Plaintiff v Defendant

2 On 20 November 2015, The Australian, a newspaper owned by the defendant, Nationwide News Pty Ltd (Nationwide), published an article in its print version and online website concerning the activities of ACN and a subsidiary, Phoenix Institute (Phoenix). The imputations that are said to flow from the article are set out below. It suffices to say that the nub of Mr Charan's case is that the article conveys to the reader that, whilst under his management, VET organisations acted unscrupulously, in breach of regulatory standards, and that he made a large amount of money as a result of that conduct.

3 At the time of publication, Mr Charan's only involvement with ACN was the holding, in escrow, of approximately four per cent of its issued capital. Phoenix had been acquired by ACN after he ceased any management role with ACN and its associated companies. On 21 November 2015 (the following day), a correction was published in the print edition and a correction and apology in the online edition. Mr Charan regarded both as unacceptable, and after a letter of concern to the author of the article, issued this proceeding against Nationwide.

4 The defence to these allegations is curious, but legitimate. Nationwide says that the imputations alleged by Mr Charan are not sustainable. Alternatively, if they are made out, then, after a relatively late amendment to the pleadings, those imputations going to unscrupulous conduct and non-compliance with quality standards on the part of companies under the management of Mr Charan, can be justified, and the defence of substantial truth under s 25 of the Defamation Act 2005 (Vic) (the Act) is made out.

The events leading up to the publication of the article

5 In order to understand the thrust of the article, its alleged imputations, and what transpired after its publication, it is necessary to set out, in short compass, the sequence of events between the time that Mr Charan became involved in the VET sector and the time of the publication of the article.

6 The system of private VET organisations offering vocational education programs (effectively in competition with the public TAFE system) commenced in this state in the early 1990s and developed over the next twenty years. Federal and other State governments have enacted similar schemes. In Victoria, a Registered Training Organisation (RTO) may be accredited with either the Commonwealth or the State government regulator.

7 In 2009, the Victorian Department of Education and Training (DET) implemented significant changes to the RTO system in this state which encouraged a large number of organisations to register as RTOs and enter the VET sector under a scheme called 'Securing Jobs for the Future'. They competed with TAFE colleges and received direct payments from the State for student enrolments under the Victorian Training Guarantee (VTG). I will set out the way in which this system worked in more detail later.

8 Mr Charan entered the VET sector after engaging in a wide range of occupations. His primary interest and work history, however, was in sales and marketing. In 2010, he commenced work (as best I can tell, as a sub-contractor) in marketing for an RTO.[1] Through this business he met Mr Brown, who worked as a trainer and in sales and marketing.[2]

9 In 2012, Mr Charan, Mrs Sally Charan, and Mr Brown established Community Training Initiatives (CTI), an incorporated company with Mr Charan and Mr Brown holding 50 per cent of the shares. The company was spectacularly successful, obtaining contracts with a number of TAFEs for the delivery of training courses.[3] Although CTI was not an RTO with either the Victorian or Federal Governments, it entered into partnerships or 'auspicing' arrangements with TAFE colleges, in particular Kangan and Chisholm Institute.

10 In 2013, Mr Brown and Mr Charan determined to expand the business by purchasing RTOs with existing government contracts. RTOs at a state level were directly funded by the relevant government department[4] and entered into comprehensive agreements for the provision of education services. Axiomatic to the development of a business of an RTO in the VET sector was increasing the number of student enrolments and thus the level of government funding.

11 In the case of Federal funding, RTOs entered into contracts under the VET FEE-HELP Scheme. The Federal Regulator is the Australian Skills and Quality Authority (ASQA).

12 At a State level, an RTO would operate in a similar manner, by way of a VET funding contract (VET funding contract) with DET. The Victorian Regulator was, at the relevant time, the Victorian Skills and Quality Authority (VSQA). A Victorian company, Consider This Training (CTT) had such a contract[5] when it was acquired by Mr Brown and Mr Charan in late 2013.

13 Once an RTO was party to such an agreement, it would be paid a fee for each student enrolment and participation in a course, which was usually paid incrementally during the course of a student's training.

14 In February 2014, Mr Brown and Mr Charan discussed the listing of CTI (and the associated training companies owned by them) on the ASX. They engaged brokers, lawyers and accountants to assist them with this venture that was given the name 'Project Standard'. It was determined that the companies (either already owned by the partners or purchased by them for the purpose of the float) would ultimately be placed within a group controlled by ACN, the holding company designated for the IPO.[6] As part of the expansion of the business and to assist in the float, several other RTOs were acquired after this date - including and of particular relevance to this case, Australian Management Academy (AMA) - the trading name of a company, Thoan Pty Ltd (Thoan). It also had a VET funding contract.

15 On 30 September 2014, ACN became the holding company of each of the various companies within the Charan/Brown group - including CTI, CTT and AMA. Both Mr Charan and Mr Brown were allocated just short of 25 million shares each in ACN.[7]

16 Mr Charan resigned as a director of CTI on 30 September 2014.

17 On 26 November 2014, ACN published a prospectus (ACN prospectus)[8] offering on the IPO an issue price of $1.70 per share. The prospectus stated that Mr Charan would sell down 21.5 million shares for a consideration of approximately $36.55 million while the balance would be held in escrow.[9] Mr Charan was required to enter into a non-compete restraint deed with ACN.[10]

18 On 10 December 2014, ACN listed on the ASX and Mr Charan received $35 million for the sale of his interest. He was left with slightly more than 4 per cent equity, held in escrow. He had no ongoing managerial role with the company. Mr Brown sold only a comparatively small portion of his shareholding and became Chief Executive Officer of ACN.

19 Shortly prior to the listing and continuing to the present time, there has been a large amount of adverse publicity concerning 'rorts' in the VET industry in its provision of vocational training, particularly concerning the abuse of contracts with both Federal and State governments.

20 During 2015, one of the authors of the subject article, Kylar Loussikian (an employee of Nationwide), published several articles about the industry and its troubles.[11] In addition, during this period a number of audits and reviews were carried out on VET organisations, including two organisations within the ACN group: AMA and CTT.

21 The ACN group failed within a year and a quarter of its listing. It was placed into voluntary administration on 22 March 2016.

22 The article was published in the print version of The Australian on 20 November 2015 (under the heading 'Watchdog takes peak training college to court') and online (under the heading 'ACCC to take top training college Phoenix Institute to court'). The online version is reproduced in Annexure A, which I précis here:[12]

(a) Phoenix (owned by ACN) is the subject of court action by the Australian Competition and Consumer Commission (ACCC);

(b) That action has been taken less than a month after the ACCC began court action against another RTO, Unique International College (Unique), for engaging in misleading or deceptive and unconscionable conduct;

(c) The CEO of ACN, Mr Brown, was comfortable with the company's conduct and noted that the ACCC had not provided Phoenix with any specific allegations or names of complainants, which could be easily tested;

(d) The ACCC was cracking down on the sector and was concerned about unscrupulous door-to-door marketing practices;

(e) Previous media reports alleged that Phoenix sent sales staff into housing commission estates, pressuring potential students to join up;

(f) The ACCC said that the court action was part of a broader investigation into colleges;

(h) ACN was under investigation by the Federal Department of Education and its ASQA shares were suspended from trade since last month;

(i) ASQA said it had uncovered significant non-compliance and was in the process of deregistering Phoenix;

(j) Mr Brown and Mr Charan had amassed fortunes of $68 and $35 million respectively;

(k) ACN acquired Phoenix for $2.25 million in January 2015 and the Federal Government fees received by it ($2.7 million and $1.9 million) were a fraction of the funding it received in 2015; and

(l) According to a Sydney University study, ACN converted more than half of the training funds from the Victorian Government into profit for its shareholders.

23 Mr Charan learned of the article early on the morning of 20 November 2015 when he read the electronic version[13] on his telephone.[14] He contacted Mr Loussikian and asked for a retraction and an apology.[15] There followed an exchange of SMS messages between Mr Charan and Mr Loussikian regarding the article and any corrections to it.[16]

24 The next day, a Saturday, a correction (but no apology) was published on page two of the print version, which read as follows:

A report in The Australian yesterday ("Watchdog takes peak training college to court", page 5) named Atkinson Prakash Charan as part of management at Australian Careers Network, which is under investigation by the Australian Skills Quality Authority. Mr Charan, in fact, left ACN late last year, and has no ongoing role in the company.[17]

25 The online version was amended in a different way. It contained an apology and removed any mention of Mr Charan, apart from the reference to the listing of ACN and his amassing a fortune of $35 million:

An earlier version of this article inadvertently named Atkinson Prakash Charan as part of ACN's current management. Mr Charan, in fact, left ACN late last year and has no ongoing role in the company. The Australian apologises to Mr Charan for the error.[18]

26 The online article, and the apology, remain accessible in this form at the present time.

The alleged imputations arising out of the article and the defence

27 The eight pleaded imputations in the statement of claim (which I have grouped under four separate headings)[19] read as follows:

Mr Charan was head of ACN, a company which engaged in unscrupulous business practices that took advantage of vulnerable consumers

(a) The plaintiff, as head of ACN, has amassed a fortune by engaging in unscrupulous business practices that take advantage of vulnerable consumers and government funding schemes in the education and training sector. (The first imputation)

(b) There are reasonable grounds to suspect that the plaintiff, as head of ACN, has amassed a fortune by engaging in unscrupulous business practices that take advantage of vulnerable consumers and government funding schemes in the education and training sector. (The second imputation)

Mr Charan was head of ACN, a company which engaged in misleading and deceptive conduct

(c) The plaintiff, as head of ACN, has been marketing education and training courses to vulnerable consumers in a manner that constitutes misleading and deceptive and unconscionable conduct in breach of the law. (The third imputation)

(d) There are reasonable grounds to suspect that the plaintiff, as head of ACN, has been marketing education and training courses to vulnerable consumers in a manner that constitutes misleading and deceptive and unconscionable conduct in breach of the law. (The fourth imputation)

Mr Charan was head of ACN, which engaged in unscrupulous door-to-door marketing practices to vulnerable consumers

(e) The plaintiff, as head of ACN, has been carrying on business in a manner that involves unscrupulous door-to-door marketing practices in relation to vulnerable consumers in the training and education sector. (The fifth imputation)

(f) There are reasonable grounds to suspect that the plaintiff, as head of ACN, has been carrying on business in a manner that involves unscrupulous door-to-door marketing practices in relation to vulnerable consumers in the training and education sector. (The sixth imputation)

Mr Charan [as head of] ACN carried on a business which was significantly non-compliant with quality standards

(g) The plaintiff, as head of ACN, has been carrying on business in a manner that involves significant non-compliance with the quality standards required from providers of vocational educational services. (The seventh imputation)

(h) There are reasonable grounds to suspect that the plaintiff, as head of ACN, has been carrying on business in a manner that involves significant non-compliance with the quality standards required from providers of vocational educational services. (The eighth imputation)

As to paragraph 5, the Defendant: (a) denies the allegations because the Web Article and the article published in print on page 5 of The Australian titled "Watchdog takes peak training college to Court" (Print Article) in their natural and ordinary meanings, do not convey, were not understood to convey, and were incapable of conveying the imputations alleged (the Imputations); and (b) says further that the Imputations alleged to have been conveyed may only be derived by means of a strained, forced or unreasonable interpretation.

29 In its amended defence filed in October 2016 (pursuant to the order of an Associate Justice), Nationwide added a plea of justification which read as follows:

Further or alternatively, if (which is denied) the Print Article and the Web Article are defamatory of the Plaintiff in the meanings alleged in sub-paragraphs 5(a)-(b) and 5(g)-(h) of the SFSOC, or any permissible variant thereof, then in those meanings the Print Article and the Web Article are substantially true and accordingly the Defendant has a defence in respect of the publication of those meanings both at common law and pursuant to section 25 of the Defamation Act 2005 (Vic.), and the equivalent provision in the other States and Territories of Australia.

30 So, justification was asserted by Nationwide to the imputations relating to Mr Charan managing a company which engaged in unscrupulous business practices and significant non-compliance with quality standards.

Principles in relation to defamatory imputations

(a) The imputations (or meanings) he relies upon are, in fact, conveyed by the article; and then that

32 In relation to the first point, the principles are well settled, as encapsulated in the following passage from the judgment of White J in Hockey v Fairfax Media Publications Pty Ltd:

The question is whether ordinary reasonable readers would have understood the matters complained of in the defamatory senses pleaded. The ordinary reasonable meaning of a matter may be either its literal meaning or that which is implied or inferred by the matter. It includes inferences and conclusions which the ordinary reasonable person draws from the words used, taking into account the observation of Lord Reid in Morgan v Odhams Press Ltd at 1245, that the reader may engage in a certain amount of 'loose thinking'.

...

Ordinary reasonable readers are taken to be persons of ordinary intelligence, experience and education, who are neither perverse nor morbid nor suspicious of mind, nor avid for scandal. They do not live in ivory towers and can and do read between the lines in the light of their general knowledge and experience. They do not engage in overelaborate analysis in search for hidden meanings, nor do they adopt a strained or forced interpretation. They are not lawyers and their capacity for implication may be greater than that of lawyers.

The ordinary reasonable reader does not look at the matter complained of in isolation but rather in the whole context in which it is published.[20]

33 Having identified which, if any, of the imputations are made out, the second question is to determine whether any of those imputations are defamatory. As it was not seriously contended by Nationwide that if the imputations were made out then they could not be defamatory, it is only necessary to set out the test without further elaboration: words are defamatory when the imputation lowers the person's reputation in the eyes of reasonable members of the community, or causes the person to be ridiculed, shunned or avoided by members of the general public.[21]

34 There is one other principle I need to refer to: there are two alternative meanings pleaded by Mr Charan in relation to the four categories of defamatory allegations. It was accepted by the parties that it is necessary for the Court to identify a single meaning in relation to these imputations.[22]

35 I have set out the thrust of the article at paragraph [22]. I think it important, bearing in mind the principles I have adverted to, that in examining an article such as this, one avoids the trap of parsing and analysing each sentence or paragraph to see whether the article as a whole conveyed the alleged imputations. What is important is the sting of the article in the eye of the reasonable reader of The Australian (print and online editions).

36 Equally, it is important to remember that a judge must disregard his or her legal training (if that be possible) and endeavour to take from the article what a reasonable reader would. There is much to be said for a jury rather than a judge making this determination; that said, I cannot avoid the task given the parties' choice of forum. I should also add the following: given the task that I have described, it is not always possible to spell out satisfactorily the reason for preferring one or more (or perhaps none) of the meanings alleged. This is often exemplified by the principle that a court (be it judge or jury) is not bound by a pleaded imputation but must ensure, as a matter of 'practical justice', that the parties know generally the nature of the asserted imputation and fight the case on that basis.[23]

37 In my opinion, the reasonable reader would have noted that the article was both general and specific: it refers to problematic issues in the VET sector as a whole and also singles out two companies: Phoenix and Unique - who have been the subject of investigation or prosecution by the ACCC. Of significance, the only persons mentioned are Mr Brown and Mr Charan.

38 With this in mind, I think the reader would have taken the following matters out of the article (including the headline) relevant to Mr Charan:

(a) That the relevant regulatory authorities (including the ACCC) were cracking down on VET organisations, and Phoenix was one of these organisations;

(b) That there were numerous allegations made about the conduct of a number of organisations in the VET sector;

(c) That ACN was one of those companies under investigation by the ACCC in relation to the conduct of its subsidiary, Phoenix;

(d) That ACN's director, Mr Brown, was comfortable with Phoenix's conduct;

(e) That Mr Charan with Mr Brown 'headed' the management of ACN at the time of the publication of the article;

(f) That, under Mr Charan and Mr Brown's watch, ACN had acquired Phoenix, which had during 2014 received over $100 million worth of government-backed loans;

(g) That Phoenix, whilst under the control of ACN, had grown enrolments significantly;

(h) That Phoenix, an ACN company, had pressured students into enrolling; had not complied with quality standards; and was in the process of being deregistered by ASQA;

(i) That the ACCC was investigating training colleges which engaged in behaviour that affected vulnerable consumers;

(j) That Mr Brown and Mr Charan made 'fortunes' as a result of the listing of ACN, which received significant government subsidies; and

(k) ACN, controlled by Mr Charan and Mr Brown, was under investigation.

39 There are three matters I should mention before I go to the individual imputations.

40 First, counsel for Mr Charan submitted that common to each imputation was the proposition that Mr Charan engaged in these practices in his capacity as a director of ACN.[24] It was then said that any broader imputation raised a false issue - namely that given the limited nature of the suggested imputation then the defence of justification could only be tenable if Mr Charan had engaged in such conduct as a director of ACN - which he never was. I do not accept this. In my view, when the article is viewed as a whole, the imputation is that Mr Charan personally, as a director of an RTO, was involved in the impugned conduct. A reasonable reader (even a sophisticated reader of the business section of The Australian) would attach little or no importance to the reference to ACN. Rather he or she would focus on the role of Mr Charan as the manager of an RTO which was said to be implicated in unscrupulous practices involving vulnerable consumers.[25]

41 Second, as I mentioned earlier, notwithstanding the headline of both versions, the substance of the article is concerned not only with the activities of Phoenix and Unique but also their conduct in the VET sector generally.

42 Third, I do not think a reasonable reader would take any account of the expression 'previous media reports allege' contained in the ninth paragraph of the article which asserts that Phoenix pressured students. This is particularly so in the context of a reference to the ASQA statement, which identifies, without qualification, Phoenix's non-compliance with quality standards. In any event, the use of the expression 'previous media reports allege' is consistent with what, in defamation law, is known as the repetition rule, summarised in Gatley on Libel and Slander, as follows:

As a general rule, the law does not allow a person to evade liability by attributing a statement to some other person.[26]

The parties agreed that this principle applied to this part of the article.

Mr Charan managed ACN which engaged in unscrupulous business practices that took advantage of vulnerable consumers - (a and b)

44 Nationwide contends that these imputations are strained as an ordinary, reasonable reader:

(a) will not have understood any allegations made by the ACCC against ACN to be proven facts, a matter which is fatal to imputation (a);

(b) will not have understood the article to be imputing that the ACCC's allegations against ACN were of misleading, deceptive or unconscionable conduct - the article expressly states that they were the allegations made in the previous month by the ACCC against Unique;

(c) will have observed that the ACCC's allegations against ACN are nowhere specified in the article - while, therefore, they might have wondered about whether there was any connection between the ACCC's announcement 'last month' and its separate announcement concerning ACN, it would involve an excessive degree of loose thinking or avidity for scandal to conflate the allegations against Unique with the allegations against ACN;

(d) will also have observed that the only reference to 'vulnerable' people in the article appears in paragraph 8, in connection with Unique, not ACN;

(e) will not have understood the article to be imputing that Mr Charan amassed a fortune as a result of unscrupulous business practices - the article expressly states that the amassing of fortunes was the result of the listing of ACN (and identifies, in paragraph 2, that the government funding apparently of concern to the ACCC had occurred 'this year'); and

(f) will not have understood the article to be imputing that Mr Charan had personally engaged in, or was personally suspected of engaging in, unscrupulous business practices - at highest, the article imputes that Mr Charan was the head of a very big company that was the subject of allegations by the ACCC.

45 For the following reasons, I do not accept any of these arguments.

46 As to (a), when the article is read as a whole and not dissected minutely, it is evident the article means more than the making of allegations, and conveys, indeed not too subtly, the following meaning: Phoenix, managed by a company controlled by Mr Charan, has in fact engaged in disreputable conduct and failed to comply with the regulator's quality standards. This has led to Mr Charan making a lot of money. I reject the proposition that the reader would conclude that these were allegations rather than assertions of fact.

47 As to (b), for reasons I set out subsequently, I accept that the article does not convey that ACN engaged in specific 'misleading and deceptive conduct'. However that does not resolve the matter. The article as a whole implies that a company under Mr Charan's control engaged in unscrupulous business practices that took advantage of vulnerable consumers. I also reject the proposition that the reader would confine that assumption to the conduct of Unique.

48 As to (c), whilst it is correct that there is no detail as to the ACCC allegations against ACN, there are specific allegations concerning Phoenix, which I have set out. The imputation does not result from loose thinking (which is permissible in any event provided it can be properly inferred from the article) - in the context of the reasonable reader trying to make sense of the article as a whole. Indeed I suspect that 'loose thinking' for a vigilant defamation lawyer may be exactly what the reasonable reader may legitimately take out of an article as the true meaning.

49 As to (d), it is correct that there is no specific reference to the conduct of Phoenix in dealing with vulnerable consumers. But the context of the reference to Phoenix sending sales staff into housing commission estates to pressure potential students is directly followed by a reference to a 'broader investigation' into colleges that 'affects consumers, particularly the vulnerable'. This means, I think, that a reader would conclude that Phoenix (and therefore Mr Charan) had engaged in such conduct.

50 As to (e), if this proposition is to be accepted, one might well question why there was any reference in the article to the listing of the company (ACN) and the fortunes realised by Mr Charan and Mr Brown. To any sensible reader the link is obvious - these men made a lot of money out of the listing that was facilitated by the use of unscrupulous business practices.

51 As to (f), whilst it is correct that Mr Charan was the head of the company, taken as a whole and particularly in light of the reference to the money made by Mr Charan out of the listing, it is patent that the imputation is that Mr Charan was knowingly involved in the unscrupulous practices of the companies.

52 I repeat what I said previously: the imputation is not confined to Mr Charan's management of ACN. I do not think that a reader would take any real notice of the company name ACN; rather, he or she would identify Mr Charan as the manager of a VET organisation from which he made a lot of money when it floated in December 2014, and that he had been involved in its management prior to that date and, further, that he was still managing that company at the time Phoenix's conduct was detailed in the article.

53 As I see it, the relevant meaning is a permissible variant[27] of imputation (a): Mr Charan managed a VET organisation which engaged in unscrupulous business practices that took advantage of vulnerable consumers and, as a result of which, he made a large amount of money.

55 It is not necessary to deal with the alternative imputation (b).

Mr Charan managed ACN which engaged in misleading and deceptive conduct to vulnerable consumers - (c) and (d)

56 The third and fourth imputations - (c) and (d) - are not made out. The disputed meaning requires the reader to attribute a specific form of conduct to Mr Charan - namely that which was misleading and deceptive.

57 The only reference to 'misleading and deceptive' conduct in the article is in the first paragraph; it relates solely to Unique and is consistent with the reference in the seventh paragraph to Unique 'coaxing' vulnerable people to enrol in diplomas they were unlikely to complete.

58 The 'pressuring of students' to sign up (contained in the third paragraph) does not of itself convey misleading or deceptive conduct as such on the part of Mr Charan or ACN. Indeed, the content of this paragraph underpins part of imputation (a) as I have discussed, as it implies that there was unscrupulous conduct generally directed towards vulnerable consumers.

59 So, in summary, a reasonable reader would not link (or conflate) assertions about Unique's conduct with Mr Charan. The reference to Unique is in the context of a crackdown on the sector. Nowhere in the article is there mention of ACN or its directors being associated with Unique or with the allegations of misleading or deceptive conduct. Nor for these reasons, does it give rise to an imputation (d) - that there were reasonable grounds to suspect that ACN engaged in misleading and deceptive conduct. The real sting of the article is the broader implication in (a) which I have, with modification, accepted.

60 The article does not convey either meaning alleged by Mr Charan.

Mr Charan managed ACN which engaged in unscrupulous door-to-door marketing practices to vulnerable consumers - (e) and (f)

61 The fifth and sixth imputations - (e) and (f) - based on the seventh paragraph in the article - are not made out.

62 There is no specific reference to 'unscrupulous door-to-door sales' in the account of Phoenix's conduct or that of ACN. Rather, the reference to door-to-door sales refers to '10 organisations' in the context of an industry-wide crackdown by the regulator. Notwithstanding the wording of the headline, a reasonable person would, I think, focus on the words of the article which, in relation to door-to-door marketing practices, contains a general assertion relevant to the industry as a whole - which is one theme of the article.

63 Mr Charan argued given the close proximity within the article of these words (i.e. unscrupulous door-to-door sales) to the allegations that Phoenix had gone on to housing estates and pressured students to enrol, then the meaning was conveyed as against Phoenix, and therefore Mr Charan.

64 Whilst I accept that the reader might link the general reference to 'door-to-door selling practices' with Phoenix's marketing on 'estates', I think in the context of the general criticism of the industry, this is too long a bow to draw and would result in a strained construction of this part of the article.

65 So, in summary, whilst I regard alleged imputation (e) as possibly available, I am not persuaded it has been established. I repeat that I think that the more general imputation I have identified at [53] is more likely. Nor, despite my view that a reader might link the two references do I think that there are reasonable grounds to suspect that Mr Charan was involved in such practices. I repeat that I consider that the allegation is directed to industry-wide practices. If I am wrong about this, then I think that the sting of the imputation is covered by the variant of imputation (a) - that Mr Charan was the head of an organisation that engaged in unscrupulous conduct towards vulnerable consumers.

Mr Charan managed ACN which was significantly non-compliant with quality standards - (g) and (h)

66 Nationwide disputes that this meaning is conveyed and says that:[28]

(a) Ordinary, reasonable readers of the article will not have understood the article to convey that Mr Charan was responsible for carrying on business in a manner that involves, or is reasonably suspected of involving, significant non-compliance with the quality standards required from providers of vocational educational services; and

(b) At highest, the article imputes that Mr Charan was the head of a very big company that had carried on, or was reasonably suspected of having carried on, business in that manner.

68 The article refers to action being taken against Phoenix, and when combined with the reference to ASQA's findings in relation to significant non-compliance with quality standards and deregistration of that company, the imputation is unequivocal. Phoenix is an ACN company and the article nominates Mr Charan as a director of ACN.

69 The reference to deregistration combined with non-compliance means far more than an investigation into practices. It readily implies that a company managed by Mr Charan was, in fact, non-compliant with the quality standards. The article conveys far more than 'reasonable suspicion'. It says positively that, as a fact, it is being deregistered because of significant non-compliance with quality standards.

70 I repeat what I said at [40] in relation to the nature of the imputations. I think a reader would not focus on ACN but rather that Mr Charan was in a managerial/ownership role of a VET organisation.

71 Accordingly, I think the relevant meaning conveyed by the article, which is a slight variant of the pleaded imputation, is as follows: Mr Charan managed a VET organisation that was significantly noncompliant with quality standards.

73 It is not necessary to deal with the alternative imputation (h).

74 Variants of the first and seventh imputations have been established by Mr Charan. Each of these imputations is defamatory.

75 The established imputations of unscrupulous business practices and significant noncompliance with quality standards are the subject of the justification defence - which means that Nationwide must, under s 25 of the Act, prove that the imputations are substantially true. The sting of the imputations are as set out above:

(a) Mr Charan managed a VET organisation, which engaged in unscrupulous business practices that took advantage of vulnerable consumers which resulted in him making a large amount of money; and

(b) Mr Charan managed a VET organisation that was significantly non-compliant with quality standards.

76 In broad compass, the allegations made by Nationwide justifying these imputations relate to the conduct of CTI, CTT and AMA. It was alleged in relation to specific courses offered in 2014:

(a) CTI employees arranged mass enrolments of students for AMA courses which did not comply with the ASQA protocols;

(b) CTT received payments under the VET funding contract in respect of multiple students who had not enrolled or participated in courses, contrary to data uploaded to DET which resulted in payments by DET to CTT and AMA. Student documentation (both enrolment and course work) in CTT and AMA courses was not completed by the student; it was completed by "scribes"; and

(c) CTI was significantly non-compliant with the quality standards set down in the VET funding contract in two ways. First by offering incentives to students to enrol in and complete courses. Second by AMA not adhering to its pre training review obligations.

77 This defence was built on differing threads of evidence:

(a) the oral testimony of a number of witnesses who had worked in the CTI group;

(b) the oral testimony of three "students" allegedly enrolled in CTI courses conducted by CTI companies;

(c) the contents of a series of audit reports, student interviews and file reviews (with associated documentation) of CTT and AMA, carried out in 2015 under the instructions of DET; and

(d) a large number of emails and associated documents flowing to and from Mr Charan and other officers or employees of the CTI companies.

78 Nationwide contends that Mr Charan's role was far more expansive than he maintained: it argued that Mr Charan was intimately involved in the management of CTI and its associated companies, and this included the recruitment of students and their training. It produced a large amount of contemporaneous documentary evidence (primarily in the form of emails) to support this proposition. It contended that the only inference to be drawn from this material was that Mr Charan was intimately involved in the day-to-day management of the companies and knew exactly what was going on in terms of unscrupulous business practices and noncompliance with stipulated quality standards.

79 In response, Mr Charan, on numerous occasions, said that his role was confined to high level marketing, sales and corporate relations on behalf of companies in the CTI group, and that he had little, if anything, to do with the day-to-day management of those companies which made up the ACN group. In essence, he contended that Mr Brown and other persons employed by CTI and its associated companies undertook the hands-on management. In other words, Mr Charan could not be associated with inappropriate conduct in relation to enrolments, training or noncompliance with quality standards.

80 Before I go to the significant factual issues, I should mention several matters.

81 First, the allegations made by Nationwide in relation to unscrupulous conduct must be established to the Briginshaw[29] standard, which requires clear and cogent proof, where serious allegations of misconduct are made. But that is not to overstate the test by which an allegation must be proved. The Briginshaw principle, as encapsulated in s 140 of the Evidence Act 2008 (Vic), does no more than require that a court carefully consider the seriousness of the allegation and the gravity of the consequences flowing from a particular finding, as effecting the level of satisfaction that must be reached, before it can conclude that an allegation has been proved on the balance of probabilities.[30] The standard of proof of a particular assertion remains that of more probable than not, but with the proviso I have set out. Importantly it must be remembered, that neither s 140 nor the statement of principle in Briginshaw establishes a different standard of proof in a civil proceeding.[31]

82 Second, there is no merit in the submission by counsel for Mr Charan that some weight should be given to the fact that Mr Charan has not been investigated either by the police or regulatory authorities in the VET sector. This is patently irrelevant to a consideration of whether the factual material adduced by Nationwide establishes, to the requisite standard, that the sting of the imputations is true. Indeed, to give the submission any weight would invite unwarranted speculation. I put it to one side.

83 Third, each party made submissions about the drawing of Jones v Dunkel inferences. In my opinion it is appropriate to draw inferences against Mr Charan on certain issues by reason of his failure to call several witnesses whom he could have been expected to call. In particular, the failure to call his partner Mr Brown in relation to specific issues and, particularly, the management of the CTI companies in 2014 is stark. I will return to this point in more detail later.[32]

84 Fourth, it seems clear that when the articles were published, Nationwide was mistaken as to Mr Charan's involvement with ACN after the float in December 2014. However, it is also clear that (perhaps providentially) that it became aware and was ultimately able to adduce evidence relevant to justifying the sting of the two imputations. It is entitled to do so.

85 Fifth, contrary to the submissions of Mr Charan, it is incorrect to analyse the evidence both as to his role at the CTI group and his knowledge and participation in unscrupulous conduct in a piecemeal or 'nuanced' fashion. Nationwide's case, in large part is circumstantial and depends on an examination of all the evidence on a particular issue and then determining what inferences can satisfactorily be drawn as to a particular allegation.

86 Sixth, Mr Charan submitted that "this case is not concerned with what Mr Charan's role at CTI, AMA or CTT was".[33] This was consistent with the false issue contention raised by Mr Charan: namely that the imputation was confined to Mr Charan's role as a director of the ACN group (of which Phoenix was a part) - which could never be justified. I repeat that I reject this narrow construction of the true imputation. Once it is appreciated that the defamatory sting of the article is directed to Mr Charan's involvement as the head of an RTO involved in unscrupulous practices, as well as its failure to adhere to quality standards, then the question of his role at the relevant RTO and his knowledge of its activities is a fundamental part of the justification defence.

Mr Charan's role at CTI and associated companies prior to December 2014

87 I now recount some uncontroversial matters preceding the float of ACN in December 2014, relating to CTI and its associated companies. These supplement my brief outline at [9]-[20].

88 In 2012, Mr Charan and Mr Brown, founded CTI. Each owned 50 per cent of the shares in CTI through respective corporate vehicles.

89 CTI's head office was at 7 Raleigh Street, Spotswood.

90 Mr Charan was a director of CTI from 7 September 2013 until 30 September 2014.

91 Mr Charan described himself in email correspondence as the 'Managing Director of CTI' until the end of November 2014 - the last document tendered in evidence in which he utilised that title is dated 26 November 2014.[34]

93 CTI was part of a group of entities, which by mid-2014 operated under the CTI banner which included CTT and AMA (both RTOs); in addition, Community Employment Initiatives Pty Ltd (CEI) operated a call centre at the Spotswood premises for the CTI companies. Mr Charan was a director and Mr Peter Cage operated the call centre which closed in mid-2014.

94 CTT was purchased by Mr Charan and Mr Brown in July 2013. Each held 50 per cent of CTT shares through corporate vehicles which purchased the entire interest of Ms Elena Celona, who had established the company.[35]

95 From the date of purchase of CTT, Mr Brown was a director. Ms Celona remained the managing director of CTT until December 2013 and left the company in February 2014.

96 On 10 September 2013, Mr Brown and Mr Charan entered into an agreement with Mr Ian McAllister under which they were entitled to 20 per cent commission on sales of the Certificate II in Understanding and Management of Diabetes (the Diabetes course) which was subsequently utilised by CTT and AMA.[36]

97 AMA (Thoan)[37] was purchased by Mr Charan and Mr Brown in June 2014. Each held 50 per cent of AMA through corporate vehicles.

98 Mr Charan was a director and company secretary after its acquisition. He remained a director until 30 September 2014 and company secretary until 21 October 2014.

99 ACN was incorporated on 17 March 2014. At the time of its incorporation, Mr Charan and Mr Brown were both directors and in effect the only shareholders.[38] Ms Anastasia Mantzis (CTI employee and manager of the business development group)[39] was also a director until 30 September 2014.[40]

100 In addition to CTI, CTT, and AMA, the float prospectus of ACN in November 2014 identified the following six entities as part of the group: Cove, Smart, Haley College, Heron Access, Loka, and ITC.[41] Of these companies, the following had State Government funding contracts: CTT, Cove, Heron Assess (Victoria); AMA (NSW, Queensland and Victoria); and Smart (Queensland and Victoria).[42]

101 In preparation for listing on the ASX on 30 September 2014, ACN acquired all of the shares in CTI, CTT and AMA/Thoan. The ACN group effectively replaced the CTI group. On that day, Mr Charan resigned as a director of ACN, CTI and AMA/Thoan.

102 Mr Charan held 33.31 per cent of the shares in ACN until it was listed on the ASX on about 10 December 2014. The bulk of his equity (29.20 per cent) was sold for about $36.5 million. Subsequently, he held 4.11 per cent in escrow.

103 On 21 March 2016, the ACN group went into administration.

104 The following witnesses gave evidence relevant to the management of CTI, and its associated companies, and as to the role of Mr Charan up to December 2014:

(b) Sally Charan - Mr Charan's wife and a director of CTI until September 2013;

(c) Michael Moffat - managing director of CTT from February 2014;

(d) David Green - Chief Financial Officer of CTI (from April 2014) and then CFO of ACN (from October 2014);

(e) Teresa Ebejer - a CTI employee from August 2014;

(f) Elena Celona - owner of CTT (prior to its sale to CTI) and then the managing director until December 2014;

(g) Ian McAllister - the developer of the Diabetes course acquired by Mr Brown and Mr Charan in 2014 and marketed by AMA and CTT;

(i) Peter Cage - employed by CTI and CEI (a CTI company) in 2013; and

105 In addition, there were numerous contemporaneous internal and external emails of Mr Charan and other CTI employees or associates, with attachments and associated documentation.

106 It is convenient here to identify a number of persons who were involved in the management or operations of CTI and its associated companies who featured, some prominently, in the evidence led at the trial but were not called as witnesses:[43]

(a) Ivan Brown - the co-founder of the CTI group and the driving force behind its listing on the ASX;

(b) Harry Kochhar - who had a number of titles at CTI including that of Director of Education and, from September 2014, the Chief Operating Officer of the embryonic ACN group;

(c) Anastasia Mantzis - a manager, and described at times as the director of operations of CTI;

(g) 'Mehdi' or 'Mehti' - a business developer who also recruited students.

Mr Charan's version of his role at CTI and associated companies

107 The following extracts from Mr Charan's evidence in examination-in-chief, in February 2017, underpin his case on this issue:

So we had a large client and this is, I suppose, my strength, in identifying and I suppose recruiting a proper marketing sales strategy and through that methodology we extracted a large client...[44]

I was just a marketing and sales guy.[45]

My domain is sales and marketing at CTI, that's correct.[46]

I have got to sort of paint a picture here about how decisions were made at CTI. So Ivan would make a lot of these decisions and he would go off-the-cuff and just basically do it and tell me once he's done it.[47]

The sales and marketing, as I was explaining yesterday, there is a clear separation between sales and marketing and the compliance and the operation of the business. So he - Harry Kochhar and Ivan was involved with the operation and the compliance and they were in charge of all those departments under that umbrella...[48]

COUNSEL: So you are quite clear in your mind that you have never held any roles in CTT?

MR CHARAN: To the best of my knowledge, Your Honour, I did not hold any roles in CTT.[49] ....

COUNSEL: Mr Charan, have you ever told anyone that you were a director of CTT?

MR CHARAN: Not to the best of my knowledge. I don't remember.[50]

108 Mr Charan also said the following about his role at CTI in the months leading up to the float in December 2014:

MR CHARAN: ... my involvement diluted and it started - I started diluting - "diluting" is probably not the word. I started phasing out from CTI or any of its subsidiaries from, I would say, probably middle to late 2013, to all the way through to when I exited and there were two reasons for it. I was going through a very personal issue in 2013 so my attention and my drive, I suppose, wasn't there in 2013.[51]

MR CHARAN: Ivan Brown was spearheading the IPO process, that's correct, and by himself.[52]

...

COUNSEL: In the months leading up to 15 December what was your role within Community Training Initiatives as it prepared to float?

MR CHARAN: Nothing, I would say. I wasn't going to the office. [...] I would get calls every day at home, you know, from - I would be at home, I would be anywhere and they would either say, "It's going ahead" or, "No, it's got going ahead" so I was always in that really unknown predicament. My role in CTI really diminished from probably mid-2014. I became passive. I was only focusing on big clients...[53]

109 These assertions are consistent with the contents of the prospectus[54] which asserts that '... Prakash Charan was primarily involved in sales and his role was reduced in 2013'.

110 Central to Mr Charan's denial of involvement in the day-to-day management of CTI and associated companies in 2014 (and as to whether he played any part in the conduct alleged by Nationwide) was whether his evidence was truthful.

111 I have concluded, comfortably, that Mr Charan was an entirely unreliable witness, not only on this issue but as to all matters relevant to his claim against Nationwide. For reasons I will now set out, I am satisfied that on issues central to the case he gave many untruthful answers and, in the main, dissembled, prevaricated or lied in an effort to advance his response to the justification defence. In particular, his evidence as to his lack of involvement in the management of CTI and associated companies was discredited by contemporaneous documentation and internal inconsistencies in his own evidence.

112 Mr Charan's lack of recollection of recent events, some of real significance in his commercial ventures (particularly given their success) was extraordinary and farfetched. In evidence-in-chief, he gave confident accounts of his business acumen and his association with a number of successful entrepreneurs. However, when cross-examined on the role he played in the Brown/Charan ventures throughout 2013 and 2014, he became vague and unhelpful to the point of patent prevarication.

113 The most conspicuous were Mr Charan's answers in cross-examination about hundreds of emails (none of which on their face demonstrated any contemporaneous problems with his memory) of which he was either an author, or a recipient, many of which he professed no recollection. In the main, these emails demonstrated that Mr Charan's role was not confined to that of a marketing guru (as he would portray himself), but that he was intimately involved in the day-to-day operations of the Brown/Charan ventures. Here is an example from 22 August 2014 (less than four months before the float) of email correspondence between Mr Brown and Mr Charan about an employee:[55]

This week coming has gotta be his last week on salary

It's 5 months now this has been dragging on, and I guarantee he hasn't been working all that time for us

He was meant to come to this mornings sales meeting and didn't bother

He disrespects everyone including Neil who he blatantly disrespects

Plus we will go hard on the call centre too, zero leads for the fortnight, only one

They been too busy trying to get other clients and then demanding more money as well while we fucking pay all their costs !

I'm of the mind to terminate the cunts immediately, or at absolute bare minimum

We need the Philippines one ASAP so we can fuck these lazy amateur idiots off

Another fucking example of parasites that we have encountered on this journey

Mr Charan (in reply to Mr Brown) on the following day:

Make sure you don't piss him off too much cause he knows a lot about what goes on with us. And BAWM will be their client soon. You know what I mean...?

If you are going hard on Monday then someone needs to change docklands office locks asap!! Cause I'm sure you wouldn't like them to take 40k off us to set up and make money through clients like BAWM etc...

114 Before I canvass some of the particular failings of Mr Charan's evidence, I should identify one issue concerning these emails. Late in the course of his lengthy crossexamination (necessarily so, given Mr Charan's evasive responses) and subsequently when recalled to give evidence-in-reply, Mr Charan, on a number of occasions, questioned the authenticity of emails which appeared to have been either authored by him or received by him directly or copied to him.[56]For instance close to the conclusion of the trial:

COUNSEL: You are inviting His Honour to accept that this e-mail is a fabrication, Mr Charan?

MR CHARAN: I am not sure. I have seen a lot of edited amended e-mails or bunch of e-mails that's received from your side and I am not sure where you got that from and how it's edited and again, I would question the validity of most of the e-mails that you have put towards me.

115 This suggestion of fabrication of emails was patent nonsense. All of the emails appeared to come from him (and in many cases bore his standard email signature or came from his private email address) or had been addressed to his work email address. There was no objection by Mr Charan's counsel to their tender (the emails had been discovered by Nationwide) and more importantly, the content and style of the emails were consistent with other emails not queried by Mr Charan. An example is this email exchange of 9 September 2014 (at which time Mr Charan says he had no involvement in the management of CTT):[57]

1. JLL Leasing - for stall rent at Pakenham $770.00

2. Australian Pacific Training Solutions - training 225.00

Please don't pay the other pending payments. I'm still waiting for fund transfer. Thanks

From Mr Charan: (to Ms Lim, with copy sent to Mr Moffat)

We need more sales through CTT. Much more than 60 Per Month

Mr Charan, when asked about this email, queried its authenticity.[58] No evidence apart from Mr Charan's assertions in cross-examination and re-examination was led to suggest that this email or the other impugned emails were not the real deal. This is but one of many examples of Mr Charan resorting to bluster and prevarication in an effort to avoid the consequences of findings based upon the contents of these emails.

116 Next, I put no stock whatsoever in Mr Charan's asserted catastrophically poor memory, which he relied upon over the six days of his cross-examination when confronted with the contents of emails contradictory to his position. He constantly said he could not remember the contents of an email and therefore could not answer the question concerning the substance of the email or any inference which could be drawn from its contents.[59] I now set out some examples of the position he took in cross-examination.

117 Mr Charan was asked about his involvement in CTT, which he and Mr Brown purchased in 2013 from Ms Celona to form part of the CTI group. Mr Charan said he held no roles at CTT, including that of director:[60]

COUNSEL: Could the witness be shown court book 0618. Mr Charan, about a third of the way down the page can you see Mr Moffat of CTT has e-mailed you and Mr Brown: "Hi Ivan and Kash. A few points that came up at our management meeting." Do you have a recollection of attending a management meeting for CTT?

MR CHARAN: I do not recall.

COUNSEL: Did you attend management meetings for CTT?

MR CHARAN: I do not recall.

COUNSEL: You have responded to Mr Moffat with the subject line, "CTT report": "Hi Mike, I will be there tomorrow morning to discuss further." Do you remember that?

MR CHARAN: I do not recall.

COUNSEL: What you said there was you were going to attend a discussion with Mr Moffat the following day to talk about matters concerning CTT. Do you agree?

MR CHARAN: Again, on the face of it, that's what it says but I do not recall this e-mail.

COUNSEL: Can you explain to His Honour why, if you had nothing to do with the management of CTT, you could have sent such an e-mail?

MR CHARAN: Again, I do not recall.[61]

COUNSEL: Mr Charan, in late 2013 did you receive weekly sales reports for CTT?

MR CHARAN: I do not recall.

COUNSEL: Could the witness be shown court book 0430. Do you see, Mr Charan, that this is an e-mail from Ms Celona to Mr Brown and you on 11 November 2013: "Hi. Here are the weekly sales reports FYI." Does that refresh your memory?

MR CHARAN: No, it doesn't. I don't recall this document.

COUNSEL: You didn't review this document before coming to give evidence?

MR CHARAN: I have not reviewed this document during the trial process - preparation, sorry.

COUNSEL: Are you able to explain to His Honour why, if you had nothing to do with the day-to-day management of CTT beyond the payment of accounts, you were being sent a weekly sales report for CTT?

MR CHARAN: Again, I don't recall this document so I am not sure how to answer that.

COUNSEL: I want to ask you about the last paragraph in that e-mail. You see Ms Celona said to you and Mr Brown: "I would love to have a meeting with you both where we can sit down and review the circumstances at present and make decisions as to how you would like to proceed without the double handling and me sitting in the middle when it is really not necessary!! It is time for the talk and strategically making those necessary decisions that are best for the business." Do you recollect receiving that?

MR CHARAN: I don't recall this document.

COUNSEL: Mr Charan, are you able to explain why, if you had nothing to do with the day-to-day operations of CTT beyond the payment of accounts you were being asked by the CEO to have a talk and to make strategically necessary decisions that were best for CTT?

MR CHARAN: I don't recall this communication so I probably wouldn't be.

COUNSEL: Did you attend meetings with Mr Brown and Ms Celona at which strategic decisions for CTT were discussed and made?

MR CHARAN: I do not recall.[62]

118 And in relation to staff and sub-contractor payments:

COUNSEL: Mr Charan, were you involved in matters such as determining the salaries, bonuses, retainers and benefits for staff at CTT?

MR CHARAN: I do not recall.

COUNSEL: Can the witness be shown court book 0451 and could we go to the last two pages of that document. Do you see at the very foot of the left-hand page, Mr Charan, is the start of the e-mail to which I want to draw your attention. You see you have sent an e-mail on 3 December 2013 in which you have said: "Hi guys. Can we offer Elise a retainer based structure? Let's give her $850 per week retainer as a subcontractor. We will deduct this amount off her commissions payable when due, hence we are calling this a retainer based model. The commission rate is as follows: $150 on commencement of training." Do you see that?

MR CHARAN: I do see that, yes.

COUNSEL: Does that refresh your memory about being involved in late December 2013 with determining payments and retainers for subcontractors?

MR CHARAN: I don't recall this e-mail, no.

COUNSEL: Were you involved in approving retainer amounts and commission rates for subcontractors of CTT?

MR CHARAN: I do not recall.

COUNSEL: Do you see a little further up the left-hand page Ms Celona responding to you: "Hi. I do not have an issue. Will check with Maria how to set this up. What happens if she does not get signups. Also is she getting this 850 monthly or fortnightly." That's Ms Celona, the chief executive officer of CTT, seeking advice from you about the payment structure for a new CTT employee. Do you agree?

MR CHARAN: That's what it says on this e-mail, the face of it, yes.

COUNSEL: Are you able to explain to His Honour why, if you had nothing to do with the day-to-day operations of CTT beyond the accounting matters you have referred to, you were involved in determining the retainer and commission rates for new subcontractors at CTT?

MR CHARAN: Again, I don't recall this e-mail, hence I am not wanting to get drawn into it.

COUNSEL: Do you see at the top of the page, Mr Charan, you have written a further e-mail on 3 December, again to Ms Celona: "Hey salary can get paid when everyone else gets paid. If she doesn't bring in enrolments after 4 weeks, we will replace her with someone more active in this space. I will be sourcing more sales staff for CTT." What's your explanation for that, Mr Charan?

MR CHARAN: Again, I don't recall this e-mail so again, I am not going to be drawn into a guessing game.[63]

119 And as to his role at CTI, the core company of the embryonic ACN group:

COUNSEL: Mr Charan, in your role at CTI did you get involved in staffing matters, matters such as whether staff had properly recorded sick leave and annual leave and so on?

MR CHARAN: Not to the best of my knowledge. I don't recall.

COUNSEL: Could the witness be shown court book 0508 and could we go to the last page or the penultimate page of that chain. Do you see at the foot of the page, Mr Charan, you have sent an e-mail on 18 April to Mr Brown and it looks like the accounts Department at CTI, copied to Ms Mantzis: "Subject: sick leave". Just read that to yourself. Have you seen that before?

MR CHARAN: I do read it on the screen, correct.

COUNSEL: Was that part of your role at CTI, to give directions about deducting hours from staff members' annual leave and so on?

MR CHARAN: Again, I don't recall this e-mail so I would be just guessing.

COUNSEL: In the previous e-mail further in the chain Ms Mantzis responds: "Hi Kash" and then she explains her absence. I just want to ask you about the sentence towards the end: "If you would like I can also start recording extra hours I work or late night and weekend calls I take for both CTT and CTI." Do you see that?

MR CHARAN: Yes, I see that.[64]

120 And in relation to direct marketing for the recruitment of students:

COUNSEL: Were you involved, Mr Charan, in late 2013, with approving scripts to be used by telemarketers in call centres who were cold calling potential students for CTI and CTT?

MR CHARAN: I do not recall.[65]

...

COUNSEL: Were you involved in settling the script that was to be used by the people who made cold calls from the call centres?

MR CHARAN: Again, I do not recall. It's something I possibly would have been involved in but I do not recall. I mean, that's my domain.

COUNSEL: That is your domain?

MR CHARAN: My domain is sales and marketing at CTI, that's correct.

COUNSEL: One of the views that you formed later in 2014 was that the script being used by the call centre operators needed to be rejigged to make it more effective. Do you recollect that?

MR CHARAN: That's your comments, not mine.

COUNSEL: You have no recollection of doing that?

MR CHARAN: I do not recall.

COUNSEL: Can the witness be shown court book 0457.

...

COUNSEL: In that e-mail on the right-hand page from Peter at Community Employment Initiatives ... It's also gone to Mr Brown and Ms Celona and Ms Mantzis: "Subject: call centre script. Hi guys. Can we sit down on Thursday at 11 am and come up with the features and benefits for the script for our telemarketers?" Does that refresh your memory as to what you were doing in relation to the descriptor telemarketers?

MR CHARAN: No, it doesn't. I do not recall. I do not recall this e-mail.[66]

121 Then, about a personal payment of $100,000 for the purchase of an interest in AMA (Thoan):

COUNSEL: Could I ask the operator to go to court book 0537. Mr Charan, do you see that that's an e-mail that you sent to Mr Green on 15 May in which you confirm having transferred $100,000 deposit in connection with the acquisition of Thoan?

MR CHARAN: Correct. I mean - hang on. Is it? On the face of it - I don't recall this e-mail. Is it?

COUNSEL: Did you pay a $100,000 deposit for your interest in Thoan?

MR CHARAN: Not to my knowledge. I do not recall.

COUNSEL: That hasn't refreshed your memory at all, Mr Charan?

MR CHARAN: No, it hasn't, and I think you are putting words in my mouth because it doesn't say "AMA" at all in that document.

COUNSEL: Mr Charan, do you see the subject line: "Trust account details - sale of shares in Thoan Pty Ltd"? You accept, don't you - - -?

MR CHARAN: I am not sure what you are reading.

COUNSEL: The subject line at the top of the page, Mr Charan?

MR CHARAN: Okay. Yes.

COUNSEL: You accept, don't you, that this is a document, on its face, about your acquisition of an interest in Thoan Pty Ltd for at least a deposit of $100,000?

MR CHARAN: Again, I am not sure.

COUNSEL: Is your evidence to His Honour that you have no recollection of transferring $100,000 in respect of the acquisition of shares in Thoan in the middle of May 2014?

MR CHARAN: I do not recall.[67]

122 I pause here to note that this testimony was, literally, incredible. A personal payment of $100,000 in May 2014 which had evaded the memory of an astute businessman.

123 I will shortly set out in detail the evidence of Mr Charan relating to discussions with Mr Brown subsequent to the float of ACN in December 2014. For the moment it only need be noted that Mr Charan had, in giving evidence on 27 February 2017, denied speaking to Mr Brown in the preceding three weeks.[68] The following exchange on 6 March 2017 between Mr Charan and counsel for Nationwide is illustrative and illuminating as to the tricks played on Mr Charan's memory of even the most recent of events:

COUNSEL: Mr Charan, I want to put to you that it's inconceivable that at the time you gave your evidence last Thursday you had forgotten having had a 27 minute conversation with Mr Brown less than three days earlier [27 February] and a 51 minute conversation with him in the same week [24 February]?

MR CHARAN: Again, Your Honour, those questions were thrown at me. Some of them were mumbled towards me. I didn't understand what he was saying. It was pretty quick. I would have - and I did - I did have - draw a mental blank on the day, or that 30 seconds-odd. I did have the luxury to think about it over the weekend, Your Honour, and here I am presenting as accurately as I can regarding the version of events.[69]

...

COUNSEL: Let me see if I can refresh your memory. The call lasted 354 seconds. That's a little under six minutes. You made it at 11.52 in the morning. Now, on Thursday, 23 February, Ms Schoff opened your case before His Honour and the court took its morning break, according to the transcript, between 11.44 am and about 12.01 pm does that assist you?

MR CHARAN: No, not really but if I did, it would have been regarding - and it looks like I have. It would have been regarding instructions given by my team to get information for this case.

COUNSEL: Who from your team, during the morning break of 23 February, asked you to call Mr Brown?

MR CHARAN: Again, I am not saying it was done that morning. It would have been done a week ago, two weeks ago. It was probably a follow-up call regarding that. I don't know what it was and I can't recall what it was, what the conversation was. But, as I said, again, I can see it, it's on my Telstra record. I would have but the content of the conversation I do not recall.[70]

...

COUNSEL: Where were you when you made that call to Mr Brown during the midmorning break on Thursday, 23 February?

MR CHARAN: Again, I do not recall. I don't know. Again, I couldn't give you an accurate description of my whereabouts. I don't know.

COUNSEL: Where do you go during the midmorning break?

MR CHARAN: Again, I don't know. I go numerous of places. A lot of places. Anywhere.[71]

...

COUNSEL: When you gave evidence last Thursday that you couldn't recall any phone conversations with Mr Brown last week or the week before, that you knew that evidence was false because you had called him three times on a single day, Wednesday, 22 February?

MR CHARAN: No, that's your opinion. That's definitely not mine. As I said to Your Honour, I make thousands of calls on a monthly basis to keep up with each one of them - I have got a bad memory as it is. To keep up with each one of those calls it's a massive task. I know it is frustrating but it's a massive task to remember everything. [72]

...

COUNSEL: When you gave evidence last Thursday that you couldn't recall any phone conversations with Mr Brown that week or the previous week, you knew that evidence was false because you knew you had called him for 38 minutes on 16 February?

MR CHARAN: No. Again that's your opinion, definitely not mine. You bombarded me with these questions in 30 seconds and at that point I drew a blank and yes, I did not recall but I have had the luxury to think about it over the weekend and here I am, giving the recollection of what the true state of play is, to the best of my knowledge.[73]

124 Mr Charan's lack of recollection was so bad that for acceptance it required a medical explanation such as that of a serious neurological disability (perhaps early-onset Alzheimer's). In stark contrast to his evidence, Mr Charan's contemporaneous assessment of his own memory in 2014 was excellent: in response to an email in which an employee or agent of CTI wrote to Mr Charan, 'We had the conversation!! It's not my fault you can't remember it.' Mr Charan replied, 'I do remember every conversation.'[74]

125 The explanation he proffered for this extraordinary affliction - that this was 'the most emotional, distressing, toughest period of my life ... those two years'[75] which I assume to refer to his separation from his wife (they separated in September 2013 and reunited in late-2014 or early-2015)[76] - was risible. It is not reflected in his day-to-day emails at the time, and tellingly, the only evidence led from Mrs Charan to suggest that Mr Charan had any significant problems with his memory or that these issues were accentuated or caused by their separation was as follows:

COUNSEL: When he [Mr Charan] is talking to you about the article, how does he appear to you?

MRS CHARAN: Well, there's two parts to that. Primarily when he first saw the article, I observed him feeling the devastation, the embarrassment, the shock, the anger; and then secondary to that has been the litigation and what I have observed, as far as him almost falling into a depression as it's increasingly getting closer to the trial and since the trial commenced. Very - lack of focus and disengaged.

COUNSEL: How has that manifested itself, the lack of focus or the disengagement?

MRS CHARAN: In a sense it's affected the family. He would often take the children to their sporting commitments and it's become more irregular for him to do that so there's been a lot of pressure in the sense that I have had to pick up that slack. He has also - we have been at several events, birthday parties, we have been at the tennis. Anywhere we are it seems that the topic has been brought up. Not always by himself, other people are asking him how things are progressing and it tends to take over every situation that we are in.

COUNSEL: Can you recall something that happened when you were at the tennis with him?

MRS CHARAN: I believe when we were at the Australian Open in January was when he found out that the defendants were asking for some personal relationship details and he became quite agitated and distracted and that was at about lunchtime, I recall, and from that time he wasn't there. It was just his body there, his mind was off. So the whole day we were there with the family and - yeah.[77]

...

COUNSEL: The events at the Australian Open and the letter he received, has that had any other effect on him since that time?

MRS CHARAN: Definitely. He's been a lot more lethargic, very stressed and I generally can't get him to communicate properly, in the sense of - I will give an example of even just yesterday. I had said to Prakash that, "Melinda called me and I am going to give my evidence tomorrow at about 11 o'clock." "Okay", he acknowledged that and then it came to the afternoon at about 5 o'clock or so and he said, "Did anyone tell you, you were going to give your evidence tomorrow?" and I went, "I just told you that at lunchtime". So it's conversations like that that are taking place more regularly, probably since late November.

COUNSEL: Have you ever seen your husband display those kinds of signs before?

MRS CHARAN: No. Definitely - I suppose another one of the signs is the sleeping and the lethargy. He would never be one to have a nap during the day and things like that. It's just the demotivation, I think. He's deflated.[78]

126 There are a couple of observations to be made about Mrs Charan's evidence: first, there was no mention of any observable effects that their relationship breakdown may have had on Mr Charan's memory. Second, Mrs Charan's evidence was limited only to the effect that the litigation had and was having on Mr Charan since November 2016, which is said to have rendered Mr Charan deflated and absentminded. It is true that the aspects of the litigation which appear to have had the most profound effect on Mr Charan are the lines of inquiry regarding the breakdown of the Charans' relationship in 2013, however Mrs Charan's evidence provides no real support for Mr Charan's claims of serious memory loss and certainly no medical explanation.

127 In contrast to his evidence in cross-examination, Mr Charan's evidencein-chief and re-examination did not suffer from similarly catastrophic lapses in memory - Mr Charan, in the main, was able to recall dates, places, names of staff and their roles without effort.

128 I repeat that, absent a persuasive medical explanation, the failing memory explanation is hogwash designed to deflect an objective inquiry into Mr Charan's role in the Brown/Charan CTI companies during 2013 and particularly during 2014. The far more likely explanation (which I accept) is that Mr Charan dissembled and prevaricated repeatedly in the course of his evidence in an effort to minimise his role in the management and activities of CTI and associated companies - as he did in relation to the true nature of his relationship with Mr Brown.

Telephone and text message communications between Mr Charan and Mr Brown before and around the time of the trial

129 In cross-examination, Mr Charan said the following of the deterioration of his relationship with Mr Brown in April and May 2014:

It was one of the most - the biggest extent of breach of trust that a partnership can endure and a partner can, I suppose - a partner does to - within a partnership. In my opinion, it's one of the biggest that anyone can - the biggest sin, I suppose, a partner can make.[79]

...

I found [...] [out that] Ivan had a business behind my back that he was operating exactly in the same field, taking our clients and taking our IP to that business. I didn't know about it for months. Months. When I did find out it was true, [...] and that was the biggest, you know, breach of trust I have endured. I feel like I was sabotaged. It was Ivan Brown and Shaun Chown that's actually named in that paragraph. Shaun Chown was the head of compliance at CTI. So Ivan and Shaun obviously conspired and did this behind my back, Your Honour, and I lost all trust and I lost all drive and enthusiasm for this - for the business, I suppose, and I suppose the e-mail on the face of it, it just proves my disappointment, my anger and my resentment of being in a partnership with him.[80]

...

What I did think was and what the promise both Ivan Brown and I made to each other was if we were going to be in there together we would do it all together, bring it into the fold. Unfortunately, he decided to do something behind my back which was the biggest breach of trust in the partnership ever, in my opinion, and the only fair thing to do when I found out was to get it back in the fold and just share the equity share or equity split, as what we have with any other RTOs or any other entities.[81]

...

Let me tell you one thing. He is not a friend. Someone who does that to you is not a friend, is definitely not on my Christmas card list ...[82]

So based on this evidence, I would have concluded that Mr Brown was a man with whom Mr Charan would not have a bar of - but that was not the case.

130 As I mentioned a moment ago, on 2 March 2017, the eighth day of the trial, counsel for Nationwide asked Mr Charan about any recent contact with Mr Brown. Mr Charan denied having spoken to Mr Brown in the preceding three weeks and on his estimation, the last time he had spoken to Mr Brown was in the first week of February (approximately a month earlier):

MR CHARAN: Okay. Well, I can't recall the last time I spoke to him. It would probably be at the start of this month...

COUNSEL: Today is 2 March?

MR CHARAN: Sorry, I beg your pardon. February. The start of February, I think. Yeah, probably around there. But, Your Honour, if you really want to know exactly the extent of it, since I departed I haven't had any contact with Ivan Brown up until I think it was this year, at the start of this year. I bumped into him at Williamstown - sorry William Street, on the corner. We sat down and had a chat and that was it. That was the last physical time I have seen him since we departed - parted ways.

HIS HONOUR: As I have understood your evidence, at some point of time prior to the float your relationship broke down and I think you told me yesterday that the cause of that was what you regarded as a duplicitous relationship with another employee in regards another company.

MR CHARAN: Correct, Your Honour...

COUNSEL: Mr Charan, was your evidence that you have physically seen Mr Brown once since the float?

MR CHARAN: To the best of my knowledge, yes. Maybe even twice. To the best of my knowledge a couple of times max.

COUNSEL: You said you have spoken to him once in the past month?

MR CHARAN: I would say the last conversation I had with him - no. Again you are putting words in my mouth. Your Honour asked me when was the last time - to answer the question that you asked me initially and I said it was probably the start of the week in February.

COUNSEL: The first week in February?

MR CHARAN: Correct. To the best of my knowledge.

COUNSEL: You haven't spoken to him this week?

MR CHARAN: To the best of my knowledge, no.

COUNSEL: You didn't speak to him last week?---To the best of my knowledge, no.

COUNSEL: You didn't speak to him in the week before that?

MR CHARAN: To the best of my knowledge, no.[83]

131 Mr Charan was then asked if it was possible that he could have forgotten any conversation with Mr Brown, Mr Charan responded (as he often did) with 'to the best of my knowledge, no':[84]

COUNSEL: It's not possible, Mr Charan, that you have forgotten speaking to Mr Brown this week?

MR CHARAN: To the best of my knowledge, no.

COUNSEL: It's not possible that you forgot speaking to him last week?

MR CHARAN: Again, to the best of my knowledge, no.

COUNSEL: It's not possible that you have forgotten speaking to him the week before last?---

MR CHARAN: Again, to the best of my knowledge, no.

132 When Mr Charan's telephone and data records from 1 February 2017 were produced shortly after this exchange as a result of a subpoena to Telstra (the Telstra records), it was apparent that there were multiple telephone conversations[85] between Mr Brown and Mr Charan in February. These included a 66 minute call on 7 February 2017 and a 27 minute phone call on 27 February 2017, the first shortly prior to the trial commencing and the other during the course of the trial.

133 Nationwide submitted, and I accept, that the Telstra records demonstrate that:

(a) Mr Charan had telephoned and spoken to Mr Brown on 17 occasions in February 2017;

(b) the telephone conversations occurred on 1, 6, 7, 8, 9, 16, 17, 22, 23, 24, 26 and 27 February 2017 and many of the telephone calls were lengthy;

(c) Mr Charan contacted and spoke to Mr Brown during the mid-morning break in the trial on 23 February;

(d) Mr Charan contacted and spoke to Mr Brown at length on the last working day before the start of his cross-examination, 24 February 2017, and they again spoke briefly the day before the start of the cross-examination, 26 February 2017;

(e) Mr Charan contacted and spoke to Mr Brown for more than 27 minutes immediately after the first day of his cross-examination on 27 February 2017;

(f) apart from those telephone calls, Mr Charan and Mr Brown also exchanged 38 text messages between 1 and 27 February 2017;[86] and

(g) In total there were over 50 separate exchanges (by phone and text) between the two men in February 2017.

134 The details of the telephone calls are set out in the table below - which was prepared by Nationwide's solicitors and admitted into evidence. The initials 'PC' refer to Mr Charan and 'IB' to Mr Brown. The 'Notes' column in the table details relevant events in pre-trial preparation and in trial. A similar table in relation to the text messages is appended to [144].

135 Once the Telstra records were produced and examined by the lawyers and their clients, Mr Charan was asked by counsel for Nationwide about his previous evidence as to his contact with Mr Brown and how it could be reconciled with the calls identified in the Telstra records. On 6 March 2017 (the tenth day of the hearing), Mr Charan commenced his explanation of his earlier evidence:

COUNSEL: Perhaps we can bring up transcript 681. Do you see, Mr Charan, at line 24 I asked you about your last communication with Mr Charan[sic]. I asked you: "The first week in February?---Correct. To the best of my knowledge. You haven't spoken to him this week?---To the best of my knowledge, no. You didn't speak to him last week?---To the best of my knowledge, no. You didn't speak to him in the week before that?---To the best of my knowledge, no." I then tendered a page of the court book and I asked you: "It's not possible, Mr Charan, that you have forgotten speaking to Mr Brown this week?---To the best of my knowledge, no. It's not possible that you forgot speaking to him last week?---Again, to the best of my knowledge, no. It's not possible that you have forgotten speaking to him the week before last?---Again, to the best of my knowledge, no." Do you adhere to all of that evidence, Mr Charan?

MR CHARAN: No. I have had - Your Honour, that all happened probably within 30 seconds of the whole questions being asked so it was put on me on the spot. I have had time to think about it and to the best of my knowledge, I have spoken to him after the first week of February but that was at the back of and only at the back of the advice and request and I suppose a little bit of encouragement from my lawyers and my counsel, to talk about, I believe, a privileged matter that - I don't think I should be divulging the content of the conversation but it was on the back of advice and the request and I reluctantly did it, to speak to Ivan Brown.

COUNSEL: When did your lawyers encourage you to contact Mr Brown?

MR CHARAN: I do not recall the exact time.

COUNSEL: Do your best. Was it last week?

MR CHARAN: Again, I do not recall the exact time. I would be just guessing.

COUNSEL: Was it the week before last?

MR CHARAN: Again, Dr Collins, don't put words in my mouth, mate. As I said, I do not recall.[87]

136 Then, shortly afterwards, Mr Charan provided the following unbelievable explanation to Nationwide's counsel as to his failure to recall these telephone conversations:

Your Honour, as far as I understand, okay - and again, I haven't seen the records and I don't know what numbers came up but I have thousands of call logs in that one month. Your Honour - and this is frustrating, as much as it is for you it is for me. I make thousands of calls, Your Honour, thousands, okay? I do not recall when, what, how long these calls are. Now, if you are definitively trying to put me in a corner and say, "Do you remember this call?", Your Honour, thousands - and you can check the records that's come in. Thousands of records, no, I cannot recall, especially sitting in this stand and being put on the spot but yes, I have had thousands and thousands of call logs that came in as part of that subpoena, okay? And that's my frustration and I thought I would bring that up purely for you to understand. Look, I can see on the face of it - I know why you are frustrated, I know, but if I made only two calls that month, Your Honour, it would have been okay, hang on, but I've made more than a thousand - let me rephrase that. Thousands of call logs in that month.[88]

137 When I asked about his earlier evidence as to no contact with Mr Brown since early February:

HIS HONOUR: Mr [Charan], are you telling me that not only did you give these answers the other day to me on your oath but also, you don't now recall with any precision whatsoever, when your solicitors asked you to get in touch with Mr Brown? Is that what you are telling me?

MR CHARAN: I do not recall. I will give you a date and it will be wrong, Your Honour. The best people to speak to would be my team.

HIS HONOUR: No. The best bet may be that I speak to you?

MR CHARAN: Okay.

HIS HONOUR: Because you are the one who has the personal knowledge of these matters and the other day you told me on your oath that you haven't spoken to Brown effectively over the last month. Now, as I follow it, what you are now going to tell me is that you have revised the evidence that you gave and that you no longer adhere to it. Is that correct?

MR CHARAN: No, Your Honour. Again, the question is do I recall when? No, I do not recall exactly when my team spoke to me about it. Initially it would have been probably I would say January, probably middle of January, when they first started talking to me about getting some information from Ivan Brown but there were subsequent discussions which I don't know when it took place, after that, to get further information about the case to assist us in the preparation of the case. Again, Your Honour, until then I have not made contact with Ivan Brown since probably, I would say early to mid-2015. I bumped into him and another thing that I have recalled. It wasn't January that I bumped into him. It was prior to me leaving for Singapore and I did confirm that with my wife on the weekend and it was, I would say, prior to 25 December. 26th is when I went to Singapore. I bumped into him at William Street, I spoke to him then. I didn't make any phone conversation or any phone calls after that day. I spoke to my counsel when I bumped into him. I explained to her exactly what I spoke about and from then, up until my counsel and my team including my lawyers - lawyer asked me to contact him, that's the only time I have contacted him, Your Honour. I am willing to - again, I am willing to provide phone records if that will give you any comfort. Now, what did give me - or I got concerned about, Your Honour, was the fact that you were a bit - I suppose a bit confused as to what relationship I held or hold with Ivan. Let me tell you one thing. He is not a friend. Someone who does that to you is not a friend, is definitely not on my Christmas card list and I can assure you now, I have not spoken to him up until my counsel gave me clear instructions to request certain information regarding the case and that was, I would say, early to mid, maybe even late January. And again, I am willing to provide you with the phone records as far back as I can. I think actually I did speak to Telstra. The number - this new number that I have got, I got on - was it February 2015 and that's the furthest back I can go on this number. I can probably provide you with the other numbers as well to show you exactly how many times I have spoken to him since 2015, my exit, up until today. I am willing to do, that Your Honour.[89]

138 The exchange between counsel and Mr Charan then continued after my interruption:

COUNSEL: Mr Charan, I was asking you about the evidence you gave last Thursday which concerned the last month or so, thinking back to the first week of February. You have now said to His Honour that that evidence was not right because you had other communications with Mr Brown in the past month or so. How many communications did you have with Mr Brown in the past month?

MR CHARAN: Again, I do not recall exactly how many. I would say the best guess I would make is probably less than a handful.[90]

139 The Telstra records were shown to Mr Charan, who responded:

COUNSEL: What this record shows, I suggest to you, Mr Charan, is that you had a telephone call with Mr Brown on 27 February, that's last Monday, less than a week ago, beginning at 4.40 pm and lasting 1,626 seconds which is about 27 minutes. Did you have a 27 minute phone call with Mr Brown last Monday, commencing at 4.40 pm?

MR CHARAN: I do not recall but I have had numerous phone calls, yes.[91]

140 Mr Charan's explanation (or lack of recollection of discussions with Mr Brown because he made and received numerous calls) is laughable - or it would be if this evidence was not given on oath: the most recent conversation was on 27 February 2017 for over 25 minutes - just four days before Mr Charan gave the evidence I have set out at [130].

141 There is another chapter in this saga: after the trial was adjourned in May 2017, Mr Charan's solicitors, by subpoena, obtained the Telstra records of calls and messages prior to 1 February 2017.

142 It will be remembered that Mr Charan swore that 'since I departed [the ACN group] I haven't had any contact with Ivan Brown up until I think it was this year'.[92] But these records demonstrate that he was in contact with Mr Brown by text message and telephone between May and October 2015.

143 There were two telephone calls between Mr Charan and Mr Brown. One on 9 May 2015 for 3 seconds (which can be ignored) and one on 28 August 2015, which went for 2 minutes and 3 seconds. More significantly, there were also many text messages between May and October 2015.

144 Below is a table from an Aide Memoire prepared by Mr Charan's lawyers showing many text messages between Mr Charan and Mr Brown taking place between 5 February 2015 and 31 January 2017.

145 Putting aside the inconsistency between his sworn evidence and the messages disclosed in these records, Mr Charan was cross-examined by counsel for Nationwide on the purpose and substance of the text messages. He said that he could not recall the content of the text messages and that he no longer had them. He then gave two possible explanations for his contact with Mr Brown in 2015. He said that he may have been contacting Mr Brown in connection with Mr Brown's disagreement with Mr Ian McAllister about unpaid royalties. But that seems unlikely as according to Mr McAllister the dispute was resolved in February 2015.[93]

146 Counsel for Nationwide suggested to Mr Charan that the subject of the text messages to and from Mr Brown between 31 July and 5 August 2015 was in relation to Ernst & Young's contract review audit of AMA.[94]

147 On 31 July 2015, DET wrote to Mr Brown informing him that a litigation support company, Law-in-Order, would be attending AMA's premises that afternoon to remove files in connection with an audit review of AMA courses. These records show that Mr Charan and Mr Brown exchanged up to 112 text messages during that day.

148 Mr Charan denied that he and Mr Brown had been communicating about the audit. His evidence was as follows:

COUNSEL: I want to suggest to you that the substance of the text exchanges over the period 31 July to about 5 August were substantially concerned with the Ernst & Young audit then being conducted in relation to AMA?

MR CHARAN: No. Again, I don't think so. I don't recall it, and it would be silly and it would be a big problem for Ivan if he did let that information out, outside of his group or the board members he had. That would be a breach of his fiduciary duty and that's something that - and a CEO and a board member takes very seriously, Dr Collins.

...

COUNSEL: I am just putting it to you as a matter of fairness and asking whether that explains that flurry of text message exchanges on 31 July?

MR CHARAN: First of all, Dr Collins, we have established that it's not 112. It could be one text message. It's not 112 so stop misleading the court. It's not 112 text messages, it could be one. You said there are many multiple towers or reception towers that that could pick up and hence, it's got an inflated number. Now, that's the first thing. The second thing is again, why would I be talking about something that I have never spoke about and that's not within my domain, my interest, nor my speciality. I am not a technical person, I am a sales and marketing dude. I am a sales and marketing person and that was my role within CTI. Why would I be talking about an audit when I am not even in that company? I mean, it doesn't make sense, Dr Collins.

...

COUNSEL: Can you explain to His Honour why it is that you consider that Mr Brown is the sort of person who would commit a massive breach of trust and the sort of person who would put a tracking device in your car but is not the sort of person who would breach his fiduciary duty?

MR CHARAN: Again, that's a question you need to ask Ivan Brown but having an independent view on your question, breaching a - your fiduciary duties, there's huge penalties attached to it. Huge penalties attached to that. I mean, that question does not make sense to me. I am sorry.[95]

149 Mr Charan's obfuscation was typical. Moreover, the close level of contact between the two (demonstrated by the text messages), is, as suggested by Nationwide, consistent with their email communications after the float in 2014 - and particularly in relation to dealings with Mr McAllister. He had complained to Mr Brown about the perceived failure of CTT and other entities within the ACN group to pay royalties allegedly due to him under an agreement in respect of enrolments in the Diabetes course.

150 On 5 February 2015, Mr Charan sent an email to Mr Brown putting forward a proposal to resolve the dispute.[96] There were further emails about prospective settlement on 9 February, which concluded with Mr Brown stating:

if he fucks me then he fucks you, be sure he knows that.[97]

151 Mr Charan then urged Mr Brown to resolve the dispute:

And don't worry about the non-compete issue, don't tie this up with ian's settlement. I'm not going to personally run the rto's in Australia, my mate will under his name. Lol :-).

152 On 10 February 2015, Mr Charan emailed Mr Brown:

Again this is between ACN and Diabetes College [of which Mr Charan owned 10%, an interest which he had not disclosed to Mr Brown]. Not me... I am happy to retain my percentage from the royalties [that is, under the Investment Agreement] but that's it... I know the board thinks they have it covered, which I think your board has not done a feasibility report/pros and cons on this matter...I know you guys [are] doing some great work as a team but if you can't see what I'm saying then let's dig a deeper hole and fuck ACN up cause I can guarantee you [that] once he pulls it off scope then this will trigger [an] audit with ASQA and possibly HESG and shit will get messy. Just fucken pay him 325k and let him walk.[98]

153 On 17 February 2015, Mr McAllister emailed Mr Charan:

This is an incredibly frustrating and annoying situation. I have been more than patient for several months now, as I did not want anything to affect your share price etc out of respect for you. ...

My patience has run out and I'm clearly being dicked about and treated like an idiot. Tomorrow morning at 11.30am I have a conference call with the head ASQA auditor to discuss removal of the qual [Diabetes course] from the three subs [including CTT and AMA]. The process is very simple. I write and confirm removal, then ASQA remove. That's it.

However, it will almost certainly start an audit which I don't want to be responsible for and affect you.

ASQA are also very keen to know in this call, is my removal simply a financial issue about royalties or do I have concerns about the RTO/delivery. At this stage, I have assured them that it is simply a financial matter and have no other concerns. That's how I would like to keep it and settle the matter. I have nothing to lose, zero assets and everything to gain. He has everything to lose and nothing to gain by forcing my hand....[99]

154 I pause here to note that Mr McAllister later said in evidence in the trial that his concerns related to matters of integrity and the falsification of student records, dating back to 2014.[100]

155 Mr Charan then forwarded the email from Mr McAllister to Mr Brown with the following note:

I will be sending this to Steve and David Green to show them that this cunt isn't fucking around and my 4.62% [in the ACN group] is at risk from the action Ian takes.

I'm getting fucken fed up Ivan. Sort this fucken thing out before it starts affecting me financially....[101]

156 Mr Brown then emailed Mr Charan asking him to tell Mr McAllister that he would remove the Diabetes course from the scope of registration voluntarily. Mr Charan responded:

Ok. Mate Can you do it before he goes in and does it. It will trigger audit if he does it.[102]

157 Mr Brown then responded by email that he would place conditions on the removal. Mr Charan responded:

Mate just take it off your scope with[in] 7 days and I will hold him back from doing it himself. You know he will out of frustration ask asqa to remove it from ACN's subs [subsidiaries] which will trigger audit and I think he is planning for aft [Australian Financial Review] to run the story. Ivan, you digging yourself a hole buddy and as I said it will affect me in a way. Just be mindful of that.[103]

Mate I think if that's what you need to do then just do it. I think he will pay it or just take it out of the 200 students that are enrolled currently. I'm not worried about your 125k, I'm more worried about ACN and possible duplication of the vocation saga.[104]

159 Mr Brown emailed that Mr McAllister would contact the newspapers and the regulators irrespective of whether the dispute was resolved. Mr Charan responded:

He won't do that to me. As he stated he won't do anything to fuck me up. It is in his interest not to do that to me. Believe that

...If I wasn't involved in this negotiation only God knows the damage Ian would have created for acn. I have kept him from fucking up acn as he was prepared to destroy you personally and acn for dicking him around.[106]

Its fucked!! He just rang me and said right!!! He doesn't want to settle then I will send the email to ASQA tomorrow morning at 9am to request them to take it off the scopes. Fuck man you know the dramas this is going to start for acn?!! Anyways, it's your problem now. I tried stopping all of this.

Man you don't understand when I say he just doesn't care. He has no assets. I told you have more to lose with acn. He will go hard cause he has outlined some serious breaches from your end. He will also sue you for those breaches. Fuck!!!

Shits going to get messy now and don't tell me I didn't try to stop it from it happening.

He has a person in asqa that's mates with him.

ASQA will do everything to protect the quality and integrity of education in this Country and if the owner of the qual writes in to remove it from an rto's scope then they will adhere, which will trigger audit for you.

He said he will notify afr [Australian Financial Review] of this... Fuck man, this could have all been sorted if you just paid the money and moved on.

Man I can't stop this now Ivan.

The war will start tomorrow. He is not scared of you and he will go toe to toe with you and acn he said. He is fuming that you have breached the contract and he will come in hard man.

I just hope it doesn't affect me in anyway.

And your fingerprints are all over everything. Be sure to know that if he causes me grief then it will end up causing u grief too.[107]

164 I draw several conclusions from this correspondence. First, that Mr Charan maintained after 15 December 2014 a keen interest in the affairs of ACN consistent with his active involvement in the management of CTI up until the time of the float. Although not involved in direct management of ACN he continued to monitor what was happening at ACN, unsurprisingly given that he retained a 4 per cent interest in the company. Second, that contrary to Mr Charan's protestations (often on oath), he and Mr Brown remained in contact (at least by text and email) during 2015 and, as we have seen, up to 2017. Third, the exchange between Mr Brown and Mr Charan demonstrates a real concern as to what an audit of a CTI company might reveal which, as the evidence in this case demonstrates, was justified.

165 Returning to the discussions between the two men in August 2015. Given Mr Charan's contact with Mr Brown prior to and during the trial, and the timing of the Ernst & Young Contract Review audit and its risk to ACN in which both had a shareholding, I accept Nationwide's submission that I should infer that the substance of the text messages, over the period 31 July to 5 August 2015, concerned the audit of AMA.

166 I also accept, in general, the submissions of Nationwide to the following effect and make these findings:

(a) Mr Charan and Mr Brown remained in contact after the float and particularly into 2017, about matters concerning the operations of CTI in 2014 and 2015;

(b) Mr Charan and Mr Brown exchanged many text messages and emails in 2015, a number in the period when the audit was being conducted;

(c) Mr Charan, at the suggestion of his legal team, enlisted Mr Brown's help to assist him in the preparation of his case in early 2017;

(d) Mr Charan spoke and communicated by text with Mr Brown regularly in the lead-up to and during the trial, including during morning breaks and on days when Mr Charan was being cross-examined; and

(e) Mr Charan lied on oath repeatedly about his lack of contact with Mr Brown after the float in December 2014.

167 There was another issue relevant to Mr Brown's communications with Mr Charan - that of text messages exchanged between the two in February 2017.

168 Mr Charan had been required to produce his mobile phone to the Court during the course of his cross-examination. This he did under protest - and only a small number of text messages was disclosed upon perusal of the contents of the phone.[108] In contrast, the Telstra records show that there were 38 text message exchanges between 1 February and 26 February 2017. Set out below is a further table prepared by Nationwide's solicitors (and accepted by counsel for Mr Charan to be accurate) and admitted into evidence. The missing messages not contained on the phone are in red with the letter 'N'.

169 Some 28 messages exchanged by the two men between 1 and 26 February 2017 were deliberately deleted from the phone by Mr Charan. It was not suggested that this was some technological glitch or error. Rather, Mr Charan's explanation for the deletion of the text messages was as follows:

I do not recall but, as I said, I would have deleted it. He is a very colourful character and he would have sent me things that were inappropriate and they were the reason, probably, why I deleted it. Again, I have got a 7 year old and I have got kids that play with my phone and I don't want them to see these things.[109]

COUNSEL: Mr Charan, they are the only text messages that have been produced in response to the call made yesterday for all text messages passing between you and Mr Brown from 1 February to today's date. Correct?

MR CHARAN: To my knowledge that is incorrect. I do believe I have deleted a couple that had some sort of profanity or pictures that I didn't want my 7 year old daughter or my kids or even my wife to see.

COUNSEL: Just let me understand that. You have deleted text messages passing between you and Mr Brown, have you?

MR CHARAN: Yes, yes.

COUNSEL: How many have you deleted?

MR CHARAN: Again, I don't recall but I recall there were things that he sent that was inappropriate which I deleted.

COUNSEL: When did you delete text messages passing between you and Mr Brown?

MR CHARAN: Again, I am not sure but it was definitely not yesterday.

COUNSEL: Was it over the weekend?

MR CHARAN: To the best of my knowledge, I don't recall. ...

COUNSEL: Mr Charan, we will just go through these pages. Do you see on the page, if we leave aside the hang up message which is the third message on the left-hand page, there are 10 messages produced... They are the only messages you had on your phone passing between you and Mr Brown from 1 February onwards as at 2.36pm yesterday, being the time at the top of the screen?

MR CHARAN: Yes. Again I don't know the dates and all that but that's all the messages that were on my phone, correct, as up until Toby inspected it.

COUNSEL: Mr Charan, you know, don't you, that the Telstra records show that there were 39 text messages exchanged between you and Mr Brown between 1 and 27 February?

MR CHARAN: That figure, you are probably making it up, because I don't - I haven't seen it. ...

COUNSEL: Mr Charan, I want to put to you that you deleted 29 text messages passing between you and Mr Brown because you knew that if they were produced to the court they would damage your case?

MR CHARAN: Again, that's your opinion. That's definitely not mine. I don't do that.

COUNSEL: Mr Charan, you gave evidence yesterday to His Honour, on your oath, that all of your communications with Mr Brown in the period since 1 February were in connection with gathering information to assist you in your case. Do you remember giving that evidence?

MR CHARAN: No, that's your opinion. What I did say, the dominant reason for it was to gain evidence. The dominant reason.[110]

171 This extraordinary story, that he deleted the text messages to prevent his family from seeing them, failed to account for the fact that there were deleted messages from Mr Charan to Mr Brown, in addition to the deleted messages from Mr Brown. Whilst I accept that Mr Brown regularly used offensive language in his emails, Mr Charan's explanation strains credulity - particularly given the timing of the deletions and Mr Charan's false evidence as to his relationship with Mr Brown.

172 I accept Nationwide's submission that the appropriate inference is that the communications between Mr Charan and Mr Brown in the period 1 - 27 February 2017 were in connection with this proceeding. Indeed, no other plausible explanation was proffered by Mr Charan.

173 I repeat that I am satisfied that Mr Charan's account as to lack of telephone contact with Mr Brown during February 2017 was deliberately false. Mr Charan's denial (which I do not accept can be qualified by 'to the best of my knowledge') amounted to calculated deceit.

174 In addition, I am satisfied that Mr Charan deliberately erased messages from Mr Brown during the course of this trial. His explanation for doing so was nonsense. I conclude that this exercise was carried out to avoid scrutiny of the detail of his conversations with Mr Brown which I accept probably related to evidence to be given at this trial. The submission by Mr Charan that this conclusion is 'without merit' is unfounded.[111]

Mr Charan's involvement in potentially unlawful conduct prior to the ASX float

175 There are three asserted examples of Mr Charan's willingness to either participate in, or turn a blind eye to, potentially unlawful or fraudulent conduct (or both).

176 The first was a statutory declaration filed with ASQA of a 'Notification of a Material Change or Event' following Mr Charan's appointment as Chief Executive Officer of AMA/Thoan. This mandatory form of document was sent to ASQA via email, by Mr Kochhar on 6 June 2014 and contained the admitted forged signature of Mr Charan.[112] On its face, it was signed at Spotswood on 6 June 2014 by Mr Charan and witnessed by a police officer, a Sergeant Matthew Simpson, stationed at Wonthaggi.

177 The following email exchange of 4 June 2014 surrounded the lodging of this statutory declaration:[113]

Hi Prakash

Can you please have this Stat Dec signed and have it to me at the earliest. The Legal name is Thoan Pty Ltd and RTO No is 21641.

Regards

Harry

178 Mr Charan said as follows in relation to the statutory declaration:

COUNSEL: Do you see, Mr Charan, that that's an email to the Federal regulator, the ASQA? Do you see that?

MR CHARAN: Yes, I do, Your Honour.

COUNSEL: You can see Mr Kochhar has written: 'Please find the attached application for notification of material change'. You can see that?

MR CHARAN: I do, Your Honour. ...

COUNSEL: Box 2.1.1 has got a cross in it, 'new chief executive officer of RTO' and then your name appears, 'Name of new chief executive officer'. Do you see that?

MR CHARAN: I do see that. I do not recall this document, Your Honour. ...

COUNSEL: Were you at any time the chief executive officer of Thoan and AMA?

MR CHARAN: Not to the best of my knowledge, Your Honour. ...

COUNSEL: Could the operator go to page 10 of 13 in that document, 1404 at the top of the page [statutory declaration]. That's not your handwriting, is it, Mr Charan, on the left hand page?

MR CHARAN: No, Your Honour.

COUNSEL: On the right-hand page that's not your signature either, is it, or is it?

MR CHARAN: Are you telling me or are you asking me?

COUNSEL: I am asking you is that your signature?

MR CHARAN: No, it's not, Your Honour. ...

COUNSEL: Mr Charan, what's your reaction to seeing a statutory declaration on the screen purportedly in your name but not signed by you?

MR CHARAN: Your Honour, do I have to answer that, Your Honour?

HIS HONOUR: Yes, you do, because I have got some concerns about this document...So, I think it is helpful to me to know what you think of this document.

MR CHARAN: Yes. I mean, I am surprised and I am, I suppose, confused.

HIS HONOUR: I think the better question, what I suspect Dr Collins was getting at, was can you proffer an explanation for why your signature would, in effect, be forged by someone else for the purpose of this document?

MR CHARAN: I couldn't elaborate on it. I would be guessing.

HIS HONOUR: I don't want you to guess.

MR CHARAN: Believe you me, I will go to town on anyone who is going to do something like that but again, I am measured and I need to be measured in my response and I am trying to be as accurate and as truthful as possible. I am as truthful as possible.

HIS HONOUR: You can't proffer an explanation for why this might be in the form it's in? Do I understand that?

MR CHARAN: Absolutely not, Your Honour. ...

COUNSEL: Mr Charan, as I understood what you just said to his Honour, you would go to town on anyone who you knew had, in effect, forged your signature on a statutory declaration. Is that what you said to his Honour?

MR CHARAN: That's what I said, Your Honour.[114]

179 In cross-examination, Mr Charan was unable to recall the document or the circumstances surrounding its compilation:[115]

COUNSEL: You see in that e-mail on the foot of the page on the right-hand side of your screen Mr Kochhar was asking you to sign a statutory declaration identification you as the chief executive officer of AMA. You see that, don't you?

MR CHARAN: That's what I am reading right now. I do not recall this e-mail but yes, I am reading that right now, Your Honour.

...

COUNSEL: Do you see if you go up the page, in the middle of the page at 4.54 pm you respond to Mr Kochhar: "We will have to do it tomorrow, mate". Do you see that?

MR CHARAN: I can read that, Your Honour, yes.

COUNSEL: Do you remember sending that e-mail?

MR CHARAN: No, I don't remember.

COUNSEL: You are accepting that by that e-mail you were telling Mr Kochhar that you would make the statutory declaration by which you were nominating yourself as the chief executive officer on the following day, 5 June?

MR CHARAN: That's your take on it, Dr Collins.

...

COUNSEL: Do you see the next e-mail, Mr Kochhar responds to you a little bit later on the same day: "It's done, mate, thanks to Ivan. Harry Kochhar." Do you see that?

MR CHARAN: I do read that, yes, Your Honour.

COUNSEL: You understand by that, don't you, Mr Charan, that Mr Brown had signed the statutory declaration that had been prepared for you?

MR CHARAN: I will not get drawn into that conclusion, Your Honour. I do read that comment but I do not recall this e-mail.

COUNSEL: You see, Mr Charan, you then responded at the top of the page: "Ivan, don't do shit like that, man." Do you see that?

MR CHARAN: Your Honour, I do read that, yes.

COUNSEL: What I am putting to you, Mr Charan, is that by 9.51 or by the time of that e-mail appearing at the top of the right-hand page, you knew that Ivan Brown had forged your signature on a statutory declaration relating to the change of chief executive officer of Thoan. Do you agree?

MR CHARAN: That's your opinion, Dr Collins. Not mine. [116]

180 As to the identity of 'Sergeant Simpson', the witness to the declaration, Mr Charan said:

HIS HONOUR: Do you know this person, Matthew Simpson? Have you ever heard of him?

MR CHARAN: No, Your Honour. No. Not to the best of my knowledge I do not know Matthew Simpson.[117]

181 Finally, I should refer to the following exchange:

COUNSEL: What I am putting to you, Mr Charan, is that...you knew that Ivan Brown had forged your signature on a statutory declaration relating to the change of chief executive officer of Thoan. Do you agree?

MR CHARAN: That's your opinion, Dr Collins. Not mine.

COUNSEL: I am asking [what is] your evidence, Mr Charan?

MR CHARAN: As I said, I don't recall this email, so hence, I can't draw any conclusion.

HIS HONOUR: Is it open to any other interpretation, do you think, looking at your email?

MR CHARAN: Yes.

HIS HONOUR: What else could it mean?

MR CHARAN: Again, I'm not sure, Your Honour. Let's look at the 20,000 other emails that--

HIS HONOUR: No, Mr Charan. You are being asked about this email and it's a serious matter. ... What other interpretation do you suggest I put to it, bearing in mind it's your email? I understand you don't recall it.

MR CHARAN: How would I interpret that?

HIS HONOUR: Yes?

MR CHARAN: Your Honour, I am not sure.

COUNSEL: Mr Charan, I just want to make it very clear to you I am putting to you that on 4 June you knew that Mr Brown had forged your signature on a statutory declaration for lodgment with the Federal regulator, ASQA. What do you say to that?

MR CHARAN: I disagree, purely because I don't recall this email and I don't recall that version of events.[118]

182 Mr Charan's explanation of the contents and purpose of the emails was disingenuous. He was unable to explain rationally the email exchange, which I readily accept, related to the forging of his signature on the statutory declaration.

183 Whilst I am satisfied that Mr Charan did not actively play a part in the forgery, that is not the end of the matter; it is clear beyond doubt (and notwithstanding Mr Charan's denials and submissions) that his closing remarks in the email chain were directed to his understanding that his signature had been forged.

184 I specifically reject the submission of Mr Charan that I should infer he did not know at the time that the document had been forged but later only suspected it.[119] The only inference available from the email correspondence (the contents of which were uncontested) points solely to the conclusion that Mr Charan knew that a false statutory declaration had been lodged with the regulator. The failure by Mr Charan to call any of the participants (Mr Brown and Mr Kochhar) in the preparation and distribution of this document to contradict the inference enhances the conclusion.

185 Particularly disturbing is the fact that Mr Charan was clearly aware that the forged document used his name and then did nothing to correct the record. In other words, the document, which appears to have been prepared by Mr Brown, declared to the regulatory authority Mr Charan's ability to serve as a director or officer of an RTO. He did not ask whether it could be withdrawn or attempt to correct the record. In addition, his lack of recollection of this exchange is completely implausible.

186 There is one other matter that was raised by counsel for Mr Charan. It is apparent that the forged statutory declaration was filed with ASQA in the form of an attachment to an email sent to 'ASQA notifications' by Mr Kochhar on 6 June 2014 - marked 'High Importance' and referring to the notification of a material change of event.[120] However, some two weeks later there was an email exchange between CTI representatives and ASQA concerning the filing of the declarations and that the relevant officer, Ms McCann at ASQA, did not have a copy of Mr Charan's statutory declaration.[121]

187 For the following reasons, I reject this submission that the evidence as to whether it was 'provided' to ASQA is dubious.[122]

188 At no time was evidence led from Mr Charan to say that he doubted that the forged declaration had been forwarded to ASQA. Indeed, the closing remark in his email implies that he must have understood that this is what had occurred.

189 The email to ASQA of 6 April 2014 attaching the statutory declaration is unequivocal. It is not to the point that Mr Charan was not copied in on this email. One would not have expected that - what is clear is that this was the final act in providing the forged statutory declaration to ASQA.

190 The subsequent email from Ms McCann is at best equivocal. All it implies is that Ms McCann did not have in her possession the forged fit and proper person declaration of Mr Charan. The simplest way for Mr Charan to establish that the declaration had not reached ASQA was to call a representative of that organisation or Mr Kochhar, who was the prime mover of this deception, to explain the situation. This was not done. Similarly, whether ASQA acted on the declaration is also beside the point - a false declaration was filed by CTI.

191 I am comfortably satisfied that the email of 6 June 2014 provided the forged statutory declaration to ASQA.

192 The second instance is that, on 3 July 2014, Mr Charan swore another statutory declaration: a 'Fit and Proper Person Requirements declaration' at Priceline Pharmacy in Williamstown.[123] He accepted that the declaration contained his handwriting and signature, however he could not recall the document.[124]

193 In this document, Mr Charan declared that neither he nor Thoan had 'ever provided a state or territory registering body and/or the national VET regulator with false or misleading information'. In my opinion, this statement was false as Mr Charan knew that less than a month before making this declaration, a declaration containing his forged signature had been submitted to the regulator in relation to AMA/Thoan. The evidence I have just referred to makes it clear that it was 'provided' to ASQA. None of the matters contained in Mr Charan's submissions[125] displaces this conclusion.

194 It matters not, as Mr Charan's submissions suggest, that no-one at ASQA was misled. To put it bluntly the point is that the statutory declaration was false.

195 The third alleged instance is a statutory declaration signed by Mr Charan in February 2014 in relation to his role at CTT.[126] Mr Charan and Mr Brown signed a letter to the Victorian Registration and Qualifications Authority (VRQA) with the declaration attached. The letter describes Mr Charan as a director and owner. The declaration was signed by Mr Charan and is dated 18 February 2014. In contrast to the June 2014 declaration I mentioned earlier, there is no doubt that Mr Charan completed and signed this document himself.

196 The letter described Mr Charan and Mr Brown as 'the new directors and owners' of CTT. In my opinion, the contents of the statutory declaration are equivocal as Mr Charan is described as a 'director, shareholder or senior officer'. He was at the time a shareholder (via a company he owned) in CTT.

197 In the result, I am not prepared to draw any adverse conclusion against Mr Charan (as urged by Nationwide) in relation to this statutory declaration.

198 I should add that what is particularly curious about the declaration is that it was witnessed by the same police officer, Sergeant Matthew Simpson, who on its face witnessed the forged June 2014 statutory declaration. Mr Simpson is apparently based at Wonthaggi - the two statutory declarations both state that they were sworn at Spotswood.

199 Finally, there is one other matter that may constitute an embryonic conspiracy to defraud investors in the IPO. On 31 May 2014, Mr Brown emailed Mr Charan:

I've already spoken to Harry and David re what needs to happen Between u me and David we are gonna backdate July income to June to pump up 2014 fy income, we have to

We also need to get 500 building cert 4

We need to employ the polymer and food guys and hope they get a factory each, worst case is 8k in wages for each guy, beat case is they generate a couple of mil on our balance sheet

This is do or die now[127]

200 Later that same day, Mr Charan responded by email:

Just let me know what to do from my side and I will get it done

201 Mr Charan's explanation of the exchange (including his response) was as follows:

COUNSEL: The obvious meaning of that, Mr Charan, I suggest to you, is Mr Brown suggesting that the accounts for CTI should be falsified by backdating payment from one financial year to the previous financial year. Is that how you read it?

MR CHARAN: That's one way to interpret it, I suppose, yes. Again, I don't recall this e-mail but if I am taking a stab at it, that's probably one way to look at it.

COUNSEL: Because he says: "The income needs to be backdated in order to pump up the 2014 financial year income, we have to." You understood that to mean that the income should be backdated to make the company look as though it had more revenue in the year ended 30 June 2014 than it in fact had?

MR CHARAN: Again, that's your opinion. You can interpret it in any way but as I said again, that's one possible way of translating it. The best person to speak to is Ivan Brown.

COUNSEL: Can you suggest any other plausible interpretation for that sentence?

MR CHARAN: Again, I'm not wanting to get involved in a guessing match. I don't recall this e-mail and that's it. I mean, the best person to speak to is Ivan Brown. He is the one that wrote that e-mail.

...

COUNSEL: I want to suggest to you, Mr Charan, that there is only one plausible interpretation of that line ['Just let me know what to do from my side and I will get it done'] and that is that you were prepared to do what needed to be done in order to give effect to the matters raised by Mr Brown, which included committing a fraud by backdating July income for CTI to the previous financial year in order to pump up the income for that financial year?

MR CHARAN: No, I don't take that view. Again, you are putting words in my mouth. To me, I do not recall this e-mail and I am not going to guess it. It could mean anything. There's five sentences or paragraphs there. That could relate to any of those five or it could relate to some other e-mail. Again, I am not going to have a stab in the dark which from time to time I do but again, Your Honour, if you want me to I can definitely have a crack at it but again, I am only going to have a stab in the dark if I was to elaborate on it.

COUNSEL: Mr Charan, are you able to offer His Honour any plausible interpretation for that sentence, other than that you were prepared to assist Mr Brown to commit a fraud?

MR CHARAN: No. Again, I have answered it before and if you want I can repeat my answer. I do not recall this e-mail. There could be many reasons or many translations to that sentence. On the face of it, as I said, there's five paragraphs there. It could relate to any of that. But again, I am not willing to take a stab in the dark, unless Your Honour wants me to.[128]

202 Mr Charan, as was his wont, queried the authenticity of the email. He said that neither he nor Mr Brown would have engaged in the backdating practice suggested by counsel for Nationwide.[129]

203 In closing submissions, counsel for Mr Charan submitted that this exchange was incapable of this connotation given the evidence of Mr Green who said that 'backdating' was simply an expression used by Mr Brown to describe accrual accounting practice.[130]

204 This analysis relied upon acceptance of the submission of Mr Charan's counsel of the effect of Mr Green's evidence :

Mr Brown used the term "backdating" from time to time and that he told him not to because the correct term was "accrual accounting".

Mr Green said how when he arrived they had just moved to an accruals accounting system and that's how he understood Mr Brown to use the word "backdating"....

It was then involved in some sort of backdating of figures, as this e-mail would suggest. So if Your Honour accepts David Green's evidence and about how Mr Brown used the term "backdating", then there are two explanations that Mr Charan or responses Mr Charan might have to the defendant's submission. The first is that he didn't understand that there was anything dodgy being suggested but the other one is the one that we point out...

Really, our principal explanation is that on this date there are five different e-mail chains dated 31 May with the same subject matter and it's simply not possible, necessarily, to read Mr Charan's answer as an agreement...[131]

205 It was said that this revisionist approach to what on its face was a clear discussion about backdating should be accepted as Mr Green's evidence was not challenged by Nationwide.

206 The problem with this proposition is that it studiously avoids the contents of the email, its context and the persons involved. It is impossible to accept that the use of the words 'pump up' of income by backdating which 'we have to' do is a shorthand reference to accrual accounting. It contradicts common sense. Indeed, why would Mr Charan reply 'just tell me what needs to be done' if it was thought that this exchange related to accrual accounting? The far more likely explanation is that, given the proximity of the float and the need for the prospectus to reflect increased earnings combined with the adverse publicity associated with other RTOs,[132] the email meant exactly what it said; i.e. we should think about backdating the accounts to improve the look of the 2014 accounts - "this is do or die now".

207 I unhesitatingly conclude that Mr Charan, rather than ask Mr Brown how this could lawfully be achieved, was prepared to countenance what on the face of it was a potentially fraudulent scheme. The email exchange says nothing about accrual accounting. Mr Green's evidence is fatuous - even if not challenged - and I reject it. Mr Brown, not the second-hand opinion of Mr Green as to Mr Brown's intentions, could have explained the true purpose of the email. The failure to call Mr Brown is telling on this point.

208 I should qualify my conclusion by noting that there was no evidence before the Court that this 'backdating' exercise was ultimately engaged in or that Mr Charan did anything more than acquiesce to a proposed course of conduct.

209 I should finish on this point by noting that Mr Charan was untruthful when he said he could not recall any of the emails I have set out at [177], [199] and [200]: in my opinion, he did so to hide (inadequately) his preparedness to acknowledge participation in 'shady' dealings (even if after the event) as in the case of the statutory declaration. This approach is consistent with the view I have taken as to his credibility.

Communications and interaction of Mr Charan with potential witnesses

210 I have already referred to Mr Charan's evidence concerning his contacts with Mr Brown immediately prior to and during the course of the trial. His evidence concerning his contact with Peter Cage and Curtis Cage was disturbing and, on one view, constituted an attempt to suborn a witness.

211 Peter Cage had worked with Mr Charan prior to the float of ACN. He was a part-owner of CEI which managed the call centre at the CTI premises in 2013 and 2014.

212 Mr Cage's evidence was roundly criticised by counsel for Mr Charan as being heavily biased and motivated by revenge.[133]

213 Whilst I accept that Mr Cage seemed to have an axe to grind and was upset about Mr Charan involving his son in this saga,[134] I did not detect any florid exaggeration on this issue (or others he gave evidence on) and crucially, on matters of substance he presented as a reliable witness whose evidence I accept. It borders on the bizarre that Mr Charan in his closing submissions could describe Mr Cage as 'antagonistic and threatening' in the light of his own demeanour and conduct when giving evidence which persisted to the end of the trial.[135] Moreover Mr Cage's evidence as to Mr Charan's involvement in the operations of the call centre - a fundamental part of recruiting students is corroborated by the documentary evidence (primarily emails).

214 Mr Cage provided a witness statement to Nationwide and an outline of his evidence was served on Mr Charan's solicitors on 8 February 2017 at 12.40pm. The outline of evidence indicated that he would be giving evidence regarding 'the widespread use of scribes at CTI in 2014'.[136]

215 The Telstra records show that, at 4.14pm on 8 February 2017, Mr Charan attempted to telephone Mr Brown. At 5.16pm, Mr Charan telephoned Mr Brown again and they spoke for 4 minutes. Shortly afterwards at 6.18pm, Mr Brown telephoned Mr Charan and they spoke for 40 minutes.[137] Three text messages (the substance of which was deleted by Mr Charan) were exchanged between the two between 4:14pm and 4:19pm.

216 At 10:07am on the following day, 9 February 2017, Mr Charan sent a text message to Mr Brown - the substance of which was deleted by Mr Charan.

217 At 10.13am on 9 February 2017, Mr Charan attempted to telephone Peter Cage's son, Curtis. At 10.17am, Mr Charan again called him - but he did not make contact.[138]

218 Shortly afterwards Curtis Cage noticed Mr Charan's missed calls on his mobile telephone; he did not recognise the number and did not know that it was Mr Charan who had tried to call him. He returned the call and had a conversation with Mr Charan for approximately 15 minutes. [139]

219 Mr Charan denied that he had contacted Curtis Cage in connection with this case. He said that his legal team had asked him to go through some emails and that when he was doing so he came across Curtis Cage's name. He then decided to telephone him to 'say g'day' and to 'see how he's doing and see exactly how he's going'. He said that that was the only purpose of his call. Mr Charan admitted that he had not had any contact with Curtis Cage since the public listing of CTI in mid-December 2014.[140]

COUNSEL: What was the purpose of your call to Curtis Cage?

MR CHARAN: To (a) say g'day, see how he's doing and see exactly how he's going. I haven't spoken to Curt. Curt and I were on very good talking terms from CTI days and just to see how he's going. I mean, yeah, that was the purpose of it.

...

COUNSEL: Mr Charan, if you weren't ringing to talk to him about the fact that his father was going to give evidence, what were you ringing him about?

MR CHARAN: Again, he is a good friend of mine, I believe. We were in a very good talking terms and again, I stumbled on his number from the process that I was conducting as per my legal team's request and I didn't even know if the number was working and again, it was just purely just to have a chat to see how was he going. Never once I brought that topic about his father being the witness on the other side, I didn't bring any of that out at all.[141]

221 According to Mr Charan, during the conversation, Curtis Cage raised, seemingly out of the blue, his father's outline of evidence in the upcoming trial, in response to which Mr Charan made some observations about Peter Cage:

COUNSEL: Mr Charan, in the conversation you had with Curtis Cage on the morning of 9 February, you told Curtis Cage that you had proof that his father was a drug addict, had a criminal record and declared bankruptcy, didn't you?

MR CHARAN: Again, I do not recall the exact conversation but, yes, we did discuss after he brought it up a few things which he agreed to but again, it was, I suppose, a private conversation between his son and myself.

COUNSEL: I just want you to focus on my question, Mr Charan. In the course of that conversation did you say to Curtis Cage that you had proof that his father was a drug addict, had a criminal record and had declared bankruptcy?

MR CHARAN: I may have. I don't recall exactly those words but I may have.

COUNSEL: You offered to send Curtis Cage the proof of those matters, didn't you?

MR CHARAN: Again, I do not recall. I may have but I do not recall.[142]

222 This implausible account of the purpose of the call is to be contrasted with the evidence of Mr Curtis Cage, a totally believable witness. He had no interest in the proceeding and was clearly reluctant to give evidence. He described the conversation between himself and Mr Charan as follows:

COUNSEL: Using your best recollection, can you tell His Honour what Mr Charan said to you and what you said to him?

MR C CAGE: Yep. Sorry, yes. He said he just wanted to have a chat and see how I was and, yeah, and then I prompted him and said, "Is this anything to do with this proceeding?" and he said, "No". He said it had nothing to do with it but since I brought it up, he would be happy to discuss it with me.

COUNSEL: Did you then have a discussion about this proceeding?

MR C CAGE: Yes, briefly. Not so much about this proceeding, in regards to my father's involvement. Peter, Peter Cage's involvement.

COUNSEL: What did Mr Charan say to you on that subject?

MR C CAGE: He just said that cases like this are public and that in order - when a - so he said - his exact words were that when a witness gives evidence the job of his team is to discredit the witness and that the things that they would say about them would then be made public. So he just let me know - actually, he didn't say I should talk to Peter but he said, "I just wanted to let you know that in order to discredit witnesses we have to dig up things about them and those things would be made public so it's in kind of the best interest not to be made public". Am I articulating well enough?

COUNSEL: Did he identify the things that he was talking about?

MR C CAGE: He just said that Peter Cage was a - well, he had evidence that he was a drug addict and that he had declared bankruptcy and that I believe that he had a criminal record.

MR C CAGE: To the best of my recollection, no. He offered to show me proof of these claims but then he said that he couldn't actually send me the proof but he could show me on Snapchat because it disappears. ...

MR C CAGE: I said it was none of my business and I didn't want any proof. I said I had no stake in the matter, it's none of my business. It's nothing to do with me. I didn't particularly want to be involved.

COUNSEL: Apart from that part of the discussion did anything else pass between you?

MR C CAGE: He just told me what he was up to these days and that he had a business idea to do with selling data, I suppose, and that was it.[143]

223 Curtis Cage gave the following evidence under cross-examination by counsel for Mr Charan:

COUNSEL: You didn't feel threatened during the course of this conversation with Mr Charan?

MR C CAGE: It was - and again, my understanding. It was clear to me that he wanted - he didn't threaten me. He definitely didn't threaten me but the tone of the conversation was, I guess, slightly intimidating. He wanted me to - and again, these are my takings on the conversation. He was trying to use me to coerce my father. In my opinion. I may have misread the situation.

COUNSEL: He wanted you, do you think, to make it clear to your father that he had better tell the truth if he was going to get into the witness box?

MR C CAGE: Well, that's not what I took from the conversation.[144]

224 Approximately two hours after Mr Charan's conversation with Curtis Cage, at 12:41pm, Mr Charan received the following text message from Peter Cage:

I have never declared bankruptcy. I don't have a criminal conviction and I was never a drug addict. I may have dabbled in some of it. So have you. I changed my name because my wife died. So whatever information you think you have it's all wrong. Even if it was true, which it isn't, I just want to do the right thing for once, exposing what really went on and you were a big part of it. So was I, but I didn't pocket millions. That's the truth. I'm ready for whatever you bring. You can't hide from the truth, we all have a past, but I didn't defraud the government out of millions. If I am everything you say I am how could have generated millions of dollars' worth of leads to CTI. You should not have called my son. Call me.[145]

225 Mr Peter Cage said he sent this message because of his concern that his son had been involved and he regarded Mr Charan's discussion with Curtis as a threat.[146] Whilst Peter Cage was somewhat hyperbolic at times his evidence on this exchange is totally plausible.

226 The Telstra records[147] show that at 1:59pm on the same day Mr Charan again telephoned Mr Brown and spoke for 21 minutes.

227 I accept unreservedly the evidence of Peter and Curtis Cage on this issue and I reject that of Mr Charan.[148] This is another example of disingenuous dissembling on the part of Mr Charan. I reject entirely the submission of Mr Charan that this was an innocent call. The fact that Mr Curtis Cage conceded that Mr Charan did not threaten him in no way militates against the conclusion that the purpose of this call was to put the 'frighteners' on Mr Peter Cage.

228 I make the following findings as to the telephone conversation between Curtis Cage and Mr Charan:

(a) Mr Charan's account that this was, in effect, a social call was deliberately false;

(b) To the contrary, Mr Charan's purpose was to have Curtis Cage convey to his father that unpleasant personal matters could emerge if he gave evidence at this trial;

(c) It follows that Mr Charan's denial as to the substance of the conversation was deliberately false;

(d) Mr Charan was in regular contact with Mr Brown at the time of the delivery of the witness statement of Mr Peter Cage and, given the timing of the call, I infer that the calls on the evening of 8 February and 9 February 2017 related to Mr Peter Cage and the evidence he might give at trial. It would be speculation to draw any further inferences as to the contents of these conversations.

Documentary evidence entirely inconsistent with Mr Charan's asserted minimal role in the CTI businesses

229 I will, in a short while, in the course of my discussion of Mr Charan's role in the CTI group refer to a large amount of documentary evidence which is to be contrasted with his sworn evidence that he had little, if anything, to do with the day-to-day management of CTI companies.

230 This body of evidence primarily consists of corporate documents and emails to and from Mr Charan and business associates in the CTI group. There is an inexplicable chasm between the objective contents of those emails which demonstrate convincingly Mr Charan's active role in the businesses (including training of staff, staff performance, recruiting students and selling courses to students) and his testimony that he was, in effect, mute as far as the operational aspects of the business was concerned. I have already, at [107]-[108], noted some of Mr Charan's assertions as to the specialised nature of his role. Others will be referred to shortly. It suffices to say, at the moment, that Mr Charan's account of his involvement in CTI businesses is comprehensively contradicted by this contemporaneous documentary evidence.

231 I have set out my findings in relation to specific aspects of Mr Charan's evidence which demonstrate a lack of credibility, a willingness to prevaricate and, at times, the making of false statements on oath.

232 I should add this. Mr Charan's demeanour in Court was also incompatible with someone who was willing to give an honest account of his involvement in the CTI companies and their management. He was hostile and aggressive; he impugned the reputation of lawyers and witnesses who were prepared to contradict his version of events. All in all he was a totally unsatisfactory witness.

233 I reject the suggestions in Mr Charan's submissions[149] that the findings in his evidence can be explained by -

234 In the result, I am satisfied that Mr Charan's evidence is unreliable and unacceptable on any issue, and I put no store in it whatsoever. I will only act upon any assertion by him if it has independent and persuasive corroboration. Moreover, in some circumstances (which I will identify), I am prepared to draw an inference that Mr Charan lied to avoid an adverse finding that may be made on a particular issue.[150] Or, to put it in a more intelligible way - Mr Charan's untruthful answers on certain topics demonstrate a consciousness of guilt on those issues.[151]

235 Finally, I should say this: I have put aside (with some difficulty) the sexist, misogynistic and racist remarks that permeate the email correspondence of Mr Charan and Mr Brown. I do not accept that this was mere office banter - it is far more debased than that description. That said, it is not my task to pass any form of moral judgment on the disgraceful language used by two alleged business leaders.

236 I have set out many of the underlying facts concerning the CTI group at [9]-[21] and [88]-[103]. It bears repeating that CTI was the original corporate vehicle of the Brown/Charan enterprise.

237 Upon the incorporation of CTI in April 2012, Mr Charan and Mr Brown each owned 50 per cent of the shares in CTI through respective corporate vehicles.

238 The company operated initially from Mr Charan's home and then acquired premises in Spotswood (and later, Docklands), from which it operated during the period up to the listing of ACN. By 2014 it had, on Mr Charan's estimate, 50 employees.[152]

239 CTI was not an RTO.[153] Its primary function was to provide training and vocational services in conjunction with TAFE Colleges such as Chisholm TAFE, Bendigo TAFE, GoTAFE, the Northern Melbourne Institute of Technology and Goulburn Ovens.[154] CTI would obtain and train the students who would then be finally assessed at the relevant TAFE and obtain a TAFE certificate.[155]

240 CTI was established, at least in part, to exploit a niche in the VET market, namely the availability of government funding for the provision of sub-contracting services to TAFEs for Recognition of Prior Learning (RPL), a form of qualification that is available without study, upon a student demonstrating existing workplace competencies.

241 Over time, the nature of CTI's operations changed. It carried out more classroom-based training and recruited and trained students pursuant to sub-contracting (or auspicing) arrangements with TAFEs and RTOs.

• Aged care and disability;
• Home and community care;
• Automotive;
• Engineering;
• General education;
• Health;
• Hospitality;
• Manufacturing;
• Business; and
• Building and construction.[156]

243 According to the ACN prospectus, CTI had the following earnings in the financial years leading up to June 2015:[157]

244 It is probably unnecessary to repeat that during the course of the trial, Mr Charan steadfastly endeavoured to distance himself from the day-to-day operations of CTI and the associated enterprises. He said on repeated occasions that his involvement with CTI was limited to marketing and sales:

My role in 2013 was predominantly based in sales and marketing... I took on the job, I suppose, to win corporates and clients that had staff more than, let's say, 50, on their books...[158]

... there is a clear separation between sales and marketing and the compliance and the operation of the business...[159]

I wasn't involved in any of the subsidiaries intimately or on a day-to-day basis. It was mainly CTI and basically promoting and marketing courses for CTI.[160]

... my primary role was a marketing and salesperson at CTI.[161]

... I was intimately involved in the marketing and sales of CTI...[162]

The signature had my title as 'managing director' but the role that I took was marketing and sales.[163]

... I wasn't a managing director of CTI. It was in the bottom of my signature, I was playing the role of a marketing and salesperson.[164]

245 Mr Charan also said that he had never been a director of the company.[165]

246 To some extent Mr Charan was supported in this assertion (i.e. his lack of involvement in the management of the company or companies within the group) by the evidence of Mr Green, Mr Thompson and Mr Moffat.

247 Mr Green was the CFO of CTI from April 2014, and of ACN from October 2014.[166] He described Mr Charan's role at the CTI group as being confined to 'sourcing and recruiting students',[167] and that role ceased after the 'roll-up' into ACN on 30 September 2014.

248 Mr Green said that Mr Charan maintained an oversight role after 30 September 2014, but only in the sense that he was protecting his investment.[168]

249 However, Mr Green's evidence as to Mr Charan's role at CTI came from a very limited perspective. Mr Green is an accountant and his main role at CTI was assisting with the float of the ACN Group. He had no real involvement with the internal operations of CTI.[169]

250 Indeed Mr Green could not recall Mr Charan using the email signature 'Managing Director' of CTI which appears on many of Mr Charan's emails. Mr Green, the CFO of CTI in 2014, said that Mr Charan did not use the title 'Managing Director' but called himself many things, including 'Chief Operating Officer'. When shown Mr Charan's email signature (in which he is referred to as Managing Director), Mr Green said that he had no memory of seeing it.[170]

251 Nor was Mr Green aware of Mr Charan's involvement with AMA in respect of which he played a pivotal role in purchasing and then managing - as will be seen in a moment.[171] Subsequently, Mr Green had no involvement in the recruitment of students, the call centre, student enrolment, compliance, training, assessment of student work or audits.[172]

252 I have already expressed my reservations about Mr Green's evidence concerning the email exchange relating to backdating of the accounts.[173] In my opinion, Mr Green's evidence about Mr Charan's title and role at CTI and associated companies cannot be accepted. His evidence on this point is also contradicted substantially by the voluminous documentation that I will detail in a moment.

253 Mr Thompson was the business development manager of CTI from July 2014 to November 2014. He managed BDs, who in another age would have been described as touts. He reported directly to Mr Charan and had daily dealings with him for the first couple of months of his employment. After that, he said that he noticed that Mr Charan started taking on a less hands-on role, although he did respond to some emails. He said that it was well-known that Mr Charan would be departing the business prior to it being listed on the stock exchange. Both Mr Thompson and Mr Charan attended sponsorship functions as representatives of CTI, including functions for Melbourne Victory, Melbourne United and Roads Australia.[174] Mr Charan did not attend any of the business development meetings which occurred on a weekly basis, initially at Spotswood and then in South Melbourne.[175]

254 Simply put, the email traffic which I will set out shortly from July 2014 to November 2014 contradicts the proposition that Mr Charan was not 'hands-on' during that time. Mr Thompson whilst the Managing Director of CTT was not a member of the senior management group and had only a limited time in which to understand the workings of CTI.

255 Then there was the evidence of Mr Mike Moffat. I will say more about his role at CTT in due course. It suffices to say that in February 2014 he became CEO of CTT, replacing Ms Celona. In his evidence, he described the intertwining of the activities of CTI and CTT during the latter months of 2014. He said that he regarded the title, 'Managing Director' of CTI as used in the emails as an appropriate description of Mr Charan's role at CTI.[176]

256 Mr Moffat said the following of Mr Charan's involvement at CTI:

...as far as I was aware when I was brought on, Ivan and Kash were joint director/owners of CTI[177]

As far as I was aware, he was the managing director. The way I understood the roles to be operating between Ivan and Kash is that Ivan was doing all of the day-to-day running, the nuts and bolts, and Kash was looking at ways to sell the businesses, by which I mean get more students in for all of the businesses.[178]

257 In my opinion, this version is also inconsistent with the hands-on role in the management demonstrated by the contemporaneous correspondence. In addition, Mr Moffat saw only one aspect of Mr Charan's role. It is abundantly clear that CTI companies operated as a group and marketing and recruitment was a group exercise.

258 I do not accept the evidence of Mr Green, Mr Thompson or Mr Moffat as to Mr Charan's limited role at CTI - save that there may have been some reduction in his participation in the management of the CTI companies in the month or so prior to the listing on the ASX; it is contrary to a large body of oral and documentary evidence, some of which I have already referred to and more of which I will set out shortly. It suffices to say that I am satisfied that Mr Charan maintained a significant involvement in the administration of the CTI group until mid-December 2014.

259 The following matters demonstrate that Mr Charan's description of his role in the company as simply being one of high level marketer was false - and the evidence of the witnesses who supported to varying degrees this proposition, inaccurate.

260 First (and as I mentioned earlier), ASIC records reveal that Mr Charan and Mr Brown were directors of CTI from 7 September 2013 (when Sally Charan resigned) to 30 September 2014 - when the company was rolled into its ACN group.

261 Second (and as I mentioned earlier), in a large body of email correspondence during 2014, Mr Charan describes himself as 'the Managing Director'.[179] Here is an example:[180]

262 Pausing here - in my opinion these two matters, without more, are sufficient to establish an ongoing management role with CTI on the part of Mr Charan. He was one of two directors of a company of which he was a 50 per cent owner. He held himself out to the world, including his employees, contractors and third parties, to be the managing director of the company.

263 Moreover, the internal and external corporate and personal emails demonstrate that Mr Charan's role was not just confined to marketing, but rather, that he participated in a broad range of operational matters of CTI and associated companies. Some of the emails either sent by him, to him, or to which he was copied in related to the following:

(c) Engaging with companies to provide vocational training;

(d) Establishing social and media presence for CTI and CTT;

(e) Establishing a call centre in the Philippines in August 2014;[183]

(f) Recruiting students for training from the construction industry;[184]

(g) Managing complaints about staff;[185]

(h) Engaging in recruitment tasks;[186] and

(i) Contracting for advertising for CTT.[187]

264 I have set out other examples when dealing with CTT and AMA separately.

265 In addition, there was evidence from other former CTI employees (Ms Ebejer, Mr Ottery and Mr Peter Cage) confirming Mr Charan's hands-on role.

266 Ms Ebejer gave evidence by video link. She joined CTI as a business development manager in August 2014. She was based at Spotswood and identified the two 'bosses' of the company as being Mr Brown and Mr Charan;[188] Mr Kochhar worked closely with both men.[189]

267 Although Ms Ebejer worked directly under Mr Thompson, she said that she regularly attended Monday business development meetings, which she said were also attended by Mr Charan (whom she referred to as Kash) and Mr Kochhar. She said Mr Charan would give instructions as to sales targets for the group. Ms Ebejer did not accept that Mr Charan's role was simply that of a 'super salesman' as described by Mr Thompson and put by counsel for Mr Charan.[190] To the contrary she said in response to cross-examination: [191]

COUNSEL: Neil Thompson will give evidence to the effect that Mr Charan was not involved in the business of CTI on a regular day to day basis. What do you say to that?

MR EBEJER: Well, I would say that's untrue. He certainly was.

268 Mr Charan denied ever seeing or meeting Ms Ebejer - to which she said:[192]

Okay. Well, I have met Mr Charan and I have spoken to Mr Charan.

269 Mr Thompson denied that both Ms Ebejer and Mr Charan attended such meetings.[193] He did not dispute that regular business development meetings took place, and that Ms Ebejer was present at most meetings.[194] Notwithstanding some minor variations, I think it clear that his evidence was to the effect that Mr Charan did not attend these meetings, apart from an original briefing meeting. He accepted that there were occasions upon which both Ms Lechte and Ms Mantzis attended the meetings.[195]

270 The contrast between the quality of the evidence of Ms Ebejer and that of Mr Charan was stark. Ms Ebejer had no motive to give false evidence, and gave her evidence in a forthright and persuasive way. The only possible motivation suggested by counsel for Mr Charan in cross-examination that might have accounted for her embellishing her account (never squarely put) was that of her probation period at CTI being extended by a couple of months which was said to be a criticism of her performance.[196] She credibly denied this and said this decision had no effect on her leaving CTI's employment; rather, she said, it was the norm.[197] One might legitimately ask why she would lie about Mr Charan and his involvement in the management of CTI and recruitment of students.

271 As I said, there is no reason to reject Ms Ebejer's evidence. If she was in error at all in her evidence it might relate to another matter and is confined to detail but not the substance of her attendance at a mass recruitment meeting in 2014. I have already expressed my reservations about Mr Thompson's evidence which minimised Mr Charan's role in the business. I place little store in it and far less in Mr Charan's denial. I will return to the question of the competing versions when dealing with Ms Ebejer's evidence on other issues, including that of mass enrolments and falsification of student documents.

272 Mr Ottery, an experienced RTO trainer and assessor, met Mr Charan in about April 2013 when applying for a job with CTI.[198] Although his evidence primarily related to AMA courses, his testimony was clear that in both 2013 and 2014, Mr Charan took a hands-on approach to all CTI-related matters.[199] His evidence was not seriously challenged and I accept his account of Mr Charan's role.

273 Mr Charan hired Mr Peter Cage in 2014, initially via CTI and then via CEI (a CTI company in which he had a shareholding), a call centre set up early in 2014.[200] Mr Cage regarded Mr Brown and Mr Charan as the owners of CTI and he took instructions from both of them.[201]

274 The call centre operated out of the Spotswood CTI office: it grew rapidly from two phones to a peak of 25 employees[202] in 2014. The staff were given a script,[203] but, according to Mr Cage, it was non-robotic. Its aim was to persuade potential students to attend enrolment courses.[204] Mr Charan was involved in its operations, including the approval of call centre scripts and its use in recruitment.[205]

275 Mr Cage (whose evidence I accept) described how the enterprise grew spectacularly between the time he started at CEI and when it was absorbed into the ACN venture - with his shares being purchased after an acrimonious debate with Mr Charan and Mr Brown.[206]

276 The documentary evidence is convincing as to the hands-on role performed by Mr Charan at CTI throughout 2014 and corroborates the accounts of Ms Ebejer, Mr Ottery and Mr Cage; in contradistinction, this evidence renders the accounts of Mr Green, Mr Thompson and Mr Moffat unreliable. I am comfortably satisfied that Mr Charan was intimately involved with the management of CTI throughout 2013 and 2014 until the time of the float. I am satisfied that he was well aware of the detail of the management of CTI and, necessarily, other companies in the group - to which I now turn.

277 To make it clear, I reject the submissions of Mr Charan that he could not properly be described as a 'Managing Director'.[207] It matters not how he was described in the ACN prospectus and that his corporate signature 'only' appeared on 63 emails. He was a director of CTI. He authored, received and was part of many, many more emails relating to the management of the CTI group. It beggars belief that he was included only on an 'FYI' basis - when examined with the correspondence in general, it is patent that he played a real, and not imaginary, role in the management of the business until it was floated in December 2014.

278 His false denials of this proposition enhance this conclusion.

279 Unlike CTI, CTT was registered as an RTO with VRQA and had a VET contract.

280 Ms Celona said that she established CTT in 2007, and it was incorporated in 2010 or 2011.[208] The business originally operated from premises at Cranbourne and later acquired space in Dudley Street, West Melbourne in 2009 or 2010.[209] Eventually it operated out of three locations, West Melbourne, Preston and Pakenham.[210]

281 CTT initially focused on retail and business courses and moved towards health services in 2008. In 2012, it offered the following health services courses: Certificate III in aged care, Certificate IV in aged care, Certificate IV in disability, and health support services.[211] At any one time, it had a total of 40 students across the three sites (with 10-15 students at each premises).[212]

282 In the ACN prospectus, CTT's activities were described as follows:

• Aged care and Disability;
• Home and Community Care;
• Health;
• Children's Services; and
• Business.

283 Ms Celona was introduced to Mr Charan through Mr Ian McAllister, whom I referred to earlier. Mr Charan offered to enter into a partnership arrangement with Ms Celona. Ms Celona rejected that proposal and instead sold the business to the corporate vehicles of Mr Charan and Mr Brown on 1 July 2013.[213] It became part of the CTI Group. Mr Charan regarded it as prime acquisition:

Ivan was the driver and very enthusiastic to do so and I could see why. It's basically giving us a presence from having a company that's got an auspice arrangement to now getting into the RTO space, a registered RTO space.[214]

284 Following the sale of the business, Ms Celona was the Chief Executive Officer of CTT and remained in that position for approximately three months.[215] She stepped down from her position as CEO in October/November 2013, but remained on the register as CEO until her replacement, Mr Moffat, was appointed in January 2014.[216] She continued as an employee until February 2014.[217]

285 The termination of Ms Celona's employment occurred as a result of a telephone call with Mr Brown and Mr Charan in February 2014.[218] Ms Celona stated that the reason for her resignation was that she was uncomfortable with the changes to CTT following its acquisition by CTI. There was a dispute after Ms Celona's departure as to 'credits' owing to DET. Ultimately it was resolved at a mediation.[219]

286 I regard Ms Celona as a credible witness and the vague criticisms of her reliability in Mr Charan's submissions are unsustainable.[220]

287 Mr Charan maintained that he had no role in CTT management. So, during the preparation for the trial, Mr Charan's solicitor, Ms Katarina Klaric, swore the following in an affidavit in relation to Mr Charan and CTT:[221]

1. Mr Charan has never been a director and has never been involved in the management of CTT. ACN acquired CTT through a share acquisition on 30 September 2014. I refer to p78-79 of the Prospectus.
2. Mr Charan only became aware of CTT being the subject of audits by the Department of Education after he read the article titled "Mixed news for listed education provider ACN" written by Kylar Loussikian and first published on-line on about 6 July 2015 by the Defendant on its website...[222]

288 In answers to interrogatories sworn on 19 October 2016, Mr Charan said:

To the best of my recollection, I have never held any roles in CTT. I have never been a director or secretary of CTT, and I have never been involved in the management of CTT.[223]

289 At trial, Mr Charan said that he had nothing to do with CTT as it was, in effect, a stand-alone organisation with its own infrastructure and personnel. He said this about his involvement:

I have never been a director of CTT, as far as we have done our investigation.[224]

To the best of my knowledge, Your Honour, I did not hold any roles in CTT.[225]

...it was an RTO that ran by itself with Elena being the head of it and what I did - and again just to confirm or just to reiterate, what I did was I tried to control the financial aspect of most businesses that I have, purely because at the end of the day it's to understand exactly what the company is making, I suppose, at the end of it, in terms of revenue, and that's the only reason why I had the dongle. By the looks of it, that's the only reason I would have had the dongle. Just to pay staff and also pay rent, pay any expenses.[226]

COUNSEL: What was your role in that business [CTT]?

MR CHARAN: What was my role?

COUNSEL: Did you have a role in that business [CTT]?

MR CHARAN: No, I didn't, Your Honour. ...

COUNSEL: Did you, in your role at CTI, have anything to do with the business of CTT?

MR CHARAN: So CTI picked up mini projects to promote and sell all the courses or courses that were part of the group, including the TAFEs. So during the journey, yes, there would have been projects that CTI would have been involved in to promote for CTT. But in saying that, Your Honour, CTT had its own sales team and marketing team.[227]

291 Mr Charan was cross-examined about his answer that he had never been involved in CTT's management:

COUNSEL: Is that [the above answer] truthful?

MR CHARAN: At that time to the best of my knowledge, yes, Your Honour.

COUNSEL: What's your evidence today - is it true that you never held any roles in CTT?

MR CHARAN: To the best of my knowledge, Your Honour, that's correct.

COUNSEL: Why are you caveating it with to the best of your knowledge, Mr Charan - do you remember?

MR CHARAN: Your Honour, I am not going to be subject to this kind of question, Your Honour.

HIS HONOUR: The question is legitimate, I require you to answer it.

MR CHARAN: It's the tone of it, Your Honour. He's got form with the Mildura case, Your Honour. I've read it.

HIS HONOUR: I don't want to know about whether he has form. I want you to answer the questions that you are asked, Mr Charan.

MR CHARAN: Your Honour, I am feeling intimidated

HIS HONOUR: Mr Charan, I am not going to have a debate with you about it. I want you to answer the questions that you are asked. If I think they are inappropriate, I will say so... You're are being asked whether you have a recollection as to your role with CTT as you sit here today in the witness box.

MR CHARAN: Yes and I have answered it, Your Honour. To the best of my knowledge, I was not - I didn't have any roles in CTT.

COUNSEL: Mr Charan, do you mean by that that you might have forgotten that you held a role within CTT?

MR CHARAN: No, Your Honour.

COUNSEL: So you are quite clear in your mind that you have never held any roles in CTT?

MR CHARAN: To the best of my knowledge, Your Honour, I did not hold any roles in CTT.[228]

292 Mr Moffat described Mr Charan's role in the management of CTT as the 'marketing person' and said that Mr Brown was the manager of the business.[229]

293 Contrary to the evidence of Mr Moffat and the repeated denials of Mr Charan, the documentary evidence (primarily emails) demonstrates that Mr Charan's involvement in the running of CTT was significant and by no means minimal or confined to marketing. For instance, Mr Charan was involved in email exchanges (either as an author or recipient of an email) concerning the following matters:

(b) Mr Moffat's appointment as CEO;[231]

(c) recruitment of students, particularly when it was clear that the bottom line (i.e. the profitability of the business) was in question;[232]

(d) dealing with the operators of the call centre in endeavouring to recruit students to AMA courses;[233]

(e) the scope and content of CTT courses;[234]

(f) the social media presence of CTT;[235]

(j) payment of bills (which Mr Charan said was the extent of his involvement);[239]

(k) employment of staff and engagement of sub-contractors;[240]

(l) negotiating lease arrangements for its property;[241]

(m) authorising advertising material and marketing campaigns;[242]

(p) employees' and contractors' salaries and commissions and personal leave entitlements;[245]

(q) payments by DET under the VET funding contract;[246]

(v) attending management meetings;[250] and

(w) meetings with the management staff of CTT.[251]

294 Ms Celona said that her main dealings were with Mr Brown but that she also dealt with Mr Charan on some matters, particularly marketing.[252] One such dealing she had with Mr Charan related to the establishment of the call centre (operated by Mr Peter Cage) which operated out of Spotswood, for the purpose of sourcing students for CTT as well as other CTI companies.[253] I see no reason, as suggested in Mr Charan's closing submissions, to treat her evidence as in some way tempering the inferences to be drawn from the email exchanges.

295 In summary, I reject Mr Charan's evidence and submission[254] suggesting that he had, in effect, little or nothing to do with CTT or its operations during 2014. This evidence was false and whilst I accept that he was not involved in all the day-to-day intricacies of the management of CTT, it is patent that he played a significant role in the management of the business, and particularly marketing and recruitment, consistent with his financial interest in the company.

296 AMA (Thoan) was purchased by Mr Brown and Mr Charan through corporate vehicles in June 2014 from Mr Stephenson. It operated in New South Wales, Queensland and Victoria. Its Victorian operations were funded under the VTG with VET funding contracts.

297 Mr Charan and Mr Brown provided the funds for the purchase of AMA. It is clear that it was purchased to increase the attraction of the embryonic ACN float.

298 In the ACN prospectus,[255] AMA's activities were described as:

• Aged Care and Disability;
• Home and Community Care;
• Business;
• Management;
• Work Health and Safety;
• Training and assessment; and
• Building and Construction.

299 Mr Charan maintained that he had no role in AMA management and that it was operated by Mr Brown, Mr Kochhar and Ms Carly Arnold.[256] During the preparation for the trial, Mr Charan's solicitor, Ms Klaric, swore the following in an affidavit:[257]

(a) Mr Charan became a director of Thoan on 3 June 2014 when Community Initiative Group Pty Ltd purchased shares in Thoan from the existing directors and shareholders of Thoan, Christine Anne Stephenson and Peter Thomas Stephenson.

(d) While Mr Charan was the Secretary of Thoan during the period from 3 June 2014 to 30 September 2014. he ceased to act as a Secretary of Thoan on the 30 September 2014 when he also ceased to be a director. However, due to an administrative error the relevant form was not filed with ASIC notifying ASIC that he had ceased to be a Secretary of Thoan on the 30 September 2014, until the 21 October 2015.

(e) Mr Charan was never involved in the day to day management and/or operation of Thoan or its business operation.

(f) Mr Ivan Brown was the Chief Executive Officer (CEO) and Mr Harry Korcher was the Chief Operations Officer of Thoan and they were involved in the operation and management of Thoan during the period that Mr Charan was a director of Thoan and leading up to the listing of ACN.

300 Prior to the trial, in his sworn answers to interrogatories, Mr Charan deposed:

At no time have I ever had any knowledge of or input into the day-to-day management of Thoan.[258]

301 In evidence-in-chief, there was the following exchange:

COUNSEL: Eventually you and Ivan, through companies associated with you, purchased Thoan in about June 2014. Did you have any involvement after that time in the running of that company?

MR CHARAN: Sorry, repeat the question.

COUNSEL: When you purchased Thoan, as you did in about June 2014.

MR CHARAN: Mmm-hmm. Did we purchase - okay, yep.

COUNSEL: Do you recall that you purchased it?

MR CHARAN: I don't know the months but, yeah, we do recall that there was a deal done, yes.

COUNSEL: Who was running that company after you purchased it?

MR CHARAN: As far as I understand, it would be Ivan Brown, Harry and Harry's manager, that lass, that girl. Is it Carly Ireland?

COUNSEL: Are who was Harry?

MR CHARAN: Harry Kochhar was a - he was a director of studies so he was a - that was her - sorry, that was his speciality.

COUNSEL: Who was he employed by?

MR CHARAN: CTI.[259]

...

HIS HONOUR: Could you help me with this. The question was directed to CTI but there were a number of associated companies during that year [2014] or previously and during that year. Was the position similar in relation to those other companies, that you had little if any involvement other than some, what seems, high end marketing?

MR CHARAN: Correct, Your Honour. I wasn't involved in any of the subsidiaries intimately or on a day-to-day basis. It was mainly CTI and basically promoting and marketing courses for CTI.[260]

COUNSEL: Did you at any time consider yourself to be the chief executive officer of AMA?

MR CHARAN: Did I at any time? - No, Your Honour'.[261]

...

COUNSEL: I asked you about the trainers before, Mr Charan. I am not sure I got an answer from you. The trainers who were subcontracted to CTI, did they provide training for the RTOs, like CTT and AMA?

MR CHARAN: I could only answer accurately as I was intimately involved in the marketing and sales of CTI, so I couldn't give you an exact yes or a no regarding CTT or AMA as I was not involved in it on a day-to-day basis.[262]

...

COUNSEL: You have no recollection of being involved in the Certificate IV in building and construction offered by AMA from late June 2014 onwards?

MR CHARAN: No. I had been involved with promoting, as far as I can recall, promoting cert IV building construction and other courses for CTI during that period of time.[263]

...

COUNSEL: ...You see this is an e-mail you sent on 18 May 2014 to Mr Kochhar and Mr Brown, "Progress update": "Hey mate, can you please give me a quick update on what's the exact state of play with AMA, CTT and current upload status for the TAFEs." Do you recollect sending that e-mail?

MR CHARAN: I do not recall, no.

COUNSEL: Can you explain to His Honour why, if you had nothing to do with the day-to-day management of AMA and CTT, you were sending an e-mail of that kind?

MR CHARAN: No. On the face of it I am just making enquiries and again, I am quite entitled to do that as a shareholder of a company - on the face of it, that's what it looks like... [264]

COUNSEL: Mr Charan, you became a director of Thoan on 30 June 2014, didn't you?

MR CHARAN: I don't recall the date and I don't recall signing the exact form, no, but I do recall there was a heap of documents buried into it. I would have signed one of those documents.

COUNSEL: Don't worry about the dates for the moment but you were a director of Thoan for a short period of time in about the middle of 2014?

MR CHARAN: On the ASIC registry and according to my lawyers, yes, correct, I do agree.

COUNSEL: You have no recollection of being a director of Thoan during that period apart from what your lawyers have told you; is that your evidence?

MR CHARAN: To the best of my knowledge. Can you repeat that question again? That was a tricky question, that one.

COUNSEL: The question was do you have any recollection of being a director of Thoan from June to September 2014, apart from being told that you were by your lawyers?

MR CHARAN: No, that's incorrect. To the best of my knowledge, there was a review by my accountants and my team, my accounting team with the ATO in settling a complex tax matter and in that, there were certain issues raised and I recall vaguely that I was - they were discussing that - this exact topic.

COUNSEL: That was some time after you had ceased to be a director, I take it?

MR CHARAN: To the best of my knowledge, yes. It happened - yeah, it had to happen after the pay day.

COUNSEL: Thinking back to 2014, were you aware at any time in 2014 that you were a director of Thoan?

MR CHARAN: I don't recall. To the best of my knowledge that is probably correct but I don't recall.

COUNSEL: To the best of your knowledge you didn't think you were a director in 2014 or you thought you were?

MR CHARAN: To the best of my knowledge, no, I didn't.[265]

304 Mr Green supported Mr Charan's position stating on several occasions that it was his belief that Mr Charan had no involvement in the acquisition of AMA and played a minimal role, if any, in management of CTI companies - his task being confined to business development.[266] I place little store in his evidence - as I indicated earlier.

305 Mr Charan was appointed a director of Thoan on 3 June 2014 and remained in that capacity until 30 September 2014.[267] He was also the secretary of the company. He 'signed' a number of statutory declarations for the purpose of accreditation with regulatory authorities, including the 'Notification of a Material Change or Event' application declaring that he was the new CEO of AMA on 6 June 2014,[268] and a 'Fit and proper person Requirements declaration' on 3 July 2014 - to which I referred earlier.[269]

306 Email correspondence (mostly using his CTI email address) supports the proposition that Mr Charan was closely involved in the management of AMA. In 2014, Mr Charan (as author or direct recipient) was involved in the following:

(e) Recruitment of management staff;[273]

(h) BD updates and management of BD staff responsible for AMA;[276]

(j) Approval of flyer and marketing material for Building course;[278]

(k) Request for AMA enrolment forms;[279]

(l) Uploading AMA enrolments for Building course;[280]

(m) Communications with staff about delivery of the Building course;[281]

(n) Nomination of Mr Kochhar as CEO of Thoan;[282]

(o) Approval of payments for enrolments;[283]

(p) Approval of AMA invoices and uploading of AMA Building course files;[284]

(q) Minutes from meetings regarding AMA courses;[285]

(r) Mr Charan's involvement in the management of AMA;[286]

(s) Compliance issues with AMA students forwarded to Charan;[287]

(t) Request for an update on training progress for the Building course;[288]

(u) Registering for AUSkey for Thoan;[289]

(v) Directions from Mr Charan concerning offering RPL through AMA;[290]

(w) AMA's enrolment documentation for two courses;[291]

(x) Mr Charan's directions regarding Mr Ottery's employment contract with AMA;[292]

(y) Request for 30 to 40 students for an AMA course;[293]

(z) Management of HR issues with AMA trainers;[294]

(aa) Setting the price for the Building course;[295] and

(bb) Directions regarding payments for enrolments in the Building course.[296]

307 The following email from Mr Charan to Mr Brown of 31 May 2014 relating to the AMA Building course shows the extent of Mr Charan's involvement in the business:

Let's run it at secondary schools like what we did for Taylors Lakes footy club.[297]

308 I mentioned Mr Ottery earlier in relation to CTI's activities. Mr Ottery assisted in the purchase of AMA by Mr Brown and Mr Charan. He attended a meeting at which he introduced Mr Stephenson, its owner, to Mr Charan and was aware of the negotiations which ultimately led to Mr Brown and Mr Charan purchasing Mr Stephenson's interest in AMA in 2014.

309 In 2014 and 2015, Mr Ottery was employed as a trainer and assessor for two AMA courses: Certificate III in Waterproofing; and Certificate III in Wall and Floor Tiling.[298] Mr Ottery continued to work for AMA after its acquisition by Mr Brown and Mr Charan.[299]

310 Although Mr Ottery taught in the classroom, he primarily performed RPL assessments, where he attended onsite and recorded his observations and assessments of the students' skills.

311 Mr Ottery said that the majority of his dealings, as an AMA trainer, were with Mr Charan[300] rather than Mr Brown.

312 There is another aspect of Mr Ottery's evidence that demonstrates Mr Charan's involvement in AMA's affairs during 2014. Mr Ottery was employed in 2013 as a trainer for CTI and developed course materials for the CTI Building course. He sold the course materials to CTI. He had agreed with Mr Charan that CTI would pay him $14,000 for the course materials. He provided the USB stick containing a complete set of the course materials to Mr Charan. He was not paid and then, in 2014, whilst at CTI's offices, he discovered that AMA was using his materials to deliver its Building course.

313 Mr Ottery emailed Mr Charan in late October 2014 seeking an explanation. Mr Charan emailed Mr Kochhar and directed him not to do anything about the issue and stated that he would deal with Mr Ottery.[301]

314 In evidence, Mr Charan said that he had no memory of the emails and again raised the possibility of a forgery or unauthorised document.[302] Mr Charan, then in what it became clear was typical - of his nature, denigrated a witness who opposed his case. He described Mr Ottery as erratic[303] and with personality disorders.[304] He went on to assert that if he had engaged in such email correspondence, it was only because:

...Ron Ottery was a difficult client. He was an extremely difficult client and I was the only one that could handle his mood swings and his tanties and I think I did well. I was a great conduit, I think.[305]

315 This was the same Ron Ottery who Mr Charan described as a justice of the peace, a PhD and a man with 'extensive knowledge about the back-end operation of an RTO'.[306]

316 I accept Mr Ottery's evidence as to Mr Charan's involvement in the operations of AMA during 2014.

317 The evidence of Mr Charan's considerable (not minimal) involvement in AMA from its acquisition in June 2014 until December 2014 is clear. He was the person who initiated the purchase of AMA and used his own funds to do so. Upon the acquisition of AMA in June 2014, he was the sole director and company secretary. Immediately after its acquisition, Mr Charan 'signed' the fit and proper person declaration which recorded him as the new CEO of AMA.

318 I reject Mr Charan's submission that "he could not reasonably have been considered to be involved in the day to day management of AMA, or intimately involved in its operations".[307]

319 When combined with documentation filed with ASIC and ASQA, email traffic, and Mr Ottery's evidence it is clear that Mr Charan was intimately involved in the management and activities of AMA. He was hands-on in the development of its courses and in dealings with its staff and the recruitment of students throughout 2014.

320 Underpinning the successful float of ACN was increasing student enrolment numbers of CTI companies: the greater the enrolment numbers, the larger the amount of government funding that could be claimed, with increased revenue and forecast revenue attracting potential investors.

321 At the end of September 2014, ACN acquired all of the shares in CTI, CTT and Thoan. From that time, Mr Charan and Mr Brown each held 33.31 per cent of the shares in ACN. Peter Cage held 0.15 per cent.

322 In preparation for the listing on the ASX, new directors were appointed to ACN at the end of September 2014, and Mr Charan resigned as a director of ACN, CTI and Thoan, but his involvement in the ACN Group activities continued - as seen in a number of the emails I have referred to.

323 Mr Charan said as follows of his role in the ACN float:

The only thing I have been involved with ACN was being in the registry for a shelf company which was, I think, registered - I don't know, well earlier than the IPO. Apart from that, I was never involved with ACN, never been part of ACN...[308]

324 Mr Green, who was intimately involved in the IPO, corroborated, in a way, this account. I have already said that I have reservations about his evidence. Mr Green (who was brought into CTI as CFO in April 2014 to assist with preparations for the float)[309] offered some support for Mr Charan's position. He said that Mr Charan was a 'silent partner'.[310] He was adamant that Mr Charan's role was passive in the months leading up to the float.[311] He was wrong on this point also. Whilst I accept that Mr Brown was the driving force that does not mean Mr Charan's role was as passive as Mr Green suggested, as is demonstrated by the contemporaneous email communications of and to Mr Charan.

325 The key to the float was the cash flow from enrolments. For instance, on 21 March 2014, Mr Charan sent an email to Mr Brown, Ms Mantzis and others in which he stated the following:

Guys just remember these errors are only minor issues and I am confident that we will fix these errors and start submitting decent amount of clusters in the Month of May and June. Let's aim for 400 clusters for the Month of May and 800 for the Month of June!!

326 I accept that Mr Charan was not involved in the management or operations of ACN once it was listed in December 2014. But the documentary evidence is inconsistent with Mr Charan's account as to his role prior to that date. Emails during 2014, to which Mr Charan was a party (either as the author or a recipient), point to a different level of involvement in the float of the ACN enterprise than that which Mr Charan portrayed although I accept that he was not involved directly with the discussions with the underwrites or the detail of the listing on the ASX:

(a) Mr Charan was involved in the initial discussions of the float of the company;[313]

(b) Mr Charan received regular updates as to how the float was progressing;[314]

(c) Mr Charan continued in his email correspondence to describe himself as the managing director of CTI;[315]

(d) the acquisition of businesses in connection with the upcoming float;[316]

(e) discussions with Mr Brown about Petra Capital (underwriters for the float);[317]

(f) the approval of draft employment contracts for new employees;[318]

(g) paying a deposit of $100,000 for his share in Thoan (AMA) in May 2014;[319] and

(h) his prospective role as Chief Operations Officer of ACN after the float.[320]

327 Mr Green's description of Mr Charan's role at the CTI companies in 2014 as solely involved in business development is inconsistent with much of the evidence adduced at trial.[321] I repeat that his evidence was unpersuasive.

328 In addition to the sale of his interest in ACN at a maximum return, Mr Charan had an additional motive to ensure the ACN companies were operated profitably. On 29 August 2014, Mr Charan acquired a 10 per cent indirect ownership interest in Mr McAllister's company, Diabetes College Australia Pty Ltd, which licensed the Diabetes course and received royalties from licensees (such as CTT) for every student enrolment. This gave Mr Charan a personal incentive to maximise student enrolments in the CTT Diabetes course.

329 Mr Charan's denial of any real involvement in the float of ACN is also an affront to common sense. This was an opportunity to make, as he described it, a large amount of money. He said this:

... if the media didn't tarnish the industry the way they did and we would have walked away with $100 million each.[322]

330 It is inconceivable that given the potential wealth that would be achieved by the sale of his interest in the group, Mr Charan did not play a real part in ensuring that the deal went ahead. Whilst I accept that Mr Brown was the driving force, Mr Charan's denial of any involvement defied, both the documentary evidence and common sense.

331 I conclude that Mr Charan had a real interest and involvement in the float of ACN in the sense that he remained involved in his management of the CTI companies in 2014 up until the time of the listing. This was in the context of the need to maximise enrolments and the consequential earnings of those companies - the embryonic ACN. His evidence as to a totally passive or inert role in the listing of the company was incorrect and designed to sit comfortably with his aim of distancing himself from the management of CTI companies during 2014.

Conclusion as to Mr Charan's role with the CTI companies prior to the float

332 I reject unreservedly the idea that Mr Charan's role was confined to sales and marketing with premium clients of the CTI group, and no more, and that his involvement in the management of CTI companies ceased early in 2014. His evidence on this issue was deliberately false.

333 I am overwhelmingly satisfied that Mr Charan was closely involved in the management of CTI and its associated companies (including CTT and AMA) up until the float of ACN in December 2014. Whilst at times Mr Brown may have been the driving force within the group, Mr Charan was undoubtedly a key part of the management structure and involved in many aspects of the group's activities, including marketing and the recruiting and training of students. I conclude that it is inevitable given his active role in the recruitment of students that he knew exactly how students were recruited, enrolled and participated in courses.

334 I reject the submission of Mr Charan that a nuanced examination of his role at CTI and associated companies demonstrates that he was not involved in its day to day management[323]. He clearly was, although of course this role was shared with Mr Brown and other senior staff at CTI. Nor do I accept that the evidence supports the proposition that he was only involved in the active management of the business up to early 2014. It clearly does not. Mr Charan was active in many aspects of CTI management throughout the year. There is no reason (apart from his assertion) to think otherwise.

335 I also reject the suggestion that the Court's time was wasted by an exanimation of Mr Charan's role at CTI,[324] AMI and CTT. In truth, the Court's time was wasted by Mr Charan's constant prevarication about his real role at CTI.

336 I specifically reject what appeared to be an alternative submission of Mr Charan that the evidence only discloses an involvement in CTI and associated companies' management until 30 September 2014.[325] The documentary evidence[326] demonstrates that Mr Charan continued to play a part in CTI affairs up until the time of the float.

337 Notwithstanding that CTI's assets were transferred to ACN on 30 September 2014, the group continued to function under the CTI banner until ACN's listing on the ASX on 15 December 2014. Courses were still run under the CTI banner, staff retained their CTI titles, the CTI management structure remained in place with Mr Brown and Mr Charan assisted by Ms Mantzis and Mr Kochhar, and to the outside world CTI was still a going concern until the listing.

338 Mr Charan's shareholding in the enterprise (whether it be CTI or ACN) remained the same until 15 December 2014. There is a considerable body of documentary material evidencing that he maintained a hands on role in marketing and recruitment until the float, although I accept that there is a tapering off of email exchanges from November 2014. An example of how closely he remained connected to the management of the business after 30 September is contained in an email exchange of 27 October between himself, Mr Kochhar and Mr Faiz relating to the preparation of course materials - which I discuss in some detail later. It defies common sense to think that Mr Charan - holding a 50 per cent stake holding in the embryonic group - would not remain in a management role until his return had crystallised.

339 I readily infer, on the basis of his involvement in the management of the companies during 2014 and with his undoubted interest in the success of the float, that he maintained a role in the management of the CTI companies up until December 2014. It was in his economic interest to do so and is an affront to common sense to suggest that he simply sat at home as a recluse waiting for the money to roll in.

340 Each of these conclusions is fortified by the failure of Mr Charan to call his partner, Mr Brown, Ms Mantzis and Mr Kochhar.

341 In my opinion, a Jones v Dunkel[327] inference is available in circumstances where Mr Charan was in day-by-day contact with Mr Brown - prior to and during the course of the trial. I reject Mr Charan's evidence as false that there was bad blood between himself and Mr Brown which, in effect, it was said, negates the expectation that Mr Brown could have been called to explain and corroborate Mr Charan's account. To the contrary, the contacts between them in August 2015 and the large number of text messages and telephone calls in February 2017 demonstrate that Mr Brown and Mr Charan maintained a close relationship and particularly so whilst this case was both in preparation and in progress. The one person who could have authoritatively contradicted the clear inferences from the correspondence and confirmed Mr Charan's limited role at CTI and its associated companies was Mr Brown - his co-founder and co-beneficiary of the sale of the CTI group. He, to use the words of the Full Court in O'Donnell v Reichard,[328] might reasonably have been expected to have been called by Mr Charan, particularly so when Mr Charan's account was so hotly contested.

342 As the Full Court of the Federal Court said in Director, Office of the Fair Work Building Inspectorate v CFMEU:[329]

... the rule in Jones v Dunkel is a principle founded in common sense.

Common sense dictates that given their relationship Mr Charan could reasonably have been expected to call Mr Brown.

343 There was no explanation for the failure of Mr Charan to call Mr Brown. That failure enables a Court to more readily accept a large body of evidence (both direct and circumstantial) against Mr Charan's case which Mr Brown could have commented on - and also enables the drawing of inferences against Mr Charan. Given Mr Charan's lack of recollection and obfuscation, the failure to call Mr Brown, on this point (and a number of others), is of probative significance in accepting the contradictory evidence I have described[330] and accept. This is particularly so when dealing with inferences arising out of the documentary evidence (one example of which is the backdating of accounts contained in the email chain I referred to at [199]-[200]) or where there is contradictory evidence or inferences to be given. This is particularly so in relation to the role of Mr Charan at CTI companies until December 2014 and, as will be seen shortly, a number of the allegations of unscrupulous conduct.

344 Even if I accepted the speculative submissions of Mr Charan (which I do not),[331] Mr Brown had, in some way, assisted Nationwide in its defence of the proceeding that would not vitiate the drawing of a Jones v Dunkel inference based on the failure to call Mr Brown.

345 Mr Charan described Ms Mantzis as the general manager of CTI[332] and this was confirmed by Mr Moffat.[333] Mr Moffat also said that there were regular CEO meetings after July 2014 attended by Ms Mantzis, Mr Brown, Mr Charan, Mr Cage, Mr Green, himself and the CEOs of AMA and Cove.[334] Ms Mantzis was a director of ACN until 30 September 2014.

346 It is singular that the general manager of CTI was not called as a witness by Mr Charan. She of all people would have known of his true role in the CTI group and his involvement in the detail of the company operations in 2014. Rather, Mr Charan called Mr Moffat (who worked exclusively at CTT), Mr Green (who had little, if anything, to do with the day to day activities of the company) and Mr Thompson a middle management CTI employee.

347 Given that 2014 was the critical year - at least in terms of Mr Charan asserting that he had played little, if any, management role at CTI, it could reasonably be expected that he would have called Ms Mantzis. It is no answer to assert that Mr Charan called Mr Thompson, a senior BD manager at CTI who reported to Ms Mantzis.

348 There was no explanation as to the failure to call Ms Mantzis and I am prepared to infer she would not have helped his case on the issue of his role at CTI up until December 2014. I more comfortably draw the inferences from the email traffic and other oral evidence which points to Mr Charan's continuing role in CTI companies until the time of the float.

349 The other person of senior management who one would reasonably have expected Mr Charan to call is Mr Harry Kochhar. Mr Kochhar had a number of roles including that of Director of Education and Director of Operations for CTI in 2014. Indeed Mr Moffat described Mr Kochhar as the Chief Operating Officer at CTI.[335] Mr Charan in describing himself as solely a high end marketer distinguished his role from that of Mr Brown and Mr Kochhar:

The sales and marketing, as I was explaining yesterday, there is a clear separation between sales and marketing and the compliance and the operation of the business. So he - Harry Kochhar and Ivan was involved with the operation and the compliance and they were in charge of all those departments under that umbrella and as I said, there was Carly Ireland - Arnold. She was basically under Harry, managing Harry's projects.[336]

350 Given that asserted division of labour it could have reasonably been expected that Mr Kochhar would have been called as a witness to explain Mr Charan's true role in CTI, particularly as Mr Brown was not called. As has been seen Mr Kochhar was involved with much of the CTI management activities and email traffic in 2014. He, like Ms Mantzis, was in a particularly good position to explain Mr Charan's activities within the group. In addition, he was a key player in the statutory declarations forwarded to the regulator and, as will be seen, the engagement of persons who were alleged to be involved in the falsification of student file documentation.

351 I infer that he would not have assisted Mr Charan's case on the issue of his role at CTI, and I more comfortably accept the evidence which points squarely to Mr Charan being intimately involved in the management of CTI companies until the time of the float.

Did Mr Charan, in his capacity as a director of an RTO, engage in unscrupulous conduct?

352 Nationwide made two discrete allegations of unscrupulous conduct on the part of CTI companies managed by Mr Charan in 2014:

(a) Mass enrolments of 'students' who could not have gained any benefit from the course in which it was proposed to enrol them; and

(b) The falsification of 'student' enrolments and course documentation which were then the subject of claims for government funding - extending to total fabrication of a student's participation in a particular course.

353 The evidence adduced on this issue can be grouped as follows:

(a) The contents of the internal and external emails - a number of which I have referred to;

(b) Persons involved in the management of CTI associated companies prior to December 2014, several of whom I have already mentioned;

(c) 'Students' who were alleged to be engaged in courses conducted by CTI companies;

(d) Representations of 'students' contained in documents (particularly audit reports, attachments and worksheets) created as a result of audits, file reviews and student interviews carried out in 2015 by audit companies on the instructions of DET in relation to courses conducted by AMA and CTT in 2014 - including correspondence and memoranda (internal and external) between DET and the auditors; and

(e) An email exchange in October 2014 between Mr Charan and Mr Kochhar concerning student enrolments.

354 The tender of the documents in category 2(e) was the subject of objection by counsel for Mr Charan. Ultimately, I determined to admit the documents into evidence under s 69 of the Evidence Act - the business records provisions. My reasoning for doing so is set out below at [452] - [492].

355 Before I go to the specifics of the evidence concerning the activities of the CTI companies, it is helpful to describe the uncontroversial evidence as to how an RTO under a DET VET funding contract operated between 2010 and 2015. I mentioned this briefly earlier.[337]

356 In this regard, I rely in particular on the evidence of Todd Lucas,[338] a senior project officer employed by DET, and (to a lesser extent) Marie Vassallo,[339] a consultant to CTT, which is to the following effect.

357 At the heart of the VTG is a computerised program, Skills Victoria Training System (SVTS). To enable payment for the training of a student to an RTO, specified documentation in the form of electronic data had to be uploaded through the SVTS web portal.

358 Mr Lucas explained that SVTS is an internet-based portal through which an RTO reports training delivery to DET.[340] The RTO does so by an employee or agent logging into SVTS on the internet and then uploading, from its own student management system, 'NAT files'. A NAT file contains information about a student, such as his or her name, the course undertaken, the units/modules in the course, the commencement date of the course (which is the start date of the first unit/module), the start date of each of the units/module, the date on which the student has completed or will complete each unit/module, and the number of hours of training. If the NAT files are in the correct form then, overnight, a computer program within SVTS (called the 'claims processor') calculates how much is payable to the RTO. All of this is automated with no human intervention and no verification of the data entered by the RTO. If the program is satisfied with the information or data provided, payment is automatically authorised. The claims processor records the claims (colloquially referred to as 'uploads') as 'pending', which denotes that SVTS has recognised the claim as one to be paid to the RTO.

359 The upshot is that there was marginal (and certainly no real) human assessment of the uploaded data that would ultimately trigger a payment for the student's training - usually but not always paid by wire transfer a month in arrears from the date on which the information was uploaded, provided the uploaded material complied with the SVTS parameters.

360 Mr Lucas gave an example of how SVTS calculates the amount payable to an RTO for a student's training.[341] If a student enrolled in a course on 1 September then, shortly afterwards, the RTO would provide information for that student to SVTS through the uploading of NAT files. If training were to start in October and finish in the same year, the RTO could include that level of detail in the upload data for each unit/module in the course at any time from 1 September. Assuming that the data passes all automatic validation checks, then payment to the RTO for the student would be designated as 'pending'. If one of the units/modules in the course were recorded as starting on 2 September and finishing on 31 October with a total of 20 hours of training, then SVTS would divide the total 20 hours of training by the duration of the module/unit (2 months). It would then automatically pay the RTO at the start of October for 10 hours of notional training in September. At the start of November, it would pay the RTO for the remaining 10 hours of training in October.

361 The only method by which DET kept a check on the claims paid through SVTS to an RTO was by the audit review process stipulated in clause 10 of the VET funding contract. This allowed VET to instruct auditors to examine practices of RTOs from time to time, to check for evidence of student participation in courses and evidence of students' eligibility to participate.

362 A generic VET funding contract underpins the VTG. Both CTT and AMA entered into such contracts for the period 2014-2016.

3.3 An RTO must:

(a) act ethically

(...)

(c) not do or omit to do anything which may damage, ridicule, bring into disrepute or be detrimental to the Department, the VET sector, the Victorian government subsidised training market, the Department of the State's name or reputation ...

(d) not pay or offer, either directly or indirectly, incentives to undertake government subsidised training.

10. AUDIT OR REVIEW

10.1. The Department (or persons authorised by the Department) may conduct an audit or review of the RTO at any reasonable time:

(a) to confirm whether the RTO is complying with this VET Funding Contract;

(b) to establish whether and to what extent the Funds have been used for the provision of the Training Services to Eligible Individuals;

(c) to investigate allegations or suspected misuse of the Funds; and/or

(d) if applicable, as part of the Department's Audit and Risk Committee's Internal Audit Plan.

10.2. The RTO must, in accordance with the Department's directions:

(a) permit the Department, or persons authorised by the Department, to enter its premises, and areas within those premises that are used for the delivery of Training Services, to conduct audits or reviews at any time reasonably required by the Department, including times when Training Services are being provided to Eligible Individuals;

(b) provide the Department (or persons authorised by the Department) with all assistance needed to perform the audit or review, including providing access to office space, telephones, photocopy facilities and other facilities at the RTO's premises;

(c) participate in and assist with any audit or review:

(i) administered by the Commonwealth Government (including an Invalid Enrolment Audit);

(ii) specified in Clauses 9.10 or 10.1, or Schedule 1 of this VET Funding Contract; or

(iii) any other audit not specifically provided for in this VET Funding Contract, but which the Department considers necessary.

(d) reimburse the Department for any costs incurred in conducting audits or reviews, if directed to do so.

10.3. If an audit or review conducted by, or on behalf of, the Department concludes that there has been non-compliance by the RTO with the VET Funding Contract, the Department may, in its absolute discretion:

(a) exercise any of its rights under Clauses 16 or 17; or

(b) require the RTO to:

(i) provide a written response to the Department on any matter relating to the audit or review in accordance with the Department's requirements;

(ii) take all reasonable steps, to the Department's satisfaction, to prevent future instances of non-compliance with this VET Funding Contract which are identified by an audit or review by implementation a management action plan agreed between the RTO and the Department (or persons acting on behalf of or engaged by the Department); and/or

(iii) within 6 months of an auditor notifying the RTO in writing of its recommendations or such other timeframe specified in writing by the Department

1. advise the Department in writing of the steps taken by the RTO to comply with and implement the auditor's recommendations, the action management plan and the VET Funding Contract, after receiving notification of the audit findings; and
2. provide any documentation required by the Department evidencing compliance with, and implementation of, the auditor's recommendations, the action management plan and the VET Funding Contract.

365 To enable a clear picture of the obligations of an RTO in relation to pre-training reviews, I set out below the provisions of the VET funding contract relating to Pre-Training Reviews. Paragraphs 4.6-4.10 of Schedule 1 (Victorian Training Guarantee Program Specifications) read as follows:

4. APPLICATION AND ENROLMENT REQUIREMENTS

Pre-Training Reviews

4.6 For each Eligible Individual, the RTO must conduct a Pre-Training Review of current competencies including literacy and numeracy skills prior to commencement in training. The Pre-Training Review must:

(a) identify any competencies previously acquired (Recognition of Prior Learning (RPL), Recognition of Current Competency (RCC) or Credit Transfer);

(b) ascertain the most appropriate qualification for that student to enrol in, including consideration of the likely job outcomes from the development of new competencies and skills; and

(c) ascertain that the proposed learning strategies and materials are appropriate for the individual.

4.7 The RTO must have a clear and documented business process for conducting the Pre-Training Review that demonstrates how the RTO determined which qualification/s the student enrolled in and why this was the most appropriate training option for that student.

4.8 The business process and related documentation used by the RTO to conduct the Pre-Training Review must be made available to the Department (or persons authorised by the Department) for audit or review purposes.

4.9 The RTO must not enrol an Eligible Individual in a course or qualification that is at an inappropriate level for that student, including but not limited to enrolling students in courses on the Foundation Skills List that would not provide additional relevant competencies.

For example, it would be inappropriate to enrol a student assessed at Australian Core Skills Framework Level 3 in all core skills areas in either Certificate I in General Education for Adults of Certificate II in Skills for Work and Vocational Pathways.

4.10 The Pre-Training Review must be completed, and the outcomes known and documented, prior to the student's commencing training.

366 So the requirements in relation to the recruitment and participation in courses by students were in broad terms as follows:[342]

(a) a student was required to personally complete an enrolment form;

(b) as part of the enrolment process, a student would complete an LLN assessment (language, literacy and numeracy), which was designed to test the student's basic ability to engage in a particular course;[343]

(c) once enrolment was completed, a pre-training review assessment was required to be undertaken to assess a student's suitability for the course he or she had enrolled in. The pre-training review form usually consisted of a two-page document containing multiple choice and tick box questions. Only after this process was completed could a student commence a course; and

(d) the RTO was required to keep the paperwork related to these requirements on its student file.

Audits and reviews under the VET funding contract

367 Both AMA and CTT were, as I mentioned earlier, RTOs that entered into VET funding contracts with DET in 2014.

368 DET instructed the auditors as to the terms and requirements of an audit or review. DET also provided pre-populated worksheets to be used when auditing files or interviewing students. A manual prepared by DET for use by auditors was the guide for this exercise.

369 In 2014 and 2015, DET engaged a panel of auditors: Ernst & Young, O'Connor Marsden and Protiviti, which carried out a range of audits and reviews of RTOs. At a high level there was a Business Process Audit (BPA) and a Transactional Cap Audit (TCA). At a more detailed level, an Evidence of Eligibility (EOE) audit would usually involve inspection of hard copy files kept by the RTO to determine whether a student was, in fact, entitled to participate in the particular course. The Eligibility of Participation (EOP) audit also required an examination of hard copy files to determine whether a student had performed the studies required. Yet another form of audit was a 'contract review' (contract review), which involved, at the very least, an examination of student files as a whole to determine whether the RTO was conforming with the provisions of the VET funding contract.

370 Finally, I should refer to the student interviews, which were conducted by the auditors and, on occasions, formed part of an audit report. Alternatively, these were requested separately by DET and formed part of a standalone report. The auditors were provided with the names of particular students by DET, who were then interviewed (usually by telephone) in relation to their enrolment and/or participation in particular courses. The questions asked by the auditors were prescribed by DET.

371 In 2015 DET, pursuant to clause 10 of the VET funding contract, instructed two firms of auditors to investigate and report on two of the companies which operated under the ACN umbrella. The auditors subsequently produced the following reports:

(a) Protiviti EOE audit of the CTT Diabetes course and Certificate III in Children's Services, Certificate III in Early Childhood Education and Care, and Diploma in Early Childhood Education (Early Childhood courses) report dated 4 May 2015 (the CTT Diabetes & Early Childhood EOE audit);[344]

(b) Protiviti EOP audit of the CTT Diabetes course & Early Childhood courses - report dated 15 May 2015 (the CTT Diabetes and Early Childhood EOP audit);[345]

(c) Protiviti EOE audit of the AMA Diabetes course - report dated 15 May 2015 (the AMA Diabetes EOE audit);[346] and

(d) Ernst & Young contract review audit of AMA - report dated 23 September 2015 (the AMA contract review).[347]

372 In addition, there were separate reports (with accompanying worksheets) of the auditors relating to student interviews conducted independently to the audits:

(a) Protiviti CTT Diabetes course student interviews - report dated 15 June 2015 (the CTT Diabetes & Early Childhood student interviews);[348] and

(b) Protiviti CTT Early Childhood courses student interviews - report dated 23 June 2015 (the CTT Early Childhood student interviews).[349]

373 The reports produced as a result of these audits and interviews were the subject of evidence from four of the responsible Protiviti auditors: Courtney Licciardo of Ernst & Young, Lindsay Bick, Danny Nguo, Ivan Vaptzarov and Jacob Bosden - all of Protiviti.

374 On 7 November 2014, DET gave notice to CTT that it was immediately withholding payment of funds to CTT under its VET funding contract. This was apparently the consequence of a significant growth in payment claims, culminating in $563,272.71 being scheduled for payment under SVTS in November 2014.[350]

375 On 10 November 2014, Mr Charan received an email from Mr Moffat informing him that 'they [DET] are calling us in to meet them at Treasury Place'. Mr Charan emailed Mr Brown requesting that he (Brown) '[s]ort this out and take control of it mate'.[351]

376 On that day, Mr Brown emailed DET expressing concern that the withholding of funds may have legal implications for the upcoming public listing of the ACN Group and sought written confirmation that the withholding of funds was not as a result of an audit or any issues of non-compliance. Ms Watts of DET declined to provide such confirmation. Mr Brown forwarded the email to Mr Charan, who responded '[t]ough slut!'.[352]

377 On 17 November 2014, DET informed CTT that it would release payments but that it reserved its rights under the VET funding contract.[353]

378 On 26 February 2015, DET determined to conduct an 'off cycle' EOE audit of CTT in respect of 2014 commencements in the Diabetes course. This audit appears to have been instigated by a complaint received by DET, which identified 20 students, including Mr Maartens (whose evidence I will set out later), who were all members of the Nunawading Basketball Club.

379 On 16 March 2015, DET notified CTT that it intended to conduct an EOE audit of the Diabetes course. It was proposed that the audit would examine samples of student course enrolments that commenced in 2014 and for which funding had already been provided.[354] The stated purpose of the audit was to provide assurance to DET that sufficient evidence of eligibility was available and to ensure compliance with the VET funding contract.

380 On 25 March 2015, DET requested that Protiviti obtain additional information for the CTT Diabetes & Early Childhood EOE audit and provided it with a copy of an anonymous complaint of 24 March 2015.[355]

381 On 2 April 2015, DET notified CTT that it was suspending the acceptance of all future enrolments and commencements in the Diabetes course. DET then withheld all payments in relation to the Diabetes course under clause 16 of the VET funding contract. In the letter to Mr Brown, it was said that the action was taken because of the significant growth in claims reported across the government subsidised training market in the Diabetes course and as a result of complaints received by DET.[356]

382 On 2 April 2015, DET requested that Protiviti undertake a further audit of the CTT and AMA Diabetes courses. In respect of CTT, it was to be an EOP audit (targeted to include students identified in the EOE audit) who commenced in 2014. The AMA, EOE and EOP audits were to be undertaken in respect of 2015 course commencements.[357]

383 On 13 April 2015, DET notified CTT that it would conduct an EOP audit of the Diabetes course.[358]

384 On 13 April 2015, DET notified AMA that it would conduct EOE and EOP audits of the Diabetes course.[359]

385 In April 2015, Protiviti conducted 21 student interviews as part of the CTT Diabetes & Early Childhood EOP audit.

386 On 2 May 2015, DET wrote to Protiviti and asked that it obtain written sworn statements from students who had been the subject of the student interviews.[360]

387 On 1 June 2015, DET instructed Protiviti to conduct further interviews of CTT students in relation to the delivery of Early Childhood courses. DET subsequently provided Protiviti with the form of the questions to be put to students and identified the students to be interviewed.[361]

388 On 23 June 2015 DET, in a letter to Mr Brown, notified ACN that it considered that CTT had committed a material breach of the VET funding contract. The letter asserted that a large number of students for whom funding had been claimed in relation to the Diabetes course had not undertaken the course. In addition, students claimed for Early Childhood courses had not in fact undertaken courses. DET gave notice under clause 17.3(a) of the immediate termination of the VET funding contract stating that money owed to CTT was to be offset against the funds that CTT owed DET in respect of students who did not receive any training.[362]

389 On 25 June 2015, DET suspended the payment of funds to AMA in relation to four courses. It also suspended the acceptance of all future enrolments and commencement of training in all qualifications. It continued its earlier suspension of funds, new enrolments and commencements in the AMA Diabetes course.[363]

390 On 7 July 2015, DET notified AMA that it had engaged Ernst & Young to conduct a contract review. It said that the review was to be conducted because of information obtained during DET's investigation into CTT, and because of the rapid growth of AMA. The review was to consider whether AMA was, and continued to be, compliant with the VET funding contract.[364]

391 On 22 July 2015, HWL Ebsworth, acting on behalf of CTT, wrote to DET alleging wrongful termination of the VET funding contract.

392 On 31 August 2015, CTT instituted a Supreme Court proceeding against DET in relation to the termination of the VET funding contract.[365]

393 On 23 September 2015, Ernst & Young provided its final report to DET in relation to its AMA contract review. The report identified material breaches of the VET funding contract.[366]

394 On 12 October 2015, DET terminated AMA's VET funding contract under clause 17.3(a) on the basis that DET was satisfied that there had been material breaches of the VET funding contract.[367]

395 I now turn to the details of the various audits and interviews conducted by Protiviti and Ernst & Young.

The CTT Diabetes & Early Childhood courses EOE audit - Report of 4 May 2015

396 On 16 March 2015, DET notified CTT that it would undertake an EOE audit.[368] As I mentioned earlier, the purpose behind an EOE audit was to ensure there was sufficient evidence that a student was eligible to undertake a course as required by the VET funding contract. DET instructed Protiviti to audit CTT Diabetes and the Early Childhood courses.

397 A group of three Protiviti employees, headed by a manager, Susannah Polya, with Mr Bick and Mr Nguo, carried out the audit, which was conducted from 18 March 2015 to 7 April 2015 under Mr Bick's supervision.

398 Both Mr Bick and Mr Nguo gave helpful and persuasive evidence (which I accept) as to how this exercise was carried out: DET provided a prepopulated worksheet (an Excel spreadsheet) containing the names of students whose files were to be reviewed by the auditors. The student files were in hard copy and were reviewed by the auditors at CTI's premises at Spotswood.

399 As Mr Nguo explained,[369] the files were provided to the auditors in batches of 30 and were inspected to determine:

(a) Whether there was adequate proof of residence or citizenship;

(b) A declaration of the number of courses being undertaken for that year;

(c) The highest qualification achieved to date; and

400 The results of the inspection of the particular files in an EOE audit were then recorded by the relevant auditor in the test sheet.[370] The auditors then completed the test sheet inserting information from the files. From here, the process was to electronically, by means of a formulae, transfer those findings onto another spreadsheet (which ultimately became an Attachment to the report delivered by Protiviti to DET) which then formed the basis of the audit report concerning audited files.

401 The report in its final form[371] identified anomalies (referred to as 'exceptions') in the review of files which did not conform with DET's criteria. These exceptions are described in the body of the audit report and lists of exceptions are attached at Appendix A and Appendix B. The review of the file demonstrates as follows: an error rate of 8.16 per cent - indicating that 24 of 294 student enrolments did not have adequate evidence of eligibility.

402 In addition to the file review, the auditors interviewed 58 students[372] by telephone; 38 students were enrolled in the Diabetes course as their primary course (described as 'Group A' in the report), and 20 students were enrolled in the Early Childhood courses (described as 'Group B' in the report).

403 Mr Bick and Mr Liu described how these student interviews were conducted: A list of students enrolled in the relevant course was provided by DET in the form of an electronic 'test sheet', similar to the worksheet used for file reviews. The students' contact details and course commencement date were pre-populated (i.e. placed in the test sheet by DET), with a set of standard questions to be asked of the students in the interview.

404 Mr Bick described the process of carrying out student interviews: The interviews were undertaken by telephone from Protiviti's offices.[373] The questions asked in an interview were identified, in summary form only, on the test sheet and the answers recorded on that document. The test sheet did not identify each specific question asked and answer given, as the contents of a column may summarise the answers given to more than one question. The date and time at which the students were contacted was recorded. The interview length would vary, depending on the students' responses.[374]

405 The information contained in the test sheets was then extracted and imported into another spreadsheet (which then became Attachment B to the audit report). This second spreadsheet would be checked to ensure that the data had been moved from the test sheet accurately.[375]

406 The standard questions asked of the students by the auditors and outlined in the test sheet included:[376]

• Student details - name, ID, contact number
• Student qualifications
• Course commencement date
• Whether interviewed: if interviewed, the time and date of interview and the initials of interviewer; if not interviewed, the reason for failed interview
• Whether disclaimer communicated to student
• Whether student has done or enrolled in any courses with CTT
• Whether student aware of CTT
• What the course was/is about
• What sort of training and activities the course involved
• Whether the student felt the course was appropriate to their needs
• Where the training occurred and who provided the training
• Who delivered the training
• How the student heard about CTT and the course
• The reasons for doing the particular course
• Whether the student was asked, before starting the course, why they wanted to do the course and what job outcomes they wanted
• When the course commenced
• Whether the student completed the course
• How long the training took
• Whether the RTO has contacted the student recently to advise of the upcoming audit/interview
• Whether enrolled in any other courses; if so, the name of any additional courses, whether completed both courses, reasons for enrolling in second course
• Highest qualification held by the student when enrolled and whether they were asked about any prior qualifications on enrolment
• How the student found out they were eligible for government subsidised training
• Whether aware that, by completing the qualification, it affects the student's entitlement to do additional courses at the same or a lower level
• Whether had to pay any fees for the course
• Whether offered an incentive to do the course

407 The test sheet also included the following questions, completed by the auditors:

• Whether information obtained from the student interview was consistent with the data reported to SVTS
• Whether student indicated that it was appropriate to call back
• Whether the interview was consistent with the EOE requirement
• Additional comments[377]
• Finalised comments for Attachment B
• Whether EOP provided[378]

408 I accept the evidence of Mr Bick[379] as to the manner in which the audits (both EOE and EOP) were carried out. I also accept the evidence of Mr Bick and Mr Liu[380] as to the process by which students were interviewed and files reviewed.

409 The results of the Group A student interviews (students allegedly enrolled in Diabetes courses) were as follows:[381]

• 19 of the 38 students for whom funding had been claimed by CTT had not undertaken the Diabetes course. Of those, nine had neither enrolled in the course nor participated in the course; ten had enrolled but not participated in the course. Some of the students interviewed by the auditors had not heard of CTT.

• A number of the students were claimed as enrolments for a second course. Five students told the auditors they had not enrolled in a second course (Aged Care or Early Childhood) and had not undertaken that second course.

• Two students had been offered the Diabetes course as part of a Certificate in General Education for Adults.

• Eight of the students had been offered a reduction in basketball membership fees if they enrolled in the Diabetes course.

410 The results of the Group B student interviews (students allegedly enrolled in Early Childhood courses) were as follows:

• One out of 20 students interviewed indicated he/she enrolled in, but did not participate in the Early Childhood course.

• One student indicated he/she also enrolled in the Diabetes course; he/she did participate in the Diabetes course, however did not participate in the Early Childhood course.

• For the remaining 18 students, information obtained from the student interviews was consistent with the data reported to SVTS (however, four students indicated that they had not heard of CTT).

411 Protiviti provided its EOE audit report and covering letter to DET on 4 May 2015.[382]

412 The earliest course commencement date for any of the 20 students who said that he or she did not enrol or participate in a course is 8 October 2014 (aside from a single entry of 21 April 2014).[383] The latest date of 'enrolment' was 18 December 2014.

413 The course commencement dates for the students who actually participated in the courses were predominantly between August - December 2014 (the latest being 10 December 2014).

The CTT Diabetes & Early Childhood courses EOP audit - Report of 15 May 2015

414 On 13 April 2015, DET notified CTT that it would conduct an EOP audit.[384] This audit took place between 15 April 2015 - 24 April 2015 at the Spotswood premises. As with the EOE audit, it was directed to students in the Diabetes course, including a number who undertook the Early Childhood course as a second course.

415 The purpose of the audit was to examine whether there was sufficient evidence of participation (i.e. whether students had, in fact, participated in the course), consistent with the terms of the VET funding contract.

416 As with the EOE audit, the EOP audit also involved a team of auditors attending CTT's office, inspecting files, and carrying out 21 student interviews.[385] The process was explained by Mr Nguo, Mr Bick,[386] and Mr Vaptzarov - whose evidence I accept.

417 Student interviews were also undertaken and the process was, in effect, identical to that undertaken by Protiviti in the CTT Diabetes and Early Childhood EOE audit.

418 It was contended by Mr Charan that the students in this cohort were the same as those in the CTT Diabetes and Early Childhood courses EOE audit. The evidence of Mr Nguo was equivocal and I accept that it cannot be concluded that it was a separate cohort. [387]

419 The results of the 21 student interviews in relation to the Diabetes course were as follows:

• Eight students said they had not enrolled in the course.

• Eleven students said they had not undertaken the Diabetes course.

• Five students had been enrolled in a second course (Aged Care and Early Childhood courses) and had not undertaken that second course.[388]

420 The exceptions (i.e. those who had not enrolled) are described in the body of the audit report and a full list of exceptions is attached at Appendix A. The file review indicates an error rate of 7.75 per cent - demonstrating that 10 of 119 student enrolments did not have adequate evidence of participation.

421 Attachment B to the EOP audit report records the course commencement dates for the students. The earliest commencement date for any student who indicated that he or she did not participate is 7 October 2014 and the latest enrolment date was 26 November 2014. The course commencement dates for the students who participated in the courses were from 29 October 2014 to 10 December 2014.[389]

422 On 15 May 2015, Protiviti forwarded the CTT Diabetes & Early Childhood EOP audit report to DET with a covering letter.[390]

The AMA Diabetes EOE audit - Report of 15 May 2015

423 This audit was carried out between 15 April and 24 April 2015. It involved both the inspection of hard copy files and student interviews.

424 Thirty-five students were interviewed in relation to 2015 commencements in the Diabetes course.[391] The results of the interviews were as follows:

• One of the 35 students interviewed had not undertaken the Diabetes course.

• Six of the 35 students said that they had received an incentive to join the course. On completion, five students received a Samsung tablet and one received $50 cash. The five who indicated that they received a tablet had the same course commencement date (30 January 2015), but the report did not identify the trainer or any other courses, and the primary worksheets were not produced.[392]

425 Attachment B to the report records the course commencement date for the student who did not participate as 15 January 2015. The course commencement dates for the students who participated were from 15 January 2015 to 11 March 2015.[393]

426 The file review revealed a number of exceptions which are contained in Appendix A and Appendix B. The file review shows an error rate of 3.33 per cent - indicating that 3 of 90 student enrolments did not have adequate evidence of eligibility.[394]

427 On 15 May 2015, Protiviti forwarded the AMA EOE Diabetes audit report to DET with a covering letter.[395]

428 In June 2015, DET requested that further interviews of students enrolled in the CTT Diabetes course (either as a first or second course) in 2014 be conducted by Protiviti.

429 Mr Liu carried out the student interviews. He had limited recollection of the exercise,[396] although he thought the likelihood was very high that he prepared the draft of the 'test sheet'.[397] He also thought it was very likely that he prepared the draft summary for the audit report.[398]

430 The results of the interviews of 20 students[399] were as follows:

• 15 of the 20 students had not undertaken the Diabetes course;

• 14 of the 15 students had not enrolled in the course;

• Seven of the 15 were also recorded as having completed a second course (Early Childhood courses) but said they had not enrolled in, nor undertaken, the second course.

431 The earliest commencement date for any student who said that he or she did not participate is 20 October 2014 and the final commencement date was 9 December 2014. The course commencement dates for the students who participated in the courses were from 30 October 2014 to 10 December 2014.[400]

432 These results were the subject of a written report by Protiviti to DET on 15 June 2015.[401]

CTT Early Childhood courses student interviews - June 2015

433 On 1 June 2015,[402] DET asked Protiviti to carry out interviews of students who CTT claimed had participated in the Early Childhood course in 2014.

435 On 23 June 2015, Protiviti provided DET with a report of the results of these interviews.[403] It records that, of the 30 students:[404]

• Seven of the 30 students had not undertaken the course;

• Five of the seven had not even enrolled in the course.[405]

436 The earliest course commencement date for any student who indicated that he or she did not participate was 17 March 2014, and the latest commencement date was 20 December 2014. The course commencement dates for the students who participated were from 12 March 2014 to 2 November 2014.[406]

437 CTT uploaded payment claims under the SVTS for these students who had not received training, during the period from 30 October 2014 to 15 January 2015.[407]

438 I accept Nationwide's submission that it can be concluded that the nominal enrolment date for these 'students' occurred earlier in time than the recorded course commencement dates. As we have seen, clause 4.10 of Schedule 1 to the VET funding contract requires the pre-review process to be undertaken prior to student enrolments. All but one of those 'students' had not even enrolled in the course. About half of the 'students' had been dual enrolled (in Aged Care and Early Childhood courses) and had not enrolled in, nor undertaken, the second course either.

The Ernst & Young July AMA contract review audit - Report of 23 September 2015

439 In early July 2015, Ernst & Young were instructed to carry out a contract review audit into 2014 and 2015 AMA courses under clause 10 of the VET funding contract. As part of the audit, five separate courses were reviewed.[408] In relation to four of the courses, student commencements from 2015 were considered. In relation to the fifth course, the AMA Building and Construction course[409], student commencements in 2014 were considered. This is the only part of the report and annexures that are relevant to this proceeding.

440 The process was described by Ms Licciardo, the internal audit manager, whose evidence as to the manner in which the audit was conducted I accept. Ms Licciardo managed the review and had a group of five consultants and senior consultants reporting to her, who were employed by Ernst & Young.[410] She understood the audit (which she described as off-cycle) to be directed, at least in part, to misuse of funds.[411]

441 Ernst & Young was provided with a copy of DET's letter to Mr Brown, advising of the AMA audit. The audit was said to be a 'quality review', to provide assurance that the students enrolled were suitable and appropriate; and participated in and completed the training course. At the time of receiving instructions, Ms Licciardo was aware that DET had terminated its funding agreement with CTT.[412]

442 The contract review involved reviewing student and trainer files, and conducting student and trainer interviews. Ms Licciardo initially developed a spreadsheet on which student file results were recorded. Ultimately, four separate spreadsheets were produced which recorded results relating to the file reviews and interviews.

443 The auditors met with Mr Brown and Mr Kochhar on 7 July 2015 at the AMA offices in Spotswood. The purpose of the meeting was for the auditors to gain an understanding of the various methods and systems that AMA had in place. Following this, auditors spent two days interviewing various stakeholders to gain a better understanding of the process and the material contained on a student file.

444 The review was conducted between 9 July 2015 and 31 July 2015 at the Spotswood premises.[413] For the purpose of the student file reviews, the auditors emailed Mr Brown and Mr Kochhar and requested batches of complete student files to be provided to them. These files were reviewed at the Spotswood office over the course of a three-week period.

445 In total, 390 student files were reviewed, as well as 72 trainer files, business development contracts, and other documents. Each file was tested for EOE, with auditors assessing in particular whether the student was eligible for government-subsidised training and whether their file contained a Medicare card, driver's licence, and EOE form. Some, but not all, the files were tested for EOP and compliance with Pre-Training Review requirements.[414]

446 The auditors entered information into a digital spreadsheet, which was later consolidated into a master spreadsheet.[415] Ms Licciardo was involved in managing the review, but did not review the files personally. At a later stage, she examined the student files for the purpose of determining whether students' handwriting was consistent across the documents, and whether signatures on the relevant course documents matched signatures on the corresponding drivers' licences.

447 In addition to file reviews, the auditors conducted 115 interviews, including of 89 students, 20 trainers, and 6 workplace representatives. They were provided with student details by DET and then selected a random sample of 20 students from each of the courses that were the subject of the review (which were separate from the 390 student files reviewed). In a similar way to the Protiviti interviews, the students were asked pro-forma questions and their answers recorded on the spreadsheet.

448 The Ernst & Young team was provided with a list of trainers by AMA, who were also randomly selected and interviewed. They were interviewed both onsite (at AMA's offices) and offsite (presumably over the phone). As with the student interviews, the trainer's questions and answers were entered into a separate spreadsheet.[416]

449 AMA was given several opportunities to contribute to the contents of the draft and final reports. Ernst & Young responded to the comments made by AMA and provided reasons for rejection of any comments.

450 On 23 September 2015, Ernst & Young completed its report.[417] It identified a number of breaches of the VET funding contract including:

(a) In relation to the 2014 AMA Building and Construction course, Ernst & Young found that AMA had breached clauses 4.6 and 4.10 of Schedule 1 in respect of each student enrolled in the Building course in 2014. Those clauses, which are set out at [365] above, required AMA to conduct a Pre-Training Review (PTR) prior to accepting enrolments and to document the PTR, and prohibited the commencement of training until after PTRs had been completed and the outcomes known and documented. Ernst & Young concluded that AMA had not done so, in that there was no document relating to an assessment of a student's existing competencies, reasons for enrolling, future aspirations, current level of education, or learning needs; and

(b) a material breach as defined in clause 1.1(a)(vi) of the VET funding contract; namely, a failure to act ethically and engaging in conduct which may damage, ridicule, or bring into disrepute or be detrimental to, the DET, the VET sector, the Victorian government subsidised training market, or the State's name or reputation.[418]

451 As a result, DET terminated AMA's VET funding contract.[419]

Are the audit reports and associated material admissible under s 69 of the Evidence Act?

452 Nationwide sought to tender each of the audit reports (with attachments), the records of the student interviews and file reviews with associated material under the business records provisions (s 69) of the Evidence Act. These fall into the following categories:

(a) audit reports and student interview summaries with attachments and schedules (the audit reports);

(b) worksheets provided by DET for use of the auditors, with other internal working documents (worksheets);

(c) internal memoranda and notes of DET and the auditors (DET and auditors' internal records);

(d) correspondence between DET and the auditors (DET/auditors' correspondence);

(e) correspondence between DET and CTT and AMA (DET/RTO correspondence).

These encompass (with a little more detail) the categories of 'representations' identified by counsel for Nationwide which were given the following nomenclatures: 'book audit facts', 'student facts', and 'DET facts'. It is clear that the critical representations are those contained in the auditors' reports, attachments and the worksheets relating to both file reviews and students interviews which underpinned these reports. The other three categories provide context to the preparation and completion of the reports and the interaction between the relevant auditors, RTO and DET.

453 Section 69 of the Evidence Act is an exception to the hearsay rule contained in s 59 of the Evidence Act which reads:

59 The hearsay rule - exclusion of hearsay evidence

(1) Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation.

(2) Such a fact is in this Part referred to as an asserted fact.

(2A) For the purposes of determining under subsection (1) whether it can reasonably be supposed that the person intended to assert a particular fact by the representation, the court may have regard to the circumstances in which the representation was made.

69 Exception - business records

(1) This section applies to a document that -

(i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or

(ii) at any time was or formed part of such a record; and

(b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.

(2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made -

(a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or

(b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

(3) Subsection (2) does not apply if the representation -

(a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding; or

(b) was made in connection with an investigation relating or leading to a criminal proceeding.

(a) the occurrence of an event of a particular kind is in question; and

(b) in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind -

the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event.

(5) For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person's knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact).

454 In Lancaster v R,[420] the Court of Appeal said of the elements of admissibility under s 69(2):

It is enough to render the document admissible that it may be concluded that the representation was made by or on the basis of information supplied by someone who had personal knowledge of the fact within one of the alternative descriptions in s 69(2). So long as the nature and context of the recorded representation permits that inference to be drawn, the supplier of the information need not be identified.[421]

455 There was no dispute that the documents in each of the categories (particularly the audit reports and the worksheets):

(a) contained representations relevant to issues in this case;

(b) contained representations that were supplied by someone with personal knowledge of the representation; and

456 So, for example, with the student interviews, notwithstanding the confidentiality of the communication between the student and the auditor (there was no identification of the individual student who was interviewed) - given the evidence of the auditors as to the manner in which the interviews were carried out, it was clear that the ultimate source - the student - was a person with personal knowledge of the representation recorded by the auditor. Similarly, the auditor's reviews of the files as recorded in the spreadsheets or reports emanated from the auditors' personal review of the files. The internal and external correspondence is essentially peripheral to the contents of the reports but provides the context for the audits and the report. It can be assumed that any representation contained within this group of documents came from a person with personal knowledge of that representation.

457 It follows that the elements of s 69(2) are satisfied in relation to each category of representation.

458 It was uncontroversial that the documents in the categories listed above at [425] (with the exception of the auditors' internal records), whether business records or otherwise, were 'kept by DET' as required by s 69(1). In addition, one could readily infer that:

(a) the relevant auditors 'kept' the reports, worksheets, internal records and their correspondence with DET as part of their records;

(b) that the relevant RTO also 'kept' the audit reports and the DET/RTO correspondence to that RTO as part of its records.

459 The argument of Mr Charan in opposing the tender of the documents was directed to four issues:[422]

(a) that the audit reports and attachments were not 'business records' and therefore s 69(1)(a) was not engaged;

(b) that the documents were prepared or obtained in contemplation of litigation and therefore by reason of s 69(3) did not fall within the s 69(1) and (2) exception;

(c) that if the documents did not fall within the s 69 exception, then the documents also fell outside the s 60 exception to the hearsay rule; and

(d) that if the documents were admissible under either s 69 or s 60, then they should be excluded pursuant to s 135 of the Act.

460 There is no definition of the expression 'business records' in the dictionary of the Evidence Act. However, 'business' has an inclusive definition which has a reference to (a) a profession, calling, occupation, trade or undertaking; (b) an activity engaged in or carried on by the Crown in any of its capacities.

461 Mr Charan asserted that the audit reports and worksheets did not satisfy s 69(1)(a) as they were a 'product' of the auditors and as such did not fall within the concept of 'business records', as distinct from the internal records of a business. This distinction was said to emanate from a line of authority following the decision of Sperling J in Roach v Page (No 15).[423] At issue in that case was whether an extract from the Australian Mushroom Growers' Association Journal was admissible as a business record. In concluding that the extract did not satisfy s 69(1)(a)(i), Sperling J reasoned:

The records of a business are the documents (or other means of holding information) by which activities of the business are recorded. Business activities so recorded will typically include business operations so recorded, internal communications, and communications between the business and third parties.

On the other hand, where it is a function of a business to publish books, newspapers, magazines, journals (including specialised professional, trade or industry journals), such publications are not records of the business. They are the product of the business, not a record of its business activities. Similarly, publications kept by a business such as journals or manuals (say, for reference purposes) are not records of the business.

...

The approach may be tested in a commonsense way. It cannot have been intended that newspapers, magazines and journals (publication of any kind produced and/ or received in the course of a business undertaking) would be evidence of whatever was stated in them.[424]

His Honour built upon this analysis in a later ruling regarding representations on websites:

So far as is presently relevant, it is the recording of business activities in the course of carrying on the business which is critical. The publication of a book by a business providing a history of the business may record details of the business carried on but it is not a 'record of business' within the meaning of s 69. Similarly, a flyer or a media advertisement or a website publication, extolling the virtues of the business in the way such publications do, is not a record of a business merely because it purportedly records activities of the business.

It is necessary to place such a restrictive construction on s 69 because it cannot have been intended that publications of this kind would qualify, any more than it would have been intended that - in the ordinary course - books, magazines or newspapers published by the business would be covered by that section.

The thinking behind the section is clear enough. Things recorded or communicated in the course of the business and constituting or concerning business activities are likely to be correct. There is good reason for the courts to afford to such records the same kind of reliability as those engaged in business operations customarily do. The same is not true of publications made for wider dissemination, for entertainment, for advertising or for public relations purposes. Such publications are justifiably received with healthy scepticism.[425]

462 For the reasons that follow, I do not accept that the audit reports and worksheets should be excluded on the basis that they are the 'product' of the auditors and are not 'internal records' of the business of DET.

463 First, the distinction between 'product' and 'records' is problematic. It does not appear in the text of s 69(1). The language used in the provision is broad and appears to encompass any documents kept by a person, body or organisation 'in the course of, or for the purposes of' a business.[426] To exclude documents that are part of the records of an organisation, however generated and for whatever purpose under this provision (as opposed to a subsequent discretionary exclusion under s 135) involves, I think, an artificial distinction not covered by the wording of the section.

464 Second, in any event, the documents in five categories (including the audit reports and worksheets) are quite unlike the documents said to be 'product' in Roach and other cases. The documents in these categories form an integral part of the record of a core function of DET - the administration of the VTG. The auditing of an RTO and the receipt of auditors' reports is an important part of the scheme for ensuring probity in the making of payments pursuant to a VET funding contract.

465 An analogous example is that of the investigative report in New South Wales v Mannall.[427] The plaintiff, in a workplace injury negligence claim against her employer, the NSW government, tendered at trial a report (authored by a Mr Breen, a regional director of a government department) commissioned by the employer defendant into the management of the workplace. The trial judge permitted the tender and acted upon a number of the representations contained in the report. There was no issue, either at trial or on appeal, that the report was a business record, rather the complaint was that it should have been excluded under s 69(3)(a) or s 135 - to which I will refer in a moment.

466 Even if, as suggested in Forbes Engineering (Asia) Pte Ltd v Forbes (No 4),[428] the reports have a character different from mere 'routine business records', as the phrase was used in that case, such an expression does not appear in the Evidence Act and that description as I mentioned earlier is inconsistent with the breadth of the material (encompassed by the memo) covered by s 69(1).

467 Third, as the authorities demonstrate, any distinction between the records of a business and the 'products' of a business turns very much on the circumstances in which the relevant document is produced. This is underscored by the ruling of John Dixon J in Wilson v Bauer Media (Ruling No 4)[429] in which his Honour distinguished the approach in Roach and determined that an article in 'Elle Magazine' was a business record, as the relevant circumstances included that the plaintiff was an actor who appeared in the article.[430]

468 Here, the audit reports were produced for a single client, DET, to specifically report upon compliance with obligations under the VET funding contracts. This was the primary weapon of DET in combating fraud. The information contained in the audit reports was drawn from student interviews, book audits, and material provided by DET. The worksheets (whether of student interviews or file reviews) were a fundamental part of the exercise underpinning the contents of the audit reports. These circumstances are quite different to the analyst and broker's reports,[431] data collections produced for public dissemination;[432] or journal articles said to fall outside the definition of business records.[433]

469 Finally, Mr Charan sought to differentiate these documents by reference to the examples of business records provided in 1973 by the New South Wales Law Reform Commission in its report preceding the introduction of the Evidence Act in that State. One has to be extremely cautious about relying upon extrinsic material associated with earlier pieces of legislation - here the New South Wales Evidence Act 1968 which preceded the introduction of the Uniform Evidence Law. Of greater relevance is the reference by the Australian Law Reform Commission in its report of the Uniform Evidence Law where it provided as an example of a business record 'plans drawn up by an architect as part of a development application process'.[434]

470 Accordingly, I conclude that the auditors reports and worksheets fall within the definition of business records belonging to or kept by an organisation, DET, for the purpose of or in the course of its business; in this case, managing the VTG. I am also satisfied that these two classes of documents form part of the records of Protiviti - which illustrates the scope of the records intended to fall within the definition. In addition, I am satisfied that documents in the other three categories (DET internal records, RTO, and auditors correspondence) form part of the records of DET within the meaning of s 69(1).

Were the documents obtained in contemplation of a legal proceeding? (s 69(3))

471 So, at this point, I am satisfied that the documents satisfy both limbs of ss 69(1) and (2). However, Mr Charan contends that the audit reports and worksheets fall foul of s 69(3) - i.e. that the representations contained in these documents were obtained in contemplation of a legal proceeding.

472 Lindgren J in Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd (No 2)[435] said of the provision:

In order for s 69(3)(a) to apply, a person must have 'prepared' or 'obtained' the representation (not the document) in contemplation of a proceeding. It is an unusual use of language to refer to the 'preparing' of a representation, but I think that the intention is clear enough; the reference is to the person who prepared, formulated, shaped or framed the terms in which the representation is made. This will typically, perhaps always, be or include the maker of the representation.

The person who 'obtains' a representation is a person who seeks the representation or procures it to be made. This person is not the maker of the representation, but may be a person who 'prepared' it.

By referring to persons who prepared or obtained the representation, the legislature was attempting to encompass all those who might cause a representation to be made in the form which it takes.[436]

473 Other than the issue of which party bore the onus, the principles were not in dispute. In Vitali v Stachnik,[437] Barret J described the purpose of the s 69(3) as preventing:

the introduction through this exception to the hearsay rule of hearsay material which is prepared in an atmosphere or context which may cause it to be self-serving in the sense of possibly being prepared to assist the proof of something known or a least apprehended to be relevant to the outcome of identifiable legal proceedings.[438]

474 Similarly, Basten JA stated in Averkin v Insurance Australia Ltd,[439] that 'once legal proceedings are on foot or in contemplation, there is a real risk of people making self-serving statements'.[440] The test is subjective; Lindgren J in Advanced Medical Institute put the question as follows: 'whether there was a reasonable probability or likelihood of proceedings in the mind of the maker of the statement'.[441]

475 Mr Charan made two primary points in arguing that the preparation of the audit reports of the worksheets and attachments was in contemplation of litigation.

476 First, it was said, correctly, that it was important to identify who procured the representation, not the document. Here, it was said by Mr Charan that it was DET which procured the representation as the audits were carried out at its behest. So the argument went, it was the subjective state of mind of DET that was relevant and it had litigation firmly in mind from the time it suspended CTT enrolments in April 2015.

477 Second, the context in which the representations were obtained was said to be significant. The audits were 'off-cycle' and were triggered by a complaint. It was also atypical that an auditor was present during the retrieval of files which were to be reviewed (as opposed to being retrieved by the RTO staff alone). Further, an anonymous tip-off was received during CTT EOE file audit.[442] As early as 21 April 2015, lawyers representing CTT had alleged bias against DET in the conduct of the audits.[443] In this context, it was said that the Court should infer that litigation was in the contemplation of the corporate mind of DET from 1 April 2015 and, at the latest, on 2 May 2015, when DET requested Protiviti to provide sworn statements of individuals reported as having participated in the CTT training.

478 Alternatively, it was suggested that DET must have contemplated that litigation was reasonably likely after the CTT proceeding was commenced on 31 August 2015.

479 For the following reasons, I do not accept these submissions.

480 First, it was the relevant auditor (an employee of Protiviti) not DET who 'obtained' the representations contained in the student interviews. Whilst it is true that this was done as part of an audit commissioned by DET, the representation (i.e. the statement) was that of the student recorded by the auditor, and it is that representation which was 'procured' by the auditor. Similarly, in relation to the information from the contents of the files that appear on the worksheets, it was the auditors who 'obtained' the representations by their examination of the file which was then recorded on the worksheet.

481 Second, I accept Nationwide's submission that there is no basis to infer that DET had any input in the form or content of the representations of the students which are contained in the student interviews worksheets, or audit reports - DET engaged the auditors as independent contractors who reported their findings to their client. The auditor was not an agent of DET - this is entirely inconsistent with the purpose of clause 10 of the VET contract, which is aimed at ensuring the reliability of the evidence obtained. There is no evidence (either direct or by inference) that the auditor's employee or the auditing firm had any apprehension of litigation. To the contrary, the evidence of the auditors was that they simply did the job they were instructed to do. Moreover, the auditors had no interest in causing the representation to be made in a particular form as Lindgren J described in Advanced Medical Association.

482 Third, if I am wrong in characterising the relevant state of mind (i.e. in terms of contemplation of litigation) to the audit company and its employees, and that it should properly be attributed to DET, then the purpose of obtaining the representation in the audit reports was to verify that CTT and AMA had complied with the terms of their VET funding contracts, not that of litigation - actual or contemplated.

483 The auditors state in the reports that they conducted the relevant audit under clause 10 of the VET funding contracts. The correspondence between DET and the auditors supports that position. When, on 2 May 2015, DET requested sworn statements, it was simply to 'shore up' the information - this is evident from the e-mail containing the request. This was, I consider, to ensure the integrity of the audit and particularly to ensure that clause 10 was complied with. Even if it could be inferred that it was preparing itself for litigation, there is no link between the litigation and the representations.

484 In Mannall, it was contended by the employer that the Breen (the commissioned investigator) Report should have been excluded under s 69(3)(a). The Court of Appeal explained the basis for rejecting this proposition both at a trial and appellate level in the following terms:

In his reasons explaining the decision to admit the document, the trial judge acknowledged that the Report addressed a complaint made by the respondent relating to her treatment by co-workers. It was held that s69(3)(a) was not engaged because the Report was brought into existence for the purpose of the Department conducting its affairs in proper order, and ensuring that complaints or matters that the Department thought should be investigated and dealt with were in fact investigated and dealt with (Black 51).

And:

In this Court the appellant pressed the s69(3)(a) objection on the basis that the respondent's intention to institute worker's compensation proceedings was known prior to the Report being requested in January 1996. The appellant points to no evidence supporting this, beyond the lodgement of a compensation claim by the respondent on 8 January 1996 (Blue 548). Nothing links this fact to Mr Breen's activities or his motivation for carrying out his brief. The submission fails to meet the point, because s69(3)(a) requires the representations themselves to have been prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, a proceeding. [444]

485 I accept the submission of Nationwide that this reasoning is directly applicable here: the trial judge in that case determined that s 69(3) was not engaged because the report was:

brought into existence for the purpose of the Department conducting its affairs in proper order, and in ensuring that complaints ... were in fact investigated and dealt with.[445]

486 On appeal, the relevant point was that nothing linked the report writer's 'activities or his motivation for carrying out his brief' to the knowledge that the Department had of the employee's intention to commence worker's compensation proceedings.[446] Here, although DET commissioned the audit reports, there is no evidence that it shaped or framed the representations in the form that they took. It did not 'obtain or prepare' the representations in the relevant sense, and consequently, there is no link between any knowledge of DET and the activities of those who made the representations contained within the audit reports. Indeed, one could well suppose that if the representations were favourable to Mr Charan then these results would have been relied upon to contradict Nationwide's defence. Even if the audits were in any sense 'targeted', this does not equate to the reports being prepared or obtained in contemplation of a legal proceeding.

487 Fourth, whilst there had been some salvos from CTT lawyers leading up to litigation instituted by it in late August 2015, this does not mean either the auditors or DET were contemplating litigation in the months preceding this date. Ultimately, the only proceeding that was issued was that of CTT, not DET. I repeat that the relevant issue is the state of mind of the person obtaining the representation.

488 In summary, I do not accept that the representations contained in the records were prepared or obtained in contemplation of legal proceedings. There must be a real prospect of litigation in the mind of the person preparing or obtaining the representation. Here, there is no cogent evidence that this threshold has been met. I am satisfied that neither Protiviti nor DET had such a state of mind so as to engage s 69(3).

489 In my opinion, nothing turns on the question of onus or burden of proof. An appropriate inference can be drawn from the material before the Court, and the question of onus need not be addressed.

490 It follows that, subject to two matters, I am satisfied that the representations contained within the documents in the categories I have identified are admissible under s 69.

491 The first qualification relates to what was said by the High Court in Lithgow City Council v Jackson,[447] in which it held that s 69(2)(a) of the Evidence Act 1995 (NSW) is not engaged where the maker of the representation lacks personal knowledge of the asserted fact.[448] This means that a representation containing an opinion, such as an Ernst & Young 'finding' in the contract review, is not admissible although the facts underlying it may be. On the other hand, the oral representation of a student to an auditor is admissible, as is an auditor's representation as to the contents of a student's file.

492 The second relates to a representation of a student who was not enrolled until 2015. I accept that by that time, Mr Charan had no formal association with ACN and, as argued by Mr Charan, he could have no relevant association with the conduct revealed by the representation (be it file review or student interview). On the other hand, a representation of a student that he or she was not enrolled or did not participate in a 2014 course is relevant.

Does the evidence have a non-hearsay purpose under s 60?

493 It is not necessary to address this issue given my conclusion as to the admissibility of the representations contained within the documents that I have held admissible under s 69 of the Evidence Act.

Should the documents be excluded under s 135 of the Evidence Act?

494 Mr Charan seeks to exclude the documents on the basis that their probative value is substantially outweighed by unfair prejudice.

495 Section 135 reads as follows:

135 General discretion to exclude evidence

The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might -

(a) be unfairly prejudicial to a party; or

(b) be misleading or confusing; or

(c) cause or result in undue waste of time; or

(d) unnecessarily demean the deceased in a criminal proceeding for a homicide offence.

496 In Matthews v SPI Electricity Pty Ltd (Ruling No 35),[449] regarding the application of s 135(a) to the tender of several documents containing representations upon which a party wished to rely and adapted for this case, I said:

(a) Mr Charan carries the onus of persuading me that the probative value of the representations contained in the class 3 documents is significantly outweighed by their prejudicial value;

(b) the representations relied upon in each document which are sought to be adduced need to be considered independently in determining whether their probative value is significantly outweighed by its prejudicial value;

(c) this is a trial by judge alone and any question of undue emphasis (in the sense of placing excessive importance on an improper or emotional basis) being attached to the documents can be put to one side; and

(d) even if the documents are admitted, it remains open to Mr Charan to argue that they should be given little if any weight in the determination of the question of the exercise of reasonable care.

497 Mr Charan argued that admission of the representations contained in the auditors' reports and worksheets was unfairly prejudicial. He made the following points concerning the unfairness of admitting the representations including:

(a) the documents sought and relied upon are not the best evidence;

(b) there is better evidence to rely upon, such as the auditors' worksheets, rather than the audit reports;

(c) the generalised way in which the documents are drafted and expressed;

(d) it is often not clear if the document expresses fact or opinion;

(f) the failure to call the authors of most of the documents;

(g) the inability of Mr Charan to discover underlying information which is relevant to the proceeding, such as the date that the claims for funding by the RTOs were submitted; and

(h) that the underlying documents do not always match the descriptions of those documents in the audit reports.

498 Evidence is not unfairly prejudicial 'merely because it tends to damage the case of the party or support the case of the opponent'.[450] 'Unfair prejudice' includes the 'danger that the fact-finder may use the evidence to make a decision on an improper, perhaps emotional basis'.[451] However, in a trial by judge alone, where a judge rather than a jury is the trier of fact, as Sackville JA observed in Seven Network Ltd v News Ltd (No 8)[452]:

the danger of unfairness to a party might be expected to be mitigated by the judge attributing less weight to material that cannot adequately be tested in cross-examination.[453]

499 But the prejudice contemplated by s 135 is not confined to the risk of an improper or emotional approach to the evidence by the trier of fact. The ability (or inability) to test the evidence which is to be adduced was discussed by Foster J in Addenbrooke Pty Ltd v Duncan (No 5),[454] a case to which:

One matter that arguably might constitute relevant unfair prejudice is the denial to the party affected of the right to cross-examine the maker of the previous representations. In Ordukaya v Hicks [2000] NSWCA 180 at [35]-[40], Sheller JA (with whom Meagher JA agreed) appeared to approve the proposition that inability to cross-examine on material sought to be introduced as a business record is not of itself unfairly prejudicial, at least in civil proceedings where there is no jury, even though that inability may well be a very relevant consideration in the Court's decision as to the weight it should ultimately afford to the evidence.[455]

Here, Nationwide contended that it called four auditors and three students, thus affording Mr Charan the opportunity to test the evidence relevant to the content and compilation of the audit reports so that there was no relevant identifiable prejudice to Mr Charan.

500 In La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd,[456] Finkelstein J said (with Jacobson and Besanko JJ in agreement):

It is true that the meaning of the term 'unfair prejudice' has been somewhat contentious. The ALRC explained the risk of unfair prejudice as being the danger that the evidence might be used in an improper, perhaps emotional, way. Clearly, a risk of that kind is much greater in the context of jury trials. However, there are also numerous authorities that suggest that an unfair prejudice may arise from procedural considerations.[457]

501 In the New South Wales Court of Criminal Appeal, in R v Suteski,[458] Wood CJ said:

I see no reason why the inability ... to cross-examine ... should not have been relevant for s 135 and s 137 of the Evidence Act. However, the bare fact that a defendant cannot cross-examine a witness is not necessarily decisive of the issue which arises in relation to these provisions. See Ordukaya v Hick; Bakerland Pty Ltd v Coleridge, and in particular the decision of Heydon JA in R v Clark.

The decisions mentioned clearly depend upon their particular facts, that is, upon the character of the evidence involved and upon the nature or strength of the potential prejudice to the defendant. Each case, in my view, needs to be examined individually by reference to the well understood balancing exercise.[459]

502 This position was endorsed in Galvin v The Queen:[460]

The fact that the defence could not cross-examine MW was an important consideration but not necessarily a decisive one. However, as was pointed out in R v Suteski, each case has to be determined on its own particular facts depending upon the probative value of the evidence and its prejudicial effect. Suteski was a very different case to the present. In the present case the fact that the defence could not cross-examine MW might have had more significance when considering some part of his evidence than it would when considering some other part of it. For example, it might be considered that it had more prejudicial impact in regards to the alleged admission rather than it did to the evidence of complaint.[461]

503 These are other examples of a court refusing to admit a representation that cannot be tested by a party: Australian Competition and Consumer Commission v Air New Zealand (No 7);[462] Seven Network Ltd v News Ltd (No 8);[463] Ringrow Pty Ltd v BP Australia Ltd.[464] I also accepted this proposition in Matthews (No 35),[465] and excluded business records where there was no opportunity to test the contents or examine the context in which the document was produced_._

504 In James Hardie Industries NV v Australian Securities & Investments Commission,[466] the New South Wales Court of Appeal summarised the proper approach to the application of s 135:

In order to apply s 135 it is necessary first to assess the probative value of the evidence. Next, the judge must determine whether that probative value is substantially outweighed by one or more of the identified dangers. Finally, the judge must decide in the exercise of a discretion whether the evidence should not be admitted. There is a balancing exercise in which opinions must be formed, one as to the probative value of the evidence (meaning 'the extent to which the evidence could rationally affect the assessment of the probability of the existence of the fact in issue', Evidence Act, Dictionary) and the other as to the dangers. There must then be the balancing, the importance of the prior opinions being emphasised by the necessity that the probative value is 'substantially outweighed' by the danger(s).[467]

505 Whilst I accept that there is some force in the points made by Mr Charan, the following matters persuade me not to exclude the representations contained in the documents which I have determined to admit under s 69.

506 First, and in my view of critical importance, the representations arising primarily from the student interviews and the file reviews are of significant probative force. They relate to serious questions: whether a student enrolled or participated in a course whilst Mr Charan (with Mr Brown) was running the CTI group; whether incentives were offered to students; whether the files contained the appropriate documentation to satisfy the requirements of DET - all in the context of what was, in effect, an honour system for an RTO to obtain payment from DET. I will not repeat the detail of the representations contained in the audit reports, file reviews, and interviews, but it is clear that they go to the heart of the allegations of justification and, particularly, that of unscrupulous conduct on the part of CTI companies (CTT and AMA) and their failure to comply with the terms of the VET funding contract.

507 Second, and unlike the position in Matthews (No 35)[468] - and contrary to the submissions of Mr Charan - there is a wealth of evidence surrounding the production of the reports generally and, in particular, the process of interviews and file reviews. Their weaknesses and strengths are now well understood. So that the representations contained in the documents, unlike those that were excluded in Matthews, are not isolated - but rather, are supported by a large body of oral evidence from the auditors relevant to their compilation.

508 As the Court of Appeal, in Mannall,[469] said of the Breen Report to an application that it should have been excluded under s 135:

1. A submission that the Report should be excluded pursuant to s 135 of the Evidence Act was rejected. Its contents might well be prejudicial to the interests of the Department, but not unfairly so, particularly since Mr Breen was a person retained by the Department because of his experience.
2. The nub of the objection, repeated on appeal, was that it was unfair to the appellant to deprive it of the opportunity to cross-examine an important witness by introducing his evidence in this manner. This, however, is an objection to the weight, not the admissibility, of the Report and it does not point to error in the exercise of the discretion under s 135.
3. It is true that some of the primary information relied upon by Mr Breen was not established independently at trial and/or was disputed by Mr Singh. Once again, this offered no ground for a blanket objection. Most of the information relied upon was established independently. In any event, it was first-hand hearsay admissible through the medium of the business record. Mr Breen's evaluation of the situation stemmed from his own experience and the expertise that was, to a degree, acknowledged when he was first commissioned to investigate. The trial judge was entitled to conclude that it was highly likely that the hearing time would be reduced by admitting the document, leaving it to the defendant to call any of the witnesses referred to in the Report. I would add that it was on the cards that many of those witnesses would be called in any event.[470]

509 The Court also observed that it was open to take into account the criticism of the representations in assessing the weight to be given to a particular representation.

510 Third, I do not accept that the alleged discrepancies in the documents might be misleading or confusing. In Matthews (No 35),[471] I referred to the comment of Campbell J in Re GHI (a protected person):[472]

There is something bizarre in submitting to a judge sitting alone that he or she should reject evidence on the ground that it might mislead or confuse him or her. I propose to trust myself, so far as that is concerned.[473]

511 Fourth, the fact that a document is not the best evidence goes nowhere. The very point of s 69 is to enable proof of hearsay evidence.

512 Fifth, the distinction between fact and opinion is apparent and this is particularly so with the provision of the relevant information in the worksheets underpinning both the student interviews and the file reviews.

513 Mr Charan must demonstrate that the probative value is 'substantially outweighed' by the danger of unfair prejudice. He has not done so. I reject Mr Charan's application under s 135 to exclude the tender of the documents.

Conclusion as to admissibility and tender of the reports and allied documents

514 The representations contained in the documents of each category are admissible under s 69 and I am not prepared to exclude that evidence under s 135.

515 I will now examine the allegations relevant to Nationwide's defence that Mr Charan engaged in unscrupulous conduct in 2014 in his management of CTI companies - but before I do so, I think it useful to examine why Mr Charan and Mr Brown would resort to such conduct in that year.

Why would Mr Charan engage in unscrupulous conduct which took advantage of vulnerable consumers?

516 As has been set out in some detail previously, by February/March 2014, the concept of the float of CTI was evolving into a reality. For it to be successful and provide maximum return to Mr Charan and Mr Brown, it had to be demonstrated to potential investors that the CTI companies were successful and had recruited a large number of students with guaranteed government payments under Federal and State schemes. Below is a selection of email correspondence from Mr Charan to Mr Brown and others in management positions of CTI companies in 2013 and 2014, which demonstrate the importance of student recruitment and the profit derived from it.

• On 10 December 2013, Mr Charan to Ms Celona at CTT (copied to Mr Brown):

Have we got anyone knocking on our doors to give us students?[474]

• On 21 March 2014, Mr Charan to Mr Brown, Ms Mantzis (a senior CTI manager) and others:

Guys just remember these errors are only minor issues and I am confident that we will fix these errors and start submitting decent amount of clusters in the month of May and June.

Let's aim for 400 clusters for the Month of May and 800 for the Month of June!!!

• On 21 March 2014, Mr Charan to Mr Moffat and others:

Hi Mike,

Please place a greater emphasis on increasing student intake for the next 3 Months. Our desired upload amount per Month is approx 170k... Is this achievable?[476]

• On 16 April 2014, Mr Charan to Christine Napl, a CTI manager (and Mr Brown):

Can we put some urgent strategies in place to recruit more Building and Construction trainers as we are about to launch a campaign in this area but don't seem to have adequate numbers of trainers in this area...[477]

• On 20 May 2014, Mr Charan to Mr Kochhar (copied to Mr Brown):

But we need to get at least 200 enrolments in to the tafe's for the month if May. This is imperative brother.[478]

• On 29 May 2014, Mr Charan to Mr Moffat (copied to Mr Brown):

Can you please ensure they get good support from all the staff at CTT as we need these guys firing on all cylinders. We need students ASAP...[479]

• On 30 May 2014, Mr Charan to Ms Mantzis and others:

Anastasia, Can we ensure that we book classes in for week starting 9th June 2014? Don't worry about the enrolment forms right now, just get them into the classes and let's deliver the first cluster.[480]

• On 31 May 2014, Mr Charan to Mr Terry Cochrane, a CTI training co-ordinator, and others, in relation to building classes:

Terry please target suburbs that are known and easily accessible via public transport etc...[481]

Hey man,

We need to recruit girls to upload these building and construction enrolments/assessments...

We don't want bottle neck issues cause we need good amount of $$$ coming in from AMA this month man.[482]