MOGS Pty Ltd v Australian Securities and Investments Commission

Reasons of primary judge 10 It is convenient to set out the following paragraphs from the reasons of the primary judge: see Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234 ("reasons"). [2] ASIC submitted that there was substantial evidence that MOGS had committed, or been knowingly concerned in, a number of contraventions of the Act including breaches of s 1041H(1) (misleading or deceptive conduct in respect of a financial product or service), s 911A(1) (provision of financial services without a relevant licence) and s 727(1) (offering securities without a current disclosure document lodged with ASIC). In general terms, ASIC sought the appointment of a provisional liquidator: 1. to secure and preserve MOGS' assets pending the final hearing and determination of ASIC's winding up application against MOGS; and 2. to empower an independent expert and officer of the Court to investigate MOGS' affairs and report back to the Court. ASIC's application was opposed by MOGS. … [4] During the course of argument, it became apparent that MOGS was, at least to some extent, acting as trustee of the MOGS Unit Trust. [5] Prior to that time, neither ASIC nor MOGS had adduced evidence of the fact that MOGS acted as trustee of the MOGS Unit Trust. Taken at its highest, the evidence was unclear as to whether the transactions undertaken by MOGS (and the subject of criticism by ASIC) were undertaken by MOGS as trustee of the MOGS Unit Trust or in its own right. Surprisingly, MOGS had failed to inform the Court that it was a trustee of the MOGS Unit Trust, had not provided the Court with a copy of the MOGS Unit Trust Deed and had not identified the unitholders of the MOGS Unit Trust. The blame does not rest with MOGS alone. ASIC was aware of MOGS' status, but apparently had not turned its mind to these questions until the issue was raised by the Court. [6] ASIC and what may be described as the MOGS parties (MOGS, Mr Stonehouse and Mrs Gore) were directed to consider ASIC's application for appointment of a provisional liquidator having regard to the Court's concern that MOGS appeared to be a trustee, at least in respect of some assets and activities, the fact that the Court had not been provided with the documents referred to in [5] above and that the unitholders of the MOGS Unit Trust were not then known and had not been notified. The possibility of replacing the trustee under s 80 of the Trusts Act 1973 (Qld) was also raised by the Court. … [26] ASIC relied upon five grounds as justifying the appointment of a provisional liquidator to MOGS: 1. in excess of $4 million raised from Australian investors and paid to MOGS appears to have been dissipated by MOGS and both the receipt and dissipation of those funds require investigations; 2. MOGS has engaged in transactions with no apparent commercial purpose, failed to comply with its obligations, and there are accounting inconsistencies and inaccuracies for which there is no or no satisfactory explanation; 3. MOGS has contravened the law including by maintaining inadequate accounts and records; 4. the information provided by Mrs Gore lacks veracity; and 5. MOGS' appears to be insolvent. [27] It is neither necessary nor appropriate to consider each of these allegations in detail. However, by way of example, the evidence disclosed transactions of the following nature: 1. payments of $1,674,588.72 to GFC09 Pty Ltd, a company associated with the personal insolvency of Craig Gore (the 17th Defendant and the husband of Mrs Gore) (Mr Gore), and payments of $798,758.62 to Mr Gore personally, those payments purportedly being made in accordance with a consultancy agreement under which MOGS agreed to pay Mr Gore a fee of $2 million per year; 2. payments to Mrs Gore totalling $832,983.92 in the nine months between 21 October 2011 and 31 July 2012 in circumstances where Mrs Gore alleged that she received a salary of $350,000 per year; 3. payments of $274,012.31 to Mr Gore's former wife in the nine months between 21 October 2011 and 31 July 2012 purportedly in accordance with a consultancy agreement between MOGS and Mr Gore's former wife in circumstances where his former wife denied ever performing work for, or being engaged by, MOGS or issuing any invoice to MOGS; and 4. the alleged assignment of what were referred to as "promissory notes", given by a company known as Propel Consolidated Holdings in favour of Mr Gore's former wife, to MOGS, in circumstances where a director of Propel, a Mr Simon Banks-Cooper, denied that the promissory notes had been assigned. This list is by no means exhaustive. … [29] MOGS is an Australian company. It has two directors: Mrs Gore and Mr Stonehouse. As noted earlier, Mrs Gore is the wife of Mr Gore. Mr Stonehouse is a business associate of Mr Gore. Mr Gore is an undischarged bankrupt and is therefore forbidden from being involved in, directing or managing any Australian company. Adamson is Mr Gore's solicitor. Adamson was a director of MOGS from May 2011 until April 2012. [30] On 28 February 2013, Mr Stonehouse described MOGS' role as follows: 2. MOGS was incorporated on 7 April 2009. 3. Initially, MOGS traded in its own right, however, on and from 1 January 2011, MOGS accepted the position of trustee of the MOGS Unit Trust and since that date its sole business has been conducted as trustee of the MOGS Unit Trust. 4. Presently all of MOGS's [sic] business is on behalf of the MOGS Unit Trust in its capacity as trustee. That business is owned by and is an asset of the MOGS Unit Trust. 5. A copy of the MOGS Unit Trust Deed is exhibited as exhibit GS-2. 6. The sole unitholder of the MOGS Unit Trust is Mash Investments Pty Ltd as trustee for the MASH Investments Unit Trust. A copy of the resolutions of MOGS as Trustee of the MOGS Unit Trust and related transfers and certificates of Units in the MOGS Unit Trust are exhibited as exhibit GS-3. 7. A copy of the MASH Investments Unit Trust Deed is exhibited as exhibit GS-4. 8. The present unitholders of MASH Investments Unit Trust are set out in exhibit GS-5. 9. Because the business of MOGS was, prior to 1 January 2011, undertaken by MOGS Pty Ltd in its own right (not as trustee) some assets used by the MOGS Unit Trust were and remained owned by MOGS Pty Ltd in its own right. The most significant of these assets was a BMW X6 (bought well before anyone from MOGS met Burrows). As a result of this ownership, some entries are made into the accounts on a "loan" account allocated to MOGS Pty Ltd for the use of these assets. 10. I have questioned MOGS's [sic] accountant, Timothy Munro about these transactions and he advised me, and I believe, that these entries were done in accordance with normal accounting practices and the entries referred to are proper and appropriate. (Emphasis added.) [31] On 28 February 2013, Mr Stonehouse also went on to describe MOGS' business activities (or at least some of them) as follows: 29. Since about January 2011, MOGS has sold approximately of [sic] 300 homes and has a substantial business. 30. In addition, presently MOGS has 43 homes in various states of completion that are due to settle (assuming they are completed) within 6 months. These 43 homes would be at risk of not completing if a provisional liquidator is appointed to MOGS. 31. No one, to my knowledge, has ever paid MOGS an option fee or deposit and then not been able to complete their purchase due to any default of MOGS. In other words, MOGS is apparently engaged in large continuing commercial transactions with what may well be wholly innocent third parties - but allegedly solely in its capacity as trustee of the MOGS Unit Trust. But that of itself raises serious questions. [32] As noted earlier, its role as the trustee of the MOGS Unit Trust and the details of those trust arrangements were not disclosed until late February. The documents exhibited to the Stonehouse affidavit repaid close reading. Clause 28 of the MOGS Unit Trust Deed, entitled "Removal or retirement of Trustee" states: 28.1 A Trustee shall automatically be removed from office if: 28.1.1 … 28.1.2 being a company it shall … have a petition for its winding up presented against it or … … 28.3 The Unitholders by Ordinary Resolution or a Trustee may at any time appoint one or more co-trustees. … 28.5 If at any time it appears to the satisfaction of the Trustee that it would be desirable to do so the Trustee may in its sole and unfettered discretion resign and by instrument in writing appoint a successor as the Trustee in any place outside the state or territory of the applicable law and transfer to such Trustee the Trust Fund and thereafter this Deed shall be construed as if Part 5 of the Schedule specified the law of that place as the applicable law. (Emphasis added.) Part 5 of the Schedule specified the applicable law as the Law of the State of Queensland. … [34] None of this was disclosed by MOGS prior to, or at, the initial hearing of ASIC's application for the appointment of a provisional liquidator to MOGS. However, the non-disclosure did not stop there. MOGS also did not disclose (and therefore did not address) the legal effect of ASIC's application to wind up MOGS under s 461(1)(k) of the Act. [35] Clause 28.1.2 provides for the automatic removal of MOGS as trustee of the MOGS Unit Trust when a petition for its winding up is presented against it. This proceeding (an application for the winding up of MOGS on the just and equitable ground under s 461(1)(k) of the Act) was filed (and served) in December 2012. [36] On 12 March 2013, the Court directed the following questions to ASIC and the MOGS parties: (1) does ASIC intend to pursue its application for the appointment of a replacement trustee for the MOGS Unit Trust: par 11(b) of ASIC's submissions dated 1 March 2013? (2) if yes to (1), does ASIC intend: (a) to formally amend its interlocutory process; and (b) to provide notice of the application to the unitholders of the MOGS Unit Trust?; (3) Clause 28.1.2 of the MOGS Unit Trust Deed (pg 29) provides that: "A Trustee shall automatically be removed from office if: … 28.1.2 being a company it shall … have a petition for its winding up presented against it …" (a) who is the trustee of the MOGS Unit Trust and if the trustee is a company, provide the relevant details of that company including date of incorporation, names of directors, names of shareholders; (b) when (and pursuant to what power) was the trustee appointed? (c) what are the assets and liabilities of the MOGS Unit Trust and who has day to day control of those assets; (d) have any one of the powers contained in cl 28.3 or 28.4 (or both) been exercised and if so, when and how? (e) has the power in cl 32 been exercised and if so, when? (4) what assets (if any) does the 12th Defendant hold in its own right? (5) does ASIC intend to pursue its application for the appointment of receivers and managers to the assets of the MOGS Unit Trust: par 13 of ASIC's submissions dated 1 March 2013?; (6) if yes to (5), does ASIC intend: (a) to formally amend its interlocutory process; and (b) to provide notice of the application to the unitholders of the MOGS Unit Trust?; … If any party wishes to refer to evidence already filed, the answers should include appropriate cross-references. If there is additional material relevant and necessary to providing an answer to these questions, the nature of that material should be identified. Prior to the response being filed, Senior Counsel for ASIC and the 12th, 14th and 15th defendants are directed to confer to identify areas of agreement and disagreement. [37] The MOGS parties responded on 15 March 2013 as follows: (3) (a) MOGS Pty Ltd is the trustee of the unit trust. (b) The unitholders held a meeting on 16 December 2012, which had the effect of allowing MOGS to continue in the role as trustee as long as a liquidator is not appointed, pending a further meeting and receipt of legal advice to the trust. (c) They are (as at 17 December 2012), in summary, as disclosed in the affidavit of Timothy Munro and the accounts as provided to ASIC. MOGS Pty Ltd presently has day to day control of the assets, subject to the Court orders. (d) Yes, on 16 December 2012 MOGS Pty Ltd was reappointed. Additionally, a further unitholder meeting has been called for 21 March 2013 to table legal advice and further consider the issue in light of the recent Court hearing. (e) No. (4) MOGS Pty Ltd owns a motor vehicle in its own right (the Toyota Hilux previously referred to), but has no other significant physical assets apart from its right of indemnity as trustee. … [40] ASIC's application came before the Court in circumstances where ASIC seeks relief against, inter alia, MOGS, Mrs Gore and Mr Stonehouse for their alleged involvement in the misuse of funds obtained from Australian investors (principally the trustees of self-managed superannuation funds). ASIC alleges that MOGS received investor funds by two routes: 1. funds raised pursuant to a so-called "US Realty Memorandum" for investment into distressed real estate in the United States, but loaned, at least in part, by the fifth to eighth defendants to MOGS; and 2. funds raised pursuant to so-called "product placement memoranda" for investment with the ninth and tenth defendants, but loaned, at least in part, by entities associated with those defendants to MOGS. [41] There was evidence regarding the raising of those funds, the loan agreements, the receipt of those funds by MOGS and MOGS' subsequent use of the funds. MOGS strenuously denied any wrongdoing. [42] Separately, there are numerous past transactions entered into by MOGS which are said by ASIC to require investigation: see [26]-[27] above. The transactions appear to raise serious questions. At present, it is unnecessary to resolve those disputes. It is unnecessary to resolve any of those disputes because, no less importantly, the terms of the MOGS Unit Trust Deed are such that it is difficult to see how MOGS by its own acts (as it asserts) can avoid the consequences of ASIC filing an application for it to be wound up - its automatic removal as trustee of the MOGS Unit Trust. [43] There is a sufficient prospect that MOGS is no longer the trustee of the MOGS Unit Trust. According to Mr Stonehouse, that is its sole activity: see [30] above. According to the Stonehouse affidavit, MOGS' own asset position is limited: see [30] above. Put simply, MOGS' substratum has gone: see, by way of example Solomon at 81-2. [44] There is however another difficulty. Although it appears that MOGS' substratum has gone, it continues to conduct, or appears to conduct, "MOGS' Business". In December 2012, Timothy Munro (a director and chief executive officer of Change Accountants and Advisors which had been engaged for three years to do accounting work for MOGS) filed an affidavit in which he stated that MOGS' operating profit for the first six months of the 2013 financial year was approximately $5 million and was expected to be in excess of $8 million. That evidence was said to be based on a review of a profit and loss statement and him having spoken with "the directors and sales staff of MOGS". In a later affidavit dated 21 February 2013, Mr Munro described MOGS' solvency as follows: MOGS is currently paying its debts as and when they fall due. It is in part doing so by arrangements with third party funders. As long as MOGS' funding facility remains in place I have no current concern about its solvency. I understand from the Directors that the funding arrangements would be immediately terminated if a provisional liquidator was appointed. [45] Mrs Gore's evidence was that: MOGS has had to obtain finance from other sources or make arrangements in order to fund and complete the property developments for purchasers (including many SMSF) … [46] The "third party funders" were not identified. The terms of the financing arrangements were not disclosed. The extent to which these facilities are drawn down was not disclosed. Mr Stonehouse did not address or seek to explain the assertion that "the funding arrangements would be immediately terminated if a provisional liquidator was appointed". [47] The appointment of a provisional liquidator pending the determination of a winding up application is a drastic intrusion into the affairs of the company. However, having regard to the facts and circumstances outlined, there are currently no other measures that would be adequate to preserve the status quo. In the circumstances (Riviana at 866), there is a reasonable prospect that a winding up order will be made. Indeed, the Court cannot presently ascertain MOGS' current legal and factual status, including its financial standing, and the basis on which it concurrently conducts "the business of MOGS": see [20]-[24] above. [48] MOGS is apparently engaged in large continuing commercial transactions with what may well be wholly innocent third parties (including self-managed superannuation funds) - but allegedly in its capacity as trustee of the MOGS Unit Trust. MOGS' failure to provide satisfactory answers to direct questions about its current status itself raises suspicion. In this context, it is important to recall that, as at 28 February 2013, Mr Stonehouse stated that the completion of 43 homes "would be at risk of not completing if a provisional liquidator is appointed to MOGS" (emphasis added). He did not explain or describe that risk. He did not state that the homes would not be completed. [49] In the circumstances, it is appropriate, and in the public interest, that a provisional liquidator be appointed to MOGS: cf Riviana at 866. There is a need for an independent examination of the state of accounts of the corporation and its activities by someone other than the directors. [50] The provisional liquidators will need to take control and preserve the assets MOGS holds whether as trustee or otherwise. The provisional liquidators will, of course, also need to form a view about ASIC's application to appoint a substitute trustee to the MOGS Unit Trust. … [55] The foregoing analysis is incomplete. That is inevitable. This is an application for the appointment of a provisional liquidator. However, in the circumstances disclosed, there is a reasonable prospect that a justifiable lack of confidence in the conduct and management of MOGS, and a case for winding up of MOGS on the just and equitable ground, would be made out at trial.

Strength of prospective appeal 11 The MOGS parties' draft notice of appeal proposed essentially the following four bases of appeal: 1. the judgment contains identifiable errors; 2. the court denied MOGS procedural fairness in relation to issues which were determinative; 3. her Honour's reasons were inadequate in that they failed to explain particular findings adequately and failed to deal with arguments made by the MOGS parties. 4. her Honour's discretion in refusing the application for a stay miscarried. 12 As to the first basis, MOGS asserted that there was no proper basis for the judge's finding that: (1) MOGS failed to inform the Court that it was trustee of the MOGS Unit Trust; (2) MOGS had not disclosed the identity of third-party funders; (3) MOGS had not identified the risk that MOGS would be unable to complete the construction of houses for its clients; and (4) MOGS "by its own acts" had purported to avoid automatic removal as trustee under the trust deed. 13 As to the second basis of a prospective appeal, MOGS claimed that the orders that it sought to appeal were made on grounds not raised until after the hearing of the interlocutory process and that MOGS was deprived of the opportunity to present evidence or be heard in respect of matters relevant to these grounds. These matters included the effect of the MOGS Unit Trust Deed and the actions taken by the unitholders to reappoint MOGS as trustee after a winding up application had been made. 14 As to the third basis, the point that the MOGS parties apparently sought to make was that, although her Honour held (at [47]) that there were "currently no other measures that would be adequate to preserve the status quo", her Honour did not deal with any of the discretionary factors raised on behalf of the MOGS parties. The MOGS parties complained that there was no disclosed basis for her Honour's finding that there was a reasonable prospect that a winding up order would be made. Nor, they asserted, did her Honour disclose why there was a justifiable lack of confidence in MOGS' conduct and management or a need for an independent examination of the state of accounts of the corporation and its activities by someone other than the directors. 15 Finally, the MOGS parties argued that the trial judge's refusal of a stay miscarried because: (1) there was no urgency in the appointment of a provisional liquidator; (2) there was no evidence to support her finding that there was no other adequate measure that would preserve the status quo; and (3) there was no finding or reasons to the effect that the public interest favoured the appointment of a provisional liquidator. There was also a contention that, in dismissing the fourteenth and fifteenth defendants' application, the trial judge failed to give adequate reasons. 16 The only grounds pressed before us in support of the application for leave to appeal were the first two grounds. 17 Having considered the matters on which MOGS relies, we do not consider that the decision is attended by sufficient doubt to warrant its reconsideration. For the reasons set out below, we are of the opinion that to the extent that factual errors were made they were not critical to the primary judge's decision. This conclusion makes it unnecessary to consider the application for a stay.

Context of the decision below 18 It is necessary in having regard to the pressed appeal grounds to appreciate the context in which the judgment below was determined. 19 As the primary judge said (at [40]), ASIC's application came before the Court in circumstances where ASIC was seeking relief against MOGS, Mr Stonehouse and Mrs Gore for their alleged involvement in the misuse of funds obtained from Australian investors. These investors were mostly the trustees of self-managed superannuation funds. ASIC alleged that MOGS had received these funds in two ways: (1) pursuant to a US Realty Memorandum for investment into distressed real estate in the United States and loaned, at least in part, by the fifth to eighth defendants to MOGS; and (2) pursuant to "product placement memoranda" for investment with the ninth and tenth defendants and loaned, at least in part, by entities associated with those defendants to MOGS. 20 Her Honour noted (at [41]) that there was evidence before her "regarding the raising of those funds, the loan agreements, the receipt of those funds by MOGS and MOGS' subsequent use of funds" and that MOGS denied wrongdoing. Her Honour also noted at [42]-[49] that ASIC had stated that it needed to investigate numerous past transactions, which appeared to raise serious questions. 21 Plainly enough, whilst her Honour's reasons contain a number of references to lack of candour on MOGS' part, the critical point for her Honour was MOGS' failure to explain how it continued to conduct its business, having regard to clause 28 of the MOGS Unit Trust Deed, which stated, amongst other things, that: 28.1 A Trustee shall automatically be removed from office if: 28.1.1 … 28.1.2 being a company it shall … have a petition for its winding up presented against it or … 22 We were taken by senior counsel for the applicants to a page (p 106) of the transcript of argument before the primary judge to illustrate the context of the decision. However, senior counsel for ASIC widened the examination to numerous other pages. When the wider context is considered, it is abundantly clear that there was considerable confusion as to MOGS' role and whether in conducting business it was or was not acting as trustee, and if it was, over what period and in respect of what assets. 23 Importantly, senior counsel for the present applicants who appeared before the primary judge had accepted that it was necessary for the applicants to adduce evidence as to the capacity in which it was apparently conducting its business. 24 It was in that context that, before the primary judge, senior counsel for ASIC called for production of the MOGS Unit Trust Deed. It was not produced on that day, but was annexed to an affidavit of Mr Stonehouse sworn 28 February 2013, after the hearing had concluded. 25 It was also in this context that the primary judge issued questions to the parties subsequent to the hearing through an email from her chambers dated 12 March 2013, set out at [36] of her Honour's judgment: para [10] above.

Proper bases for findings 26 We are not persuaded that MOGS has established to the requisite degree that doubt attends her Honour's challenged findings. Only one of a number of third party funders was ultimately identified for her Honour and no documentary support was apparently provided for MOGS' contention that its funding arrangements would be immediately terminated on the appointment of a provisional liquidator. MOGS' claim that its business would not survive the appointment of a provisional liquidator was supported by no more than bare assertion. 27 Significantly, her Honour found that MOGS failed to explain how it could continue to conduct the business as trustee in view of clause 28.1.2 of the MOGS Unit Trust Deed. 28 The only parts of Mr Stonehouse's affidavit that related to MOGS' role as trustee were paragraphs [2]-[10], which are set out at para [30] of the primary judgment (reproduced at [10] above). 29 Mr Stonehouse's evidence, it has since transpired, was less than forthright. It was silent concerning the purported reappointment on 16 December 2012 of MOGS as trustee of the MOGS Unit Trust. 30 The applicants had traversed the issue of the appointment of a provisional liquidator to a trustee company in written submissions dated 28 February 2013, before the primary judge. These submissions did not, as ASIC pointed out in submissions in response, address the terms of the MOGS Unit Trust Deed, or more particularly clause 28.1.2 governing the automatic removal of MOGS from the office of trustee by reason of the application filed below. Nor, as with Mr Stonehouse's affidavit, did the applicants' submissions in any way deal with MOGS' purported reappointment as trustee. 31 In the questions emailed to ASIC and the MOGS parties on 12 March 2013 her Honour specifically drew attention to clause 28.1.2 and asked: (a) who is the trustee of the MOGS Unit Trust and if the trustee is a company, provide the relevant details of that company including date of incorporation, names of directors, names of shareholders; (b) when (and pursuant to what power) was the trustee appointed? (c) what are the assets and liabilities of the MOGS Unit Trust and who has day to day control of those assets; (d) have any one of the powers contained in cl 28.3 or 28.4 (or both) been exercised and if so, when and how? (e) has the power in cl 32 been exercised and if so, when? The MOGS' parties provided the following response on 15 March 2013: (a) MOGS Pty Ltd is the trustee of the unit trust. (b) The unitholders held a meeting on 16 December 2012, which had the effect of allowing MOGS to continue in the role as trustee as long as a liquidator is not appointed, pending a further meeting and receipt of legal advice to the trust. (c) They are (as at 17 December 2012), in summary, as disclosed in the affidavit of Timothy Munro and the accounts as provided to ASIC. MOGS Pty Ltd presently has day to day control of the assets, subject to the Court orders. (d) Yes, on 16 December 2012 MOGS Pty Ltd was reappointed. Additionally, a further unitholder meeting has been called for 21 March 2013 to table legal advice and further consider the issue in light of the recent Court hearing. (e) No. Her Honour at [37] described these answers as opaque. We have no reason to disagree. The MOGS parties provided her Honour with no information from which one might discern how it was that MOGS claimed to continue as trustee in light of clause 28.1.2. When the applicants before us attempted to demonstrate by new evidence how this had been effected, it served only to further muddy the waters. We will now turn to that. 32 As noted earlier, the day before this hearing, the applicants filed an affidavit of Daniel Clarke, another solicitor acting for the applicants. It annexes what purports to be the draft minutes of a meeting of unitholders of the MOGS Unit Trust held on 16 December 2012. 33 Self-evidently, despite the title of the minutes, it was not such a meeting. The attendees were Mrs Gore, Mr Stonehouse and Dr Anseline, each in their capacity as representatives of unit holders in the MASH Investments Unit Trust. 34 The draft minutes purport to record how "in the absence of a Trustee [of the MOGS Unit Trust] … it was resolved … to appoint MASH INVESTMENTS Pty Ltd as a Co-trustee of the MOGS Unit Trust". Of course, other considerations apart, MASH Investments Pty Ltd was already the trustee for the only unit holder in the MOGS Unit Trust. Thus there was an apparent attempt to appoint, as co-trustee of the MOGS Unit Trust, the same company which was the trustee of the sole unitholder. 35 The belated production to this Court of such confused and confusing information only reaffirms the correctness of the decision by the primary judge to appoint a provisional liquidator. 36 Quite apart from the legal confusion exposed in the minutes, it was the very kind of information which senior counsel for the applicants before the primary judge said, on 26 February 2013, would be produced to her Honour (see [23] above). It was not produced. Nor was it referred to in the applicants' written response to the questions put by the primary judge in the email. Nor, as we have noted, did Mr Stonehouse refer to it in his affidavit. The Clarke affidavit serves only to heighten our grave concerns surrounding the conduct of the business of the MOGS Unit Trust. 37 The primary judge was incorrect when she stated in her reasons (at [5]) that prior to the hearing of argument before her neither the ASIC nor the MOGS parties had adduced evidence that MOGS acted as trustee of the MOGS Unit Trust. In fact, both ASIC and Mrs Gore had put on affidavit material deposing to this fact. That evidence was brought to the attention of the primary judge on 26 February 2013. The error was replicated at para [32] of her Honour's reasons. 38 However, we do not agree that this error "infected" the entirety of the reasoning of the primary judge. In our view, nothing turns on it. Indeed, what is evident from her Honour's reasons, and what concerned her, was that the evidence was unclear as to whether the transactions undertaken by MOGS and the subject of criticism by ASIC were undertaken by MOGS as trustee of the MOGS Unit Trust or in its own right. Moreover, what was critical to her Honour's reasoning was the failure by the MOGS parties to properly explain the effect of cl 28.1 of the MOGS Unit Trust Deed which provides for the automatic removal from office of the Trustee when a petition for its winding up has been presented: reasons at [32]-[35]. We have already canvassed the lack of candour on the part of the applicants as to the purported reappointment of MOGS Pty Ltd as Trustee on 16 December 2012. 39 Moreover, this opacity went to a central issue concerning the conduct of the business and the protection of innocent investors. The primary judge set out her concerns cogently at [27], [40]-[42] and [44] which narrate the very significant dubious financial transactions involving payments of millions of dollars to a company associated with Mr Craig Gore, who is an undischarged bankrupt, as well as to him personally and to his former wife as well as to his present wife. 40 As the primary judge noted, with substantial foundation, these transactions which were but exemplars amongst numerous past transactions entered into by MOGS appeared to raise serious questions which required not only independent investigation but the protective measure of appointing a provisional liquidator. Again, with strong support in the evidence, her Honour noted that MOGS may very well no longer be the Trustee of the MOGS Unit Trust. We think that is highly likely to be the case and no doubt ASIC will take appropriate steps to protect the assets of the Trust. 41 Set against these matters the factual error made by the primary judge is of no significance. 42 We do not accept that the primary judge was also wrong when her Honour stated (at [46]) that the third party funders were not identified. Whilst one funder was identified in a letter dated 18 December 2012 from the applicants' solicitors to the Court and to ASIC, the others were not. More importantly, the basis of the funding, its terms and conditions, were not revealed to the primary judge. There was no evidence beyond mere assertion, as the primary judge noted at [46], that the funding arrangements would be immediately terminated if a provisional liquidator were appointed. Nor were they disclosed to this Court. 43 As ASIC submits, in relation to the identified funder there was no evidence tendered by the applicants that there were reliable or secure funding arrangements or that any such arrangements would be immediately terminated upon the appointment of a provisional liquidator. In response to ASIC's subsequent request for documents constituting or recording the "credit line" referred to in Mrs Gore's affidavit, MOGS responded that "while written loan agreements exist for individual loans, the credit line provided by that entity is pursuant to a verbal agreement". The "written loan agreements" were provided to ASIC by MOGS in accordance with an order made by the primary judge only on 12 February 2013. In fact, there were no written loan agreements at all. Nor was there any documentary support at all for the contention that MOGS' line of credit or funding arrangements would be immediately terminated upon the appointment of a provisional liquidator. 44 There was no evidence of any condition of any agreement by which finance would be withdrawn in the event of an appointment of provisional liquidators to MOGS. Moreover, there was no evidence as to why alternate funding could not be sourced in any event, secured by all the assets that MOGS says it has.

No denial of procedural fairness 45 We are equally unpersuaded that the second suggested basis for appeal discloses a matter that justifies consideration by an appellate court. During the hearing of the applications and, as we have explained, in subsequent submissions made to the Court, the MOGS parties had ample opportunity to explain how MOGS continued to conduct its business as trustee, notwithstanding clause 28.1.2 and to put on, or apply to put on, further evidence on that issue if they thought it appropriate to do so. There has been no satisfactory explanation of why the minutes of the meeting of 16 December 2012 were not raised at the February hearing before the primary judge or in the Stonehouse affidavit, post-hearing submissions or response to her Honour's emailed questions. The same can be said of the MOGS' parties failure to identify MOGS' funders. 46 The MOGS parties referred in written submissions to an earlier footnoted statement made in their 4 March submissions to the possible need to adduce new evidence, but this statement was made in a different context and not in response to the questions her Honour asked. At various points, the MOGS parties' complaint that her Honour did not give notice that she viewed the MOGS parties' answers of 15 March 2013 as unsatisfactory was tantamount to a submission that the court must give notice before making a finding adverse to a party. Such a proposition is self-evidently misconceived.

Disposition 47 As the third and fourth proposed grounds of appeal were not pressed in relation to the application for leave to appeal, it is unnecessary to evaluate their prospects at any length. It suffices to note that we consider that they also fail to raise sufficient doubt about the primary judge's decision for the application for leave to appeal to succeed. 48 For these reasons, we are not persuaded that in all the circumstances the decision is attended with sufficient doubt to warrant being reconsidered by an appellate court. We would not therefore grant leave to appeal. It is unnecessary to consider the second limb of the test in Décor. 49 As noted above, the MOGS parties also made application for a stay until the determination of the appeal. Since there will be no appeal, this application also fails. 50 There was also a further separate issue raised by the MOGS parties' application for leave to appeal. This concerned the trial judge's dismissal of an application made by Mrs Gore and Mr Stonehouse to have injunctions against them set aside. These injunctions were made ex parte on 3 December 2012 by another judge of the court and included orders as to the delivery up of passports and prohibitions against leaving Australia. The trial judge declined to set these orders aside, although her Honour indicated (at [56]) that, if circumstances changed, they might renew their application. Mrs Gore and Mr Stonehouse stated, in written submissions, that they consented to have this part of the application for leave stood over. We see no reason not to deal with this part of the leave application. There is nothing shown that would indicate any sufficient doubt attaches to her Honour's decision in this regard to warrant reconsideration by an appellate court. Accordingly, the whole of the MOGS parties' leave application should be dismissed. As her Honour indicated, it is open to these parties to renew their application in appropriate circumstances. 51 Accordingly, for these reasons, the application for leave to appeal and the stay application are each dismissed. The applicants should pay the respondent's costs of each application. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Kenny, Jacobson and Gilmour.