repealed New South Wales statutes that created offences directed to directors of corporations in circumstances similar to those found in s 26 of the Act. That is, where a corporation committed an offence under the legislation, a director is taken to have committed the same offence. The prosecutor identified 120 current statutes and 24 repealed statutes containing such provisions, in none of which was the term "director" defined. The statutes covered areas that are diverse in nature. It is obvious that they all share a common theme, namely the creation of a criminal offence, but other than that it is impossible to discern any other common feature. They include statutes such as the Aboriginal Land Rights Act, the Banana Industry Act, the Charitable Fundraising Act, the Combat Sports Act, the Coroner's Act, the Fisheries Management Act, the Funeral Funds Act, the Land Sales Act, the Mine Health and Safety Act, the Native Vegetation Act, the Ozone Protection Act, and the Wine Grapes Marketing Board (Reconstitution) Act. 139 The prosecutor identified four current statutes and three repealed statutes in which directors of a corporation are taken to have committed the same offence as the corporation but where the term "director" was either defined to include a person who acts as a director or occupied the position of a director etc, or defined a director by reference to the definition of that word in the Corporations Act 2001. Again, these statutes are diverse in nature and there is no common thread or theme. 140 The prosecutor submitted that, in the case of the seven statutes where the expanded or Corporations Act definition of director had been utilised, there was nothing to suggest that this had been undertaken for reason of more-efficient administration of the statute, the kind or degree of social mischief being addressed or otherwise. Rather, it appears that in these few instances where parliament has actually turned its mind to the definition of "director", it has chosen the obvious - a definition that either adopts or accords with that in the Corporations Act 2001. There is no reason to presume that parliament has intended to treat the term "director" in the other 144 statutes identified above, or in the Occupational Health and Safety Act 2000, differently. 141 This submission presupposes that there is some haphazard approach by parliament to a consideration of whether or not "director" when used within a statute of the relevant kind is intended to have an expansive meaning by specific reference or whether this may merely be assumed. I would conclude to the contrary effect. That is, one cannot assume to parliament a haphazard or careless approach to the provisions of a statute which will have the force of law and which, in the case of these enactments, create criminal offences. Rather, it may be assumed that where parliament intended a more expansive use of the word "director" should be applied within the provisions of an enactment, it specifically ensured that its intentions were manifested by the use of particular language. The parliamentary draftsman and the legislators must be deemed to be aware of the availability of such language. Where they have declined to use it, it must therefore be assumed that parliament intended that the ordinary usage meaning of the word "director" was to apply. 142 There is some reference to the ordinary meaning of the word "director" in the decision of the Full Court of the Supreme Court of South Australia in Harris v S (1976) 2 ACLR 51. At p 54, Bray CJ said: A director in ordinary parlance is a member of the governing body of the company (or sometimes the sole governor) appointed in accordance with its constitution …. He is a controller appointed internally in the normal working of the company, not one imposed upon it from outside…. 143 Wells J said: To the commercial community, a director is one who has been regularly appointed pursuant to Memorandum and Articles and who, with his fellow directors, controls the affairs of the company primarily in the interests of its members. (At p 64). 144 The online Oxford English Dictionary defines "director" in a number of ways, depending on the context. In the circumstances of these proceedings, the definition that, in my opinion, is most appropriate is: A member of a board appointed to direct or manage the affairs of a commercial corporation or company. 145 The more general definition, and one for which the prosecutor contended, was: One who or that which directs, rules or guides; a guide, a conductor; one that has authority over others; a superintendent; one that has the general management of a design or work. 146 It is obvious, in my opinion, that it is the former dictionary definition that is appropriate to be applied in the circumstances of these proceedings in ascertaining the ordinary English usage of meaning of the word "director. 147 The Macquarie National Online Dictionary defines "director", relevantly, as: One of a body of persons chosen to control or govern the affairs of a company or corporation. 148 I agree with the submissions of the defendant that in ordinary English usage, the word "director" used in association with a corporation conveys a meaning of someone who has been duly appointed a director of that company in accordance with its constitution. It does not include a director within the extended meaning as defined in the Corporations Act or a de facto director. 149 The prosecutor complains that if such a meaning is afforded, it will frustrate the application of the Act to cover persons who purport to act as directors. There are three answers to this proposition. Firstly, even applying an approach to construction as required by s 33 of the Interpretation Act, the ordinary English usage of the language should not be strained. Secondly, if the legislature had wished to include within the definition of "director" persons who purported to act as a director, even though not validly appointed, then there are abundant examples in similar legislation of the ways in which this could be achieved. Thirdly, provided a person is concerned in the management of the corporation, that person will be amenable to prosecution under s 26(1) because the section makes specific provision to cover such persons. 150 For all these reasons I conclude that the defendant was neither a director of Dekorform at law nor a director as contemplated within the provisions of s 26(1) of the Act as at the date of the offence with which he has been charged, namely 3 July 2006 and for these reasons the charge under s 8(1) should be dismissed. 151 The prosecutor led no evidence concerning the alternative count based on a breach of s 10(2) of the Act. I formally find that the prosecutor has not established a breach by Dekorform of s 10(2) of the Act. In any event, the findings that I have made concerning the primary s 8(1) charge as to the application of s 26(1) would also justify the dismissal of the alternative charge. 152 For all of these reasons, the charges brought against the defendant should be dismissed. 153 During the course of submissions, senior counsel for the prosecutor and for the defendant both indicated that if my judgment was unfavourable to their respective clients, it would be the subject of an appeal. For this reason both of them urged me to consider whether or not the defendant had made out the defence available to him under s 26(1)(a) so that my reasons could be considered on appeal. 154 In normal circumstances, I would have some doubt about the appropriateness of proceeding to consider matters that were arguably superfluous, especially in criminal proceedings. However, the parties have invested a great deal of resources and have expended, on my estimate, a great deal of money in pursuing these proceedings. There have been more than 15 hearing days, albeit not all of each day was fully occupied with the taking of evidence or submissions. In addition, some hearing days have been occupied in dealing with interlocutory matters including a consideration of extensive summonses issued by the prosecutor for the production of documents by Alesco and associated companies within the Alesco group. Each side retained senior and junior counsel and, obviously, a solicitor was present for each side during each day of hearing. Furthermore, voluminous documentation was tendered into evidence and, I assume, all of which has been read by all of the legal practitioners substantially involved in the proceedings. The costs of preparation for the trial alone must be considerable. It may reasonably be inferred that the costs of both parties would be in the range of $500,000 - $750,000. 155 Given the obvious investment of both parties in the outcome of the proceedings, and given the avowed intention of the losing party to advance the matter, to the High Court if necessary, I am prepared to accede to the joint request that I publish reasons concerning the availability to the defendant of the defence under s 26(1)(a). The defence under s 26(1)(a)

156 Before considering a number of decided cases to which I was referred by the parties in submissions, I shall endeavour to undertake my own construction of the provisions of s 26(1). I observe, firstly, that the context in which s 26 applies is against a background of strict or absolute liability which is visited on the corporation in the circumstances of these proceedings, namely under s 8(1) of the Act. 157 It is clear from its provisions that the purpose of s 26(1) is to extend criminal culpability to persons who were relevantly involved in the contravention by a corporation of the Act. The nature and extent of that involvement in the context of the purpose of the section can only be gauged by considering the prima facie application of the section in the context of the exculpatory matters described in (a) and (b). That is, given the manner in which s 26(1) is framed, it cannot, in my opinion, be concluded that anyone who is a director or anyone who is concerned in the management of the corporation will ipso facto be taken to have contravened the same provision of the Act. To conclude otherwise would render the defences contained within s 26(1)(a) and (b) of no effect. 158 The point can be made by describing the circumstances in which s 26(1) applies in another way. I shall commence by confining this description to the circumstances of a director. The alternative way of describing the offence is that if a corporation has contravened any provision of the Act, a director of the corporation who was in a position to influence the conduct of the corporation in relation to the contravention and who did not use all due diligence to prevent that contravention is taken to have contravened the same provision. The onus of establishing that the director was not in such a position or used all due diligence falls on the director. The provisions of the section can be so described and extrapolated to apply to someone concerned in the management of the corporation. 159 The recasting of the provision in this way, which, hopefully, retains faithfully the manner in which s 26(1) applies, demonstrates that the intent and purpose of the provision is focussed on the position of the director in terms of influence over the conduct of the corporation in relation to the contravention and the use of all due diligence to prevent that contravention by the director. This in turn focuses attention on the individual circumstances of the director. I should add for completeness that the recasting of the section in this way assumes an exact co-relationship between a director who was and a director who was not in a position to influence the corporation. The assumption is that there cannot be any logical state of affairs that would fall outside the area covered by the negation of the proposition of being in a position to influence and being in such a position. 160 In analysing and considering the provisions of s 26(1), I also take into account the following matters:

A director is taken to have committed the same offence as that committed by the corporation by reason of his or her office as a director. That is, it is the defendant's position as a director per se that attracts the prima facie declaration of guilt. It follows that in examining any particular set of circumstances involving an allegation of breach brought against a person in his or her capacity as a director, that the focus of attention should be on the defendant's position as a director and not any other position which might be occupied by the defendant that would fall outside his or her duties, responsibilities and obligations as a director.

In considering the provisions of the defence under s 26(1)(a), the Court is required to consider, firstly, the position of the defendant, secondly, whether that position enabled the defendant to influence the conduct of the corporation and thirdly, the contravention of the Act itself because the conduct of the corporation must be one that is "in relation to" the contravention.

The applicability of the defence must assume that the defendant would be in such a position despite being a director. That is, there is an express assumption contained within the provision that the defence can be raised outside of, and is not constrained by reason of, the duties, obligations and responsibilities that attach by reason of the fact that the defendant holds the office of a director.

The manner in which sub-sections (a) and (b) are framed must reflect an acknowledgement that not all directors will be in a position to influence all of the conduct of the corporation solely because they hold the office of director.

Therefore, it is necessary in applying the provisions of s 26(1) to examine what it is that may be considered beyond the mere position per se of a director, that is the fact that the defendant holds the office of director.

Some clue in this regard is provided by the provisions of s 26(1)(a) and (b) when read as a whole. The meaning of whether someone is "in a position" of the kind referred in the provision is given by the Oxford English Dictionary Online Edition in the following terms: 8.a fig "a relation in which a person stands with respect to another or others; a person's circumstances, condition or situation, esp as affecting his or her influence, role, or power to act; spec (freq in social position) status, rank, standing." The adoption of this meaning dictates that it is necessary to consider the individual circumstances or situation of the defendant as a director in determining whether or not the defendant was in a relevant position to influence the corporation.

Both defences, that is those contained within sub-sections (a) and (b), are directed to the particular contravention. This must involve a consideration of the circumstances by which the state of affairs which constitute the breach occurred. The necessity to consider the circumstances of the particular breach militates against accepting any prima facie culpability by reason only of the fact that a defendant holds the office of director in the corporation. 161 In considering the approach to construction, I also take into account that the Act is a criminal code and, notwithstanding the beneficial nature of the Act, a Court should be slow to construe its provisions so as to unnecessarily extend the range of persons who may be caught by its terms and subjected to the sanctions imposed by it beyond that which may appropriately be comprehended within the provisions of the section. 162 The general approach to construction of such a provision was considered by the High Court of Australia in Waugh v Kippen [1986] HCA 12; (1986) 160 CLR 156. At [11], in a joint judgment, Gibbs CJ, Mason, Wilson and Dawson JJ said: [11] A construction of the rule that would require an employer to have regard to the risk of injury to a particular worker finds support in the character of the Act as legislation concerned with furthering industrial safety. In that character it should be construed "so as to give the fullest relief which the fair meaning of its language will allow", to use the words of Isaacs J. in Bull v. Attorney-General for New South Wales [1913] HCA 60; (1913) 17 CLR 370, at p 384; cf. also Pearce, Statutory Interpretation in Australia, 2nd ed. (1981), pars. 187-191, pp. 137-141. On the other hand, there is the consideration, to which McPherson J. referred, that a breach of cl. 25 is attended with a penal sanction. The modern approach in construing penal statutes was stated by Gibbs J. (as he then was) in Beckwith v. The Queen [1976] HCA 55; (1976) 135 CLR 569, at p 576 as follows: "The rule formerly accepted, that statutes creating offences are to be strictly construed, has lost much of its importance in modern times. In determining the meaning of a penal statute the ordinary rules of construction must be applied, but if the language of the statute remains ambiguous or doubtful the ambiguity or doubt may be resolved in favour of the subject by refusing to extend the category of criminal offences: see R. v. Adams [1935] HCA 62; (1935) 53 CLR 563, at pp 567-568; Craies on Statute Law, 7th ed. (1971), pp 529-534. The rule is perhaps one of last resort".

In the course of argument, the question arose whether the two principles of interpretation to which we have referred come into conflict in the present case and if so, how the conflict is to be resolved. If such a conflict was to arise, the Court must proceed with its primary task of extracting the intention of the legislature from the fair meaning of words by which it has expressed that intention, remembering that it is a remedial measure passed for the protection of the worker. It should not be construed so strictly as to deprive the worker of the protection which Parliament intended that he should have: Harrison v. National Coal Board (1951) AC 639, per Lord Porter at p 650; John Summers & Son Ltd. v. Frost (1955) AC 740, per Viscount Simonds at p 751; McCarthy v. Coldair, Ltd. (1951) 2 TLR 1226, per Denning L.J. at pp 1227-1228. In such a context the strict construction rule is indeed one of last resort. Furthermore, the process of construction must yield for all purposes a definitive statement of the incidents of an obligation imposed on the employer. The legislature cannot speak with a forked tongue. Although the standard of proof applicable to criminal proceedings for a breach of the obligation will differ from that applicable to civil proceedings and the law may provide specific defences by way of answer to a prosecution which have no relevance to civil proceedings (as in Sovar v. Henry Lane Pty. Ltd. [1967] HCA 31; (1967) 116 CLR 397), the elements that make up the obligation will be the same in each case. For example, in the present case one could not conclude in favour of an objective criterion of the likelihood of a risk of injury in the context of a criminal proceeding and a subjective criterion for the purposes of a civil action. 163 In construing the provisions of s 26(1), it is not necessary, in my opinion, to adopt any approach that would in any way not be reflective of the ordinary English usage meaning of the words used. 164 Thus far, I have only considered the provisions of s 26(1) by reference to so much of them that apply to a defendant who is a director. However, s 26(1) applies also to each person concerned "in the management of" the corporation. Such a person is also deemed to have contravened the same provision as the corporation subject to the application of the defences available under sub-sections (a) and (b). Of course, a person who is concerned in the management of the corporation may not hold an office as such of the kind that is recognised by both statute and common law as applies to a director. Nevertheless, it may be assumed in construing s 26 that the legislature intended that the provision would apply in the same way to persons who had some relevant degree of involvement in the affairs of the corporation and, in particular, with respect to the contravention by it of the provisions of the Act. If one assumes then that the legislature intended that natural persons who brought about or were otherwise culpably involved in the contravention by a corporation of a provision of the Act should be taken to have contravened the same provision and to thereby be held criminally liable, whether as a director or as a person concerned in the management of the corporation, then the same approach should be taken to the application of each of the defences contained within sub-sections (a) and (b). This, again, would militate against construing s 26(1) as it applied to a director in a way that would ignore the particular personal circumstances that applied to the director in ascertaining whether he or she was or was not in a position to influence the conduct of the corporation in relation to the particular contravention. 165 For this reason, also, I conclude that, in considering whether a defence under s 26(1)(a) is available to a director, it is necessary to take into account the personal circumstances that apply to the director and his or her directorship in ascertaining whether that person was in a position to influence the conduct of the corporation in relation to the particular contravention charged. There are obvious examples where such a person will not be in a position to influence the conduct of the corporation taking into account his or her personal situation. Absence through illness or other incapacity or, in relevant circumstances, in an area remote from the place of business, may deprive such a person from being in a relevant position of influence. There may be cases where such a person will be precluded from exercising any influence about that particular matter either by reason of the constitution of the corporation or because the corporation has relevantly or lawfully confined the person's area of influence. In some cases the nature of a person's authority may be dictated by his or her area of responsibility. A director who concurrently held the full-time executive position of financial controller may not be in a position to influence the conduct of the corporation with respect to a particular breach of the occupational health and safety legislation. By extrapolation, therefore, it is necessary, in my opinion, when considering the personal circumstances that apply to the director in the context of a directorship, to take into account the totality of the person's relationship with the corporation. Of course, both under the Corporations Act 2001 and at common law, directors have a general duty of care and diligence, which must pervade, in a general sense, all of the activities of a director. The relevant statutes and case law are conveniently collected and summarised in the judgment of Staff J in Inspector James v Sunny Ngai and ors [2007] NSWIRComm 203 commencing at [115], and I respectfully draw attention to that part of his Honour's judgment in this regard. My understanding of the relevant authorities is that, in general terms, a director's duty to attain and maintain familiarity with the affairs of the corporation outside any particular area of expertise is limited to those matters "which might reasonably be expected to attract enquiry ….", as referred to in the judgment of Santow J in Australian Securities and Investments Commission v Adler and ors (2002) 168 FLR 253, extracted in the judgment of Staff J in Ngai at [116]. 166 I have previously observed that, in considering the provisions of s 26(1)(a), it is necessary to focus attention on the conduct of the corporation "in relation to" the contravention by it of the provision of the Act. 167 It is well recognised that the words "in relation to" are words of wide import and that they connote a nexus between the two matters to which they refer. The particular nexus that is required is to be derived from the context in which the phrase operates. 168 There is some consideration of decided cases about the meaning of this phrase in the joint judgment of Toohey and Gummow JJ in the High Court of Australia in PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at pp 330 - 331. 169 I would construe the necessary relationship which is contemplated by s 26(1)(a) as one that extends to the totality of the conduct of the corporation by which the contravention is constituted. That is, it is not necessarily confined to the particular event on the particular day that was the incident which may have been the manifestation of the risk to health, safety and welfare created by the corporation. Thus, in the context of these proceedings, the conduct of Dekorform, as particularised in the charge, extended to the removal of the interlock mechanism, the removal of the external anti-kickback fingers, the failure to instruct, train and supervise and the failure to undertake a risk assessment, amongst other failures. These are matters that obviously pre-dated the incident which occurred on 3 July 2006. Thus, the necessary relationship is one between those acts and omissions and the actual contravention that manifested itself on 3 July 2006, being the contravention with which Dekorform and the defendant in these proceedings were charged. 170 A necessary result of this conclusion is that what may need to be considered in determining whether any defence under s 26(1)(a) is properly open to the defendant will be matters that arose in a temporal sense prior to the actual incident on 3 July 2006. That is, it is not sufficient for the defendant to say that on that day he was not in a position to influence the conduct of Dekorform concerning those matters. It would be necessary for him to demonstrate that it was the course of conduct whether by way of act or omission that manifested itself in the incident on 3 July 2006 over which he was not in a position to influence the conduct of Dekorform. However, in order to address this matter it would be necessary in turn that the defendant be appraised of some evidence about when the course of conduct commenced, or the state of affairs was created. These are matters, it seems to me, that must be established by the prosecutor. It must be for the prosecutor to identify the conduct of the corporation in relation to the particular contravention by the corporation. If this were not the case, the defendant would be forced to speculate on what the prosecutor might be able to establish in connection with matters that could arguably implicate the director. This is because the director is taken to have committed the same offence as the corporation. Each act or omission by which the conduct of the corporation brings about a state of affairs of which the incident is the end result also, arguably, may constitute a breach of the Act. The position would be different if s 26(1)(a) referred to the conduct of the corporation which constituted the contravention, but it does not do so. 171 There are some vague references in the evidence to the time when a course of conduct constituted by various acts or omissions of the corporation referred to in the particulars of the charge under s 8(1) brought against the corporation may have occurred, but it may be difficult to identify any dates with precision. Indeed, the parties did not address me about the state of affairs or course of conduct which constituted "the conduct of the corporation in relation to its contravention of the provision …." This makes it difficult to consider, in a temporal sense, whether or not the defendant was in a position to influence the conduct of the corporation. Because I am able to deal with these proceedings on other grounds, it is not necessary that I consider this aspect further. 172 In considering the provisions of s 26(1)(a), I repeat that the circumstances in which a corporation will contravene the Act will reflect the absolute or strict liability imposed upon it by the Act itself. A director or a person concerned in the management of the corporation will be taken to have contravened the same provision. If a Court were to construe s 26(1)(a) having apparent regard to the absolute or strict nature of the offences created by the Act when considering what constitutes a position to influence the conduct of the corporation, the Court will in effect be applying the same standard twice because it is already taken into account in determining whether or not the corporation has contravened the Act. Such an approach would, in my opinion, be impermissible and inappropriate when undertaking the task of construction of the provisions of the sub-section. This fortifies giving the expression "a position to influence the conduct of the corporation" its ordinary meaning rather than one coloured by any consideration of "policy". 173 I now turn to consider three first instance decisions in this Court that deal with the application of s 26(1)(a) of the Act. 174 The first decision is that of Inspector Ken Kumar v David Aylmer Ritchie [2006] NSWIRComm 323. These proceedings concerned a contravention by a corporation of s 8(1) of the Act. The corporation conducted a business involving the repair, cleaning and storage of shipping containers and tanks. There was a wash bay facility in the company's premises in which a tank was being cleaned. On 15 January 2003, an employee, Mr Howie, used a spray gun to spray a highly volatile and flammable substance on the tank that was used as a cleaning agent. Later, there was an explosion in which Mr Howie suffered fatal injuries. Two directors were charged with a breach of s 8(1) of the Act by reason of s 26(1) including, relevantly, a Mr Ritchie. He was a director of the company and had become CEO of a group of companies, of which the particular company was a subsidiary, in October 2001. The holding company was a public company and owned 30 subsidiaries operating in New Zealand, Australia, the USA, Fiji, India and Papua New Guinea. The group employed 1,600 staff. Whilst he was CEO, Mr Ritchie resided in New Zealand and worked there. By the time of the incident, there were seven divisions of which the container division, operated by the company which employed Mr Howie, was one. That division itself comprised eight to ten businesses. Mr Ritchie's duties were predominantly managerial and administrative at a parent company level. As CEO, he spent about half a day to one day a month dealing with the container services business of the group operating in Australia, New Zealand and Fiji and about one-third of that time was spent dealing with the Australian business. There were five container parks in the business, three in Melbourne, one in Brisbane and one in Sydney. Mr Ritchie visited Australia every two months and spent two to three days in Australia on each visit. He had minimal visits to the Sydney facility where the incident occurred. Mr Ritchie had no general knowledge of tank washing procedures, no knowledge of cleaning methods or cleaning agents and was not personally involved in any occupational health and safety matters concerning particular businesses because he lacked specialist knowledge and expertise. However, at a group level he was concerned to ensure that each of the divisions and the companies within the divisions had in place and maintained appropriate occupational health and safety protocols and procedures. 175 Mr Ritchie accepted that as at the date of the incident "he had the authority to give directions to people employed at Owens Container Services: he was a Director of that company and had authority to make recommendations to that company." (At [23]). 176 In those proceedings, the defendant had sought to argue that, having regard to the personal circumstances of Mr Ritchie as CEO of a large conglomerate with little if any opportunity to become aware of, let alone consider, a particular operation to be performed using a particular process, the defence under s 26(1)(a) was available to him. The approach to construction contended for by the defendant was along similar lines to those that, I have earlier concluded, ought properly be taken in the context of the application of the defence available under s 26(1)(a). 177 The trial judge rejected this approach. At [170], his Honour said: [170] As already noted, the construction urged by the defendant suggests that this approach could not have been intended by the legislature because, by the very nature of their roles, all directors are capable of influencing the actions of the corporation. In dealing with this argument it is well to remember that the Act imposes a strict or absolute liability on employers in relation to safety at the workplace. It is quite consistent with that approach that where a corporation is the employer that strict liability applies to those who are the operative minds of the corporation, namely the directors. There is nothing incongruous or unlikely about such an approach. The legislature has, however, provided a limited defence by allowing liability to be avoided if the director demonstrates that he or she was not in a position to influence the conduct of the corporation in relation to the contravention or, being in such a position, used all diligence to prevent the contravention by the corporation. Those defences focus upon the contravention and, in a sense, recognise that in the "real world" (so heavily relied upon by the defendant) there may be situations where, for a variety of reasons, a director was not able to influence the conduct of the corporation. Hypothetical examples are of necessity artificial but it is not beyond the realms of possibility that a director may have been in a minority on the Board in urging a more costly but effective system of safety that the other directors were not prepared to adopt or, as suggested by the prosecutor, at the relevant time a director was on leave of absence or suffering some other disability when a particular policy decision was taken and may not have been informed of that decision. Indeed, in Newcastle Wallsend a defence was established where, at the relevant time, the defendant did not hold a position of authority to influence the conduct of the corporation although he did so at another relevant time. Those examples are sufficient to indicate that there is an opportunity for the sub-section (1)(a) defence to be availed of by a director but it is no answer to say that the defences are narrow and limited. Much the same comment might be made in relation to the general defences found in s 28. The limited nature of these defences is understandable having regard to the public purpose served by safety legislation, especially having regard to the objects of the Act set out in s 3, namely, (a) to secure and promote the health, safety and welfare of people at work; (b) to protect people at a place of work against risks to health or safety arising out of the activities of persons as work; (e) to ensure that risks to health and safety at a place of work are identified, assessed and eliminated or controlled; (g) to provide a legislative framework that allows for progressively higher standards of occupational health and safety to take account of changes in technology and work practices; and, (h) to protect people (whether or not at a place of work) against risks to health and safety arising from the use of plant that affects public safety. To secure these objectives the legislature has adopted a system of strict or absolute liability of employers and has adopted provisions like s 26 to emphasise responsibility of persons in the corporate structure to ensure the safety of workplaces. 178 It is clear from the extract of his Honour's reasoning, which I have set out above, that his Honour was only prepared to apply the defence under s 26(1)(a) where the defendant director had in some way been constrained from carrying out his or her directorial duties. The examples given are being in a minority on the board, absent on leave or suffering some "other disability" which would presumably prevent the director attending to his or her duties. Such an approach was taken in the context of an assumption that the holding of office as a director per se created a position of influence such that the s 26(1)(a) defence could not operate. In considering this aspect, his Honour noted that the defendant had been "active at both a macro and micro level in the development of the company's safety policies" but in doing so does not appear, in my opinion, to have differentiated between those policies that applied in a general sense to the group of companies rather than the particular company which employed Mr Howie. In any event, his Honour went on to apply an approach to construction that assumed that an "authority" of influence over the conduct of the corporation created by the holding of an office of director negatived any consideration as to whether or not such a person was "in a position" to influence the conduct of the corporation. At [173] his Honour said: [173] Mr Ritchie's position as a Director meant that he had, by virtue of that position, the authority to influence the conduct of the corporation and to do so in relation to this particular contravention. It was within his authority and control to seek to have a policy of safety audits operating at the wash bay sites that addressed the critical issue of earthing and prohibiting the use of MEK or laying down strict procedures for the use of other volatile and dangerous chemicals. Mr Ritchie was in a position to have reports made to him and policies endorsed addressing each and every aspect of this comprehensive failure by the company. This did not necessarily involve him or require him to become involved in day to day operations in a hands-on way but required effective reporting lines and recommendations from those with expertise in aspects of this specialist operation. He was a Director of a company that had as part of its operation the cleaning of ISO tanks, some of which contained chemicals and materials that were hard to remove. As a Director, he had to be active and diligent in requiring information about the nature of that business, the chemicals being addressed, the risks thrown up by having to work with those chemicals, obtaining expert advice as to the best way to remove risks from the operation and ensure the safety of employees at each site. The system should have made him aware of the existence of MEK and how that was to be properly and safely dealt with when cleaning tanks at any of its sites. He should have been informed of the importance of earthing these facilities and the risks that flowed from not having an effective system of earthing. He should have been informed of the details of appropriate protective work clothing required for this task and the means by which the wearing of this clothing was to be ensured at each site. 179 With respect, I am unable to construe the provisions of s 26(1)(a) in this way. The result is that an individual who happened to be a director of a subsidiary company is to be held to have had the same criminal culpability as the company in circumstances where he resided in another country, and was the chief executive officer of a large group of companies with diverse interests extending beyond Australia. I am unable to apply s 26(1)(a) so that its provisions would expose a person in the circumstances of Mr Ritchie to criminal culpability because he was not aware of the existence of the highly flammable substance being used to clean the particular tank at the particular location on the particular day when the incident occurred. I am unable to ascribe to a person in the position of Mr Ritchie the responsibility for ensuring that there was a system in place which made him personally aware of these circumstances and that would have informed him of the particular risks that flowed from the manner in which the work was carried out. To expect the chief executive officer of a large and disparate group of companies which operates internationally to take steps to ensure that he be informed of this level of detail and to have expected him to have taken those steps to have prevented the incident occurring results, in my opinion, in the imposition of a penal regime that does not reflect in a realistic way the manner in which businesses operate. In construing the provisions of s 26(1)(a) in this way, his Honour was applying an approach to construction that was contended for by the WorkCover Authority of New South Wales. 180 That the necessity to take into account the varied structures of corporate groups, the varied undertakings of businesses operated by corporations and the varied role of directors, both executive and non-executive, within corporations is appropriate is referred to in the judgment of Madgwick J in the Federal Court of Australia in Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565. At p 570, his Honour said: The variety of commercial and corporate life is such that it seems to me unprofitable to attempt a general statement as to what is meant by "acting as a director". Whether a person does so act will often be a question of degree, and requires a consideration of the duties performed by that person in the context of the operations and circumstances of the particular company concerned. I have, for example, referred to the circumstance of the size of the company. In a large and diversified company, great discretion to deal with very important matters must be reposed in employees. In the case of a supermarket chain, as in Tesco , it would hardly occur to anyone to suggest that a managerial employee held to have "acted as the company" in breaking a consumer protection law at a particular store was acting as a director of the vast company concerned. As suggested above, in the case of a single person making decisions for a company the business of which was confined to the operation of a corner store, a different view might be taken.

Similarly, the internal practices or structure of the company may be relevant; commonly a director with particular expertise is assigned particular concerns, and has a bare minimum to do with the general affairs of the company. In such a case, the circumstances may bear the conclusion that such work is more done as an expert employee or consultant than as a director cf Mistmorn Pty Ltd (in liq) v Yasseen (1996) 21 ASCR 173 at 183; 33 ATR 332 (the cases cited at that reference appear to have been included in error).

Another relevant factor may be how the person who is claimed to have acted as a director was reasonably perceived by outsiders who deal with the company. This may aid a conclusion that the supposed director has held himself or herself out as such. Express holding-out was treated as a relevant factor in the Re Valleys case and, with respect, this appears obviously correct. However, an express claim to be a director may, in some cases, be carefully not made. That would not prevent a conclusion, nevertheless, that a person's dealings with third parties point to his or her having acted as a director. 181 His Honour's reference to Tesco is to Tesco Supermarkets Ltd v Nattrass (1972) AC 153. I respectfully agree with his Honour's observations, which were cited with apparent approval in the New South Wales Court of Appeal in Nacomp Technology Australia Pty Ltd v Graich [2001] NSWCA 120 at [13]. 182 I interpolate that a conviction for an offence which is constituted by a breach of the Act is a serious matter, particularly where it involves the death of an employee. As I pointed out in Inspector Gregory v S&P Jackson Pty Ltd and Scott Jackson [2009] NSWIRComm 158, such a conviction is arguably a matter which needs to be disclosed in appropriate circumstances and may adversely impact upon the ability of a person so convicted to obtain a visa to travel internationally. 183 The next judgment to which I wish to refer is Inspector Aldred v Herbert and ors [2007] NSWIRComm 170. A corporate defendant, Salamander Shores Hotel Pty Ltd ("Salamander") had pleaded guilty to a breach of s 8(2) of the Act. Three of its directors were charged with the same breach by reason of the application of s 26(1) and all pleaded not guilty. Salamander had purchased a hotel/motel on 22 February 2002. It employed about 50 persons, including 6 full-time maintenance personnel. A licensed electrician had been employed to provide electrical maintenance services up to September 2002 and thereafter a contract electrician was used for this purpose. The hotel/motel was located on approximately 3 acres of land and included a swimming pool, which was secured by a fence and childproof gates. On 1 December 2002, a 13-year-old boy who lived locally and was not a guest was swimming in the pool. He did not obtain permission to use the pool and the general manager of the hotel/motel was not aware that he was swimming in the pool that day. He had previously used the pool and had been asked to leave by staff. The young boy left the pool to retrieve a tennis ball. Whilst attempting to return to it by climbing a retaining wall and pool fence, he stood on a pipe which contained electrical wiring. The evidence was to the effect that the young boy was wet, he had placed his foot on a corroded section of the pipe which collapsed, cutting through the insulation layers of the electrical wiring and causing the pipe to become electrified. No residual current device ("RCD") had been fitted. 184 The evidence was that none of the directors was involved in any way in running the business. This was undertaken by qualified and experienced managers. Two of the directors attended the business from time to time and another one, who was, in effect, an investor, only attended the premises rarely. One of the directors had experience in and concentrated on the financial management of the business. None of the directors had any expertise in connection with electrical wiring or, indeed, matters relating to occupational health and safety. 185 The general tenor of the evidence was that two of the directors made enquiries from time to time of management concerning the safe operation of the business but there was no attempt to undertake any particular audit of any occupational health and safety regime, which was applied to the business, nor was there any attempt to ensure that there was a detailed examination and audit of the safety of the electrical wiring throughout the hotel/motel and surrounds. 186 The defendants relied upon case authorities at appellate level to the effect that directors were required at general law and under the Corporations Law to take reasonable steps to place themselves in a position to guide and monitor the management of the company but that they were not required to undertake detailed inspection of day-to-day activities. That is, the defendant directors were entitled to rely on information given to them from time to time by persons with apparent expertise. The defendants sought to distinguish their circumstances from those of a director who had a significant and hands-on role in the operations of a corporation, including, in particular, matters that touched upon occupational health and safety. 187 In her judgment, the trial judge rejected the relevance of any consideration of the duties of directors at law, relying for this purpose on observations of Spigelman CJ in the New South Court of Appeal in Powercoal Pty Ltd & Peter Lamont Foster v Industrial Relations Commission of NSW & Rodney Dale Morrison [2005] NSWCA 345; (2005) 145 IR 327; 64 NSWLR 406. 188 Significantly, in determining that the three directors were unable to bring themselves within s 26(1)(a), her Honour said: [59] The evidence in the present proceedings reveals that the three directors did very little to inform themselves about the affairs of the corporation, in particular its safety policies and procedures, its maintenance regime and workplace safety in general. They did not take reasonable steps to familiarise themselves with the operations or the running of the corporation. Apart from installing persons whom they regarded as competent and experienced managers, making occasional site inspections and attending to some safety matters which had been specifically brought to their attention, the directors on the evidence, attended to little else by way of safety issues. They made no enquiries into matters of safety. Rather, as they have sought to emphasise, they placed complete reliance on others whom they considered possessed the necessary expertise. They themselves had no experience or expertise in running a hotel/motel business, nor they said, did they possess any experience or expertise in safety matters generally.

[60] Whether the defendants can each establish defences under s 26(1)(a) falls to be considered by reference to the corporation's contravening conduct. This conduct involved three failures or omissions under s 8(2) of the Act, namely the failures to ensure the electrical cabling at the pool area was safely maintained; that an RCD was fitted to the electrical circuitry; and, the failure to conduct an adequate risk assessment in relation to this electrical cabling. Ignorance of electrical or maintenance matters of itself could not facilitate a conclusion that the directors were not in a position to influence the conduct of the corporation. This conclusion is even more compelling in circumstances where the defendant abdicated all directorial responsibility and placed complete reliance on others of whom they said possessed the requisite experience. None of the directors, according to the evidence provided any input or played any role in the management of a safety system. (Messrs Chang and Wadley merely believed one was in place at the premises.) Mr Herbert said he regarded the management team as responsible for the safety of visitors. No board meetings were held prior to the accident to discuss occupational health and safety issues. Having appointed experienced management teams to run the business the directors relied on the management teams to raise any issues including issues of safety. Mr Herbert said that he assumed Mr and Mrs Pease would arrange for such risk assessments and he had a "level of comfort" that risk assessments had been undertaken by the maintenance team.

[61] Although these matters may also apply to considerations of whether the defendants used all due diligence under s 26(1)(b) (an issue to which I will shortly turn) they illustrate in my view the inherent flaw in the defendants' submission that they were not in a position to influence the conduct of the corporation because they lacked experience and expertise in the specific area of electrical cabling. In my view they were entitled to rely on others who possessed the relevant experience and expertise but only if they satisfied themselves that those other persons to whom the vital functions of detecting and obviating risks to safety had been delegated, could discharge and were discharging that function. An occasional site inspection and an otherwise passive role adopted by the defendants in relation to safety issues does not and cannot amount to reliance on others for the purpose of successfully establishing a defence under s 26(1). 189 Her Honour referred to Inspector Kumar v Ritchie, which I have previously referred to, and endorsed the approach that his Honour took in those proceedings. Her Honour concluded: The three directors might have lacked expertise in relation to matters of electrical cabling but they had the authority to enquire into the history of maintenance of the cabling and whether, with regard to risks to safety, there were any risks associated with the cabling or, whether relevant risks had been assessed or identified, and whether the cabling needed to be, or could be rendered more safe by the fitting of some safety device such as an RCD. None of these actions would have required any prior knowledge or foresight (or expertise) as preconditions which had to be present before enquiries could be instituted. Each director, as one of three directors of the corporate defendant, was in a position to make decisions about safety matters in particular. According to their evidence when specific safety matters (such as the installation of fire stairs and the removal of a trip hazard) were brought to the their attention by management they provided the funds. They did not however, having employed persons whom they considered to be competent and experienced managers, initiate any further steps or make any enquiries to ensure that persons at the premises, in particular Master Morgan would be protected from risks of injury to safety, while at those premises. I therefore find that each defendant has failed to establish a defence on the balance of probabilities under s 26(1)(a) of the 2000 Act. (At [63]). 190 Finally, her Honour rejected the defence available under s 26(1)(b), for reasons with which I am not concerned for the purpose of these proceedings. 191 It will be seen that the approach in Herbert involved a determination that in considering the position of each of the directors in connection with influence over the conduct of the corporation, the Court was entitled to assume that that influence extended to all of the detailed matters associated with the operation of the hotel/motel, including the state of electrical wiring as it affected a person who was seeking to enter the swimming pool in a manner which was not reasonably contemplated, namely by means other than the gate to the enclosure which had been provided for this purpose. This is similar to the approach adopted in Inspector Kumar v Ritchie. 192 It is explicit in the reasoning of her Honour in [61] and [63], which I have extracted above, that the influence of the directors extended to conduct which included satisfying themselves that their management team had the necessary expertise and had carried out the necessary enquiries to determine whether there were any risks posed by the electrical cabling and its housing; that they should have ensured that they had for themselves looked at the history of the maintenance of all electrical cabling (the precise means of doing so not being clearly explained) and they should have ascertained (again in a manner unexplained) whether there were any risks associated with the cabling and whether any risks had been assessed or identified and whether safety devices such as an RCD should have been fitted. There is no explanation in [63] as to what means should have been adopted to undertake these enquiries and examinations, particularly as it might be assumed that what is referred to is a process other than that of using existing management. There is, again, no specification about the "further steps" or "enquiries" which the directors were assessed as being required to have undertaken to ensure that persons, including a young boy trespassing on the premises, would be protected from any risk of injury or to their safety whilst at those premises including using a means, other than a gate, of gaining entry to the pool. Short of retaining some independent expert (having previously ascertained that such a person was indeed such an expert) to investigate the totality of the electrical wiring throughout all of the property, it is not clear what more the defendants could have done. Of course, those proceedings were concerned only with the electrical wiring. Logically the directors would have been required to have undertaken the same process with respect to all items of equipment and all plant and infrastructure used and located within the property and, arguably, with respect to each and every work activity undertaken within the property. All of these matters were said by the WorkCover Authority of New South Wales to be within the influence of directors of the corporation and failure to attend to them would prevent a director from relying on any defence under s 26(1)(a) or (b). 193 Such enquiries, which would have applied to the Salamander Shores Hotel Pty Ltd, would arguably apply inter alia to each and every incoming non-executive director of each and every corporation that conducted any hotel, motel or resort complex, or any other premises throughout New South Wales where the public congregate, such as retail and entertainment complexes. Whilst such a proposition might be seen by some as representing an overdramatic reaction, it seems to me that it is a logical and necessary extrapolation of the position contended for by the prosecutor in those proceedings, the WorkCover Authority of New South Wales. 194 The third case is Inspector Wayne James v Sunny Ngai and ors [2007] NSWIRComm 203, which I have previously referred to. A corporation and a number of defendants who were directors were charged with breaches of s 8(2) of the Act. Two of the directors claimed that they were not in a position to influence the conduct of the corporation as provided for in s 26(1)(a), relying on the constitution of the corporation. That constitution provided that one other director should, during his lifetime, assume the office of Governing Director and that that office would allocate to him all the powers conferred upon the company and that he would have authority to exercise, in effect, all of the powers and authorities of the board and to this extent other directors of the company would be under his control and bound to conform to his directions. 195 In determining that these two directors in these circumstances were entitled to avail themselves of the defence under s 26(1)(a), Staff J first observed that: the section expressly recognises that not every director will be held to have contravened the same provisions as the corporation. The section distinguishes between those directors who are in a position to influence the conduct of the corporation in relation to its contravention and those who are not …. (At [125]). 196 At [127] and [128], his Honour said: [127] In my view, the defence available in s 26 is designed to avoid a situation of persons being punished simply by reason of holding the office of director. In order for a director to be liable, it is necessary to establish that the director was complicit in the contravention. The evidence establishes that in respect of the practical position, the defendants, because of the limited powers, duties, responsibilities and defined roles provided to them by the Governing Director, were not in a position to influence the Corporation's contravention and were not complicit in the Corporation's contravention. Similarly, from a theoretical perspective, in light of the Articles of Association, these defendants were not in a position to influence the contravention by the Corporation.

[128] The section provides for punishment for an offence to which the person is deemed to be a party because the person is not able to establish the matters of exculpation in s 26(1)(a) or s 26(1)(b). Whether a person was not able to influence (to the requisite degree), the relevant conduct of the corporation will depend on a range of matters, both legal and factual. 197 Staff J considered the judgment in Inspector Aldred v Herbert and ors, to which I have previously referred. His Honour said, in relation to that judgment: 130 Herbert appears to be a case which proceeded on the basis that each director had all the powers usually available to directors. The scope of those powers was therefore assumed by her Honour and their source was not analysed, referred to, or considered. This case, to my mind, is of little assistance in respect of the issues that fall for determination in this matter where the directors do not have the assumed powers that the directors had in Herbert because of the provisions of the Articles of Association. Herbert was not a case where specific directors had the requisite power to influence the corporation's conduct and others did not. Furthermore, when her Honour stated that "the fact that a person is a director, is enough, subject to the defences, to establish liability for the corporate defendant's contravention" and "[t]his conclusion is based on the responsibilities and duties of a director of a corporation and the clear words of s 26(1)" (at [53]), her Honour did not appear to recognise or make any allowance for a differentiation between directors as required by the terms of s 26(1)(a), namely, those directors who are in a position to influence the particular conduct of the corporation and those who are not. If s 26(1) is approached upon the basis that because a person holds office as a director, that person must be in a position to influence the conduct of the corporation, the defence available to a director under s 26(1)(a) is rendered meaningless. In addition, such an approach, fails to give effect, or proper effect to the source of, or limitations of that power.

131 In my view, to the extent that her Honour (at [54]) approached the availability of the defence simply by reference to the facts that directors are at the top of the corporation hierarchy to make decisions on matters of operations policy and management, and without examining whether the directors were in a position to influence the relevant conduct of the corporation, her Honour adopted too narrow a view of the availability of the defence under s 26(1)(a). 198 Staff J then considered a submission made on behalf of those defendants that they had a "lack of knowledge about the management of safety issues, about safety generally and about any safety issues or concerns" and that this demonstrated "their lack of involvement with either the management of the company or any safety matter, as well as indicating their lack of involvement in the particular failures of the Corporation." (At [136]). 199 His Honour said: [137] The evidence is that the defendants were fully aware of the limitations imposed upon them by Mr Henry Ngai and I find no basis for concluding that the defendants were in any position to do anything even if they had made enquiries in respect of the guarding of machines. Ms Ly, in particular, had no knowledge about safety or training and did not have any experience at all in relation to safety issues. Furthermore, Ms Ly was overseas for a substantial period of time prior to the incident, which clearly limited, in any event, her ability to influence the operations of the Corporation in respect of occupational health and safety, or any matters outside her area of responsibility. In my view, the issue is not one of ignorance, nor wilful blindness, as submitted by Mr Docking, but rather that the defendants had neither the powers nor the authority to deal with safety matters. The defendants have established, on the balance of probabilities, that their powers and duties were excluded by the Articles of Association and by the direction and conduct of Mr Henry Ngai. At all relevant times, Mr Henry Ngai was acting within the scope of the powers bestowed upon him as Governing Director and by complying with his authority and directions, the defendants conducted themselves within the constraints imposed upon them by the Articles.

[138] Furthermore, the defendants' lack of knowledge about the management of safety issues and safety generally indicates, in my view, that the defendants meet the test as set down by the Full Bench in Powercoal (at [116]) that the defendant "had no real control over the Corporation's conduct so that they were not in a position to institute simple, practicable changes to a safety system well within the means of the Corporation".

[139] Clearly, a director can be liable for a complete failure to act if the director is in a position to influence the relevant contravention. So much was acknowledged by Backman J in Herbert at [63] where her Honour observed: ... The three directors might have lacked expertise in relation to matters of electrical cabling but they had the authority to enquire into the history of maintenance of the cabling and whether, with regard to risks to safety, there were any risks associated with the cabling ...

[140] In other words, her Honour found the directors were in a position to influence the contravention, or were complicit in allowing the contravention because they had the power or authority to influence it.

[141] Mr Docking submitted that the words "not in a position to influence the conduct of the corporation" must be read down so that they do not conflict with the obligations of directors generally to participate in the management of the corporation and in particular to meet their common law and statutory duties or obligations. Reference was made to a number of authorities which reflect the modern approach to directors' duties and responsibilities in the context of other bodies of law dealing with negligence, company and taxation law: Re Australasian Venezolana Pty Ltd (1962) 4 FLR 60; Rema Industries and Services Pty Ltd v Coad & Ors (1992) 107 ALR 374; Group Four Industries Pty Ltd v Brosnan (1992) 59 SASR 22 and Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113.

[142] In rejecting this approach, I respectfully agree with the observations of Backman J in Herbert at [57] where her Honour observed: ... The issue whether the defendants were not in a position to influence the conduct of the corporation does not in my view fall to be considered by reference to cases on the law of negligence or company or taxation law, but rather by reference to the statutory context or regime in which the defence is found, namely s 26(1) of the 2000 Act. The words, "...not in a position to influence the conduct of the corporation..." must be assessed by reference to their statutory surrounds which would include the objects of the 2000 Act. The Court of Appeal in Powercoal v Industrial Relations Commission (NSW) rejected a similar attempt by the Claimant to invoke case law dealing with persons constituting the directing mind and will of the corporation and with various provisions of the Corporations Act 2001 (Cth), as being applicable to s 50(1) of the 1983 Act (at [95] - [99]):

[143] Furthermore, in my view, such cases are of little assistance in that they do not consider the position of directors bound by a particular set out articles of association, as is the case here. In addition, the cases deal with questions of knowledge of or failure to enquire where directors had general and not restricted powers or duties.

144 To my mind, there is no warrant for reading down the defences available under s 26(1)(a), particularly where a director's obligation is removed or curtailed by the Articles of Association and the exercise of powers by a governing director under the Articles. In such circumstances, a director cannot be required to act contrary to or in breach of the Articles.

145 The evidence clearly establishes that neither of the defendants was in any way the directing mind and will of the Corporation in respect of occupational health and safety and was therefore not complicit in respect of the offences as they lacked the necessary influence. 200 It will be seen that the approach to construction of s 26(1) adopted by Staff J rejected what his Honour referred to as the "too narrow" approach in Inspector Aldred v Herbert and, by implication therefore, the approach adopted in Inspector Kumar v Ritchie. 201 Indeed, Staff J referred to the necessity to "establish that the director was complicit in the contravention" inherent in s 26 (at [127]) and to the limitation of "powers, duties, responsibilities and defined roles" of directors (at [127]). In considering the powers and authority of directors, Staff J was prepared to take into account the knowledge of directors about particular matters and the fact that one director was overseas for a substantial period of time, which limited her ability to influence the operations of the corporation in respect of occupational health and safety matters. (cf [137] and [138]). 202 The approach to construction favoured by Staff J accords broadly with the conclusions that I have reached concerning the proper approach to the construction of s 26(1). As there have been different opinions expressed by members of this Court, any principle of comity does not arise. 203 To the extent that the prosecutor relied on an approach to construction of s 26(1), which is contrary to that which I have concluded is the appropriate approach, then I reject it. Put shortly, the prosecutor sought to adopt the reasoning of the Court in Inspector Kumar v Ritchie and Inspector Aldred v Herbert. It was submitted by the prosecutor that in his capacity as director, the defendant had a responsibility to make himself familiar with the fundamentals of the business of Dekorform including its occupational health and safety obligations and that the defendant had the "ability" and "power" to influence the conduct of Dekorform in relation to the operation of the particular machine. 204 Furthermore, the prosecutor eschewed any reliance on any other position occupied by the defendant as being inconsistent with or detracting from his capacity to influence Dekorform with respect to the particular contravention by it. In written submissions, the prosecutor said: [128] The position from which the Defendant relevantly derived his ability and/or power to influence the conduct of Dekorform in respect of its contravention is the Defendant's position as a "director" of Dekorform . For the reasons given below, nothing arising from the Defendant's "related positions and offices" such as deputy CEO of Alesco, his membership of the Executive Committee of Alesco, being Chair of the Parbury Executive Committee, being a member of the Alesco board and eventually as Chief Executive Officer Elect of Alesco do not in any way detracted from or were inconsistent with the Defendant's relevant influence in his position as director of Dekorform. Rather, his occupation of those positions enhanced and complemented the relevant ability and power held by the Defendant as a director of Dekorform. 205 The prosecution sought to argue that the attendance by the defendant at the Parbury Divisional meetings, in which he received reports of the kind that I have earlier described, was indicative that the defendant "in his various roles was involved in the management of Dekorform." 206 I respectfully disagree. The fact that the defendant attended these meetings in his capacity as either deputy CEO or later when he became CEO of Alesco does not indicate any involvement in the management of the business of the Parbury Division, let alone the management of the business of Dekorform. Any comments or suggestions made by the defendant, as disclosed in the minutes of the meetings, were confined to suggestions about the format of reports and the like. There is no suggestion that the defendant ever made any specific mention of Dekorform. These minutes are consistent with the defendant's characterisation of his participation as one of receiving reports that would then enable him to relay information to the Alesco board. Indeed, the defendant's understanding was shared, in his evidence, by Mr Wareing, the chairman of the board of Alesco. 207 The prosecutor sought to seize on various items discussed at meetings of the executive committee of Alesco, as revealed in the minutes, that indicated, firstly, some involvement of the defendant in the management of the Parbury Division and in the management of Dekorform and, secondly, as putting the defendant on notice, in some way, concerning his duties and responsibilities with respect to occupational health and safety matters. 208 I have previously referred to and dealt with the prosecutor's submissions concerning the "considerable evidence" that the defendant "in his various roles" was involved in the management of Dekorform and, in particular, to the material concerning the defendant's attendance at the Parbury Divisional meetings. In addition to this evidence, the prosecutor relied on the fact that the defendant was the deputy CEO of Alesco and later the CEO, was a director of Parbury, which was the sole shareholder of Dekorform, was on the executive committee of Alesco and became its chairman, was on the board of Alesco, was involved in OH&S issues (pointing specifically to the Silestone matter) and signed a number of documents as a director. 209 I am unable to see how any of this evidence would allow the Court to conclude that in some way the defendant had some involvement in the management itself of the Dekorform business. In reaching this conclusion, I am conscious that I have not received submissions from the parties as to the burden of proof in this regard. On one basis, any matter of fact that is adverse to the interests of the defendant should be proven by the prosecutor to the criminal standard (see R v Olbrich [1999] HCA54; 199 CLR 270). On the other hand, the burden of demonstrating that he was not in a position to influence the conduct of Dekorform, in relation to its contravention of the Act, falls on the defendant, albeit to the civil standard. In order to avoid any doubt, I conclude that, even to the civil standard, the prosecutor has not demonstrated that the defendant had any involvement in the management of the Dekorform business, or indeed any involvement in the affairs of Dekorform other than the signing of the statutory and other forms, which I have earlier described, or in receiving reports directly or indirectly about the business, at least prior to the date of the incident, namely 3 July 2006. I conclude that the defendant's duties were undertaken by him as, firstly, deputy CEO and, later, CEO of Alesco. He was at all times an executive director of Alesco. He was not, however, an executive director of Dekorform in the usual sense in which that description is used. 210 The prosecutor faintly sought to argue that, in some way, the defendant was actively involved in the management of the Dekorform business. The truth is, as disclosed in the evidence, that it was managed by Mr Brydson who reported to Mr Paul, who was general manager of the Parbury Division. It was the evidence of the defendant that the annual sales of Dekorform, as revealed in the evidence, were in the range of $4 to $5 million per annum, whereas the sales of the Parbury Division were of the order of $140 million per annum and of Alesco as a whole in the range $600 to $700 million per annum. These figures reflect the focus of his attention and activities. 211 In terms of occupational health and safety matters, the defendant's responsibilities as deputy CEO and CEO of Alesco, as understood by him in consultation with, firstly, Mr Clarke and, secondly, Mr Wareing, extended to ensuring that, overall, the businesses within the Alesco group had in place occupational health and safety policies and that those responsible for operating each business were monitoring the occupational health and safety obligations of the business. There was an expectation, as revealed in the evidence, that there would be reported to senior executive officers of Alesco any particular occupational health and safety problems within any of the businesses and this occurred in the case of the incident involving Silestone in the Parbury business. There was also an expectation that they, and members of the board of Alesco, would be furnished with information about lost time injury frequency rates as a means of monitoring occupational health and safety compliance. On the evidence, this occurred. 212 The defendant conceded in cross-examination that he did have the ability as the deputy CEO or CEO of Alesco to enquire into and investigate the discharge by Dekorform of its occupational health and safety obligations. However, he was adamant that he could have only become so involved appropriately if he had been informed of some matter that was indicative that some investigative process should have been undertaken. Unless he had been alerted to any particular difficulty, including the failure of senior personnel operating the Dekorform business to comply with occupational health and safety obligations, it would have been unnecessary and inappropriate for him to have become involved. 213 On the basis of the evidence given in the proceedings, I conclude that the involvement that the defendant had with the Dekorform business was limited, firstly, by the arrangement that he had with Mr Clarke concerning the specific matters to which he should attend after he became employed and upon becoming deputy CEO, and, subsequently, by his arrangement with the chairman of the board, Mr Wareing, after he became CEO. Furthermore, in a pragmatic sense, the defendant's involvement in Dekorform was limited by the necessity for him as firstly, deputy CEO and later as CEO to discharge all of the duties of those positions within the Alesco corporation as a whole, which, on his evidence, severely limited any opportunity to become involved in the management of the Dekorform business. It follows that if he had any involvement in the Dekorform business, the defendant did so in his capacity as an executive of Alesco through reporting mechanisms, which involved intermediary reporting through the general manager of the Parbury Division. Except for the signing of the particular documents to which I have earlier referred, there is no evidence that the defendant was required, or ought to have undertaken or engaged in any particular work in connection with the Dekorform business. 214 Significantly, I conclude, on the evidence, that the defendant, as a matter of fact, had no active role to play in the occupational health and safety activities within the Dekorform business and had, as a matter of fact, no responsibilities in connection with the implementation of the occupational health and safety strategies and programs of that business. Nor did anything happen that could reasonably have alerted the defendant to any state of affairs that called for any reaction or action on his part. 215 I should add that the prosecutor submitted that I should treat the defendant's evidence with some caution because, in a number of areas, his credibility as a witness was to be doubted. The defendant gave evidence both by way of examination in chief and cross-examination over several days and, not unnaturally, there are some few areas where there might be some doubt about matters to which he attested. However, none of these matters was, in my opinion, a matter of any significance for the resolution of the proceedings and none of them, either individually or in the aggregate, would have the effect of discrediting the defendant or his evidence. I accept the defendant as a truthful witness who gave evidence to the best of his ability in the face of sustained and rigorous cross-examination. 216 It follows that, as a matter of fact and law, I find that the defendant was not in a position to influence the conduct of Dekorform in relation to the particular contravention of the Act, which I have found occurred on 3 July 2006. This conduct covered the state of the equipment, and the failure to maintain it, the failure to ensure that it was not operated in an unsafe manner and to ensure that there were in place relevant systems and the provision of information, instruction, training and supervision and the carrying out of a risk assessment. These were matters that were outside the responsibilities, duties and obligations of the defendant as a matter of fact, assuming that he were relevantly a director of Dekorform on that date for the purpose of s 26(1) of the Act. Indeed, if the defendant did have any such duties, obligations or responsibilities as a matter of fact they would have accrued to him in his capacity as an executive of Alesco. For reasons which I have already advanced, I do not conclude that, as a matter of law, the defendant had such duties, responsibilities and obligations as would preclude him from relying on the defence available to him under s 26(1)(a). 217 I conclude, therefore, on this alternative basis, namely on the assumption that the defendant was relevantly a director of Dekorform on 3 July 2006, that he was not in a position to influence the conduct of Dekorform in relation to its contravention of the Act because he was not aware of that conduct, nor should he have properly been so aware. 218 For completeness, I note that the defendant introduced evidence given primarily by a Mrs Walker. That evidence was about the steps that could have been taken by the defendant if he was obliged, by reason of the provisions of s 26 of the Act, to undertake an audit of all of the operations of each of the businesses within the Alesco group with a view to uncovering any risk to injury that existed within the Dekorform business arising out of the failure by Dekorform to have ensured the safe operation of the machine which caused the untimely death of Mr Hogden. This evidence was based on an observation contained within the judgment in Ritchie to the effect that it was within the authority and control of the defendant director in those proceedings "to seek to have a policy of safety audits operating" that would have uncovered the risk to safety which existed and that would, pursuant to proper lines of reporting and communication, allowed for expert assistance to be provided to rectify the situation. The evidence of Mrs Walker, a principal of Safety Works Group Pty Ltd was designed to demonstrate the amount of time that would have been taken if the defendant had engaged that organisation to carry out safety audits and make investigations and enquiries concerning the compliance of each of the businesses within the Alesco group with their obligations under the Act, bearing in mind the number of businesses and having regard to the fact that, on the defendant's evidence, over 2,000 pieces of equipment were owned by all of the businesses both in Australia and New Zealand. Such evidence only becomes relevant if it is determined that, firstly, the defendant was a director of Dekorform at the relevant date, namely 3 July 2006, and if the undertaking of such an audit was something required of the defendant as a director of Dekorform as an essential and intrinsic part of his directorial obligations so that, in effect, there would be no defence available to him under either s 26(1)(a) or (b). In view of the conclusions that I have reached in connection with these proceedings, I do not propose to deal with this evidence because it involves the assumption of a double hypothesis, neither element of which, in my opinion, applies. In these circumstances, it is not necessary, nor is it appropriate that I deal with this evidence. Orders

219 I make the following orders: 1. The charges are dismissed. 2. Costs are reserved with liberty to apply.

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