Inspector James v Ryan

1 This matter concerns an application for leave to appeal and, if leave is granted, to appeal by Inspector Wayne James of the WorkCover Authority of New South Wales from decisions of Marks J given on 18 December 2009 in the matter of Inspector James v Ryan [2009] NSWIRComm 215 ('liability decision') and 28 May 2010 in Inspector James v Ryan (No 2) [2010] NSWIRComm 63 ('costs decision'). The application is made pursuant to ss 191 and 197A of the Industrial Relations Act 1996. 2 Marks J dismissed two charges against Justin James Ryan under the Occupational Health and Safety Act 2000 ('OHS Act'). Mr Ryan had been charged with an offence under s 8(1) of the OHS Act by reason of the provisions of s 26(1) of the same Act and, in the alternative, under s 10(2) of that Act. The charges related to an incident at the premises of Dekorform Pty Ltd at Milperra on 3 July 2006 when Wayne Hogden, an employee, was fatally injured by a timber board that 'kicked back' as it was being fed into a circular saw. 3 Marks J found that Dekorform had contravened s 8(1) of the OHS Act by failing to ensure the health and safety at work of employees. Under s 26 of that Act a director or person concerned in the management of a corporation that has contravened the OHS Act is taken to have contravened the same provision as the corporation unless, pursuant to s 26(1)(a) and (b) 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. 4 It had been alleged by the appellant that Mr Ryan was a director of Dekorform. Marks J held that the appellant had failed to prove that allegation. His Honour also held that Mr Ryan was not in a position to influence the conduct of Dekorform in relation to its contravention of s 8(1). Accordingly, the charges against Mr Ryan were dismissed. 5 In Inspector James v Ryan (No 2), Marks J dealt with the question of costs. In that respect, his Honour made the following orders: 1. Subject to Order 2, the prosecutor is to pay the defendant's costs of the proceedings in an amount assessed under the Legal Profession Act in default of agreement.

2. Notwithstanding the provisions of Order 1, the defendant is not entitled to recover against the prosecutor any costs arising out of or in connection with the question whether the defendant was validly appointed a director of Dekorform Pty Ltd by Alesco Corporation. RELEVANT FACTUAL BACKGROUND

6 Marks J helpfully provided a detailed account of the factual background. We draw from his Honour's account in relation to the following matters of relevance: (1) Alesco Corporation Limited ('Alesco') was a company listed on the Australian Stock Exchange. It was a business that managed 'a diverse portfolio of businesses with strong industrial brands, in niche or specialist markets… .' It had 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 four divisions were Construction and Mining, Garage Doors and Openers, Kitchen and Laundry, Scientific and Medical. (2) In November 2003, the respondent was appointed to the position of group general manager - automotive of Alesco, reporting to the chief executive officer, Mr Kevin Clarke. The chairman of the board of Alesco was Mr Sean Wareing. The Company Secretary/general counsel for Alesco was Ms Lucy Rafferty. (3) Early in 2005, Mr Clarke told the respondent that he was to be appointed to a position of deputy CEO, effective on 1 February 2005. A letter from Mr Clarke to the respondent dated 31 March 2005 confirmed the appointment and referred to '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 respondent become involved 'generally in the strategic issues facing the organisation and you are invited to attend all Alesco board meetings.' (4) In about May 2005, the respondent was asked by Mr Clarke to become involved in the 'Parbury business'. Parbury Pty Ltd was a wholly owned subsidiary of Alesco and was part of the Kitchen and Laundry Division. 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. The respondent was asked to attend the meetings of the Parbury business and report about that business 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. (5) A meeting of the Executive Committee of the Parbury business held on 17 March 2005 was chaired by Mr Kevin Clarke, and among the attendees was Mr Rob Paul, who was the divisional general manager. Mr Paul was purportedly appointed a director of Dekorform and Parbury Pty Ltd on 1 April 2005. On 17 May 2005, a further meeting occurred, chaired by the respondent who was formally welcomed and introduced to the Parbury executive team members. (6) On 29 September 2005, the respondent 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. (7) The respondent was purportedly appointed to the board of directors of Alesco and as a director of Dekorform on 1 October 2005. (8) On 10 October 2005, the respondent attended the Dekorform premises. By that time, a public announcement had been made that the respondent would succeed Mr Clarke as CEO when Mr Clarke retired on 31 May 2006. Whether the respondent visited the Dekorform factory thereafter was the subject of conflicting evidence. Marks J found that he did not so attend until the incident involving the death of Mr Hogden. (9) Clause 3.2 of Dekorform's Constitution provided that 'the Holding Company may by notice to the Company [Dekorform] appoint a person to be a Director, either to fill a casual vacancy or as an additional Director.' 'Holding Company' was defined as meaning Alesco Corporation Limited. The only evidence concerning the creation of the constitution of Dekorform consisted of a memorandum from the General Counsel/Company Secretary of Alesco dated 7 May 2002. Attached to it was 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 was assumed by Marks J, was 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. (10) The respondent, 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. Marks J inferred that the circulating resolution was signed shortly prior to 12 October 2005.

(11) On 25 May 2006, the respondent 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. (12) 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.' (13) ASIC records relating to Dekorform showed the respondent as having been appointed a director on 1 October 2005 and as remaining a director as at the date of the search of the records on 20 September 2006. A later search of ASIC records of Dekorform, carried out on 11 July 2008, showed the respondent as remaining a director as at that date. (14) Section 1274B(2) of the Corporations Act 2001 (Cth) provides: (2) In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the writing is proof of such a matter in the absence of evidence to the contrary. (15) The respondent 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.

(16) Ms Sireen Shaqawi had been employed by Alesco since June 2008 as an assistant company secretary. Her principal duties included 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.' (17) Ms Shaqawi carried out searches in about May and June 2009 of Alesco company records (computer and hard copy) including the records of all subsidiary companies and looked at the company register of Dekorform for documents that related to the respondent's appointment to the board of that company. In the company register Ms Shaqawi found a consent to act form that the respondent had signed. Ms Shaqawi located in Alesco's records a resignation by the respondent 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. (18) Apart from the consent to act as a director of Alesco and its subsidiaries, including Dekorform, signed by the respondent 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 respondent. (19) Clause 13.5 of Dekorform's constitution 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.' (20) 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 stated: As a result of Kevin's departure, I have arranged for Kevin to resign from all Alesco subsidiary boards effective 31 May 2006. Justin [the respondent] has been appointed a director of all Alesco subsidiary boards, together with the appropriate general manager or Neil Thompson (as the case requires) … (21) Section 9 of the Corporations Act defines 'director': " 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). 7 The definition in (b)(i) is usually referred to as the 'de facto director' definition. The definition in (b)(ii) is usually referred to as the definition of a 'shadow director'. LIABILITY DECISION

8 Marks J considered and determined four fundamental issues: (1) whether the respondent was a director of Dekorform in accordance with Dekorform's Constitution; (2) whether the respondent was a director of Dekorform within the meaning of the definition of 'director' in the Corporations Act ; (3) what was the meaning of 'director' in s 26 of the OHS Act; and (4) whether there was a defence available to the respondent under s 26(1)(a) of the OHS Act. 9 In relation to the first issue, his Honour found at [93] that: [T]here 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. 10 What brought his Honour to this conclusion was that: (a) Alesco did not give notice to Dekorform in accordance with cl 3.2 of Dekorform's Constitution that it was appointing the respondent as a director, (b) the use of a notice given by Alesco to Dekorform pursuant to cl 3.2 of the Constitution was not part of the practice of the board of directors or other senior executives of Alesco, (c) a course of conduct of the kind adopted by Alesco, its board members and senior executives, which was inconsistent with the provisions of the Constitution of Dekorform, was not sufficient per se to create a valid regime for the appointment of the respondent as a director if what is done is inconsistent with the provisions of the Constitution, (d) that Ms Shaqawi had not found any record of such a notice having been given, and (e) none of the provisions of the Corporations Act which dealt with the effect of irregularities in the conduct of meetings or the affairs of corporations impacted upon the invalidity itself of the appointment of directors. 11 Accordingly, Marks J was not satisfied beyond a reasonable doubt that the respondent was a director of Dekorform as contemplated by its Constitution on the date of the alleged offence, namely, 3 July 2006. 12 The second issue concerned whether the respondent was a director of Dekorform within the meaning of the definition of 'director' in the Corporations Act. In that respect, having regard to (b)(i) of the definition in s 9, Marks J found that the respondent had on three occasions, acted as a director of Dekorform. They were the occasions upon which the respondent 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. However, his Honour found there was no evidence that on 3 July 2006, the respondent performed any act or engaged in any conduct in circumstances where it would follow that s 9(b)(i) of the definition applied. Marks J found that the respondent's '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.' Further, his Honour found: [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. 13 In response to the appellant's reliance on the common law de facto officers principle and after referring to what McHugh JA said in GJ Coles & Co Ltd v Retail Trade Industrial Tribunal (1986) 7 NSWLR 503, his Honour stated (at [107]): 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. 14 The third issue dealt with by Marks J was the meaning of 'director' in s 26(1) of the OHS Act. This was in response to the appellant's submission that the meaning of 'director' in s 26(1) 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. 15 His Honour held that the meaning of 'director' in s 26(1) was confined to a person who was duly appointed to that position in accordance with the constitution of a corporation. In this respect, Marks J agreed with the submission of the respondent that (at [126]): "[I]t 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 liability 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. 16 Marks J also relied on Dean v Hiesler [1942] 2 All ER 340 where it was held that a person who had acted as a director but who had not been validly appointed a director in accordance with the provisions of the Companies Act 1929 (UK), was not in fact a director of the company and, therefore, could not be guilty of an offence under a penal statute, namely, the Defence (General) Regulations. The words in question in the statute were 'every person who, at the time of the commission of the offence, was a director.' 17 His Honour agreed with the respondent's submission that in ordinary English usage, the word 'director' used in association with a corporation conveyed a meaning of someone who has been duly appointed a director of that company in accordance with its constitution. It did not include a director within the extended meaning as defined in the Corporations Act. 18 Marks J concluded that the respondent was neither a director of Dekorform at law nor a director as contemplated within the provisions of s 26(1) of the OHS Act as at the date of the offence with which he had been charged, namely 3 July 2006 and for these reasons that the charge under s 8(1) should be dismissed. 19 At [151] Marks J noted that the appellant led no evidence concerning the alternative count based on a breach of s 10(2) of the OHS Act and, therefore, found that the appellant has not established a breach by Dekorform of s 10(2) of the OHS Act. In any event, his Honour observed, the findings that he had 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. 20 The fourth issue was unnecessary for Marks J to answer. However, his Honour acceded to the joint request that he publish reasons concerning the availability to the respondent of the defence under s 26(1)(a). 21 In considering this issue the trial judge: (a) regarded it as 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. By extrapolation, therefore, it was necessary, 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; (b) found that the necessity to consider the circumstances of the particular breach militated against accepting any prima facie culpability by reason only of the fact that a defendant holds the office of director in the corporation; (c) considered that because the OHS 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; (d) understood 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 Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 168 FLR 253, extracted in the judgment of Staff J in Inspector James v Ngai [2007] NSWIRComm 203 at [116]; (e) did not agree with the approach of Haylen J in Inspector Kumar v Ritchie [2006] NSWIRComm 323 where his Honour found a Chief Executive Officer of a large international company had not made out a defence under s 26(1)(a). Marks J stated at [179]: [179] ... 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. ...

(f) disagreed with the approach of the trial judge in Inspector Aldred v Herbert [2007] NSWIRComm 170 where three directors were charged over an incident where a young boy was electrocuted in the grounds of a hotel when he stood on a pipe carrying electrical wiring. The trial judge in that case endorsed the approach of Haylen J in Ritchie . In expressing his disagreement Marks J stated at [192]-[193]: [192] … 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. (g) found that the approach to construction favoured by Staff J in Ngai accorded broadly with the conclusions that his Honour reached concerning the proper approach to the construction of s 26(1). In Ngai, Staff J stated at [127] and [130]-[131]: [127 ] ... 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.

[130] … Furthermore, when her Honour [in Herbert ] 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).

(h) found that as there had been different opinions expressed by members of the Court ( Ritchie , Herbert and Ngai ), no principle of comity arose;

(i) found that the fact the respondent attended meetings of the Parbury business in his capacity as either deputy CEO or later when he became CEO of Alesco, did not indicate any involvement in the management of the business of the Parbury Division, let alone the management of the business of Dekorform; (j) found that even to the civil standard, the appellant had not demonstrated that the respondent 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, 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. His Honour concluded that the respondent'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; (k) found that the respondent, 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 respondent to any state of affairs that called for any reaction or action on his part; (l) found that the respondent was not in a position to influence the conduct of Dekorform in relation to the particular contravention of the OHS Act, which occurred on 3 July 2006; (m) concluded that on the assumption the respondent 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 OHS Act because he was not aware of that conduct, nor should he have properly been so aware. COSTS DECISION

22 In relation to costs at first instance, his Honour's position is summed up in his conclusion: [52] The prosecutor submitted that the Court should, in the circumstances, decline to order that he be required to pay the defendant's costs of the proceedings. The prosecutor sought one of three alternative orders, namely that each party pay their own costs, that the defendant pay the costs of the prosecution incurred in respect of the liability of Dekorform with no other order as to costs or that the prosecutor pay 20 per cent of the overall costs of the defendant. [53] It follows from the discussion which I have undertaken with respect to the principles established by Latoudis , which I am bound to apply, and the particular matters put forward by the prosecutor in resisting the defendant's application that in general terms the defendant should be entitled to a costs order in his favour. The one reservation that I have concerns the changed position of the defendant about whether he had been validly appointed at law as a director of Dekorform. I have discussed these matters earlier at [24] and following. [54] I am of the opinion that the conduct of the defendant in contradicting the representation made on 13 November 2008 that he was at all relevant times a director of Dekorform, such contradiction occurring after the hearing had commenced, constitutes conduct that would disentitle the defendant from obtaining a costs order in his favour about this issue. In referring to "this issue", I am referring only to the question whether the defendant had been validly appointed a director of Dekorform, something that could only have been attended to by Alesco Corporation, the ultimate parent company. I do not intend to disentitle the defendant from recovering his costs with respect to the remaining controversy concerning whether or not he was otherwise a director for the purpose of s 26 of the Act because it is clear from the manner in which the prosecutor conducted the proceedings that these were issues that the prosecutor would have pursued even if informed that the defendant had not been validly appointed a director of Dekorform. Given also that the prosecutor vigorously contested the evidence that the defendant adduced about the validity of his appointment as a director of Dekorform, there is no justification in my opinion for making any order about this matter in favour of the prosecutor against the defendant. APPEAL GROUNDS

23 There were 39 appeal grounds in the amended notice of appeal. However, we consider there are five principal issues to be determined in the appeal. These are as follows: (1) Whether the word 'director' in s 26(1) of the OHS Act is limited to a member of the governing body of a corporation appointed in accordance with the corporation's constitution or whether it also includes a person who acts in the position of a director if that person has not been validly appointed as a director (see the extended definition of 'director' at (b)(i) or (b)(ii) in the Corporations Act in s 9).

(2) Whether the respondent was appointed as a director of Dekorform in accordance with that company's constitution and whether he was such a director on 3 July 2006.

(3) Depending on the answer to (2), whether the respondent was a director in accordance with the extended definition in (b)(i) or (b)(ii) of the definition of 'director' in s 9 of the Corporations Act and whether he was such a director on 3 July 2006.

(4) Depending on the answer to (2) and (3), whether Marks J erred in finding that the respondent was not in a position to influence the conduct of Dekorform in relation to its contravention on 3 July 2006. (5) Costs.

24 We are satisfied that the appeal raises matters of such importance that, in the public interest, leave should be granted: s 188(2) of the Industrial Relations Act. In particular, the appeal raises the question of whether the meaning of 'director' in s 26(1) of the OHS Act is confined to a person who was duly appointed to that position in accordance with the constitution of a corporation. That question has not been previously determined at appellate level. The appeal also raises important issues regarding whether a person was appointed as a director and when a person may be regarded as a de facto director. MEANING OF 'DIRECTOR' IN s 26(1) OF THE OHS ACT

25 Marks J held that 'director' in s 26 of the OHS Act did not include a 'director' within the extended meaning of 'director' contained in s 9 of the Corporations Act, in (b)(i) or (ii) of that definition. His Honour held that the word 'director' should be given the ordinary English meaning, namely, a person duly appointed as a director in accordance with the constitution of the corporation. 26 The appellant contended that Marks J erred in law in construing the term 'director' in the restrictive way his Honour did and submitted the meaning of 'director' in s 26 included such persons who satisfy the meaning of that word in the Corporations Act and included de facto directors. The respondent, on the other hand, submitted Marks J was correct in his interpretation. 27 The word 'director' is not defined in the OHS Act. It, therefore, requires the Court to construe what the legislature meant in using that word in s 26. Section 33 of the Interpretation Act 1987 states: 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. 28 In Chugg v Pacific Dunlop Ltd [1990] HCA 41; (1990) 170 CLR 249 Dawson, Toohey and Gaudron JJ considered the terms of s 35(a) of the Interpretation of Legislation Act 1984 (Vic), which may be regarded as an equivalent of s 33, and stated at 262: The choice directed by s 35(a) of the Interpretation of Legislation Act is not as to the construction which "will best achieve" the object of the Act. Rather, it is a limited choice between "a construction that would promote the purpose or object (of the Act)" and one "that would not promote that purpose or object". 29 The principles of statutory interpretation were stated by McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]: The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute (see Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213 per Barwick CJ). The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole" (Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320 per Mason and Wilson JJ. See also South West Water Authority v Rumble's [1985] AC 609 at 717 per Lord Scarman, "in the context of the legislation read as a whole"). In Commissioner for Railways (NSW) v Agalianos ((1955) 92 CLR 390 at 397) Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed ( Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590 at 597; Minister for lands (NSW) v Jeremias (1917) 23 CLR 322 at 332; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312 per Gibbs CJ; at 315 per Mason J; at 321 per Deane J). 30 Boland J observed in AJ Mills & Sons Pty Ltd v Transport Workers' Union of New South Wales [2009] NSWIRComm 135; (2009) 187 IR 56 at [55]-[57] in relation to the rules governing statutory interpretation: [55] In interpreting a statute the courts must determine what parliament meant by the words it used, not what parliament intended to say: Re Bolton & Others; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518; Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410 at 459; Harrison v Melhem [2008] NSWCA 67 per Spigelman CJ at [14] and [16].

[56] The approach to statutory interpretation '(a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means ... one may discern the statute was intended to remedy': CIC Insurance Ltd v Bankstown Football Club Limited [1997] HCA 2; (1997) 187 CLR 384 at 408. See also Project Blue Sky Inc & Others v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]; Zoological Parks Board of New South Wales and Australian Workers' Union, New South Wales [2004] NSWIRComm 85; (2004) 135 IR 56 at [44].

[57] Extrinsic materials may be considered for certain specified purposes in ascertaining the meaning of legislation: see s 34 of the Interpretation Act. However, the content of any extrinsic material cannot be used to simply rewrite the terms of the statutory provision: Newcastle City Council v GIO General Limited [1997] HCA 53; (1997) 191 CLR 85 at 113 per McHugh J. Further, the history of the legislation, whilst not decisive in itself, may shed light on the intention of the legislature: Donald Gifford, Statutory Interpretation , (1990) Law Book Co at 91 and the cases referred to therein. 31 In relation to the history of legislation referred to by his Honour as an aid to interpretation, the appellant drew attention to Zickar v MGH Plastic Industries Pty Ltd [1996] HCA 31; (1996) 187 CLR 310 at 329 where it was stated by Toohey, McHugh and Gummow JJ (references omitted): The Court was taken to earlier statutes of New South Wales to show how the question of injury or personal injury had been dealt with and to decisions construing the relevant provisions of those statutes and like provisions in the laws of the Commonwealth and other States. Some reference to those provisions and decisions is necessary, mainly because of the respondent's argument that Hockey v Yelland is an obstacle to the success of this appeal. But the first inquiry must be as to the language of s 4 and the proper construction to be placed on that language. However it is of some importance to note that the definition of "injury" now finds its place in its own section and not, as in the past, in the definition section. The repositioning of the definition lends support to the argument that here is a new section, to be construed according to its terms. Not surprisingly perhaps, the respondent argued that the legislature must be taken to have had Hockey v Yelland in mind when enacting s 4. But that is an argument which carries little force in contemporary society where parliamentary processes are more exposed to examination by the courts. In R v Reynhoudt Dixon CJ said: [T]he view that in modern legislation the repetition of a provision which has been dealt with by the courts means that a judicial interpretation has been legislatively approved is, I think, quite artificial.

This passage was referred to by Mason ACJ, Wilson and Dawson JJ in Flaherty v Girgis. Their Honours said: Whilst it is true that, where an inference can be drawn from the terms in which subsequent legislation has been passed that parliament itself has approved of a particular judicial interpretation of words in an earlier statute, a court should adhere to that interpretation, the difficulty is in discerning the existence of parliamentary approval: see Geelong Harbour Trust Commissioners v Gibbs Bright & Co. Mere amendment of a statute not involving any re-enactment of the words in question could seldom if ever constitute approval of an interpretation of those words. Even re-enactment of the words in circumstances not involving any reconsideration of their meaning, as for example, in a consolidating statute, does not do so: Williams v Dunn's Assignee: Melbourne Corp v Barry. At most the principle affords a presumption of no great weight concerning the meaning of the words used and cannot be relied upon to perpetuate an erroneous construction ... For the reason given by Dixon CJ, the suggested rule nowadays is little use as a guide and it will not be permitted to prevail over an interpretation otherwise appearing to be correct.

32 Section 26 of the OHS Act is to be found in a piece of legislation that is concerned with regulatory or 'quasi-criminal' offences, which may be distinguished from 'true' criminal offences: see Morrison v Chevalley [2010] NSWIRComm 116 at [210]-[225]. The statute is both preventive and remedial in nature: Haynes v C I & D Manufacturing Pty Limited (1994) 60 IR 149 at 157. It is a piece of legislation 'concerned with furthering industrial safety': Waugh v Kippen [1986] HCA 12; (1986) 160 CLR 156 at 164 per Gibbs CJ, Mason, Wilson and Dawson JJ. Their Honours continued: 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. 33 Their Honours also considered at 164-165 the question of conflict that may arise between the two principles of interpretation (beneficial legislation to be interpreted liberally, penal statutes to be interpreted strictly) in the context of the Factories and Shops Act 1960 (Qld): 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 LJ 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.

34 The observations by Hungerford J in Kirkby v A & MI Hanson Pty Ltd (1994) 55 IR 40 at 49-50 regarding the OHS Act's predecessor, the Occupational Health and Safety Act 1983 ('the 1983 OHS Act'), have been accepted for many years, including at appellate level, as an accurate statement of the purpose of the legislation and the context in which the general duties under it arise: I think it notorious that workplaces have the potential to be unsafe and building sites, by their inherent nature, are certainly no exception. It may be undoubted, it seems to me, that the legislature had that in mind in enacting the Occupational Health and Safety Act which, as its long title states, has the purpose "to secure the health, safety and welfare of persons at work"; the objects of that Act in s 15(1) emphasise the point. And, so, Div 1 - General Duties of Pt 3, which includes s 16(1), of the Occupational Health and Safety Act was passed to effect the apparent purpose by creating absolute obligations on the relevant persons to remedy and protect against the perceived mischief of risks to health, safety and welfare in the workplace. Section 16(1) forms part of that statutory purpose and, I think, represents an instance of the legislature's concern to improve safety in the working environment. The High Court (Mason, Wilson, Brennan and Dawson JJ, with whom Gibbs CJ agreed) observed in McLean v Tedman (1985) 155 CLR 306 at 313: "Accident prevention is unquestionably one of the modern responsibilities of an employer." The approach was furthered by Mason, Wilson and Dawson JJ when their Honours said in Bankstown Foundry Pty Limited v Braistina (1986) 160 CLR 301 at 309: "In so far as legislative requirements touching industrial safety have become more demanding upon employers, this must have its impact on community expectations of the reasonably prudent employer".

It is my view that the nature of the duties, and hence the question of whether an employer has offended against s 16(1), are to be construed in that context. As was stated by Lord Shaw in Butler v Fife Coal Co [1912] AC 149 at 178-179: "The commanding principle in the construction of a statute passed to remedy the evils and to protect against the dangers which confront or threaten persons or classes of His Majesty's subjects is that, consistently with the actual language employed, the Act shall be interpreted in the sense favourable to making the remedy effective and the protection secure. This principle is sound and undeniable."

Again, and to a similar effect, Isaacs J commented in Rice v Henley (1914) 19 CLR 19 at 22: "In interpreting an Act which is directed to guarding against accidents and to the preservation of human life I think one should endeavour to carry out the objects of the legislature as far as the language of the Act will reasonably permit." 35 The same observations may be made of the OHS Act. The long title of the Act is: 'An Act to secure the health, safety and welfare of persons at work; to repeal the Occupational Health and Safety Act 1983; and for other purposes'. The Act provides in cl 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,

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

... 36 The obligation under the general duty provisions of the OHS Act to provide a safe workplace is absolute: see Carrington Slipways Pty Limited v Callaghan (1985) 11 IR 467; Cahill v State of NSW (Dept of Community Services) (No 3) [2008] NSWIRComm 123; (2008) 182 IR 124. The principal objectives in introducing the 1983 OHS Act were 'the promotion and maintenance of the highest degree of physical, mental and social well-being of workers in all occupations; the protection of workers in their employment from all risks resulting from factors adverse to health …' (second reading speech on the Occupational Health and Safety Bill made on 1 December 1982 by Mr Pat Hills, Minister for Industrial Relations, in Hansard at 3684). This carried over into the OHS Act (second reading speech of the Minister for Industrial Relations, the Hon J W Shaw QC, in relation to the Occupational Health and Safety Bill 2000 (Hansard, 26 May 2000, 5936, 5937, 5938)).

37 It is very clear that the purpose of the OHS Act is to protect all persons at places of work (with the minor exceptions prescribed by the Act) from being placed at risk of injury or death. The Act takes a strict approach to liability. The objects of the OHS Act, its beneficial or remedial character, the nature of the duties under the Act and its coverage of workers in all occupations to ensure their health, safety and welfare, indicate a legislative intention that the words of the statute should not be construed narrowly. 38 This is confirmed by what Spigelman CJ stated in Powercoal Pty Ltd v Industrial Relations Commission of New South Wales [2005] NSWCA 345; (2005) 64 NSWLR 406; (2005) 156 A Crim R 269; (2005) 145 IR 327, where his Honour considered the words 'management of the corporation' in the context of s 50 of the 1983 OHS Act (the predecessor provision to s 26 of the OHS Act): [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 s 50(1) a narrow, let alone a technical, meaning. The purposive approach to interpretation required at common law, and now by s 33 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. 39 It is not uncommon in statutes providing for regulatory offences by corporations to find provisions deeming directors or officers of the corporation, or persons concerned in the management of the corporation, guilty of the same offence as that committed by the corporation: see, for example, Hookham v R [1994] HCA 52; (1994) 181 CLR 450 where the High Court had occasion to consider s 8Y of the Taxation Administration Act 1953 (Cth), which provided: (1) Where a corporation does or omits to do an act or thing the doing or omission of which constitutes a taxation offence, a person (by whatever name called and whether or not the person is an officer of the corporation) who is concerned in, or takes part in, the management of the corporation shall be deemed to have committed the taxation offence and is punishable accordingly.

(2) In a prosecution of a person for a taxation offence by virtue of subsection (1), it is a defence if the person proves that the person: (a) did not aid, abet, counsel or procure the act or omission of the corporation concerned; and

(b) was not in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the act or omission of the corporation.

(3) For the purposes of subsection (1), an officer of a corporation shall be presumed, unless the contrary is proved, to be concerned in, and to take part in, the management of the corporation.

(4) In this section, 'officer', in relation to a corporation, means: … 40 Deane, Dawson and Gaudron JJ found at 459 that: Section 8Y, in providing that the person is "punishable accordingly", is not providing for punishment for an offence which was really committed by the corporation and is only "deemed" to have been committed by that person; it is providing for punishment for an offence to which that person is deemed to be a party because of his or her complicity in it … .

The appellant also submits that the Commonwealth has not suffered a loss by reason of the offences committed by him. That submission is again based upon the misconception that the offences committed by the appellant were a fiction, being only "deemed" to have occurred. But, as we have endeavoured to explain, the offences were actual offences to which the appellant was deemed to be a party. There is, therefore, no basis upon which to draw a distinction between the offences committed by the appellant and the offences committed by the corporation … . 41 Accordingly, it may be said in respect of s 26 of the OHS Act (see Morrison v Chevalley at [18]): a. the provision reverses the onus of proof which would otherwise rest upon the prosecution of proving that a defendant who is a director of the corporation, and each person concerned in the management of the corporation was in a position to influence the conduct of the corporation in relation to its contravention of the provision, or the defendant, being in such a position, did not use all due diligence to prevent the contravention by the corporation;

b. the provision is not imposing liability for an offence which was really committed by the corporation and is only 'taken' to have been committed by the director or person concerned in the management of the corporation; it is providing for liability for an offence to which that director or person concerned is deemed to be a party because of his or her complicity in it; and

c. there is no basis upon which to draw a distinction between the offences committed by the director or person concerned in the management of the corporation and the offences committed by the corporation. 42 As it was explained in Morrison v Chevalley at [218] and [222] in relation to the complicity of a director or person concerned in the management of a corporation under s 26: [218] Nevertheless, the legislation appears to proceed on the basis that behind a corporation is a 'controlling mind' (directors and persons concerned in the management) and that the corporation 'must act through living persons' who should not escape liability for the contravention by the corporation unless it could be shown that these individuals were not in a position to influence the conduct of the corporation in relation to its contravention, or that these individuals, being in such a position, used all due diligence to prevent the contravention by the corporation: see Morrison v Powercoal at [170].

[222] Section 26 does not, of itself, create an offence. Rather, the actual offence that the individual is taken to have committed is the same offence committed by the corporation (for example, an offence under s 8(1) of the Act). However, that does not suggest that s 26 is not necessary. Section 26 is the mechanism by which a director or person involved in the management of the corporation is taken to have committed the same offence that the corporation has committed: Inspector Jorgensen v Daoud [2005] NSWIRComm 135 at [25]-[30].

43 Thus, the mischief that s 26 seeks to remedy is to ensure directors and persons concerned in the management of the corporation do not escape liability for contraventions by a corporation, in circumstances where those persons may be regarded as the 'controlling mind' of the corporation. Each director and each person concerned in the management of the corporation is presumed to have a responsibility for ensuring the occupational health and safety of persons in the workplace. So that if the corporation relevantly contravenes the OHS Act, in order to escape liability the director or person concerned in the management must make out one of the statutory defences. It will not be sufficient for a director or person concerned in the management to simply plead 'occupational health and safety is not my area of responsibility' or to plead ignorance or to plead delegation of the responsibility to another director or manager. What must be proven on the balance of probabilities is that the director or management person was not in a position to influence the contravention by the corporation or that if he or she was in such a position, used all due diligence to prevent the contravention by the corporation. 44 In finding that the word 'director' in s 26 'conveys a meaning of someone who has been duly appointed a director of that company in accordance with its constitution' and that '[i]t does not include a director within the extended meaning as defined in the Corporations Act or a de facto director', Marks J's reasoning in that regard may be summarised in the following way: (a) his Honour had reservations about endeavouring to construe s 26(1) on the basis that it was consistent with the purpose or object of the OHS Act that as many persons as possible be made prima facie liable for prosecution of a breach of the OHS Act where a company of which they are a director is guilty of a contravention: reference to Metal Manufacturers Ltd v Lewis (1988) 13 NSWLR 315 at 326 per Mahoney JA (at [121]-[123]); (b) the OHS 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. This also provides the basis for resisting the submissions 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 OHS Act (at [124]); (c) the proposition that unless a broad construction of 'director' was applied, there might be a temptation by persons to seek to avoid criminal liability under the OHS Act by arranging that they not be validly appointed as directors, did not constitute any proper or appropriate approach to construction of a legislative provision (at [125]); (d) 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 OHS 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. Thus, it is not necessary to strain the language of s 26 to bring about a result that is consistent with the objects of the OHS Act (at [126]); (e) the ordinary meaning of 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 is this ordinary meaning that is applicable under s 26: Harris v S (1976) 2 ACLR 51 at 54 per Bray CJ; Scott v R (1990) 20 NSWLR 72 at 77 per Gleeson CJ, Hunt and Allen JJ agreeing; Dean v Hiesler at 340, 341 (at [127]-[129], [131]-[135], [144]-[148]); (f) 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 OHS Act could have been framed accordingly. There are other instances where occupational health and safety legislation is framed in this manner (at [136]-[137]); (g) having regard to a number of statutes that do not define 'director' and statutes 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, 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 (at [138]-[141]). Whether 'director' in s 26 should be read down

45 In relation to his Honour's reasons described in (a), (b) and (c) above, his Honour was endeavouring to justify why the term 'director' in s 26 was to be read down. To that end, his Honour sought to downplay the importance of a purposive approach to interpretation and the requirement to consider, in the first instance, the context in which the word is used; context including the mischief which the statute was intended to remedy. In relation to his Honour's reliance on Lewis, we note the decision of the Court of Appeal in Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; (2003) 57 NSWLR 113, where Spigelman CJ throws doubt on the majority decision in Lewis (Mahoney and McHugh JJA, Kirby P dissenting) as an authority that should be followed. At [67] and [73] the Chief Justice stated (some references omitted): [67] The subsequent case law suggested that the Lewis majority would not generally be followed. Lewis was often distinguished. It was never overruled, however, differences between the majority judgments were highlighted. The reasoning of subsequent judgments reflected the approach of Kirby P who was increasingly cited with approval. (See eg Daniels v Anderson (1995) 37 NSWLR 438 at 498 per Clarke and Sheller JJA.

[73] The divergence in reasoning in Lewis, Morley and Brosnan had not been resolved prior to the repeal of s592(2)(a). Nevertheless, the preponderance of authority was against the adoption of a technical approach to the defences in s592(2). The repeal of the paragraph made it unnecessary to resolve the divergence in approach. 46 We also note that Mahoney JA, on whom Marks J relies at [122] of his judgment at first instance, did not refer to s 33 of the Interpretation Act in terms. In our opinion, Lewis did not provide a strong foundation for the proposition that it may be difficult or inappropriate to apply s 33 in some cases. 47 It is undoubtedly the case, with respect to his Honour, that an objective of the OHS Act is to 'secure' the health, safety and welfare of all persons in workplaces; that is, to ensure or guarantee their safety. To that end, corporations are subject to an absolute liability regime insofar as their general duty to ensure safety is concerned. Certain persons who are presumed to be the controlling mind of the corporation, namely, directors of corporations and persons concerned in the management of the corporation, are not permitted to hide behind the 'corporate veil' to avoid liability. They are to be held to account by being taken to have contravened the same provision of the OHS Act as the corporation, subject to making out one of the defences in s 26(1), which if they do so, thereby proves that they were not complicit in the corporation's contravention. 48 Under such a statutory regime, it would be startling if the legislature intended to excuse from liability under an Act persons who were not appointed as directors under their corporation's constitution but who, nevertheless, acted in the position of director and who were in a position to influence the conduct of the corporation in relation to a contravention, or were in a position to exercise all due diligence in that respect, but failed to do so. Certainly, the corporation might be found liable, but the person or persons exercising relevant control over the corporation would escape liability because they had not been 'duly appointed' according to the corporation's constitution. A person acting in the position of a director in accordance with the definition in (b)(i) of s 9 of the Corporations Act or a person in respect of whom the directors of the company are accustomed to act in accordance with the person's instructions or wishes (s 9(b)(ii)), would be liable for offences under the Corporations Act, but according to his Honour they would escape liability under the OHS Act. 49 There does not appear to us to be any rational reason to support the proposition that the legislature meant for the word 'director' to be read down in s 26(1) such that a person acting in the position of director, or a person within the definition under (b)(ii), could escape liability. In Powercoal, as we earlier observed, Spigelman CJ expressed the view that the words 'management of the corporation', which appear in s 26, should not be read down so as to apply only to central management. There is no logical reason to take a different view about the word 'director', which appears in the same provision. Directors and persons concerned in the management of the corporation

50 Marks J took the view that 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 OHS 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. Thus, his Honour reasoned, it was not necessary to strain the language of s 26 to bring about a result that was consistent with the objects of the OHS Act.

51 The logic of what his Honour suggests is that a person who is formally appointed as a director may be covered by the term 'director' in s 26(1), but a person who acts in the position of director and undertakes precisely the same functions as a formally appointed director, is not so covered and falls into a different category of 'person concerned in the management'. We do not think that was the legislature's intention. It is not to strain the language of s 26(1) to construe 'director' as including a person formally appointed as a director as well as a person recognised nationally by the corporations law as a director because that person is acting in the position of director and may be performing precisely the same functions as a formally appointed director. 52 It was his Honour's view that, if a person is in a position to influence the conduct of a company in relation to its contravention of the OHS Act and has engaged in conduct sufficient to make her or him a de facto director, the person will be one who is concerned in the management of the corporation. We do not think it necessarily follows that a de facto director, that is a person acting as a director, is a person concerned in the management of a corporation. In our opinion, a director formally appointed and a person acting as a director (both performing the same functions) would, in respect of any allegation of liability under the OHS Act, be indistinguishable. Yet the legislature chose to identify two separate classes of persons in s 26, because in our opinion, a director, whether formally appointed or acting in that capacity, may not be a person concerned in the management of a corporation.

Whether ordinary meaning of 'director' applies in s 26

53 Marks J found that it was the ordinary meaning of the word 'director' that was applicable in s 26. His Honour referred to the ordinary meaning adopted by Bray CJ in Harris v S at 54: 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… 54 His Honour also referred with approval to the definition of 'director' in the Online Oxford English Dictionary, namely, 'A member of a board appointed to direct or manage the affairs of a commercial corporation or company'. His Honour concluded that the ordinary meaning of the word 'director' used in association with a corporation (at [148]): [C]onveys 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. 55 Marks J gained support for this interpretation from Scott v R and Dean v Hiesler. As his Honour observed, Mr Scott had been charged with a breach of the provisions of the Crimes Act 1900, 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 (New South Wales) 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. The Court of Criminal Appeal held that this direction was wrong in law. 56 At [129] Marks J referred to what Gleeson CJ held, namely, that the word 'officer' where used in that provision of the Crimes Act should reflect 'the ordinary and natural meaning of the word.' Further, that Gleeson CJ had held 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. 57 In Scott v R, Gleeson CJ held that the trial judge was wrong in accepting that because the Companies (New South Wales) Code defined an officer as including an employee, that the defendant, being an employee, was an officer. His Honour observed that it produced the consequence that: [N]ot only would the chief executive of Rothmans be an officer of the company but so also would the receptionist at the front desk. That consequence does not accord with ordinary usage apart from some special definition.

To be an officer it is neither necessary nor sufficient that a person be an employee of the company in question. The jury should have been told that the fact that the appellant was an employee of Rothmans was relevant but not conclusive on the issue of whether he was an officer. Not all employees of a public company are properly described as officers of the company. 58 Earlier in the judgment (at 77) Gleeson CJ stated: 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. … 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 . 59 It is not our position that because the Corporations Act defines 'director' that definition must automatically be adopted in s 26. Rather, the Corporations Act is a 'source of information disclosing material relevant to the determination of the issue which arises under the [OHS Act]'. 60 In Scott v R it is not difficult to understand how the Court came to the conclusion that not all employees will be officers of a corporation, notwithstanding the statutory definition of 'officer' under the Companies Code in that case. It is apparent why the ordinary meaning of the term 'officer' was preferred. 61 However, in the present case it is not at all apparent why the ordinary meaning of 'director', as Marks J defined it, is to be preferred over the definition in s 9 of the Corporations Act. It would mean, as we earlier observed, that persons who would otherwise have the same duties and responsibilities as a director appointed under the company's constitution would be immune from prosecution under the OHS Act, notwithstanding that their complicity in a contravention by the corporation had the most serious consequences for persons in the workplace. 62 Dean v Hiesler was a case where the respondent was proceeded against under a penal statute, the Defence (General) Regulations, as being a director of a company at a time certain offences against the regulation limiting supplies were committed. It was proved that the respondent had not been appointed as a director, although he had attended at the offices of the company and signed letters, cheques and documents describing himself as a director. It was held that the regulation, being a penal statute had to be construed strictly and the respondent, who had not been duly appointed, could not be a director within the meaning of the regulation. 63 Viscount Caldecote LCJ stated at 341: 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. 64 Tucker J stated at 341: 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. 65 The first thing to be said about Dean v Hiesler is that the statute under consideration in that case was regarded as a penal statute. However, the dominant purpose of the OHS Act is not penal, but rather it is remedial or beneficial. Accordingly, the strict construction approach adopted in Dean v Hiesler does not apply to a statute whose dominant purpose is to protect persons from risk of injury: Waugh v Kippen. 66 Secondly, the Companies Act 1929 (UK) defined 'director' as a person occupying the position of a director. However, Viscount Caldecote stated that it was not the court's task to 'consider what is the precise meaning and effect of the definition contained in the Companies Act…', but that it was a 'simple question, whether the man in question was a director of the company' (Dean v Hiesler seems to have been the trigger for the legislature to extend the statutory definition to any person who was purporting to act in the capacity of a director). Tucker J, although indicating agreement with Viscount Caldecote, took the view that the words in the regulation, 'every person who, at the time of the commission of the offence, was a director', meant 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'. Birkett J simply indicated agreement, presumably with the outcome proposed by Viscount Caldecote and Tucker J. 67 In Corporate Affairs Commission v Drysdale [1978] HCA 52; (1978) 141 CLR 236, it was unanimously held that a de facto director, such as a person appointed by the board to fill a casual vacancy but not re-elected at the next annual general meeting, was a director within the meaning of s 124 of the Companies Act 1961 (NSW). 68 Section 124(1) provided: A director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office. 69 Section 5 of the Companies Act provided that 'Director includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors of a corporation are accustomed to act.' No reliance, however, was placed on the definition in s 5, in the various members of the Court coming to the conclusion that 'director' as it was used in s 124 included a de facto director.

70 Aickin J (with whom Gibbs CJ agreed) referred to a line of English authority regarding provisions in companies' legislation that referred to the obligations of a director or manager where it had been held that a 'director' included a de facto director. The cases included Gibson v Barton (1875) LR10QB 329; Coventry and Dixon's Case (In re Canadian Land Reclaiming & Colonizing Co.) (1880) 14 Ch D 660; In the Matter of New Par Consols Ltd & the Companies Acts 1862-1890 [1898] 1 QB 573; Re Western Counties Steam Bakeries & Milling Co [1897] 1 Ch 617; R v Lawson [1905] 1 KB 541 and Western Bank of Scotland v Baird (1872) 11 Macph (Ct of Sess) 96. 71 After referring to Dean v Hiesler, Aickin J stated at 255: So far as appears from the report the cases concerning de facto directors and other de facto officers to which reference has been made were not brought to the attention of the Court. It is, however, clear from the careful reservations made by the Lord Chief Justice that the Court was dealing with a particular penal regulation and was not seeking to determine or apply the meaning of the word "director" in the Companies Act itself. In those circumstances it appears to me that this case cannot be regarded as detracting from the force of the observations made in Coventry and Dixon's Case (1880) 14 Ch D 660 and the other cases to which I have referred. 72 Mason J, who delivered the other main judgment (and with whom Gibbs CJ also agreed), stated at 243: The case of the de facto director who holds over after his appointment as a director has terminated, accords with the assumptions which s. 124 (1) makes. He continues to occupy the office of director, albeit now without lawful authority, and discharges the duties attaching to that office. It is not incongruous that, although he is a de facto director, he is commanded to "act honestly and use reasonable diligence" in the discharge of those duties. There is no inconsistency in acknowledging that he should not attempt to discharge the duties of an office to which he has no title and in going on to say, as the sub-section does, that if he does set about discharging those duties he shall do so in the manner described by the sub-section. 73 Mason J also referred to the decision in Harris v S at 244: In Harris v. S., Bray C.J. and Wells and Sangster JJ. held that in the absence of statutory expansion the word "director" in s. 124 imports a person appointed or elected to that office pursuant to the articles of association and that the first limb of the statutory definition comprehends those who are directors appointed or elected pursuant to the constitution of the corporation but are not called directors. Evidently their Honours' attention was not drawn to the cases on de facto directors and de facto officers and for this reason I do not regard the interpretation which they placed on s. 124 (1) as compelling. 74 Murphy J referred to the same line of English cases as Aickin J and held at 245 that if a person is a de facto director, that is, acts as a director, without lawful authority, he comes under the obligations imposed by s 124. 75 There is a clear line of authority referred to in Drysdale, and in Drysdale itself, to the effect that reference in companies' legislation to directors in the context of directors' obligations, may mean that a director includes a de facto director and that the term will not necessarily be limited to a director validly appointed. However, we note what Aickin J said at 256: In these circumstances I am of opinion that it is now too late to say that the word "director" in these sections and their successors is confined to directors properly so called and duly appointed to such office, whatever view I might have taken in the absence of the authorities. This is, however, not to say that the term "director" wherever it is used in the Act bears this meaning. Whether it should be given this meaning in other sections will depend upon the terms, context and purpose of such sections. 76 Dean v Hiesler may be distinguished for the reasons referred to by Aickin J in Drysdale. However, neither Dean v Hiesler nor Drysdale is directly on point. The former was concerned with a truly penal statute, whereas that is not the case here. Moreover, for reasons that are not apparent in Dean v Hiesler no consideration was given to whether the term 'director' in the regulation included a person other than one validly appointed as a director. Drysdale was concerned with the NSW Companies Act and the obligations of directors under that Act. We are concerned here with what is a director under the OHS Act. 77 Nevertheless, what Drysdale demonstrates is that the meaning of the term 'director', when it is considered in isolation from its definition in companies' legislation (if such a definition exists), will not necessarily be limited to its ordinary meaning, but may extend to include de facto directors. 78 Marks J placed too much weight on Dean v Hiesler, which seems to be limited to the particular circumstances of that case. We were unable to find any Australian case where Dean v Hiesler has been followed. Historical considerations

79 The respondent submitted there was a powerful reason for the Court to conclude that it was not the legislature's intention that the word 'director' in s 26 of the OHS Act was to reflect the definition in the Corporations Act. 80 Reference was made to s 50 of the 1983 OHS Act. It will be recalled that the 1983 OHS Act was introduced as a bill into the Parliament in December 1982 (the Act commenced on 4 May 1983). Section 50(1) was the predecessor provision to s 26(1) and provided: 50 Offences by corporations

(1) Where 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, shall be deemed to have contravened the same provision unless he or she satisfies the court that: (a) (Repealed)

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

(c) he or she, being in such a position, used all due diligence to prevent the contravention by the corporation. … 81 As the respondent submitted, in 1978 the Commonwealth and the six States executed a formal agreement that provided the framework for a co-operative Commonwealth states scheme for a uniform system of law and administration in relation to company law and the regulations of the securities industry in the six States and the Australian Capital Territory. As a result of that agreement the Companies Act 1981 (Cth) was passed and the States adopted that Commonwealth legislation (see Companies (New South Wales) Code). The Explanatory Memorandum issued with the Companies Bill 1981 (Cth) set out some of the terms defined in the Companies Bill. One of them was the word 'director' as follows: director - modified to include "whether or not validly appointed to occupy or duly authorised to act in the position" to take account of the NSW Court of Appeal decision in R v Drysdale (1978) 3 ACLR 680 (Note that the Appeal Court's decision was set aside by the High Court (1978-79) 22 ALR 161) 82 Mr Robberds QC for the respondent submitted: When the Companies Act 1981 became law, the definition of director included those additional words. Those words appeared in the Companies (New South Wales) Code . Thus, the New South Wales Parliament knew in the lead up in the passing of the 1983 Occupational Health & Safety Act that throughout Australia the Commonwealth and the States had expanded the meaning of the word director for the purposes of the companies legislation so as to include de facto directors within that meaning.

That is a further indication … that when the New South Wales legislature did not provide for an expanded meaning of director in the 1983 Act that was a deliberate decision. This history confirms that director in s 26 of the 2000 Act has the meaning for which we contend. When one takes into account the ordinary meaning of the word 'director' as was propounded [in] the paragraphs which we read to you and the history of the legislation, the result is that there are not two constructions open of the word 'director'.

What I am saying, when the Parliament came to draft the 1983 Occupational Health & Safety Act , it was aware because it was a party to the agreements going back to 1978 which resulted in the Commonwealth Companies Act 1981 which became the NSW, Victoria … Code in 1981, 1982. And in that Act you have the expanded definition. But in spite of that, knowing that it went into the statute because of … the Court of Criminal Appeal judgment in Drysdale , the NSW legislation didn't do it when it came to … adopting the 1983 Occupational Health & Safety Act … . That must mean, with respect … it does not include the extended definition. 83 Mr Robberds also referred to other OHS legislation (Victoria, Western Australia, Northern Territory, United Kingdom), which included extended definitions of 'director', unlike the New South Wales Act. We note, however, in Victoria, Tasmania, Northern Territory, Queensland and South Australia the relevant statutes do not adopt the Corporations Act definition of 'director' to the extent that none of them refer to a person 'acting in the position of director' and none of them refer to a director 'whether or not validly appointed…', this latter description having been included in the Commonwealth Companies Act in 1981. 84 To accept the respondent's proposition that if the legislature had intended that director in s 50 of the 1983 OHS Act was to bear an extended meaning, it would have adopted that definition in the Companies Code, requires us to adopt a level of presumption about the legislature's intention that we do not think is open. In Zickar, as we noted earlier, the 'rule' that the repetition by re-enactment of a provision that has been dealt with by the courts means that a judicial interpretation has been legislatively approved, was held to carry little force. The proposition that because an Act whose purpose is to protect persons from risk of injury in workplaces did not adopt a definition of 'director' in companies' legislation recently passed meant that such a definition had no application, carries even less force.

85 The same observation may be made about the view adopted by Marks J that where the legislature declined to use the Corporations Act definition of 'director' in certain statutes, it must, therefore, be assumed that Parliament intended that in all of those statutes the ordinary usage meaning of the word 'director' was to apply. We do not know of any rule of statutory construction that would support such a proposition. Conclusion

86 In our opinion, the word 'director' in s 26 of the OHS Act embraces the concept of a de facto director as that term is defined in the Corporations Act. Further, there is no reason to exclude shadow directors given our view about the purpose of the legislation. We find that Marks J erred in holding that the term 'director', where it appears in section 26(1) of the Act, does not include the extended meaning of 'director' as it appears in s 9 of the Corporations Act. Ground 7 of the appeal is made out. WHETHER RESPONDENT WAS APPOINTED AS A DIRECTOR OF DEKORFORM IN ACCORDANCE WITH THAT COMPANY'S CONSTITUTION

87 Whilst we have dealt in part with the chronology of events in summarising the factual background, it is necessary that we descend into more detail in our consideration of this second issue. 88 Mr Ryan commenced employment with Alesco on 19 January 2004 as Group General Manager - Automotive. On 16 December 2004 Mr Ryan became a member of the Executive Committee of Alesco. On 1 February 2005 he was appointed as Deputy Chief Executive of Alesco.

89 On 31 May 2005, Mr Clarke confirmed Mr Ryan's appointment as Deputy Chief Executive of Alesco and 'a number of areas of increased responsibility', including 'appointment to the board of all subsidiary companies that form part of [Ryan's] span of control.' 90 Between 17 May 2005 and 23 May 2006, Mr Ryan attended meetings as Chairman of the Executive Committee of the 'Parbury Division' of Alesco. Dekorform, it will be recalled, was part of the 'Parbury Division', wholly owned by Alesco. On 7 July 2005, Mr Clarke resigned as director of Parbury Pty Ltd and Mr Ryan was appointed director of Parbury Pty Ltd. 91 The minutes of a Board Meeting of Alesco on 30 August 2005 show that the Board put over to the next meeting the key terms of the appointment of Mr Ryan after discussions concerning the proposal to appoint him CEO and Managing Director of Alesco effective from 1 June 2006. 92 In a memorandum dated 22 September 2005 from Sean Wareing, Chairman of the Board of Alesco, to Mr Ryan, Mr Wareing referred to 'discussions regarding your intended appointment to the position of Chief Executive Officer and Managing Directors effective 1 June 2006', and stated that '[s]ubject to Board approval, you will be appointed Deputy Managing Director of Alesco and a director of all of its subsidiaries effective from 1 October 2005.' 93 On 28 September 2005, Alesco had its Annual General Meeting at which Mr Wareing, announced that '[I]n February 2005 [Justin Ryan] was appointed to his current role as Deputy CEO with direct responsibility for … kitchen and laundry divisions …'. 94 On 29 September 2005, Mr Ryan signed a consent to act as a director of Dekorform. ASIC records show that Mr Ryan was appointed a director of Dekorform and Alesco on 1 October 2005. Those records also show that on 4 October 2005 a 'Form 484' was submitted and received by ASIC notifying appointment or cessation of company officeholder for Dekorform. 95 On 7 October 2005, Mr Ryan signed a Circulating Resolution of Directors and a Power of Attorney to act on behalf of Dekorform. On 10 October 2005, Mr Ryan attended the premises of Dekorform at Milperra. 96 In a letter dated 6 December 2005, from Mr Wareing to Mr Clarke, then CEO of Alesco, Mr Wareing confirmed, inter alia, that Mr Clarke was to continue to chair the Executive Committee of Alesco until 1 February 2006, at which time Mr Ryan would take over as Chairman. On 7 February 2006, Mr Ryan attended his first meeting as Chairman of the Executive Committee of Alesco. 97 On 25 May 2006, Mr Ryan signed a Deed of Cross Guarantee, a Statement of Solvency and a Circulating Resolution of Directors of Dekorform. On 30 May 2006, he signed an Executive Employment Agreement appointing him to the position of Chief Executive Officer and Managing Director of Alesco, effective 1 June 2006. 98 On 31 May 2006, Mr Ryan signed a Circulating Resolution of Directors of Dekorform accepting the resignation of Mr Clarke and the appointment of Mr Neil Thompson as a director of Dekorform. On the same day, Mr Clarke ceased as director of Dekorform. 99 On 1 June 2006, Mr Ryan was appointed as Chief Executive Officer and Managing Director of Alesco. 100 On 3 July 2006, Wayne Hogden was fatally injured. On 30 June 2008 prosecutions were commenced against Dekorform, Mr Ryan and Mr Robert Paul. On 1 August 2008, Mr Ryan resigned as a director of Parbury Pty Ltd. 101 Between 13 and 15 May 2009, Mr Ryan requested Sireen Shaqawi, Assistant Company Secretary of Alesco, to search records relating to his appointment as director of Dekorform. The search was conducted of records held by Alesco and Dekorform, but Ms Shaqawi was unable to find any notice given by Alesco to Dekorform appointing Mr Ryan as a director of Dekorform. 102 Counsel for the respondent conveniently and correctly summarised the main elements of his Honour's reasoning in arriving at the conclusion that Mr Ryan had not been appointed as a director of Dekorform: i. Clause 3.2 of Dekorform's constitution requires Alesco to appoint directors of Dekorform by notice to Dekorform: [59]. ii. This requires some action by Alesco, or by a person to whom its powers for that purpose have been delegated: [60]. iii. The defendant signed a consent to act as a director of Dekorform and some other companies on 29 September 2005: [62]. iv. Persons who considered themselves to be directors of Dekorform on 31 May 2006, including the respondent, signed a circulating resolution on that day appointing a new director. This resolution was inconsistent with the Dekorform constitution; [66]. v. It may be assumed that the current constitution of Dekorform was adopted by it on or before 7 May 2002: [67]. vi. Ms Shaqawi searched all of Alesco's physical and computer records for documents indicative of the appointment of the respondent as a director of Dekorform and found only his consent to act: [75] to [79]. vii. Ms Rafferty asked Ms Shaqawi to search for circulating resolutions by which the respondent may have been appointed to the board of Dekorform: [80]. viii. This instruction makes it apparent that Ms Rafferty understood that a circulating resolution was the method of appointing a director of Dekorform: [80] and [81]. ix. Mr Wareing and Mr Clarke shared Ms Rafferty's understanding. They had never seen a notice by Alesco to a subsidiary appointing a director: [81] and [82]. x. The circulating resolution of 31 May 2006 was indicative of a practice for appointing directors of Dekorform that was inconsistent with its constitution: [83]. xi. The course of conduct adopted by Alesco and its senior executives, which was inconsistent with Dekorform's constitution, was not sufficient to appoint the respondent as a director of Dekorform: [91]. 103 Essentially, the appellant submitted the trial judge erred in respect of each of his findings summarised above. We will deal with each of the appellant's assertions of error. Construing Dekorform's Constitution

104 The appellant submitted that in construing the Dekorform constitution Marks J erred in failing to construe other corporate documents as extrinsic material in order to understand the meaning and effect of the constitution of Dekorform. These documents, according to the appellant, included: (a) the constitution of the holding company, Alesco;

(b) the Alesco 'Corporate Governance Policy and Code of Conduct for Directors'. In this respect, the appellant emphasised that the Policy and Code: 'delegates the day to day management of the business and affairs of the Alesco Group …to the chief executive officer". The appellant noted that Alesco 'Group' included all its related subsidiaries. 105 We note that the 'Corporate Governance Policy and Code of Conduct for Directors' was approved by the Alesco Board on 25 February 2004, and the Alesco constitution was adopted on 26 September 2007, whereas the constitution of Dekorform was adopted on 4 April 2002. We do not understand how it could be said the Dekorform constitution should be construed by reference to documents relating to a different entity that did not come into existence until well after Dekorform's constitution. Furthermore, as the respondent submitted, the circumstances in which it is permissible to have regard to extrinsic material in the construction of the constitution of a company are limited. Reliance in this respect was placed on Egyptian Salt & Soda Company Ltd v Port Said Salt Association Ltd [1931] AC 677 at 682 where Lord McMillan observed: It must be borne in mind that the purpose of the memorandum is to enable shareholders, creditors and those who deal with the company to know what is its permitted range of enterprise, and for this information they are entitled to rely on the constituent documents of the company. They have not access to other sources of information such as the antecedent transactions which the learned judge invokes, and have no means of knowing, for example, 'that the intention of the promoters that the company should not export salt was known to the defendant company,' a circumstance which the learned judge adduces. The intention of the framers of the memorandum must be gathered from the language in which they have chosen to express it. 106 This approach to the construction of the constitution of a company was, as the respondent submitted, applied by Ipp JA in National Roads and Motorists' Association Ltd (NRMA) v Parkin [2004] NSWCA 153; (2004) 60 NSWLR 224 at [81] (Santow and Bryson JJA agreeing) and McColl JA in the Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207; (2007) 70 NSWLR 344 at [61] (Mason P and Harrison J agreeing). Whilst McColl JA referred to some potential loosening of what was decided in Egyptian Salt (see Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812; (2005) 56 ACSR 263 per Finn J; approved on appeal in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144; (2006) 156 FCR 1 (Weinberg, Kenny and Lander JJ)), her Honour noted Finn J's recognition 'that a tight rein may well need to be kept on what should count as "surrounding circumstances" when construing at least aspects of a company's constitution.'

107 We do not consider Marks J erred in not having regard to the extrinsic material referred to by the appellant in order to understand the meaning and effect of the constitution of Dekorform. Failure to find documents relating to respondent's appointment

108 It will be recalled there was evidence that Ms Shaqawi failed in her searches of electronic and physical records to find any resolutions for Alesco/ Dekorform concerning the appointment of the respondent. Nor did she find any documents that would constitute notice by Alesco to Dekorform to appoint the respondent. The appellant submitted Marks J erred in finding that the absence of such documents was evidence creating a reasonable doubt as to compliance with Dekorform's constitution concerning the appointment of the respondent.

109 It is to be borne in mind that Ms Shaqawi found no documents consistent with a procedure for the appointment of directors of the kind prescribed in the Dekorform constitution, namely the delivery to a subsidiary company of a notice of appointment by Alesco. As the respondent submitted, if there had been numerous such documents, but none for the respondent's appointment to Dekorform, 'a hypothesis that those documents had existed and had been lost might have had substance.'

110 What is more, Marks J did not rely solely on the evidence of Ms Shaqawi to find there had been no appointment in accordance with Dekorform's constitution. At [93] Marks J stated: [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. 111 The evidence of Mr Wareing referred to by Marks J and which his Honour described at [81] of his judgment, was that Mr Wareing 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'. 112 The evidence of Mr Clarke was that he commenced work at Alesco in 1995 and had never seen a written notice from Alesco to a subsidiary company appointing a director. Mr Clarke added that he would not have expected to see such a notice. The reference in his Honour's judgment at [93] to 'a course of action' was a reference to the practice of using a circulating resolution to appoint new directors, a practice that his Honour found was inconsistent with the requirements of Dekorform's constitution. But we note not even this wrong practice was followed in relation to Mr Ryan's appointment.

113 The appellant submitted that the 'obvious reason' why Mr Clarke would not have expected to see the notice was that the paper work was not put in records of the Board of Alesco but left to Ms Rafferty. Thus, the search by Ms Shaqawi was inevitably of limited consequence. Given the evidence, we think the 'obvious reason' was that senior executives of Alesco were unaware of the need to follow a procedure of using such notices, and did not do so. Further, it does not follow that Ms Shaqawi's search was of limited consequence. As the respondent submitted, Ms Shaqawi was the assistant company secretary and her principal duty was to assist Ms Rafferty, the company secretary. If Ms Rafferty had prepared the proper documents, it is unlikely that Ms Shaqawi would have failed to find them. Further, contrary to the appellant's submission, Ms Shaqawi never said she restricted her search to 'the records of the Board of Alesco'.

114 At [80], Marks J referred to other evidence of Ms Shaqawi: [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. 115 The appellant submitted Ms Shaqawi's evidence was hearsay and that Marks J wrongly used that evidence concerning the opinion of Ms Rafferty as to what documentation she would have expected to be found concerning the appointment of the respondent as a director of Dekorform, despite the limited purpose for which such evidence was permitted.

116 The respondent submitted the appellant's complaint was not available, since his counsel led the evidence from Ms Shaqawi in cross-examination, made no complaint about it below, and relied on it in submissions.

117 It is apparent that Marks J relied on the evidence of Ms Shaqawi and Messrs Clarke and Wareing, as well as the presence of the circulating resolution of Dekorform concerning the purported appointment of Neil Thompson, to find there was reasonable doubt about whether Mr Ryan had been appointed in accordance with Dekorform's constitution, that is, pursuant to cl 3.2, which 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. The Holding Company is defined in cl 13.1 as Alesco Corporation Limited.

118 In our opinion, the trial judge was entitled to conclude on the evidence there was reasonable doubt. The word 'may' in cl 3.2 of Dekorform's Constitution

119 The appellant submitted that the word 'may' in cl 3.2 of Dekorform's constitution was, prima facie, to be considered discretionary and the words 'shall/must' obligatory when used in legislation. The constitution of a corporation is to be construed according to the rules of construction of terms applicable to contracts generally. Further, that the courts should seek to give the provisions business efficacy and that '[w]ords are to be given their natural meaning. The word may is usually facilitative not mandatory.' The appellant also submitted that where the constitution imposed a mandatory requirement, it expressly said so (by use of the term 'must') in cll 4.6, 5.11, 5.17 and 7.1. 120 Clause 3.2 of Dekorform's constitution must be read in conjunction with cl 13.6, which provides: Notice from Holding Company The Holding Company may exercise a power or discretion or give its consent under this Constitution by notice in writing: a) executed by the Holding Company; or b) executed on behalf of the Holding Company by a director, secretary or executive officer of the Holding Company,

and delivered to or sent by facsimile or other electronic means to the Company. 121 The use of the word 'may' in cl 3.2 is to make it discretionary as to whether or not a director is appointed. The word 'may' does not provide any discretion about whether or not notice is given. Notice is required and it must be in writing. It makes no sense that a holding company would not be required to notify a subsidiary company that it had appointed a director to the subsidiary.

122 The appellant submitted, however, that a court in construing the provisions of the Dekorform constitution would acknowledge the close legal and economic relationship existing between Alesco and Dekorform and that Marks J erred in undertaking the task of construing the constitution using a highly technical approach, as if the two corporations were unrelated. It was further submitted: In many senses Alesco and Dekorform are one company and significant overlap in personnel is the reality. The Defendant described the subsidiary as highly tied into the holding company. The realties (sic) here included: (a) Alesco was the ultimate holding company of Dekorform.

(b) Alesco could remove any director which it did not wish to have as a director.

(c) Alesco had control over Dekorform in General Meeting as it was the owner of the company which held 100% shares in Dekorform.

(e) The oral testimony was unchallenged to the effect that Alesco managed Dekorform at least through its CEO.

(f) Dekorform was not a public company listed on the stock exchange. It was a proprietary company.

Having regard to all these factors and principles, the court would and should allow for flexibility, even informality, in the manner in which directors of Dekorform are appointed. Thus a meeting of minds of the CEO of Alesco with all existing directors of Dekorform that a particular person should be appointed a director should suffice. However his Honour seems to have taken the reverse position excluding even a unanimous circulating resolution of these same persons holding as being outside the terms of the constitution: (a) despite the powers of the directors to manage Dekorform (b) despite the fact that this is done with the consent of the CEO of Alesco (c) despite the fact that Alesco could remove an unwanted director (d) despite the fact that the directors are authorised to act in the best interests of Alesco. (emphasis in original) 123 It does not seem to us that any of these considerations, either separately or collectively, overcome the requirement in Dekorform's constitution for the holding company to give notice. Notwithstanding the close relationship, Alesco and Dekorform were two separate legal entities each with their own constitution. There is no basis for ignoring the requirement to provide notice merely because of a close economic and legal relationship. 124 The appellant appeared to submit, in the alternative, that if notice of appointment was required by cl 3.2 of the Dekorform constitution, it could be oral notice; that the effect of the word 'may' was that the 'means of conveyance' described in cl 13.6 was optional. If this were correct then what was the point in cl 13.6 prescribing how the written notice was to be executed and delivered? An option to provide oral notice makes the means of execution and delivery as prescribed by cl 13.6 entirely superfluous. We do not accept this alternative submission. In any event, we are unable to find in the evidence where oral notice was given by Alesco to Dekorform of the respondent's appointment as a director.

125 The appellant referred to other provisions of the constitution where the word 'must' was used. Clause 5.11 is the only provision that provides that something 'must be effected by a notice in writing'. That 'something' is an appointment or termination of an appointment of an Alternate Director. We are unable to find any reason why the appointment of an Alternate Director must be in writing, but the appointment of a director, either to fill a casual vacancy or as an additional director (cl 3.2), need not be.

126 The appellant submitted the trial judge failed to consider the application of the principle of 'unanimous consent', which permits the validation by unanimous conduct of an otherwise invalid or voidable appointment. The appellant submitted this could be done either by the existing directors (other than the respondent) of Dekorform exercising their powers or by the unanimous consent of directors of Parbury Pty Ltd, it being the sole shareholder of Dekorform.

127 The appellant did not refer to any evidence of there being 'unanimous consent' to validate the respondent's appointment, only that it could have been done either by the directors of Dekorform or the directors of Parbury.

128 In any event, s 134 of the Corporations Act enables a company's internal management to be governed by the provisions of the Corporations Act that apply to the company as replaceable rules, by a constitution or by a combination of both. Section 135(2) enables replaceable rules to be displaced by a company's constitution. Two of the replaceable rules listed in s 141 of the Corporations Act are ss 201G and 201H. They relevantly provide: (i) a company may appoint a person as a director by resolution passed in general meeting (section 201G); and (ii) the directors of a company may appoint a person as a director (section 201H).

129 Clause 13.5 of Dekorform's constitution provides that the provisions of the Corporations Act that apply as replaceable rules are displaced by the constitution and, accordingly, do not apply to the company. Thus, the replaceable rules in ss 201G and 201H do not apply to Dekorform. Thus, the only way for the respondent to have been appointed a director of Dekorform was by notice given by Alesco to Dekorform pursuant to cl 3.2 of the constitution.

130 No power was conferred by the constitution of Parbury Pty Ltd to appoint directors of Dekorform. The constitution of Dekorform did not repose that power in the directors or members of Parbury. The inherent power of Dekorform's shareholder to appoint directors by ordinary resolution in general meeting had also been displaced by cl 13.5 of Dekorform's constitution.

131 The appellant complained that the trial judge erred by failing to give reasons for not accepting the principle of unanimous consent. His Honour was not required to give reasons in respect of every matter raised in the proceedings: Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639 per Meagher JA at 647 (Mahoney P and Priestley JA agreeing at 643). It is patently clear the principle of unanimous consent had no application.

132 On a wider front regarding the alleged failure to give reasons, the appellant referred to the duty of the trial judge to give reasons for findings of fact (Shellharbour City Council v Rigby [2006] NSWCA 308 at [232]-[233] per Beazley JA). The appellant submitted that the ultimate findings of the trial judge as to whether the respondent's appointment was valid gave rise to the following errors: (a) Whilst his Honour recited the Prosecution submissions (at [85]-[89]), he failed to give reasons for rejecting each of them.

(b) His Honour failed to review and assess critical and material evidence which he was required to consider.

(c) Erroneous findings of fact when all relevant evidence is considered. 133 It was further submitted that: His Honour's process of reasoning in the judgment falls well short of that required. He recited a very limited (and inaccurate) version of the evidence, then recited the submissions of the parties and then proceeded to make the ultimate findings under a paragraph commencing 'having considered the totality of the evidence ' while repeating this same controlling phrase during this critical paragraph. (emphasis in original) 134 In respect of the appellant's submissions (b) and (c) quoted above, they are lacking in specificity, merely asserting a failure or an error without more. In respect of submission (a), in [85] Marks J summarised the appellant's submissions as being that, first, the documents in evidence that refer to the respondent as a director of Dekorform should cause his Honour to be 'slow to accept the evidence of Ms Shaqawi' that she had searched for documents effecting the respondent's appointment and not found any, and, secondly, these documents were sufficient notice from Alesco to Dekorform of the respondent's appointment to its board.

135 As to the first submission, it is addressed at [93] of his Honour's decision where his Honour stated: [93] ... 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. 136 Marks J considered all of the relevant evidence regarding the appointment, or absence thereof, and it is implicit in his Honour's reasoning that the existence of documents pointing to the respondent being a director was outweighed by the totality of other considerations, they being the unsuccessful search by Ms Shaqawi, the evidence of Messrs Clarke and Wareing, the circulating resolution and the evidence regarding Ms Rafferty that she had asked Ms Shaqawi to search for any circulating resolutions by which the respondent may have been appointed a director of Dekorform and not any notice appointing the respondent or any resolution regarding the respondent's appointment. Those other considerations led his Honour to conclude there was reasonable doubt about whether the respondent had been validly appointed as a director. It is a doubt we share.

137 Further, as the respondent submitted, the appellant did not point to anything about Ms Shaqawi's demeanour in the witness box, the manner in which she gave her evidence, or any internal inconsistencies in it, which would have caused his Honour to doubt her evidence. Her evidence withstood vigorous and protracted cross-examination by senior counsel for the appellant. The appellant did not call a witness to give evidence rebutting the evidence of Ms Shaqawi. Her evidence was not contradicted by documents.

138 As to the second submission, none of the documents referred to by the appellant either on appeal or at first instance, could be regarded as a notice given in accordance with cl 3.2 of Dekorform's constitution. And this is what Marks J found at [93], namely, that Alesco had no documents that identified 'the use of notices to subsidiaries of the kind contemplated by the Dekorform constitution'. As the respondent submitted, implicit in this finding is the rejection of the appellant's second submission.

139 The note by Ms Rafferty dated 23 May 2006 referred to at [85] of the first instance decision was a note to Alesco's HR Committee, not a notice to Dekorform. The letter of 31 March 2005 written on behalf of Alesco by Mr Clarke to the respondent announcing that he will be appointed to the board of all subsidiaries which would form part of his span of control, was not a notice to Dekorform that Mr Ryan was appointed to be a director. No explanation was provided by the appellant how these two documents could have effected the appointment of the respondent to the Dekorform board on 1 October 2005.

140 At [86] Marks J quoted the following submission of the appellant: 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. 141 The practice or policy of Alesco answers nothing about the requirement in cl 3.2 of Dekorform's constitution. As Beazley JA observed in Shellharbour City Council 'it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance'. This submission of the appellant was at the lower end of the scale of significance.

142 The appellant's submissions, summarised at [87] of his Honour's decision, were that: (a) there may be other places that Ms Shaqawi could have looked for documents effecting the appointment of the respondent to the Dekorform board, and

(b) his Honour should be 'slow to accept the evidence of Ms Shaqawi' that she had searched for documents effecting the respondent's appointment and not found any, because the consequence might be that Ms Rafferty and Alesco had engaged in a criminal act when they filed a document with ASIC that showed the respondent as a director of Dekorform. 143 As to (a) above, the respondent was correct in submitting the appellant had to prove the affirmative in that he had to prove a valid appointment, not merely to speculate about the possibility of there being other places in which Ms Shaqawi might have searched for them. The appellant did not point to any real place where such documents might have been, and in which Ms Shaqawi did not look. The appellant should have identified such places himself, if there were any, and tendered evidence of their existence, rather than merely conjecturing and then criticizing his Honour for declining to entertain the conjecture. In any event, the evidence indicates that Ms Shaqawi carried out a comprehensive search of where it could reasonably be expected the relevant document would have been located, but no such document was discovered.

144 As to (b) above, again the onus was on the appellant to prove a valid appointment, not to speculate about why the relevant document was not found. There was no basis upon which Marks J was entitled to speculate in the manner submitted by the appellant in order to overcome any doubt that the evidence as a whole created about the existence of a notice under cl 3.2. Further, all relevant persons believed, albeit mistakenly, that Mr Ryan had been appointed as a director of Dekorform consistent with the document filed with ASIC. There was no evidence of any intention to mislead.

145 At [88] of his Honour's decision, Marks J referred to the appellant's submission that the Court should be slow to accept the evidence of Ms Shaqawi alone in circumstances where the respondent had not called Ms Rafferty to give evidence. At [92], contrary to the appellant's claim that his Honour failed to give reasons, the trial judge explained why he did not draw any inference unfavourable to the respondent's case by reason of the failure of the respondent to call Ms Rafferty to give evidence.

146 At [89] of his Honour's decision Marks J referred to the appellant's submissions regarding a number of provisions of the Corporations Act which dealt with the impact of irregularities and the effectiveness of acts of directors. These included ss 1322 and 210M of the Corporations Act. His Honour dealt with this submission at [90], by accepting that none of the provisions of the Corporations Act, which dealt with the effect of irregularities in the conduct of meetings or the affairs of corporations, impacted upon the invalidity itself of the appointment of directors.

Further alleged failures to consider material evidence causing errors of fact

147 The appellant submitted that Alesco's 'Corporate Governance Policy and Code of Conduct for Directors', its constitution, and the contract of employment of Mr Clarke, had the effect of delegating to him the power of Alesco to appoint directors of Dekorform. Apart from the fact that there was no evidence of any steps taken by Mr Clarke to appoint the respondent as a director of Dekorform, we are unable to discern from the documents referred to by the appellant, any power to appoint a director to a subsidiary that would take precedence over cl 3.2 of the Dekorform constitution.

148 We note that the Governance Policy and Code of Conduct provide that '[t]he Board may exercise all the powers of the company that are not required to be exercised by Alesco in general meeting' and that 'the Board delegates the day to day management of the business and affairs of the Alesco Group … to the chief executive officer …'. It also provides, however: To assist the chief executive in his role, the Board has established an authorities level policy ( appendix 2 ) for group executives. This policy sets out the authority levels between the Board, the chief executive and the group executives of each division of the Alesco Group and the manner in which the decision-making powers may be exercised at the various levels of management. The authority levels document does not provide for the delegation of the power to appoint directors of subsidiaries. 149 The appellant submitted there was other documentation that supported the fact that Alesco had a policy to appoint certain persons as directors of its subsidiary companies and that policy carried with it a process to implement it by means of the CEO appointing the relevant Alesco executives. The documentation identified was: (a) The Executive Service Agreement of 15 July 2003 between Alesco and Mr Clarke whereby he agrees to serve as Managing Director but also to act on behalf of any Related Company, as if they were the duties to be performed on behalf of the Company as required by the Board (clause 3.3(c)) and agrees to use his best endeavours to promote the business interests of the Company and its Related Bodies Corporate.

(b) The Deed of Indemnity dated 17 December 2003 which was signed by Mr Clarke on behalf of Alesco and the Defendant. The recital to this deed states that: A "The Director has been (or will be) appointed a director of one or more subsidiaries B It is a condition of the Director agreeing to act, or to continue to act, as a director of the Relevant Subsidiary that Alesco enters into this deed C It is Alesco's policy to indemnify directors of a Relevant Subsidiary … D Subject to the terms and conditions of this deed, under this deed Alesco undertakes;

(a) … (b) … to maintain an insurance policy covering the Director

(c) The letter of Alesco written by Mr Clarke dated 21 March 2005 states that it was a term of the appointment of the respondent as deputy CEO that he will be appointed to the board of all subsidiary companies that form part of your span of control.

(d) ASIC documentation and documents upon which they were founded

150 None of the documents referred to by the appellant was a notice to Dekorform for the purposes of cl 3.2 of its constitution. They are, as the respondent submitted, documents that record either an expectation that the respondent would be appointed a director of Alesco subsidiary companies, or a belief that he had been appointed a director of Dekorform. Neither category of document brought about such an appointment.

151 The appellant submitted that Marks J erred in failing to draw a Jones v Dunkel ((1959) 101 CLR 298) inference adverse to the respondent. The appellant submitted the inference had been sought as it was Ms Rafferty who certified to ASIC that the respondent had been appointed as a director of Dekorform: 'She had legal responsibilities to advise ASIC and be accurate. It was the [respondent] who was seeking to undermine the certification.' It was further submitted for the appellant: [I]t was Ms Rafferty who attended to the appointments on behalf of both Alesco and Dekorform.

Ms Rafferty considered that there would be a circulating resolution concerning the appointment of the Defendant. No evidence was called as to why she had this expectation nor was any evidence called as to whether this expectation carried with it the existence of other documentation concerning appointments. Absent Ms Rafferty being called, his Honour engaged in speculation as to whether her belief as to the existence of a circulating resolution carried with it any probative inference as to the method of appointment and consequential documentation. His Honour failed to direct himself as to these evidentiary limitations arising from the failure by the Defendant to call Ms Rafferty.

Ms Rafferty also seems to have a role in respect of security over the computer system.

Ms Rafferty was the relevant officer within both companies for the giving of notice and the action of appointment following notice. The Defendant agreed with this.

Ms Shaqawi gave evidence as to Ms Rafferty's carefulness in ensuring all documents sent to ASIC were correct.

Ms Rafferty was the person who had the responsibility to ensure the constitution was complied with.

The Defendant was intimately involved in the business of both Alesco and Dekorform. He was Ms Rafferty's superior. He had access to the computers and office where the documents were held. He gave instructions (with Ms Rafferty) to do the searches in May 2009 and again in June 2009.

Both Weissensteiner v R (1993) 178 CLR 217 and Dyers v R (2002) 210 CLR 285 makes it clear that a Jones v Dunkel inference will rarely be appropriate in the criminal context. This is because the accused has no case to make.

There is however in the present case a statutory prima facie presumption in favour of the evidence in the certificate from ASIC: Section 1274B of the Corporations Act ...

By dint of this statutory presumption, there was an evidentiary onus on the Defendant to displace the presumption of accuracy of the facts stated in the certificate.

In these circumstances, given that Ms Rafferty lodged the information with ASIC, to suggest that it was incorrect placed an evidentiary onus on the Defendant to call her.

Alternatively, it is submitted his Honour failed to consider what weight to give to the searches absent Ms Rafferty who it is being suggested misled ASIC in the forms she lodged on behalf of both Alesco and Dekorform. 152 Jones v Dunkel is authority for the proposition that an inference against a party's case that is available on the evidence may be more confidently drawn if that party fails to call a witness who is presumably able to put a true complexion on the evidence, and that party gives no explanation for the witness's absence: Kitto J at 308. The appellant, however, does not say what inference is to be drawn. The appellant's main complaint seems to have been that no evidence was called as to why Ms Rafferty had an expectation there would be a circulating resolution concerning the appointment of the respondent, nor was any evidence called as to whether this expectation carried with it the existence of other documentation concerning appointments. Absent Ms Rafferty being called, it was contended that his Honour engaged in speculation as to whether Ms Rafferty's belief as to the existence of a circulating resolution carried with it any probative inference as to the method of appointment and consequential documentation and that his Honour failed to direct himself as to these evidentiary limitations arising from the failure by the respondent to call Ms Rafferty.

153 The evidence as to Ms Rafferty's expectation was led by the appellant in the cross-examination of Ms Shaqawi. The expectation was consistent with the evidence of Messrs Wareing and Clarke, the existence of the practice of the circulating resolution and with the results of the searches of Ms Shaqawi. If the appellant had wished to have evidence of the 'existence of other documentation concerning appointments' it was open to the appellant to call that evidence from Ms Rafferty. 154 We note that s 1274B of the Corporations Act, as the appellant submitted, provides in ss (2): (2) In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the writing is proof of such a matter in the absence of evidence to the contrary. 155 Thus, although the ASIC record shows that the respondent was appointed as a director of Dekorform, the record is capable of rebuttal by showing that no appointment was made in accordance with the company's constitution.

156 The appellant disputed the findings of the trial judge that certain evidence complemented the evidence of Ms Shaqawi. First, it was disputed the oral evidence of Messrs Clarke and Wareing was complementary. As to Mr Clarke's evidence, it was submitted that as he would not have expected to see a cl 3.2 notice that evidence could not be said to be complementary. We dealt with this issue earlier, finding against the appellant's submission. As to Mr Wareing's evidence, it was submitted this was not complementary because he simply stated that he was unaware until June/July 2009 that the Alesco Board needed to appoint directors of subsidiaries and that he was not aware of any procedure whereby notice to subsidiaries needed to be given of such intention. It seems to us that evidence is highly probative of the proposition that Alesco never gave a notice to any subsidiary appointing a director.

157 It was further submitted by the appellant that: (1) the evidence of Messrs Clarke and Wareing, taken together with Mr Wareing's letter to the respondent of 22 September 2005, provided 'irresistible evidence' that Mr Clarke on behalf of Alesco made the appointments of directors to the subsidiary companies; and (2) the 'notice' Mr Clarke gave of those appointments was through Ms Rafferty's consents for the future director to sign. As to the first proposition, there was no evidence to support the proposition that Mr Clarke had a delegated power under cl 3.2 to appoint directors to subsidiary companies and, indeed, there is no evidence that Mr Clarke appointed the respondent as a director of Dekorform. As to the second proposition, a consent to act as a director could not reasonably be regarded as a notice for the purposes of cl 3.2 of the Dekorform constitution. In connection with this second proposition, it was submitted for the appellant that Ms Rafferty, as company secretary of both companies, had two legal and administrative hats. The effect of this, it was contended, was that she did not have to give notice to herself of appointments to subsidiaries. We agree with the respondent that the effect of this submission was that nothing needed to be done at all to appoint a director of Dekorform: 'It all happened notionally - inside Ms Rafferty's head. The constitution of Dekorform cannot be subverted in this way.'

Documentary evidence and their factual matrix allegedly not considered

158 The appellant submitted Marks J failed to consider the 'many material historical and contemporaneous documents' concerning the appointment of the respondent to Dekorform (and other subsidiary companies) when he found non-compliance with cl 3.2 of the constitution. We deal with each of these documents: (a) the Deed of Indemnity followed by the letter from Mr Clarke of 31 March 2005 advising the respondent that he would be appointed to the boards of subsidiary companies which he controls. The Deed was made on 17 December 2003, before the respondent had commenced employment with Alesco, and contemplated future appointments to the boards of subsidiary companies. It was not an instrument of appointment consistent with cl 3.2. The letter did not mention Dekorform. It foreshadowed some board appointments, but it also was not an instrument of appointment. (b) the consent to act as a Director of Dekorform was but one of eleven (sic - thirteen) appointments as a director of other subsidiary companies. Thus, it was contended, a process was afoot and the contemporaneous documents needed to be considered in that light. Regardless of any process afoot, the consent to act could not be regarded as an 'appointment'. A signed consent to act is required by s 201D of the Corporations Act before any person can be appointed as a director of a company. As the respondent submitted, a consent says nothing about the method of appointment required, or anyone's knowledge of that method. The appellant also submitted that, as the consent to act was addressed to 'The Directors Alesco Corporation Ltd', this acknowledged that Alesco was the appointing corporation as required under cl 3.2 of the constitution. This is merely conjecture. One might also speculate that the consent to act was addressed to Alesco because it was, principally, a consent to act as a director of Alesco. (c) The minutes of the Board meeting of Alesco of 30 August 2005 and a memorandum dated 22 September 2005 from Mr Wareing to the respondent. It was submitted the minutes showed that the Board put over to the next meeting the key terms of the appointment of the respondent after discussions concerning the proposal to appoint the respondent as CEO and Managing Director of Alesco, effective from 1 June 2006. The memorandum, it was submitted, was an in-principle agreement which Mr Wareing placed before the Board of Alesco. The memorandum stated: 'Subject to Board approval, you will be appointed Deputy Managing Director of Alesco and a director of all its subsidiaries effective from 1 October 2005'. The minutes for 30 August 2005 make no mention of this memorandum (which was merely an expression of intent), or any other memorandum, relating to the employment or board appointments of the respondent. The minutes of the meeting of the board of 27 September 2005 say that Mr Wareing 'proposed signing a memorandum with [the respondent] confirming these matters', but the 'matters' being confirmed related to the respondent's employment. The minutes make no mention of subsidiary board appointments for the respondent. There is no record of the board of Alesco approving the matters referred to in the memorandum of 22 September 2005 prior to 1 October 2005. Indeed, the respondent's uncontradicted evidence was that no appointment of him to the board of Dekorform was ever approved by the board of Alesco. The appellant, nevertheless, submitted that having regard to the 'longstanding and unerring practice of the board to appoint senior executive directors to the boards of Alesco subsidiaries within their responsibility, the Alesco board must be taken to have also approved the respondent's appointment to those subsidiaries, including Dekorform. The Wareing memorandum articulated a universally acknowledged practice that was intended to, and did, apply to the respondent, namely, that those two types of appointments went hand-in-hand.' The 'practice' referred to by the appellant was not in accord with Dekorform's constitution. It cannot be right that a practice relating to the important function of appointing directors developed inconsistently with the company's constitution could supplant the requirements of the constitution.

(d) Form 484. This was an electronic form lodged by Ms Rafferty with ASIC stating that the respondent was appointed a director of Dekorform on 1 October 2005. It was submitted that this was a document signed by Ms Rafferty who was secretary of both relevant corporations and that she had a statutory duty to ensure it was correct under s 205B of the Corporations Act . It was noted that Ms Rafferty was a lawyer and that she was 'punctilious in performance of her duties'. Further, that: In this Form 848 (sic - 484), Ms Rafferty stated that the information in the cover sheet and attached sections of the form were true and complete. Further, although she signs the form as the secretary of Dekorform, she stated that if there is a query about this form "Alesco Corporation Ltd" should be contacted. This is an acknowledgement that it is Alesco which was involved in the appointment of the director. His Honour did not consider the document and this inference. (emphasis in original) (e) It may be accepted that Ms Rafferty lodged the Form 484 with ASIC indicating the respondent had been appointed a director of Dekorform on 1 October 2005. The appellant contended that an inference could be drawn that Alesco was involved in the appointment because any query was to be directed to it. Even if such an inference could be drawn, and we think if it could it would be tenuous, it is outweighed by the evidence that created a reasonable doubt that Alesco did not give notice to Dekorform appointing the respondent as a director in accordance with the requirement in cl 3.2. Documents subsequent to the respondent's appointment as director allegedly not considered nor evaluated

159 It was submitted for the appellant that it was open to a trial judge to assess his 'finding' of no notice, by assessing the conduct of the persons after the appointment as at least part of the factual matrix of Dekorform's approach to compliance with legalities. Further, that it was incumbent on Marks J to consider documents in addition to the 31 May 2006 circulating resolution (which the appellant contended was the only document considered post-appointment) that were created after the respondent's appointment in assessing whether there had been compliance. The appellant submitted his Honour was required to consider why it was that the respondent, a lawyer, at all times considered himself legally appointed and acted accordingly. Not only did he consider himself legally appointed, it was submitted, but so did his other directors and the company secretary, all of whom acted as if legal pre-conditions had been complied with. At no time, the appellant contended, did his Honour consider how these assumptions arose and why they were acted upon.

160 The particular document relied on by the appellant that the respondent signed post-appointment, was on 5 October 2005 when he signed as a director of four companies, in respect of three of which he had been purportedly appointed a director on 1 October 2005. The appellant noted that the respondent's signature was accompanied by that of Ms Rafferty, the company secretary of Alesco, although not signed in that capacity. Further, that Ms Rafferty did, however, sign in her capacity as the company secretary of each of the four companies, including Dekorform. It was submitted Marks J had no regard to the implications of the existence and execution of this document. Rather, that he relied on one document created well after the appointment to support the invalidity of the appointment.

161 The fact that persons acted, soon after 1 October 2005, as though Mr Ryan had been appointed as a director, is not a substitute for the giving of notice under cl 3.2. There is no warrant, in our opinion, for introducing the notion of constructive notice; no authority was cited in that respect. In the absence of evidence that a notice was given in accordance with cl 3.2 of Dekorform's constitution, and in the face of evidence that the procedure in that clause was never observed by Alesco in relation to any of its subsidiaries, Marks J was entitled, indeed bound, to conclude there was reasonable doubt that notice had been given. What the appellant seeks to do, impermissibly, is have the Full Bench draw inferences in the face of probative evidence that was contrary to the inference sought to be drawn.

162 The appellant asserted that Marks J 'failed to consider the implications of the conduct of the [respondent] in having formally signed resignation forms in respect of his directorships of all subsidiary companies of Alesco other then Dekorform'. It was noted, in particular, the respondent signed a resignation of his directorship of Parbury Pty Ltd on 1 August 2008. It was submitted that: The manner of appointment of a director of Parbury is the same as Dekorform. The searches undertaken by Ms Shaqawi revealed no documents concerning: (a) Consent to act as a director of Parbury P/L

(b) No circulating resolution of the directors of Parbury P/L.

His Honour did not consider this evidentiary conundrum, namely that the Defendant chose to resign as a director in circumstances where his Honour would have found he was not validly appointed. His Honour was required to consider that the absence of documentation was not a matter of validity but poor security of relevant documents and that the failure to resign as a director of Dekorform was an acknowledgement of him being a validly appointed director. He could give no reason for not advising ASIC that he was not a director as shown in their documents. (emphasis in original) 163 In cross-examination, however, Mr Ryan said he resigned from the board of Parbury shortly after he was prosecuted because imprisonment was possible for a second offence. His prosecution commenced on 1 July 2008. This shows that he had resigned from these boards before he realised in May 2009 that he had not been appointed to them.

164 The appellant submitted that in addition to the documentation, his Honour had to consider the oral evidence concerning the positive intent of those in authority in Alesco to appoint certain persons as directors of the subsidiary companies, because it was in the interests of Alesco to have the relevant Alesco executive(s) on the Boards of the subsidiary companies within their control. It was submitted the oral testimony complemented the contemporary documentation that there was a system of appointments by Alesco of directors of the subsidiary companies, that the system was well known to the executives of Alesco and if notice was required to be given to the subsidiary company, this took the form of 'corporate knowledge'. The appellant referred to the evidence of Messrs Clarke and Wareing.

165 In responding to this submission, we state, first, that 'corporate knowledge' is not notice for the purposes of cl 3.2. Secondly, we have considered the evidence of Mr Clarke relied upon by the appellant and it appears to be submitted by the appellant, based on that evidence, that an appointment of the respondent to the board of Dekorform would have been consistent with a practice within Alesco of appointing to the boards of subsidiaries the executives with operating responsibility for the subsidiary and, therefore, the making of the appointment should be inferred. However, as the respondent submitted, this is no answer to the evidence that no steps were ever taken in accordance with Dekorform's constitution to effect his appointment. What is more, the evidence of Mr Clarke does not prove that he or anyone else appointed Mr Ryan as a director of Dekorform. The reference to Mr Wareing's evidence does not alter our previously stated position that Marks J was correct in holding that Mr Wareing's evidence, that is, notices appointing directors were not given to subsidiaries, complemented the evidence of Ms Shaqawi that was to the effect that Alesco has no documents consistent with the operation of the procedure required by cl 3.2 for appointing directors of subsidiaries.

166 The appellant complained that the trial judge did no more than 'tilt his hat' at the attack by the appellant on the credibility of the respondent. His Honour addressed the issue of credibility at [215] of his judgment: [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. 167 Marks J obviously had regard to the appellant's submissions regarding credibility. We are satisfied his Honour dealt with the issue appropriately and was not in error. In any event, as the respondent submitted, his credibility was irrelevant to the question whether Alesco, by notice to Dekorform, appointed him as a director of Dekorform. The respondent did not need to rely on any evidence that he gave, as support for his argument that he was not so appointed.

'Voidable' but valid appointment or void appointment

168 The appellant queried Marks J's reliance on Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1. The passage relied upon by his Honour was at 33-34 per Williams J: Section 124 of the Companies Act 1936 provides that the acts of a director shall be valid notwithstanding any defect that may afterwards be discovered in his appointment. Article 93 of the articles of association of the company provides that all acts done by any meeting of the directors or by any person acting as director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every person had been duly appointed and was qualified to be a director. The effect of this section and article was recently considered by the House of Lords in Morris v Kanssen (1946) AC 459. Lord Simonds pointed out (1946) AC at p 471 that there is a vital distinction between (a) an appointment in which there is a defect or, in other words, a defective appointment, and (b) no appointment at all. His Lordship said "that the section and the article, being designed as machinery to avoid questions being raised as to the validity of transactions where there has been a slip in the appointment of a director, cannot be utilized for the purpose of ignoring or overriding the substantive provisions relating to such appointment" (1946) AC, at p 472. The appointments of Mrs. Dampney and Mrs. Arnott were invalid because no extraordinary resolution had been passed under Art 86 increasing the number of directors and thereby creating vacancies to which they could be appointed. This was a substantive provision which had to be fulfilled before they could be appointed, and one that could not be overridden by a section of an Act or an article dealing with slips or irregularities in appointments. It follows that, in my opinion, the only valid vote in favour of W A Grant's appointment as managing director was that of D F Grant, and that the appointment was invalid.

169 Williams J referred to article 86 of the articles of association of the company in that case as 'substantive'. The appellant contended in the present appeal that cl 3.2 was merely procedural and, therefore, any failure to observe that provision did not nullify the appointment. For this submission the appellant relied on Project Blue Sky at [91]-[93]. Project Blue Sky was concerned with acts done in breach of a condition regulating the exercise of a statutory power, not with the failure to observe substantive provisions of a corporation's constitution. The appellant pointed to no authority where Project Blue Sky had been applied to the construction of such constitutions.

170 That cl 3.2 is a substantive provision in the same way as article 86 was in Grant, is undoubtedly the case. The appointment of a director is a fundamental exercise of power within the corporation or, in this case, by the Holding Company. Dekorform was required to be given notice in writing of that appointment. It is the only means under Dekorform's constitution by which such an appointment could be made.

171 The appellant referred to the judgment of Fullagar J in Grant and submitted that his Honour determined that: despite non-compliance with the articles of association in the appointment of a director, the appointment will not be invalid where: (a) there has been an irregularity in appointment

(b) the slip has occurred because the parties have not had present in their minds the legal difficulties in the way of doing what they honestly thought they were entitled to do; and

(c) the acts were done in good faith. 172 Fullagar J took a different view to the majority regarding validation; he was in the minority. The majority, McTiernan, Williams and Kitto JJ, held that the purported appointment of the two directors was not saved by the constitution of the company or the Companies Act. Latham CJ did not need to decide the point.

173 Kitto J, agreeing with Williams J, stated at 53: The actual decision in Morris v. Kanssen (1946) AC 459 was that where a person assumes to act as a director without any purported appointment the section and article do not operate to validate his acts. But the passage quoted by my brother Williams from the speech of Lord Simonds, with which the whole House agreed, shows, I think, that the case justifies a broader proposition. The passage points out that the section and article relate only to the case where a slip has been made in appointing a director, and it draws a distinction between such a case and a case in which substantive provisions relating to an appointment have been ignored or overridden. The reason for the distinction is, I think, that a defect in an appointment can be said to exist only where some requirement has been neglected in exercising a power to make an appointment. The section and the article presuppose an appointment in fact made by a person or body having power to appoint, and they refer to a slip in the making of the particular appointment in question. It is therefore necessary to distinguish between the defective exercise of a power to appoint and the non-exercise or non-existence of such a power. The proposition which I think is justified by Morris v. Kanssen (1946) AC 459 is that where a person acts as a director, either without being appointed or in pursuance of a purported appointment made by a person or body not authorized to make an appointment, neither section nor the article operates to validate his actions. 174 The appellant, nevertheless, submitted that what Fullagar J determined were the very circumstances in the present case. Further, that unlike the position in Grant there is no tension within the corporation in upholding the appointment valid. Alesco and Dekorform were in one sense the same company. Each (and the shareholders) consented to the respondent's appointment. It was submitted that: · Dekorform's constitution makes this clear: a. permitting the directors to act, in Alesco's interests b. permitting Alesco to remove directors

c. permitting Alesco to appoint directors · Alesco providing indemnity and insurance for the directors of Dekorform · The financial reporting of Dekorform to be maintained by the Alesco · The Corporations Act maintains the concept of group of companies, such as Alesco and Dekorform as related body corporates despite the corporate veil. · The constitution permitted validation of acts by directors which would have included the passing unanimously of the appointment of the Defendant as director. · The Corporations Act would permit a court validating the appointment. There would be no reason why on application, this would not have been done, nor opposed by any interested party. · Unlike in the facts in Grant the appointment of the Defendant as a director of the subsidiary company did not carry with it any additional salary nor share of profit. · In both cases a general meeting could validate the appointment. In the present case the 'shareholders' (Parbury) at the general meeting would also be represented by the other two directors of the corporation. 175 The first four dot points seem to suggest that we should accept that Alesco and Dekorform were one and the same. As we earlier stated, they were two different entities each with their own constitution. It could not possibly be correct that because there was a close relationship, the constitution of one may be ignored. As Robert Goff LJ put it in Bank of Tokyo Ltd v Karoon [1987] AC 45 at 64: [Counsel] suggested beguilingly that it would be technical for us to distinguish between parent and subsidiary company in this context; economically, he said, they were one. But we are concerned not with economics but with law. The distinction between the two is, in law, fundamental and cannot here be bridged.

176 The fifth dot point overlooks the fact that there was no appointment to be validated. As to the sixth dot point, again, no appointment was made to validate and neither s 201M nor s 1322 of the Corporations Act could bring about the retrospective appointment of the respondent to the board of Dekorform: Morris v Kanssen [1946] AC 459. As to the seventh dot point, we do not see the relevance. As to the eighth dot point, as we earlier stated, a general meeting of members of Dekorform did not have the capacity to appoint directors. Conclusion

177 We find that there was no appointment of the respondent as a director of Dekorform in accordance with Dekorform's constitution. In making that finding Marks J did not commit any error WHETHER THE RESPONDENT WAS A DE FACTO OR SHADOW DIRECTOR

178 As we earlier discussed, Marks J found that the respondent was not a de facto director of Dekorform, under the definition of director in (b)(i), or a shadow director under (b)(ii) in s 9 of the Corporations Act. His Honour relied on the terms of the definition in (b)(i), especially the reference to 'act in a position', to find the respondent was not a de facto director on 3 July 2006. His Honour also relied on what McHugh JA said in GJ Coles v Retail Trade Industrial Tribunal, that the common law de facto officer principle attached only to the 'acts' of persons who purported to exercise the duties of an office without being lawfully appointed to that office: [107]. Therefore, his Honour reasoned, this reinforced the conclusion that it was only when the respondent performed the acts of a director that he could be held to be a de facto director and as the respondent did not perform the act of a director on 3 July 2006, he was not a de facto director. Marks J found that the respondent's 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 three documents, 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: [99]. 179 Marks J also found at [103]-[105]: [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. 180 In Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 at 570, Madgwick J stated: 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. 181 Nevertheless, there appears to be various indicia that have been developed to assist in the task of determining whether a person, not appointed or not validly appointed, is acting in the position of director. A number of these are described in the article by Martin Markovic, 'When are you a director when you're not a director? The law of de facto directors', (2007) 25 C&SLJ 101, where the learned author referred to a number of relevant authorities. 182 Whilst Markovic asserted that intention by the person to be a director was not an essential element of the statutory definition the learned author noted that in Mistmorn Pty Ltd (in liq) & Wily v Yasseen (1996) 33 ATR 332; (1996) 14 ACLC 1387, Davies J was 'satisfied that Yasseen intended that he would not be a director' (at 1391). Nevertheless, his Honour held Yasseen was a de facto director. Similarly, it was noted that Madgwick J in Deputy Commissioner of Taxation v Austin held that Austin was a de facto director, notwithstanding '[n]or do I doubt that, with the exception of signing the agreement with the DCT, he believed that, in law, he was not acting as a director'. As for the intention by the corporation, Markovic also considered that was not an essential element but accepted that if a company intended a person to be a director, it was 'clear evidence in support of de facto director status'. We agree. 183 Markovic considered whether 'holding out' as a director was a requisite element. He submitted that holding out by the company was not an essential element, but it was clear evidence in support of de facto director status: see Re Hydrodam (Corby) Ltd [1994] 2 BCLC 180, where Millett J stated at 183: A de facto director is a person who assumes to act as a director. He is held out as a director by the company, and claims and purports to be a director although never actually or validly appointed as such.

184 Holding out by the person was considered by Markovic not to be a requisite element for the statutory definition of de facto director, nevertheless, he stated: [E]vidence of holding out by the company and/or person would constitute clear evidence in support of de facto director status. As Madgwick J commented in Deputy Commissioner of Taxation v Austin [at 570]: 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 Re Valleys Rugby League Football Club Ltd [1997] 2 Qd R 645 and, with respect, this appears obviously correct.

185 The learned author also referred to Forkserve Pty Ltd v Jack [2000] NSWSC 1064; (2001) 19 ACLC 299 at 312, where Santow J found at [42]: I accept that the position, or title, of Leon Jack in the Plaintiff company is ambivalent. I accept that Leon Jack never consented in writing to becoming a director of the Plaintiff company. I find however, that, even if Leon Jack did not expressly consent to act as a Director of the Plaintiff company, through his actions he represented himself to third parties as a Director. This is particularly seen in the fact that Leon Jack signed a number of documents as "Director" of Forkserve. Even if Leon Jack did not give much thought to these actions, and even if he signed the documents merely for convenience as submitted by the Defendant, Leon Jack must have been aware that he was being represented to the recipients of those documents as a director of the Plaintiff as he did knowingly sign as a director. 186 At 105, Markovic referred again to the decision in Deputy Commissioner of Taxation v Austin in relation to persons exercising top level management functions: Madgwick J in Deputy Commissioner of Taxation v Austin … made a number of insightful comments with respect to de facto directors, including "[w]hether a delegate or intermeddler is acting as a director will depend upon the nature of the functions or powers which are exercised and the extent of their exercise"[at 569] His Honour further stated … that "it seems to be a necessary condition of acting as a director, whether properly appointed or not, that one exercises what might be called the actual (and statutorily extended) top level of management functions" [at 569]. Although an essential condition for de facto director status, Madgwick J recognised "[h]owever, that is not necessarily a sufficient condition for such a conclusion, nor is it the same as saying that one must do things which only a director can do"[at 569]. 187 Thus, if a person intended to be a director or the company intended the person to be a director, or the person or company held out that the person was a director and the person exercised top-level management functions, such indicia is evidence in support of de facto director status. 188 It was undoubtedly the case that the respondent intended to be a director of Dekorform: he signed a consent to act form and until May 2009 believed he was a director. It was also undoubtedly the case that the Holding Company, which had the exclusive power to appoint directors of Dekorform, intended the respondent to be a director: Ms Rafferty, the company secretary, filed a 484 form lodged with ASIC stating that the respondent was appointed a director of Dekorform on 1 October 2005. Dekorform held out the respondent to be a director. The public ASIC record confirms this by the historical extract relating to Dekorform as at 11 July 2008, which shows the respondent as a director. Mr Ryan held himself out to be a director by signing the three documents referred to by Marks J at [99] of his judgment. 189 The critical question then is whether the respondent exercised top-level management functions. Madgwick J in Deputy Commissioner of Taxation v Austin considered that a necessary condition of acting as a director was that person exercised top-level management functions. 190 The signing by the respondent of the documents referred to by Marks J at [99] of his judgment suggests that in doing so the respondent was exercising a top-level management function. The first document was a resolution signed by Messrs Clarke, Ryan and Paul as directors of Dekorform granting certain executives of Alesco Shared Services Group, which was responsible for collecting Dekorform's debts from time to time, power to act on behalf of Dekorform. The power was in the form of a power of attorney. The execution by the respondent purporting to be as a director of Dekorform was undoubtedly the exercise of a top-level management function. 191 The next document signed by the respondent was a deed of cross guarantee. It was executed by the respondent as a director of Dekorform in accordance with s 127(1) of the Corporations Act. In executing the deed, the respondent was undoubtedly fulfilling a top-level management function. 192 The third document was signed by the respondent on 25 May 2006. It was a circulating resolution signed by the directors of Dekorform, including the respondent, relating to the deed of cross guarantee. The signing of this document also represented a top-level management function.

193 Marks J took the view that it was only when the respondent signed the documents that he could be considered to have been acting as a director and not otherwise. This view, as we have said, was reinforced in his Honour's mind by the discussion of the de facto officer principle by McHugh JA in GJ Coles v Retail Trade Industrial Tribunal. In that case the Court of Appeal was concerned with a failure to convene a meeting of the Retail Trade Industrial Tribunal in accordance with the procedures laid down in the relevant Act and regulations, in that the required assessors did not attend or participate in the sitting of the Tribunal, and an award was made by the chairman alone. The other two members of the Court, Kirby P and Hope JA, were not prepared to apply the doctrine because they were not convinced that it applied to the proceedings in question. McHugh JA expressed the view that, although the rule had not been invoked, and the court had not heard counsel in the matter, it did appear, prima facie, that the de facto officer rule would prevent the invalidation of the award, even though the Tribunal was improperly constituted. 194 McHugh JA referred with approval to the judgment of Richmond J in Re Aldridge (1893) 15 NZLR 361 and that of Butler CJ in State v Carroll (1871) 9 Am R 409. In the latter case, at 423, the Chief Justice said: The de facto doctrine was introduced into the law as a matter of policy and necessity, to protect the interests of the public and individuals, where those interests were involved in the official acts of persons exercising the duties of an office, without being lawful officers. It was seen, as was said in Knowles v Luce , that the public could not reasonably be compelled to inquire into the title of an officer, nor be compelled to show a title, and these became settled principles in the law. But to protect those who dealt with such officers when apparent incumbents of offices under such apparent circumstances of reputation or color as would lead men to suppose they were legal officers, the law validated their acts as to the public and third persons, on the ground that, as to them, although not officers de jure , they were officers in fact, whose acts public policy required should be considered valid. It was not because of any quality or character conferred upon the officer, or attached to him by reason of any defective election or appointment, but a name or character given to his acts by the law for the purpose of validating them. 195 The de facto officer rule, therefore, has no application to directors of corporations. This was recognised by Marks J (see [107]). Nevertheless, his Honour drew from GJ Coles v Retail Trade Industrial Tribunal that: [T]he 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.

196 GJ Coles v Retail Trade Industrial Tribunal was concerned with a completely different legal and factual scenario to the present case and is not authority for, or even persuasive of, the proposition that a person may only be considered to be a de facto director at those times he or she performs an isolated act that one would only expect a director to perform. We see no impediment in the definition of director on the Corporations Act. Indeed, we think the wording supports the notion that where a person engages in a particular course of conduct over a period of time, he or she may be regarded as acting in the position of director over that period. We note that despite his reliance on what McHugh JA discussed in GJ Coles v Retail Trade Industrial Tribunal, Marks J acknowledged at [102] that it was possible that a person may 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, his Honour found there was no evidence in the proceedings that there was any such course of conduct. 197 Marks J was correct regarding his observations that it was possible that a person may 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 de facto director. The observations are consistent with Forkserve and Deputy Commissioner of Taxation v Austin. In Forkserve, Santow J found that the defendant, Mr Jack, acted in breach of continuing fiduciary duties after he had assumed the status of a de facto director upon signing a number of documents representing himself to third parties as 'director' (at [42]-[43]). Santow J also found that, but for the plaintiff's consent, Mr Jack would have been in breach of his continuing fiduciary duty (derived from his status as a de facto director) in taking a teledex book containing a customer list when he left the company (at [37] and [123]) - an act that was unrelated and subsequent to any third party representations as his position as a director.

198 At [42]-[43] his Honour stated: [42] I accept that the position, or title, of Leon Jack in the Plaintiff company is ambivalent. I accept that Leon Jack never consented in writing to becoming a director of the Plaintiff company. I find however, that, even if Leon Jack did not expressly consent to act as a Director of the Plaintiff company, through his actions he represented himself to third parties as a Director. This is particularly seen in the fact that Leon Jack signed a number of documents as "Director" of Forkserve. Even if Leon Jack did not give much thought to these actions, and even if he signed the documents merely for convenience as submitted by the Defendant, Leon Jack must have been aware that he was being represented to the recipients of those documents as a director of the Plaintiff as he did knowingly sign as a director.

[43] Hence Leon Jack's position falls under the definition of "director" in s 60(1)(a) of the Corporations Law , namely "a person occupying or acting in the position of director of the body, by whatever name called and whether or not validly appointed to occupy, or duly authorised to act in, the position".

199 It is apparent in Forkserve that Santow J did not take the view that the defendant could only be regarded as acting in the position of director on each occasion he signed a document. Rather, his Honour regarded the signing of the documents as representing to the recipients of those documents that he was a director and that was sufficient for the purposes of meeting the definition in the relevant Corporations Law. 200 Deputy Commissioner of Taxation v Austin involved a claim by the Deputy Commissioner of Taxation for an indemnity against Mr Austin in his capacity as a director of Talljade Pty Limited. Talljade had been placed into liquidation and a claim had been made by its liquidator against the Deputy Commissioner for recovery of an unfair preference. Under s 588FGA of the Corporations Law, the Commissioner was entitled to indemnity against directors of a company for amounts recovered from him as unfair preferences by a company's liquidator. The central issue was whether Mr Austin was properly to be regarded as having acted as a director of the company, following his purported resignation from that position before preferential payments were made by the company. Madgwick J had to consider whether the defendant 'occupied or acted in the position' of a director during the period from 17 April to 21 June 1996. His Honour considered the sum of Mr Austin's actions over the relevant period of time and found that he was performing top-level management functions that 'one would expect only of a person acting as a director or of a person specifically granted such authority by all those who might conceivably have been thought to be directors.' 201 Whilst Forkserve provides some support for the proposition that Mr Ryan was acting as a director of Dekorform as a consequence of signing the documents earlier described, we are reluctant to follow that authority unquestioningly.

202 The circumstances in the present case are quite different to those in Forkserve. In Forkserve, it was a relatively straightforward exercise of examining the defendant's acts in relation to one company over a period of time. In the present case, the respondent was acting in a variety of roles for different companies at different times and it is not a matter of simply extrapolating the fact that the respondent signed a number of documents one would usually expect only a director to sign and concluding that, at the relevant time, the respondent was a director of Dekorform. Moreover, the signing of the documents described by Marks J at [99] did not span the day pleaded in the Application for Order as being that time when the offence occurred, namely, 3 July 2006. There was also the evidence of Mr Wareing, the chairman of Alesco, that an appointment to the board of a subsidiary meant taking responsibility for statutory accounts and signing off and that apart from signing, for Alesco group purposes, the documents described by Marks J, the respondent did not take on any other responsibility so far as the subsidiary companies were concerned. Mr Clarke, in his evidence, said that the executives managing businesses were appointed to the boards of subsidiaries for convenience, for statutory and company secretarial type needs, for administrative purposes or to give status to the executive. 203 A closer examination of the circumstances is required, in our opinion, if we are to be satisfied beyond reasonable doubt that the respondent was, at the relevant time, a director for the purposes of s 26 of the OHS Act. 204 In this last respect, as we earlier indicated, Madgwick J in Deputy Commissioner of Taxation v Austin considered that an essential requirement in being able to find a person was acting in the position of director was that the person was performing top-level management functions.

205 It is necessary to examine whether, in addition to the signing of the three documents, it could be concluded that because of the management functions the respondent was performing, it is beyond reasonable doubt the respondent was a de facto director at the relevant time. Accordingly, we turn to the respondent's management role in Dekorform. 206 It may first be noted that the company's constitution provided in cl 4.1 that: The business of the Company is to be managed by the Directors, who may exercise all such powers of the Company as are not, by the Corporations Act or by this Constitution, required to be exercised by the Company in general meeting. 207 On 1 February 2005, the respondent was appointed Deputy CEO of Alesco and in March 2005 Mr Clarke confirmed this appointment. The appointment involved 'a number of areas of increased responsibility', including 'appointment to the board of all subsidiary companies that form part of [the respondent's] span of control.' The respondent was a member of Alesco's Executive Committee and attended meetings of that Committee. He was later chairman of that Committee. 208 The appellant submitted that the respondent had not been appointed to the boards of the subsidiary companies for no reason, but rather he was appointed to be, and was, responsible for the management of these companies. 209 Alesco wholly owned Parbury Pty Ltd through Pargone Pty Ltd. Dekorform was wholly owned by Parbury Pty Ltd. In the financial year 2006, Parbury was part of the Kitchen and Laundry Division of Alesco. Although Parbury was part of a Division, it was often referred to in the evidence as the 'Parbury Division', which included Dekorform. There were 'Executive Committee' meetings of 'Parbury' held from time to time that were later referred to as 'Business Review' meetings. Mr Ryan attended nine Parbury Business Review meetings as Deputy CEO of Alesco between 17 May 2005 and 23 May 2006.

210 The meetings encompassed the Dekorform business. Mr Ryan attended and chaired these meetings and Mr Paul, who was the General Manager of the Parbury business, including Dekorform, attended the meetings and reported to Mr Ryan. Mr Paul was purportedly appointed as a director of both Dekorform and Parbury Pty Ltd on 1 April 2005. Mr Brydson was an employee of Dekorform and managed that business on a day-to-day basis. He reported to Mr Paul. 211 Mr Ryan commenced chairing the Executive Committee meetings of the Parbury business on 17 May 2005. By this time he had been appointed to the Executive Committee of the Holding Company on 16 December 2004 and Deputy CEO of Alesco on 1 February 2005. At the meeting various reports were provided including the general manager's report, and reports on sales, marketing and finance. A further meeting, this time referred to in the agenda as a 'Business Review Meeting' (but the minutes record it as an 'Executive Committee Meeting'), occurred on 25 July 2005 chaired by the respondent. By this time, Mr Ryan had purportedly been appointed as a director of Parbury Pty Ltd (7 July 2005). Various reports were provided on the Parbury businesses including Dekorform. Mr Paul reported under the heading 'OH&S' one lost time injury in the Silestone business and the 'Preventative Plan'. Further Business Review Meetings took place on 23 August and 20 September 2005 chaired by Mr Ryan, with the usual reports on business activity of the Parbury business, including Dekorform, being provided.

212 On 22 September 2005, Mr Wareing wrote to the respondent referring to recent discussions regarding his proposed appointment to the position of Chief Executive Officer and Managing Director of Alesco effective 1 June 2006. On 27 September 2005, the minutes of the meeting of directors of Alesco show that Mr Wareing indicated that he proposed signing a memorandum with Mr Ryan regarding his appointment as CEO from 1 June 2006. There was no dissent recorded. The minutes also show that the meeting resolved to appoint Mr Ryan as an executive director and Deputy Managing Director of Alesco effective from 1 October 2005. On 29 September 2005 Mr Ryan signed the consent to act as a director of Dekorform and ASIC records show Mr Ryan having been appointed a director of Dekorform on 1 October 2005. 213 Mr Ryan continued to chair the Parbury meetings through to 23 May 2006, just prior to him assuming the role of CEO of Alesco. It is evident from the minutes of the meetings that Mr Ryan was not merely a passive note taker. However, the minutes show that the only instructions the respondent gave at these meetings concerned the format of the reports given to him at the meetings, and the cessation of revised budgets for the Parbury business. Otherwise, according to the minutes, he asked a few questions and made a few suggestions in the later meetings. He never mentioned Dekorform. From time to time occupational health and safety was an item on the agenda. 214 The evidence of Mr Clarke was that the respondent 'was given the Parbury business to manage'. In July 2005, following the resignation of Mr Clarke as a director of Parbury Pty Ltd, Mr Ryan 'took over the responsibility for the particular division' and 'reported thereafter on the Parbury business to the [Alesco] Board'. On 1 June 2006, the respondent was appointed as CEO of Alesco with responsibility for all the business of Alesco. 215 However, we do not accept that the chairing by the respondent of the Parbury business meetings should translate into the proposition that he was acting in the position of director of Dekorform. Whilst it may be accepted the respondent was not merely a passive note taker at those meetings and that the business of Dekorform, together with other businesses, was the subject of discussion at those meetings, the respondent chaired the meetings in his capacity of Deputy CEO of Alesco and as a representative of the Alesco board. We do not accept that the respondent was wearing two hats at the meetings, one as Deputy CEO of Alesco and the other as director of Dekorform. The inference to be drawn from the evidence is that Mr Paul, as General Manager of the Parbury business and director of Dekorform, was the person representing Dekorform at the business meetings. 216 The evidence regarding the respondent's involvement in the business of Dekorform shows that the involvement was, at best, marginal. The agendas and minutes of the meetings of the Parbury business show no indication that the respondent was acting in the position of director of Dekorform at those meetings. 217 The appellant, however, referred to the evidence given by Mr Wareing, that the respondent was able to ask Mr Paul 'all manner of questions' about occupational health and safety and, if there was evidence of non-compliance with occupational health and safety standards, Mr Wareing would have 'expected' the respondent to tell Mr Paul 'to fix it'. But this says nothing about Mr Ryan's authority to tell Mr Paul 'to fix it'. Mr Paul was also, purportedly, a director of Dekorform. Any instruction by Mr Ryan to Mr Paul 'to fix it' would most likely be in his capacity as Deputy CEO of the Alesco group, not as a fellow director of Dekorform.

218 There is other evidence that supports the conclusion that the respondent was not acting in the position of director of Dekorform at the relevant time. The evidence is addressed in the respondent's first instance submissions and may be summarised as follows: a) Mr Clarke stated that the internal organisation of business management in the Alesco Group was by way of divisions and through authority levels, not by way of companies. The divisions were the means by which the Alesco Group was operated and managed. It was run as a federation of independent entities. The businesses were not run by way of legal entities. The way the Alesco Group ran the organisation did not involve the legal entities of the subsidiaries. b) Mr Clarke's evidence was that there were no meetings of the directors of subsidiaries. Circular resolutions were made from time to time for formal purposes such as group loan facilities and appointments to offices in the company. There were no board meetings to determine how any subsidiary business ran or to make business decisions at a subsidiary level. The board of Alesco decided how the organisation would be run (Mr Ryan's evidence). Subsidiary boards had 'very little role, if any' in the running of the businesses of the Alesco group (Mr Clarke's evidence). c) Mr Wareing gave evidence that as far as he was aware, the respondent's role as a director of subsidiaries was confined to signing off accounts. Mr Wareing also gave evidence that the directors of the subsidiaries were not part of management as a consequence of their appointments, and the way the Alesco Group organised management was through divisions and not through legal entities. d) As far as Mr Wareing was concerned, an appointment to the board of a subsidiary meant taking responsibility for statutory accounts and signing off. Apart from signing, for Alesco group purposes, the power of attorney, the deed of cross guarantee and the circulating resolution, the respondent did not take on any other responsibility so far as the subsidiary companies were concerned. e) Mr Clarke said that the executives managing businesses were appointed to the boards of subsidiaries for convenience, for statutory and company secretarial type needs, for administrative purposes or to give status to the executive. A board appointment was not part of the role of the executive. There was no policy of the Alesco board about these appointments. The appointment of directors to subsidiaries was 'quite a low level issue'. f) The reason for the respondent replacing Mr Clarke on the board of Parbury Pty Ltd was for convenience according to Mr Clarke's evidence and was 'purely administrative'. g) The respondent did not receive any remuneration for being a director of subsidiaries. The respondent did not report to the board of directors of Alesco on Dekorform matters (Mr Ryan; Mr Wareing's evidence). h) How Dekorform operated was not dependent on how its directors chose to behave. It was dependent on how the board of Alesco decided to run the organisation (Mr Ryan's evidence). i) The authority levels document sets out the authority levels policy for group executives. It sets the authority levels between the Alesco board, the CEO and the group executives of each division of the Alesco Group and the manner in which decision-making powers may be exercised at the various levels of management. j) Mr Wareing gave evidence that the purpose of authority levels was to graduate the authorities within the Alesco Group and to ensure that people at appropriate levels carried authority appropriate to those levels. k) The offer of employment made by Mr Clarke to the respondent on 27 November 2003 stated that the respondent would be bound by the constraints that that document placed on his authority.

l) The respondent signed the authority levels document on the first day he started at Alesco (Mr Ryan's evidence). On that day, 19 January 2004, Mr Clarke gave the respondent a copy of the authority levels document and told him that these were his authorities as group general manager of the Automotive division. He also told him that, if he sought to go beyond those authorities, he would require Mr Clarke's written consent (Mr Clarke's evidence). m) Mr Clarke could not delegate to his subordinates the authorities which were delegated to him by the Alesco board. Mr Wareing gave evidence that the delegated authorities were specific as to which parties carried them and that Mr Clarke could not just, at his whim, tell somebody that they had authority to do a particular task for which they did not have their own authority. n) There was no authority level within the authority levels document, for the respondent when he was appointed Deputy CEO (Mr Clarke's evidence). According to Mr Clarke, as Deputy CEO, the respondent was in an unusual and temporary position, and it was not absolutely clear what his authority was. He shadowed Mr Clarke and referred issues to him for decision. o) The general managers were running the businesses when the respondent became the Deputy CEO. They continued to do so. Nothing changed (Mr Ryan's evidence). p) The respondent said he did not have any authority to get involved in the running of the management of any of the businesses, by which he meant 'selling stuff, buying things, inventory. I had no authority to incur expenses to spend money'. Nevertheless, he had KPIs for improvements in business performance in the businesses of Parbury, Marathon and Robinhood. q) Mr Wareing gave evidence that the respondent was given responsibility for a number of divisions but not in terms of the authority levels document. This is consistent with the extent of his responsibility being to report to the Alesco board and to Mr Clarke. r) There was no specific job description for the respondent's position as Deputy CEO. It was a newly tailored role to fit the respondent into (Mr Clarke's evidence). Mr Clarke agreed with Mr Wareing that he would give the respondent a number of responsibilities and an opportunity to learn more about the group. s) Dekorform was managed by Mr Brydson under the supervision of Mr Freeland and then later Mr Paul (Mr Brydson's evidence). t) Mr Brydson accepted that he had primary responsibility to ensure compliance with the Occupational Health and Safety Act. He accepted responsibility for the business at Dekorform. He considered himself to be part of the management of Dekorform at the time of the accident on 3 July 2006. u) Mr Brydson only reported to the general manager of Parbury. He did not attend the business review meetings of Parbury. He attended monthly management meetings of the Parbury executive team. v) Mr Brydson took his instructions from Mr Paul directly. The idea that the respondent would speak to Mr Brydson about Dekorform matters was not in the expectation of Mr Brydson. w) The respondent did not report to the Alesco board on Dekorform (Mr Ryan's evidence). He gave two reasons why he did not report. One was that his focus was on his KPIs, which included two relating to the business of Parbury Pty Ltd. They did not relate to Dekorform. Mr Clarke had told the respondent to concentrate on the Wilsonart contract and the sales performance of Parbury. x) The second reason was that, a number of times over the years, Mr Clarke had told him that Dekorform was a very well run business, a very profitable business run by Mr Brydson and a very capable team. Mr Clarke confirmed having had that view. The respondent's attention was not directed to Dekorform (Mr Ryan's evidence). y) The remuneration packages for senior Alesco employees in the 2005/06 financial year show that the respondent's bonus depended on his KPIs and Alesco's earnings per share and return on equity. By comparison, the bonus of the General Managers depended on their KPIs and the profit before interest, tax and amortisation and net operating assets of the division or businesses they ran (Mr Ryan's evidence). Furthermore, each of the General Managers and the CEO, Mr Clarke, had a KPI related to the lost time injury frequency rate. The respondent did not. 219 Whilst there was material in the evidence that the appellant maintained contradicted some of the foregoing matters, the weight of the evidence strongly suggested that the respondent's involvement in the management of Dekorform was very much at the margin. The evidence demonstrates that as the Deputy CEO, the respondent had no authority under the authority levels documents. Being a director of a subsidiary did not mean that the respondent could run the subsidiary with the other directors. That was not what Alesco intended. As the respondent submitted, in the eyes of Alesco, the directors of the subsidiaries did not have the power to run those companies. The only indication that the respondent performed top-level management functions in the capacity of director of Dekorform was the signing of the documents in October 2005 and May 2006, but the significance of that is diminished because it was for the purposes of the Alesco Group. Otherwise, the respondent was not involved in any substantive way with the company that one would usually expect of a person acting in the position of director. 220 The position of the respondent was most unusual. He was acting in very senior management positions within Alesco, which was the holding company and owned Parbury Pty Ltd, which in turn owned Dekorform. He chaired meetings of the Parbury business, part of which was Dekorform. The critical question, however, was the respondent's connection to Dekorform. In that respect we have found that Marks J did not err in finding that Mr Ryan had not been formally appointed as a director of Dekorform in accordance with that company's constitution. That then left the question of whether Mr Ryan was acting in the position of director of Dekorform. There were, not surprisingly, indications that he was acting in that position. These indications led us to the conclusion it was his intention and Dekorform's intention that the respondent be a director, but they were not sufficient in our view to prove beyond reasonable doubt that Mr Ryan was a de facto director at the relevant time. There was also the holding out that he was a director by virtue of the signing the documents in October 2005 and May 2006 as a director of Dekorform. 221 The signing of the documents by the respondent as director was a significant indicator that Mr Ryan was a de facto director. However, they were one-off acts and not indicators that he acted in the position in an ongoing capacity. The more reliable indicator was whether Mr Ryan was acting in a top-level management position with Dekorform. In that respect, the evidence fell well short. 222 Because of the way the business of Alesco was structured and the expectation that he was not required to, and did not, manage Dekorform as a director, it is not open to find beyond a reasonable doubt that at the relevant time the respondent was acting in the position of director of Dekorform. 223 We would venture to add that even if it had been open to us to find that the respondent was a de facto director, it would have been impossible to find he was in a position to influence the conduct of Dekorform in relation to its contravention of the OHS Act. He had not been appointed as a director and his role in relation to the management of Dekorform was so marginal that it would have constituted an injustice to find that he was complicit in the company's contravention. 224 We find that Marks J did not err in relation to his finding that the respondent was not a director within the meaning of (b)(i) of the definition of director in s 9 of the Corporations Act. Shadow director

225 There remains the question of whether the respondent was a 'shadow director' within the meaning of (b)(ii) of the definition of director in s 9 of the Corporations Act. Although the respondent contended the appellant made no submission below about this matter, we intend to deal with it. The provision in (b)(ii) states '... the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes.' 226 If a person is a shadow director then that person will be one, in accordance with whose instructions or wishes, the directors are accustomed to act. It is to be noted that the definition refers to 'directors' being accustomed to act. 227 In his article 'The Law of Shadow Directorships' [1998] BondLawRw 12; (1998) 10(2) Bond Law Review 184, Michael D Hobson, looked at s 60(1)(b) of the Corporations Law, which provided that 'director, in relation to a body, includes a reference to ... b) a person in accordance with whose directions or instructions the directors of a body are accustomed to act...' 228 In discussing the phrase 'directors of the body' Hobson stated: The third element of s 60(1)(b) is that the 'directors of the body' are accustomed to act in accordance with the person's directions or instructions. Whilst 'directors of the body' obviously refers to the board, there is considerable uncertainty as to its proper interpretation. As noted above, the judgment of Lord Lowry in the Kuwait case is frequently cited as authority that all the directors of the body must be accustomed to act in accordance with the person's directions or instructions ((1985) 3 ACLC 212 at 218). However, it is suggested that Lord Lowry's judgment does little more than confirm that exercising control over a minority of directors will not constitute a shadow directorship.

The proposition that 'directors of the body' refers to all the directors of the board appears to be supported by Millett J. Whilst failing to address the issue in Re Hydrodam (Corby) Ltd, in his subsequent extra-judicial statement, his Honour opined that 'directors' refers to the whole board, not just some of its members. 'The definition, therefore, does not cover the case where one person is there to do what somebody else (a relative, a business associate, or some other company whose interests he represents) wants him to do. What the term covers is a case where the whole board has effectively abandoned its responsibility for making its own decisions and instead has become accustomed to follow the directions of a third party.'

Thus far, the Australian courts have not provided an interpretation of 'directors of the body'. However, it is submitted that to require all the directors of the board to act in accordance with the person's directions or instructions, would be to ignore the purpose of the section. As observed by Markovic: Little is to be gained from requiring 'all' the directors being accustomed to act in accordance with the person's directions or instructions. The company will implement the person's directions or instructions if the majority of the board act upon them. There seems little logic in allowing the person to escape falling within the ambit of s 60(1)(b) merely because a single or a minority or the directors are not accustomed to act in accordance with the person's directions or instructions when the majority of the board are accustomed to act. To require the whole board to abandon its responsibilities and be accustomed to follow the person's directions or instructions it is submitted would allow a substantial loophole (Markovic M, 'The Law of Shadow Directorships' (1996) 6 Aust Jnl of Corp Law 323 at 329).

The New Zealand legislature has firmly addressed this issue with the enactment of the Companies Act 1993 (NZ). Section 126(1)(b)(i) of the Act provides that a 'director', in relation to a company, includes 'a person in accordance with whose directions or instructions [a de facto or de jure director] may be required or is accustomed to act.' This provision unequivocally extends the definition of director to include persons that control or direct the actions of a single director. It is suggested that this demonstrates a legislative intent to implicate all persons who interfere in the affairs of the board, not only those who control a majority of the directors. Whilst the Australian provision does not support such an inference, it is suggested that s 60(1)(b) should be interpreted as including those persons who direct or instruct the majority of the directors. In the alternative, the Australian provision should be amended to unambiguously reflect the legislature's intent. 229 Whether 'directors' in (b)(ii) refers to the whole board or just the majority, the 'board' of Dekorform consisted of the respondent, Mr Paul and Mr Neil Thompson. The board had never met as a board and there was no evidence that Mr Paul and Mr Thompson were accustomed to act in accordance with Mr Ryan's instructions or wishes. 230 In any event, it was not proven that Mr Paul and Mr Thompson were appointed as directors of Dekorform in accordance with that company's constitution or that they were acting in the positions of directors. In that case, (b)(ii) could have no application. 231 We find there was no error by Marks J in finding at [105]: [105] ... 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. WHETHER THE RESPONDENT WAS IN A POSITION TO INFLUENCE

232 In the light of our findings that the respondent was not appointed as a director of Dekorform and our finding that the respondent did not fall within the definitions in (b)(i) or (b)(ii) of the definition of director in s 9 of the Corporations Act, it is unnecessary for us to consider whether the respondent was in a position to influence the contravention of the OHS Act by Dekorform, although we earlier expressed a tentative opinion in the negative. COSTS

233 The parties did not deal with the question of costs as determined by Marks J in his costs decision. We propose to provide the opportunity of dealing with that issue now that the parties know our decision on the liability question. ORDERS AND DIRECTIONS

234 The Full Bench makes the following orders: (1) Leave to appeal is granted. (2) The appeal is dismissed except in relation to ground 7 of the appeal and, in that respect, the appeal is upheld. 235 The appellant shall have seven days to file submissions on costs with the respondent having a further seven days in which to reply. Unless a party indicates a desire to be heard orally on costs, the question will be determined on the papers. ______________________________________________

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