FEDERAL COURT OF AUSTRALIA

Gore v Australian Securities and Investments Commission [2017] FCAFC 13

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed with costs.

2.    The cross appeal be dismissed with costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DOWSETT AND GLEESON JJ:

1    We have read the reasons prepared by Rares J. We wish only to address the appellant’s alleged accessorial liability in connection with s 727 of the Corporations Act 2001 (Cth) (the “Corporations Act”). We otherwise agree with his Honour’s reasons and proposed orders.

2    The primary allegation against the appellant (“Ms Gore”) concerning s 727 was that she was, directly or indirectly, knowingly concerned in the contravention of that section by other defendants. As against her, the respondent (“ASIC”) sought declaratory and injunctive relief. At some stage, ASIC identified a possible difficulty in obtaining declaratory relief as to accessorial liability for a breach of s 727. As a result, it sought, and obtained leave to amend the originating process so that declaratory relief was sought pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth), (the “Federal Court Act”). As to the availability of injunctive relief, ASIC relied upon s 1324(1) of the Corporations Act which provides:

(1)    Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute:

(a)    a contravention of this Act; or

(b)    attempting to contravene this Act; or

(c)    aiding, abetting, counselling or procuring a person to contravene this Act; or

(d)    inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or

(e)    being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or

(f)    conspiring with others to contravene this Act;

the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing.

3    In the course of our consideration of the matter, it became apparent that Ch 2 of the Criminal Code (Cth) (enacted as part of the Criminal Code Act 1995 (Cth)) (the “Criminal Code”) applies to offences under the Corporations Act. The contravention of s 727 is a criminal offence. Chapter 2 of the Criminal Code deals with, amongst other things, the so-called physical and fault elements of offences created under Commonwealth legislation. It also deals with accessorial liability. In general, accessorial liability under the Corporations Act is regulated by s 79 which provides:

A person is involved in a contravention if, and only if, the person:

(a)    has aided, abetted, counselled or procured the contravention; or

(b)    has induced, whether by threats or promises or otherwise, the contravention; or

(c)    has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)    has conspired with others to effect the contravention.

4    However s 1324(1) does not use the words “involved in a contravention”. It rather contains its own accessorial provisions in subparas 1324(1), (c), (d), (e), and (f). These paragraphs are similar to paras (a), (b), (c) and (d) of s 79.

5    We sought and obtained further submissions from the parties concerning these matters. We have taken those submissions into account.

ACCESSORIAL LIABILITY, APART FROM THE CRIMINAL CODE

6    There is, in our view, a distinction between being concerned in, or party to a contravention and being knowingly concerned in, or party to that contravention. Neither participation in the alleged contravention, nor knowledge of the elements of the contravention is sufficient in itself to attract accessorial liability under s 1324(1)(e). Rares J has demonstrated that Ms Gore so participated. We need say nothing further about that aspect. The remaining question concerns the state of Ms Gore’s knowledge at the times at which she participated.

7    In Yorke v Lucas (1985) 158 CLR 661 Mason ACJ and Wilson, Deane and Dawson JJ held that in order to establish, in civil proceedings, that a person is liable as an accessory to a statutory contravention, all of the elements of that contravention must be proven, as must be the alleged accessory’s knowledge of the essential facts constituting the contravention. At 661, their Honours said, concerning a legislative provision similar to s 79 and paras (c) to (f) of s 1324(1):

In our view, the proper construction of par. (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.

8    Brennan J (as his Honour then was) published separate reasons to the same effect. At 676, his Honour adopted a passage from the joint reasons of Wilson, Deane and Dawson JJ in Giorgianni v The Queen (1985) 156 CLR 473 in which their Honours held that for the purposes of the criminal law, an accessory’s participation, “must be intentionally aimed at the commission of the acts which constitute it”.

9    In Giorgianni, the Court was comprised of Gibbs CJ and Mason, Wilson, Deane and Dawson JJ. The case concerned an offence of culpable driving, an offence of strict liability. The conduct in question was the driving of a motor vehicle with defective brakes. The relevant legislation provided that where a person aided, abetted, counselled or procured another person to drive dangerously, resulting in death or grievous bodily harm, the first person might be convicted of the offence of culpable driving. The appellant was so convicted, although it had not been proven that he knew of the defective brakes. At 481 Gibbs CJ endorsed the following passage from the reasons of Lord Goddard CJ in Johnson v Youden [1950] 1 KB 544 at 546:

Before a person can be convicted of aiding and abetting the commission of an offence he must at least know the essential matters which constitute that offence. He need not actually know that an offence has been committed, because he may not know that the facts constitute an offence and ignorance of the law is not a defence.

10    At 482 Gibbs CJ said:

Numerous other cases, including, in Australia, Blackmore v. Linton ... and Wilson v. Dobra ... (a case under the Criminal Code (W.A.)), accept that the general principle is that a person can be convicted as a secondary party only if he had knowledge of the essential circumstances. Further, as has already been indicated, the person charged must have intended to help, encourage or induce the principal offender to bring about the forbidden result. In other words, both knowledge of the circumstances and intention to aid, abet, counsel or procure are necessary to render a person liable as a secondary party ... .

11    At 484, Gibbs CJ considered two “licence” cases. In Carter v Mace [1949] 2 All ER 714 a person who conducted a transport clearing house was convicted as an accessory to the offence of carrying cargo without an appropriate licence. The decision appears to support the proposition that for the purpose of deciding whether there is accessorial liability, failure to make reasonable enquiries may be equated to knowledge. Gibbs CJ rejected that proposition. In Smith v Jenner [1968] Crim LR 99, a divisional court also rejected it. As far as the reports go, in neither case was it suggested that the prosecution had to show that the alleged accessory knew of the need for a relevant licence, as opposed to the facts creating such need. However it seems unlikely that in either case, the alleged accessory could have denied knowledge of the need for the relevant licence. A person conducting a transport clearing house would probably be aware of transport licensing matters. The driving instructor in Smith v Jenner would surely have known that a learner-driver needed a licence or permit. If these assumptions are correct, there would have been little point in the defendant in either case raising such matters. We make these observations only as a possible explanation of the fact that the point was apparently not raised. Another explanation might be that each defendant accepted that the prosecution did not have to prove knowledge of the law.

12    In Giorgianni, Mason J (as his Honour then was) also approved Lord Goddard’s view in Johnson v Youden. His Honour said:

(T)he “link in purpose” between the secondary party and the principal offender is not established where a person does something to bring about, or render more likely, the commission of an offence by another in circumstances in which, through ignorance of the facts, it appears to him to be an innocent act.

13    At 500, Wilson, Deane and Dawson JJ said:

It is necessary, therefore, to proceed upon the basis that the offences of culpable driving were committed by Renshaw. It is those offences which the appellant was alleged to have aided, abetted, counselled or procured. To have done so he must have intentionally participated in the principal offences and so must have had knowledge of the essential matters which went to make up the offences of culpable driving on the occasion in question, whether or not he knew that those matters amounted to a crime ... .

14    In considering whether an alleged accessory’s recklessness is sufficient to constitute knowledge, their Honours said at 505:

The third question raised by the passage which we have cited from Reg. v. Glennan is whether it is possible to aid, abet, counsel or procure the commission of an offence by acting recklessly. Aiding, abetting, counselling or procuring the commission of an offence requires the intentional assistance or encouragement of the doing of those things which go to make up the offence. The necessary intent is absent if the person alleged to be a secondary participant lacks knowledge that the principal offender is doing something or is about to do something which amounts to an offence. We have already referred to Johnson v. Youden ... and the other cases in which this point is made clearly. The same point was expressed differently but with equal clarity by Lord Goddard C.J. in Thomas v. Lindop ... , where he said:

“More than once this Court has pointed out that it is impossible to convict persons of aiding and abetting the commission of an offence unless they know the facts which must be proved to show that an offence has been committed … . It is, of course, not necessary to show that the person knew that it was an offence, because he cannot plead ignorance of the law, but where anyone is charged with aiding and abetting a person to commit an offence, it must, at least, be shown that he knew what that person was doing. A person who does not know of the acts which another person is doing cannot be charged with aiding and abetting him because he does not know that he is doing acts which amount to an offence.”

See also Pereira v Director of Public Prosecutions (1988) 82 ALR 217.

15    It is important to note that when, in Giorgianni, Wilson, Deane and Dawson JJ referred to, “a secondary participant (who) lacks knowledge that the principal offender is doing something or is about to do something which amounts to an offence”, their Honours were not suggesting that the alleged accessory had to know that the relevant circumstances constituted a contravention of the law. Such a proposition would have been quite inconsistent with Lord Goddard’s observation concerning ignorance of the law, with which observation their Honours apparently agreed. We make this point because, in some of the other cases concerning the question similar, superficially ambiguous passages appear. In our view, it is settled that in general, it is not necessary to prove knowledge of the law, or knowledge that a particular fact situation attracts legal consequences. That proposition applies to the proof of both principal and accessorial liability. Of course, the Parliament may legislate to contrary effect.

16    Using the broad language of Mason J in Giorgianni at 494, the necessity of a “link” between the alleged accessory and the principal offender will not be established if the facts known to the alleged accessory demonstrate an apparently innocent act. In Giorgianni the unknown facts concerned the brake defects, not knowledge of the relevant law. In Yorke v Lucas, the absent knowledge was the misleading or deceptive nature of the representations, again not absence of knowledge of the relevant law. The point is that the provisions which establish accessorial liability, civil or criminal, generally use expressions such as “knowingly concerned in” or “aiding and abetting”. Those provisions have traditionally been construed as requiring actual knowledge of all relevant circumstances. This requirement comes from such accessorial provisions, not from the provisions creating the relevant principal contravention. As a result, it is not uncommon for accessorial liability to depend upon knowledge, proof of which is not required in order to prove the contravention as against the principal offender.

CONSTRUCTION OF SECTION 727 AND PART 6D.2

17    Section 727 provides:

Offer of securities needs lodged disclosure document

(1)    A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with ASIC.

Offer form to be included in or accompanied by disclosure document

(2)    A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless:

(a)    if a prospectus is used for the offer—the offer or form is:

(i)    included in the prospectus; or

(ii)    accompanied by a copy of the prospectus; or

(b)    if both a prospectus and a profile statement are used for the offer—the offer or form is:

(i)    included in the prospectus or profile statement; or

(ii)    accompanied by a copy of the prospectus or profile statement; or

(c)    if an offer information statement is used for the offer—the offer or form is:

(i)    included in the statement; or

(ii)    accompanied by a copy of the statement.

...

Non quoted securities—waiting period after lodgment before processing applications for securities

(3)    A person must not accept an application for, or issue or transfer, non quoted securities offered under a disclosure document until the period of 7 days after lodgment of the disclosure document has ended. ASIC may extend the period by notice in writing to the person offering the securities. The period as extended must end no more than 14 days after lodgment.

Simple corporate bonds

(3A)    Subsection (3) does not apply in relation to an offer of securities under a 2 part simple corporate bonds prospectus if the securities are in the same class as existing securities that are quoted on a prescribed financial market immediately before the application period for the prospectus but for differences as to:

(a)    the fixed term of the securities (if any); or

(b)    the rate at which interest is payable under the securities; or

(c)    the dates on which the holders are to be paid interest under the securities.

Issue or transfer not to breach section 708 ceiling

(4)    If a person relies on subsection 708(1) to make offers of securities without disclosure to investors under Part 6D.2, the person must not issue or transfer securities without disclosure to investors under that Part if the issue or transfer would result in a breach of the 20 investors ceiling or the $2 million ceiling (see subsections 708(3), (4), (5), (6) and (7)).

Circumstances in which a person is taken not to contravene this section

(5)    If:

(a)    a person relies on subsection 708AA(2) or 708A(5) to make offers of securities for issue or sale without disclosure to investors under Part 6D.2; and

(b)    the notice given under that subsection purported to comply with subsection 708AA(7) or 708A(6) but did not actually comply with subsection 708AA(7) or 708A(6);

the person is taken not to contravene this section.

18    At first instance, the case was conducted upon the basis that proof of the s 727(1) contraventions would effectively constitute proof of the s 727(2) contraventions, at least for the purpose of establishing accessorial liability. See the judgment at [290]-[291] and [452]-[453]. The appeal was conducted on the same basis. We proceed accordingly.

19    Section 727(1) proscribes particular conduct. By virtue of other provisions in the Corporations Act, any contravention of that section is a criminal offence. The proscribed conduct is offering securities or distributing application forms for such an offer. However not all such offers or distributions are proscribed. The proscription relates only to an offer which needs disclosure under Pt 6D.2 and then, only if no disclosure document has been lodged with ASIC. Part 6D.2 defines the circumstances in which there must be disclosure and prescribes the form that such disclosure must take. Section 727(1) does not refer to any particular section contained in Pt 6D.2, but to the Part as a whole, suggesting that the overall effect of Pt 6D.2 must be that the offer, “needs disclosure to investors under Part 6D.2”.

20    In Pt 6D.2, s 706 provides:

An offer of securities for issue needs disclosure to investors under this Part unless section 708 or 708AA says otherwise.

21    Relying upon this section, ASIC submits that Pt 6D.2 establishes a general rule requiring disclosure, to which there are exceptions. In Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc (2009) 71 ACSR 1 at [35]-[40], Martin J adopted that approach, leading to the conclusion that in proceedings brought by ASIC, alleging infringement of s 727, it was for the respondent to prove that the exceptions were engaged. The primary Judge, at [242]-[246], appears to have adopted the same approach.

22    As we read Pt 6D.2, it deals separately with offers of securities for issue (in ss 706, 708 and 708AA), and offers of securities for sale (in ss 707, 708 and 708A). Thus it seems that there must be at least two general rules (one established by s 706 and the other, by s 707) and two sets of exceptions. Alternatively, it might be said that the “rules” established by Pt 6D.2 are:

    for an offer of securities for issue, those prescribed by ss 706, 708 and 708AA; and

    for an offer of securities for sale, those prescribed by ss 707, 708 and 708A.

Such an approach would be consistent with the reference in s 727 to an offer needing “disclosure to investors under Pt 6D.2” and the similar usage in ss 706, 707 and elsewhere in Pt 6D.2.

23    Neither s 706 nor s 707 can operate without reference to s 708 and either s 708AA or s 708A. Section 706 does not, in terms, provide that all offers need disclosure. The “general rule” is that all offers require disclosure other than as provided in s 708 and s 708AA. Similarly s 707 (itself a very complex section) is subject to s 708 and s 708A.

24    It is easy enough to assert that ss 706 and 707 establish general rules, and that subsequent sections offer exceptions. However one must guard against arbitrary classification. The classification depends upon the proper construction of Pt 6D.2. In Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249, especially at 257-258 (per Dawson, Toohey and Gaudron JJ), the High Court considered a similar question. Great importance was attached to the fact that the proceedings were criminal in nature. This consideration militated against the adoption of a construction which led to the imposition of an evidentiary burden on the defendant. Further, the matters treated as relevant to the proper construction of the relevant provisions went well beyond the wording of the statutory provisions. The contravention to be proven in the present case is also criminal in nature. As we have said, s 727, itself, focusses on the effect of Pt 6D.2 rather than the operation of any individual section.

25    The approach taken in Chugg was applied more broadly by French CJ in Momcilovic v The Queen (2011) 245 CLR 1. At [44] his Honour said:

The common law “presumption of innocence” in criminal proceedings is an important incident of the liberty of the subject. The principle of legality will afford it such protection, in the interpretation of statutes which may affect it, as the language of the statute will allow. A statute, which on one construction would encroach upon the presumption of innocence, is to be construed, if an alternative construction be available, so as to avoid or mitigate that encroachment. On that basis, a statute which could be construed as imposing either a legal burden or an evidential burden upon an accused person in criminal proceedings will ordinarily be construed as imposing the evidential burden.

26    Heydon J may have been expressing a similar view when, at [467], his Honour spoke of the unpalatable nature of reversal of the onus of proof in criminal matters. The other members of the Court seem not to have addressed this aspect of the case. See also R v Hunt [1987] 1 AC 352 at 374, per Lord Griffiths, Lord Keith of Kinkel and Lord Mackay of Clashfern concurring. At 386, Lord Ackner indicated that his separate reasons were substantially the same as those of Lord Griffiths.

27    In the present case, there is no compelling reason for construing Pt 6D.2 and s 727 as imposing any probative onus upon an accused contravener. In those circumstances we are inclined to the view that the onus is not on the alleged contravener to prove the operation of s 708 and s 708AA. However he or she would bear an evidentiary onus, requiring that he or she lead evidence, or point to some aspect of the prosecution evidence, which raises the issue. If that evidentiary onus were satisfied, ASIC would have to exclude such operation of the “exceptions”. Neither Ms Gore nor any of the other respondents alleged that s 708 or s 708AA was engaged. Nor did any of them challenge ASIC’s contention that the offers required disclosure to investors and lodgement with ASIC. Ms Gore has not pointed to any evidence which might discharge the evidentiary onus.

28    There may be another reason for concluding that ASIC bore the burden of proof concerning the operation of ss 708 and 708AA, at least in connection with the declaratory relief. In JD Heydon, Cross on Evidence (Australian ed) the author states at [7070]:

In the case of relief by declaratory order, the party seeking the declaration has the burden of proof of any matter which is a necessary element of the declaration sought “(even if in proceedings by that party for relief of another kind, or in proceedings by the other party, that matter would not arise unless raised (and the burden of proof consequently assumed) by the other party).”

Where a party seeks a negative declaration (eg a declaration that an acquisition will not contravene s 50 of the Competition and Consumer Act 2010 (Cth)), that party bears the onus of proving that negative proposition.

(Footnotes omitted.)

29    There is ample authority for these propositions. See Hume v Monro (No 2) (1943) 67 CLR 461 at 474, Blanch v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653 at 658-660 and Warner v Hung (No 2) (2011) 297 ALR 56 at [46]-[48]. See also the decision of French J (as his Honour then was) in Australian Gas Light Company v Australian Competition and Consumer Commission (2003) 137 FCR 317 at [355]-[356]. In Warner, Emmett J said at [46]-[47]:

46    As a general rule, the burden of proof of a fact that is an essential element in a claimant's cause of action lies on the claimant. A party who seeks relief has the burden of satisfying the Court of facts that, in the absence of proof of other facts, would justify the grant of that relief. What those facts might be will depend on the nature of the relief sought and the operation of any relevant presumptions. In the case of relief by declaratory order, the precise terms of the declaration sought assume particular significance. Thus, the party seeking a declaratory order has the burden of proof of any matter that is a necessary element of the declaration sought, even if, in a proceeding by that party for relief of another kind, or in a proceeding by the other party, that matter would not arise unless raised, and the burden of proof consequently assumed, by that other party (see Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 657 at 660).

47    Putting it another way, when a person commences a declaratory proceeding, that person bears the legal onus of proof. That is so even though the majority of the facts that are relevant may be in the opposing camp. It is for the claimant to establish the ambit of the rights to be declared, and to prove all the facts necessary to enable the declaration to be made (see Blanch v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653 at 655). When a party seeks a negative declaration, such as, for example, a declaration that an acquisition will not contravene s 50 of the Competition and Consumer Act 2010 (Cth), that party bears the onus of proving that negative proposition (see Australian Gas Light v Australian Competition and Consumer Commission (No 3) (2003) 137 FCR 317 at [355]-[356]).

30    That there may be a special probative burden in connection with declaratory relief does not necessarily mean that in order to obtain the other relief sought in this case, the onus was on ASIC to exclude the operation of ss 708 and 708AA. ASIC could have established an entitlement to such other relief without seeking or obtaining declaratory relief. In any event, the point was not taken at the trial or on appeal.

Was accessorial liability proven?

31    We once again set aside any question concerning the operation of the Criminal Code. At [254] the primary Judge identified the elements of the s 727(1) offence as:

    the alleged contravener made an offer of securities or distributed an application for an offer of securities;

    the offer needed disclosure to investors under Pt 6D.2; and

    no prospectus, profile statement or offer information statement had been lodged with ASIC.

32    Although we would not necessarily express the elements of the s 727 offences in identical language, we take issue only with his Honour’s articulation of the second element. In our view, it should not be understood as meaning or implying that the principal contravener needed to know that Pt 6D.2 led to such necessity or that Pt 6D.2 even existed. The facts to be proven were those which would engage Pt 6D.2.

33    At [288] his Honour said that none of the defendants had contested ASIC’s contention that each of the SPG and WPO offers necessitated the provision of a disclosure document to offerees and its lodgment with ASIC. For present purposes, however, the relevant question is as to Ms Gore’s knowledge. The primary Judge concluded at [451] that Ms Gore needed only to know that the offers were being made, or that the application forms were being distributed, and that no disclosure document had been lodged with ASIC. His Honour based this conclusion upon the decision of the Full Court in Rafferty v Madgwicks (2012) 203 FCR 1, particularly at [257]-[258].

34    In Rafferty the relevant question was whether a firm of solicitors was involved in a contravention of the Trade Practices Act 1974 (Cth). The case concerned an alleged contravention of the Franchising Code of Conduct (Cth) (the “Franchising Code”). Pursuant to the Franchising Code, a franchisor had to give certain documents to a prospective franchisee at least 14 days before the latter entered into a franchise agreement, or any agreement to enter into such an agreement. The solicitors advised that the proposed agreement would not be a franchise agreement. As a result, the documents were not provided. In proceedings alleging contravention of the relevant legislation, the solicitors were joined upon the alleged basis that they were involved in the contravention. At first instance the primary Judge held that the solicitors did not know that “the Franchising Code applies to or in relation to the agreements”. The Full Court considered that such approach was wrong, and that it was not necessary that the applicants show that the solicitors knew that the Franchising Code applied. However it was necessary that they show that the solicitors knew that the relevant party was entering into a franchise agreement, or an agreement to enter into such an agreement. At [257]-[258] the Full Court said:

257    Where the Franchising Code is the applicable industry code, the existence of a franchise agreement, or an agreement to enter into a franchise agreement is the sine qua non of any contravention of s 51AD. Thus in order for Madgwicks to hold the requisite intent, Madgwicks had to be aware that T2SA in the case of the RA, and Embleton in the case of the HOA, were entering into a franchise agreement and an agreement to enter a franchise agreement respectively. Consistently with Rural Press, Madgwicks was not required to make the correct legal judgment that the Code applied, nor was Madgwicks required to know that the relevant conduct was a contravention of s 51AD. However, Madgwicks was required to know that the RA was a franchise agreement and the HOA was an agreement to enter a franchise agreement.

258    Accordingly, having regard to our identification of the essential elements of the s 51AD contraventions in this case, we accept, as the Rafferty parties submitted, that, in order to establish that Madgwicks fell within s 75B as a person involved in the contraventions of s 51AD by T2SA and Embleton, it was not necessary for the Rafferty parties to establish that Madgwicks knew that the Code applied to or in relation to the RA and the HOA. It was, however, necessary for Madgwicks to know, with respect to the RA, that T2SA was entering into a franchise agreement and, with respect to the HOA, that Embleton was entering into an agreement to enter into a franchise agreement. In view of our conclusion on this point, it is unnecessary to address the submissions of the Rafferty parties that essential elements of a contravention could only be composed of matters of fact and not matters of fact and law.

35    Clearly, the Court considered that it was not necessary to prove that Madgwicks knew of any aspect of the Franchising Code or the relevant legislation. It is perhaps a little unclear as to whether Madgwicks had to know that the relevant proposed agreement was a franchise agreement in the sense in which that description is generally used, or whether they had to know that it was a franchising agreement according to a definition in the Franchising Code. However, even in the latter case, it seems that Madgwicks would only have had to know the facts which led to the engagement of the relevant provisions. The categorical rejection of the proposed need for any knowledge concerning the legislation and the Franchising Code cannot have any other result. After considering the evidence concerning that issue at [260]-[267], the Full Court concluded that the solicitors did not know that the proposed agreements had that character.

36    It follows that in this case, ASIC would have to prove that Ms Gore knew that the offer had the characteristics which would engage Pt 6D.2. ASIC would not have to prove that she knew of the requirements contained in either s 727(1) or Pt 6D.2. In our view, ASIC had to prove that Ms Gore knew:

    that an offer of securities was made or an application for an offer was distributed;

    the facts which created the need for disclosure, that is, in the absence of any reliance on s 708 or s 708AA, the content of the offer by reason of which it was an “offer of securities for issue”; and

    that no disclosure document had been lodged with ASIC.

37    The primary Judge considered it to be “incongruous” that against a principal contravener ASIC had to prove three matters, and against an alleged accessory, it had to prove knowledge of all three, but in fact had only to prove knowledge of two, the offer or distribution and the failure to lodge the relevant documents with ASIC. At [427] his Honour summarized ASIC’s case as follows:

ASIC submitted that proof of the accessory involvement of the MOGS defendants in the contravention of s 727(1) required it to establish only that those defendants knew the matters which gave rise to the contravention, namely, that there had been an offer of securities or the distribution of an application form for an offer of securities and that no disclosure document had been lodged with ASIC. It contended that it was it not necessary for it to establish, in addition, that the MOGS defendants knew that the offers needed disclosure to investors under Pt 6D.2 and, in particular, that it was not necessary for it to establish that none of the exemptions contemplated by s 708 was available.

38    We have previously sought to demonstrate that neither Giorgianni nor Yorke v Lucas required that it be proven that an alleged accessory knew of the relevant legal provisions which rendered the principal contravener’s conduct unlawful. Those decisions establish only that it must be proven that the alleged accessory knew the relevant factual matters leading to illegality. The decision in Rafferty is to similar effect. To require more would be inconsistent with the long-established proposition that ignorance of the law is no defence. The relevant knowledge in this case is knowledge of the facts which led to the need for disclosure, not that such disclosure was required by Pt 6D.2, or even that it existed. In this case, knowledge of the content of the offer was proof of the need for disclosure. Thus it was necessary that ASIC prove that Ms Gore knew that content.

39    The apparent incongruity is explained by the difference between our view as to the content of the second element of the offence and that expressed by the primary Judge. His Honour considered that the second element was that the offer needed disclosure pursuant to Pt 6D.2, following the literal words of s 727(1). In our view, it was that there were facts which engaged the provisions of Pt 6D.2. His Honour’s approach fell foul of the rule that ignorance of the law is no excuse and, in our view, was not required by the language of s 727(1) which can be readily construed in the manner which we have identified. Our approach does not contain that defect.

40    Having regard to the evidence which was before the primary Judge, and subject to our subsequent discussion of Ch 2 of the Criminal Code, we consider that the primary Judge properly concluded that:

    there had been an offer of securities and/or distribution of an application for such an offer;

    in circumstances in which there was need for the lodgment of a disclosure document, those circumstances being the contents of the offer;

    no disclosure document had been lodged; and

    Ms Gore knew those matters.

THE CRIMINAL CODE

41    As Rares J has demonstrated, Ch 2 of the Criminal Code applies to the s 727 offences. His Honour has also explained the operation of Ch 2 in the present case. The matters to be proven against Ms Gore included the physical and fault elements identified by the application of Ch 2 to s 727. It may be arguable that s 1308A of the Corporations Act, in applying s 11.2 of the Criminal Code (dealing with parties to an offence) excludes the operation of s 79 and those parts of s 1324 of the Corporations Act which deal with accessorial liability. Such an approach might achieve a more coherent approach to the application of Ch 2 to offences under the Corporations Act. However the better view is that s 1308A applies Ch 2 of the Criminal Code only to offences. It has no application to accessorial liability under s 79 or s 1324, at least where accessorial liability does not, of itself, constitute an offence.

42    In R v Donaldson (2009) 103 SASR 309 the Full Court of the Supreme Court of South Australia considered the application of Ch 2 of the Criminal Code to the s 727 offences. At [45] Duggan J identified the physical elements of the s 727(1) offence as:

1.    An offer was made to an investor.

2.    The offer was in relation to a security.

3.    The offer was of such a nature as to require disclosure to the investor of the information prescribed by Part 6D.2 of the Corporations Act.

4.    There was a failure to lodge a disclosure document with ASIC.

43    We doubt whether any purpose is served by treating the offer and the subject of the offer as different physical elements. It may be that in a jury trial, it would be easier, in directing the jury, to break down the offence in that way. Logically, however, a description of the act of offering or distribution necessarily involves identification of the object offered or distributed. In this case, that object can only be fully described, having regard to the provisions of Pt 6D.2. We also consider that, at least in theory, it is not necessary to show that an offer was made “to an investor”. Section 727(1) does not so provide. The reference to “investors” in s 727(1) is to notional investors to whom disclosure must be made pursuant to Pt 6D.

44    The process of identifying the elements of an offence, without regard to Ch 2 of the Criminal Code, is not necessarily the same process as is required in identifying the physical and fault elements of an offence pursuant to that Chapter. However, the physical elements of the offence pursuant to the Criminal Code, are that:

    an offer of securities was made or an application form was distributed;

    there was a need for disclosure pursuant to Pt 6D.2; and

    no disclosure document was lodged with ASIC.

45    Again, the requirement was that the facts leading to the need for disclosure be established, not the principal contravener’s knowledge of those facts or of the effect of Pt 6D, or even of its existence. Section 727(1) and Pt 6D.2 do not identify the relevant fault elements of the offence. Hence s 5 of the Criminal Code applies. Of the physical elements, the first is a matter of conduct, and so the fault element is, by default, intention, meaning intention to make the relevant offer or distribute the application. The second and third elements may be either states of affairs (and therefore conduct) or circumstances in which conduct, or a result of conduct occurs. For conduct the default fault element is intention. For a circumstance the default fault element is recklessness. The basis for distinguishing between a state of affairs and a circumstance is unclear. However s 4.2 of the Criminal Code provides that conduct can only be a physical element if it is voluntary, being the “product of the will of the person whose conduct it is”. To be relevant for the purposes of the Criminal Code, a state of affairs must be voluntary in the sense in which s 4.2 uses that term. It is possible that a particular factual situation might be characterized as a state of affairs, if voluntary, but as a circumstance, if not voluntary, assuming that the nature of the particular situation permits either characterization. There may be circumstances in which a state of affairs is clearly not a circumstance and vice versa.

46    At this point we should stress that one must distinguish clearly between the physical and fault elements required to be proven as against the principal contraveners (which matters are governed by Ch  2 of the Criminal Code) and the knowledge necessary in order that Ms Gore be found to be an accessory to the contravention of s 727(1) (which matter is regulated by s 1324 of the Corporations Act and the cases to which we have referred). As against both the principal contraveners and Ms Gore, ASIC had to prove the three physical elements and the fault elements. It may have been difficult for ASIC to prove that the requirement for disclosure arose as the product of the wills of the principal contraveners. It may also have been difficult for ASIC to prove that the failure to lodge a disclosure document was a product of their respective wills. It is more likely that those matters were the products of Mr Gore’s will. Hence they should be treated as circumstances rather than states of affairs, the default element being, in each case, recklessness.

47    Section 5.4 of the Criminal Code provides:

(1)    A person is reckless with respect to a circumstance if:

(a)    he or she is aware of a substantial risk that the circumstance exists or will exist; and

(b)    having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(2)    A person is reckless with respect to a result if:

(a)    he or she is aware of a substantial risk that the result will occur; and

(b)    having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(3)    The question whether taking a risk is unjustifiable is one of fact.

(4)    If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element.

Section 5.2 defines “intention” as follows:

(1)    A person has intention with respect to conduct if he or she means to engage in that conduct.

(2)    A person has intention with respect to a circumstance if he or she believes that it exists or will exist.

(3)    A person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events.

Section 5.3 defines “knowledge” as follows:

A person has knowledge of a circumstance or a result if he or she is aware that it exists or will exist in the ordinary course of events.

48    The effect of these provisions is that recklessness may be proven, not only by proving recklessness, but also by establishing intention or knowledge, fault elements which might generally be considered to be more serious than recklessness. For reasons which we have given in connection with s 4.2 of the Criminal Code, it is unlikely that, with respect to the second and third physical elements, ASIC could prove intention as against the principal contraveners. Thus it seems that ASIC had to prove that the principal contraveners knew, or were reckless as to whether disclosure was needed and as to whether a disclosure document had been lodged.

49    As against Ms Gore, ASIC had to prove that she knew not only the physical elements established as against the principal contraveners, but also that they were reckless as to the requirement for disclosure, and as to whether lodgment had occurred, or knew such matters. It may be possible to argue that the requirement for “knowledge of the essential facts constituting the contravention” would be satisfied if Ms Gore knew that the principal contraveners made offers or distributed applications, that the offers needed disclosure and that there had been no disclosure, even if she did not know that the principal contraveners knew, or had been reckless as to such matters. However such an approach would raise the possibility that a person could be an accessory in the absence of a contravention.

50    We should say something about the decision of the Court of Appeal of New South Wales in R v JS (2007) 230 FLR 276. In that case, the accused was charged with a breach of s 39 of the Crimes Act 1914 (Cth) (the “Crimes Act”). That section provided:

Any person who, knowing that any book, document, or other thing of any kind, is or may be required in evidence in a judicial proceeding, intentionally destroys it or renders it illegible or undecipherable or incapable of identification, with intent thereby to prevent it from being used in evidence, shall be guilty of an offence.

51    Section 31 of the Crimes Act, provided that the term “judicial proceeding” meant:

Judicial proceeding means a proceeding in or before a federal court, court exercising federal jurisdiction or court of a Territory, and includes a proceeding before a body or person acting under the law of the Commonwealth, or of a Territory, in which evidence may be taken on oath.

52    It seems that in isolating the physical and fault elements of the s 39 offence, the prosecution submitted that whether proceedings were “federal” was a question of law for the judge, not the jury to determine. The Court rejected that proposition, holding that the Criminal Code necessarily applied to the elements of the offence as identified in the provision which established it. Although the decision has some similarity to the exercise which we have performed with respect to Ch 2 of the Criminal Code, it has no real present relevance.

CONCLUSION

53    The impact of the Criminal Code upon these proceedings was not raised at first instance, and so was not considered. Although we are able to identify the physical and fault elements of the relevant offences, it would be difficult for this Court to relate the evidence to those elements. The matter would almost certainly have to be remitted for further hearing. It is also possible that, with knowledge of the matters to be proven pursuant to the Criminal Code, Ms Gore would choose to give evidence. The present options are:

    to uphold the finding at first instance, notwithstanding the failure to have regard to the Criminal Code; or

    to remit the matter for determination in accordance with the law.

54    If these proceedings were for a criminal offence, we would send the matter back for reconsideration. Notwithstanding the fact that the parties conducted the case in a particular way, it would be inappropriate for a conviction to have been recorded for an offence which was, in effect, unknown to the law. However proceedings alleging accessorial “liability” pursuant to s 1324 are not of that nature. Given the purely civil nature of the proceedings, we see no obstacle to allowing the result to stand, based as it is upon the way in which the parties chose to conduct the case at first instance. We would dismiss grounds 1 to 6 of the amended notice of appeal.

55    As to the duration of the injunction, we have concluded that the primary Judge correctly found that Ms Gore was knowingly concerning in contraventions of s 727. Hence a primary basis for Ms Gore’s appeal concerning that matter disappears. To the extent that Ms Gore submitted that the period was otherwise excessive, we agree with the reasons and conclusions reached by Rares J. We consider that the question depended upon the view of the primary Judge as to how the public could best be protected, having regard to the totality of her misconduct. The accessorial findings concerning s 727 would have had little impact on that question. As to the cross-appeal, we also agree with his Honour’s reasons and conclusions. In our view, Ms Gore’s conduct in connection with the contraventions of s 727 was part of a larger scheme. We consider that the primary Judge’s decision adequately reflected her overall culpability.

56    As to the costs at first instance, our conclusions concerning the s 727 issues dispose of a primary basis for Ms Gore’s attack on his Honour’s orders. His Honour was in a better position, than are we, to determine the question. No basis has been demonstrated for varying such orders.

57    The appeal and cross-appeal should be dismissed. The appellant should pay the respondent’s costs of the appeal. The cross-appellant should pay the cross-respondent’s costs of the cross-appeal.

Associate:

Dated:    13 February 2017

REASONS FOR JUDGMENT

RARES J:

Table of Contents

Introduction

58    Marina Gore (Mrs Gore) has appealed against the primary judge’s declarations that she was knowingly concerned in four contraventions by various principal contravenors of s 727(1) and (2) of the Corporations Act 2001 (Cth) (to which generally, for simplicity, I will refer as “the Act”) and two contraventions of both s 1041H of that Act and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and against his Honour’s orders that, first, she be enjoined for 7½ years from, in effect, carrying on business in the financial services industry, and, secondly, she pay 80% of 95% of the costs of the Australian Securities and Investments Commission (ASIC) from the time of her joinder as fifteenth of eighteen defendants in the proceedings below. ASIC has cross appealed against the term of the injunction complaining that it was manifestly inadequate.

59    The principal contravenors made various offers of securities, in two private placement memoranda (PPM) using corporate vehicles incorporated in the British Virgin Islands (BVI) and a website located in the Cayman Islands. The primary judge found that each PPM was in the nature of a prospectus for the issue of shares to investors, and that no prospectus or other “disclosure document” had been lodged with ASIC in accordance with Pt 6D.2 of the Act. It will be necessary to explain the factual background in more detail below. However, there are essentially three issues that arise in Mrs Gore’s appeal.

60    First, his Honour held that ASIC had failed, but did not need, to prove for the purposes of establishing her accessorial liability, that Mrs Gore knew one of the three factual elements that constituted a contravention of s 727(1) and (2). That element was that an offer for securities needed disclosure to investors under Pt 6D.2 of the Act (in which s 727 was located). If Mrs Gore had to know that the offers for securities needed disclosure to investors under Pt 6D.2, then his Honour’s finding that she was an accessory to the principals’ contraventions of s 727 cannot stand. Mrs Gore also argued that his Honour erred in finding another element, namely that she knew that the offers for securities had not been lodged with ASIC.

61    Secondly, the primary judge held that Mrs Gore was knowingly concerned in making a representation conveyed by each of the offers for securities, namely that moneys invested by Australian self-managed superannuation funds (SMSFs) in the future would be used for the purchase of property by the offeror when each of those representations was misleading or deceptive or likely to mislead or deceive. His Honour found that Mrs Gore knew that the principals who made those representations did not have reasonable grounds for doing so and thus the representations were deemed to have been misleading (see: s 769C(1) of the Corporations Act; s 12BB(1) of the ASIC Act). Mrs Gore challenged the primary judge’s findings that she had actual knowledge that each PPM conveyed that representation and that it was made without reasonable grounds.

62    Thirdly, the primary judge held that the purpose of the remedy of an injunction in s 1324(1) was not to punish the person enjoined but rather was to protect the public. Mrs Gore complained that the term of the restraint on her was excessive. In contrast, ASIC argued that his Honour should have construed the power to enjoin to include a punitive aspect and that the 7½ year term of the restraint was manifestly inadequate.

The statutory scheme

63    Chapter 6D of the Corporations Act dealt with fundraising. Offering securities for issue included inviting applications for the issue of the securities (s 700(3)) and Ch 6D applied to offers received in Australia, regardless of where any resulting issue, sale or transfer occurred (s 700(4)). Any attempt to contract out of the application of Ch 6D was void by force of s 703. Part 6D.2 began with an “overview” in Div 1, where s 704 provided that, relevantly, ss 706, 707 and 708 “say when an offer for securities needs disclosure to investors under this Part”. There were four categories of disclosure documents that had to be used for offers that needed disclosure under Pt 6D.2 (s 705). Division 2 was headed “Offers that need disclosure to investors” and commenced with ss 706 and 707 that, relevantly, provided:

706    Issue offers that need disclosure

An offer of securities for issue needs disclosure to investors under this Part unless section 708 or 708AA says otherwise.

707    Sale offers that need disclosure

Only some sales need disclosure

(1)    An offer of securities for sale needs disclosure to investors under this Part only if disclosure is required by subsection (2), (3) or (5).

Off market sale by controller

(2)    An offer of a body’s securities for sale needs disclosure to investors under this Part if:

(a)    the person making the offer controls the body; and

(b)    either:

(i)    the securities are not quoted; or

…

and section 708 does not say otherwise. (emphasis added)

64    By force of s 708, offers of a body’s securities did not need disclosure to investors under Pt 6D.2, relevantly, if all were personal offers and none of those offers would result in a breach of the 20 investors and $2 million ceilings. A personal offer could only be accepted by the person to whom it was made, the offer having been made to that person as someone likely to be interested in it, having regard to the offeree having indicated interest in offers of that kind or the offeree having had some prior contact, professional or other connection, with the offeror (s 708(2)). The two ceilings would be breached if, in any 12 month period, the offer resulted in the issue of securities to more than 20 people and the amount raised by the issuer exceeded $2 million (s 708(3)).

65    Ordinarily, if an offer of securities needed disclosure under Pt 6D.2, a disclosure document in the form of a prospectus or information statement had to be prepared (s 709(1)). Division 4 of Pt 6D.2 dealt with the required disclosure that any such disclosure document had to contain (ss 710-716). Next, Div 5 dealt with what a proposing offeror needed to do to make an offer that required disclosure, and s 718 required that a “disclosure document to be used for an offer of securities must be lodged with ASIC”.

66    Division 1 of Pt 6D.3, headed “Prohibitions and Liabilities”, contained s 727 which, relevantly provided:

727    Offering securities without a current disclosure document

Offer of securities needs lodged disclosure document

(1)    A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with ASIC.

Offer form to be included in or accompanied by disclosure document

(2)    A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless:

(a)    if a prospectus is used for the offer - the offer or form is:

(i)    included in the prospectus; or

(ii)    accompanied by a copy of the prospectus; or

(b)    if both a prospectus and a profile statement are used for the offer--the offer or form is:

(i)    included in the prospectus or profile statement; or

(ii)    accompanied by a copy of the prospectus or profile statement; or

(c)    if an offer information statement is used for the offer--the offer or form is:

(i)    included in the statement; or

(ii)    accompanied by a copy of the statement.

Note:    Sections, 707, 708, 708AA and 708A say when the offer needs disclosure to investors under Part 6D.2.

…

Issue or transfer not to breach section 708 ceiling

(4)    If a person relies on subsection 708(1) to make offers of securities without disclosure to investors under Part 6D.2, the person must not issue or transfer securities without disclosure to investors under that Part if the issue or transfer would result in a breach of the 20 investors ceiling or the $2 million ceiling (see subsections 708(3), (4), (5), (6) and (7)).

Circumstances in which a person is taken not to contravene this section

(5)    If:

(a)    a person relies on subsection 708AA(2) or 708A(5) to make offers of securities for issue or sale without disclosure to investors under Part 6D.2; and

(b)    the notice given under that subsection purported to comply with subsection 708AA(7) or 708A(6) but did not actually comply with subsection 708AA(7) or 708A(6);

the person is taken not to contravene this section. (emphasis added)

67    A person who contravened s 727(1), (2) or (4) committed a criminal offence by force of s 1311 and items 236, 237 and 239 of Sch 3 to the Corporations Act prescribed penalties for contravention of each of s 727(1), (2) and (4) of 200 penalty units or imprisonment for five years or both. It was common ground before the primary judge and in the appeal, that a finding in relation to an alleged contravention of s 727(1) would produce a similar finding about the contravention of s 727(2) in the identical factual situation. Thus, it was not necessary for his Honour or this Court to consider the application of s 727(2) separately and for brevity I will refer below only to s 727(1).

68    Division 7 of Pt 1.2 of the Corporations Act, headed “Interpretation of other expressions”, provided for accessorial liability in s 79 as follows:

79    Involvement in contraventions

A person is involved in a contravention if, and only if, the person:

(a)    has aided, abetted, counselled or procured the contravention; or

(b)    has induced, whether by threats or promises or otherwise, the contravention; or

(c)    has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)    has conspired with others to effect the contravention. (emphasis added)

69    Relevantly, s 1041H(1), which was in Pt 7.10 (and was in similar terms to s 12DA(1) of the ASIC Act to which I need not separately refer again), provided:

1041H    Misleading or deceptive conduct (civil liability only)

(1)    A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive.

Note 1:    Failure to comply with this subsection is not an offence.

Note 2:    Failure to comply with this subsection may lead to civil liability under section 1041I. For limits on, and relief from, liability under that section, see Division 4.

70    For the purposes of Ch 7 of the Corporations Act, s 769C (which was in similar terms to s 12BB(1) of the ASIC Act to which I need not separately refer again) provided that if a person made a representation with respect to a future matter and the person did not have reasonable grounds for doing so, the representation was taken to be misleading.

71    The Corporations Act and the ASIC Act conferred powers in numerous sections on the Court to make orders in respect of contraventions. Relevantly, s 1101B(1) provided that on an application by ASIC, the Court could make such orders as it saw fit if, first, it appeared that a person had contravened a provision of Ch 7 and, secondly, the Court were “satisfied that the order would not unfairly prejudice any person”. Some examples of orders that the Court could make under s 1101B(1) appeared in s 1101B(4).

72    Part 9.5 of the Corporations Act also conferred powers on courts. In particular, s 1324(1) (which was in relevantly similar terms to s 12GD of the ASIC Act to which I need not separately refer again) conferred power on the Court to grant an injunction as follows:

1324    Injunctions

(1)    Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute:

(a)    a contravention of this Act; or

(b)    attempting to contravene this Act; or

(c)    aiding, abetting, counselling or procuring a person to contravene this Act; or

(d)    inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or

(e)    being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or

(f)    conspiring with others to contravene this Act;

the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. (emphasis added)

73    In proceedings, other than for an offence, s 1332 provided that the civil standard of proof, on the balance of probabilities, applied to establish, or satisfy the Court, for any purpose relating to a matter arising under the Act that a person had “contravened a provision of the Act” (s 1332(a)) or that “a person has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to a contravention [of] … a provision of this Act” (s 1332(d)).

The primary judge’s decisions

74    The primary judge delivered his principal reasons where he decided issues of liability (Australian Securities and Investments Commission v ActiveSuper Pty Ltd (In Liq) (2015) 235 FCR 181) before deciding the question of relief in his second set of reasons (Australian Securities and Investments Commission v ActiveSuper Pty Ltd (In Liq) (No 2) (2015) 106 ACSR 302 (the relief reasons)). The principal reasons are detailed and what follows is substantially a summary of the findings that his Honour made relating to the liability of Mrs Gore.

75    Mrs Gore was a director of MOGS Pty Ltd and a company associated with her was one of its shareholders. Her husband, Craig Gore (Mr Gore), worked as a consultant to MOGS. As at 2011, he had extensive corporate experience having been a director of over 100 companies.

76    Mark Adamson was a shareholder and, between 23 May 2011 and 23 April 2012, a director of MOGS. He was a lawyer who worked for Evans Ellis Lawyers and he performed a considerable amount of legal work for MOGS. From about August 2011, MOGS paid directly Mr Adamson’s and his secretary’s salaries, as employees of the law firm, as well as the firm’s overheads for its Gold Coast office, which was in the same premises as MOGS’ offices.

77    Graeme Stonehouse was also a director of MOGS and a company associated with him was one of its shareholders.

78    MOGS was a property developer that, principally, sold house and land packages to both non-SMSF and SMSF investors. In the second half of 2011, MOGS began to target sales to SMSFs and, by late that year, such sales accounted for over 50% of its business. MOGS engaged financial planners who dealt directly with the investors. Its business model involved it, or one of its subsidiaries, acquiring and then selling land to an investor on the basis that, for a non-SMSF investor, MOGS would co-ordinate the construction of a home on the land by a builder with whom MOGS had agreed the price. Initially, the non-SMSF investor would pay the purchase price of the land and then progress payments for the construction work. MOGS sought to achieve a profit of between $20,000 and $30,000 on each property.

79    However, because a superannuation fund could not borrow to finance construction of a building, MOGS only sold completed homes to SMSFs. Accordingly, when selling to SMSF investors, MOGS had to finance both the land acquisition and construction costs. As MOGS’ sales to SMSFs became an increasingly significant part of its business in the second half of 2011, its need for finance also increased. That was because it had to acquire the land and construct the house before completion could occur under its agreement with the SMSF investor. Usually, that process took about six months. MOGS found it difficult to raise the necessary finance and often was unable to make payments as and when they were due.

80    His Honour found that MOGS’ financing requirements and difficulties in the second half of 2011 largely explained the desire of those involved with MOGS to make use of funds invested by SMSFs in shares issued pursuant to the two PPMs in issue on this appeal, namely those PPMs issued by Syndicated Property Group Ltd (SPG) (the SPG PPM) and Worldwide Property Opportunities Ltd (WPO) (the WPO PPM), as well as funds raised by investments in a venture pursuant to what his Honour called the US Realty Memorandum. The latter US Realty Memorandum was an earlier fundraising, in which Mrs Gore was not a participant, but from the proceeds of which she and MOGS derived benefits. Each of SPG and WPO was incorporated in the BVI in late 2011.

81    On 23 November 2010, Mr Gore entered into a personal insolvency agreement with a trustee under Pt X of the Bankruptcy Act 1966 (Cth) under which he had to ensure that, relevantly, the recently incorporated GFCO9 Pty Ltd paid the trustee $1 million as an annual fee for three years by equal monthly instalments for the benefit of his creditors. On about 9 May 2011, MOGS and GFCO9 entered into a consultancy agreement under which MOGS agreed to pay GFCO9 a “base fee” of $2 million annually for the provision of Mr Gore’s services and Mr Gore had to be available to manage and co-ordinate the pursuit of, substantively, MOGS business as a property developer. The “base fee” for Mr Gore’s services was a very significant liability for MOGS, which only had net assets at 30 June 2011 and 2012 respectively of $29,000 and $150,000. As his Honour found, the consultancy agreement was not at arm’s length and, in order for MOGS to meet its obligation to pay the annual “base fee”, it had to increase its income considerably. Of course, GFCO9 and Mr Gore needed MOGS to do so in order for him to meet his obligation under the personal insolvency arrangement.

82    His Honour found that Mr Gore exercised considerable control and influence over MOGS’ affairs in the latter part of 2011 and early part of 2012. He also found that Mr Gore was the driving force behind the establishment of SPG, WPO and a Cayman Islands company, Cayco Management Ltd, that had been incorporated in January 2012. Mr Gore was made bankrupt on 18 April 2012.

83    Jason Burrows controlled ActiveSuper Pty Ltd and he also, together with Justin Gibson, exercised considerable control over Royale Capital Pty Ltd. In late 2010 Royale distributed the US Realty Memorandum to some SMSF investors promoting it as an investment opportunity. That document was entitled “US Deals Invest Now” and recommended that SMSFs to whom it was marketed acquire shares in an American company that would be formed to purchase “distressed” real estate in the United States with a view to it realising a profit after five years. Over 185 SMSF investors took up that “opportunity” and paid ActiveSuper a total of about $3.1 million for investment in it. His Honour found that only about $455,000 of that sum came to be invested in 14 properties in Arizona by four limited liability companies incorporated in the United States (the LLCs). No shares in the LLCs or any other entity were ever issued to any of the SMSF investors in respect of their investments.

84    On 12 September 2011, Mr Gore met Mr Burrows for the first time. Mr Gore then learnt that ActiveSuper was establishing about 10 new SMSFs each week. He told Mr Burrows that he was not aware of the “gold mine” on which he (Mr Burrows) was sitting. Mr Gore was not a man to let others sit idly on such treasures. He saw, as the primary judge found, the opportunities for MOGS to obtain money to finance its operations, as well as to sell properties to ActiveSuper’s and Royale’s SMSF clients.

85    By the first week of October 2011, Mr Gore had suggested that Royale could raise the $4 million in finance that MOGS needed and lend it to MOGS, secured by a fixed and floating charge over MOGS’ assets and personal guarantees from its directors. On 7 October 2011, Mr Gore, Mr Adamson and Mr Burrows, among others, had a meeting with Minter Ellison Lawyers, at which they discussed establishing a fund that would be regulated under the managed investments scheme provisions in the Corporations Act.

86    However, the primary judge found that by 12 October 2011 Mr Gore had come to the view that a fund not regulated by Australian law was preferable. At a meeting around this time at which, among others, Mr Adamson, Mr Stonehouse, Mr Burrows and Mr Gibson were present, Mr Gore suggested establishing a fund in the BVI. His Honour found that Mr Gore’s purpose from the inception of his scheme was to use entities in the BVI (the BVI scheme) to avoid the Australian regulatory regime and that Mr Adamson, Mr Stonehouse and Mr Burrows knew this. He inferred that “[Mrs] Gore must also have known of this purpose”.

87    On 14 October 2011, Mr Gore sent an email to Mrs Gore, Mr Adamson and others with a draft PPM for a pooled investment scheme established in the BVI. That draft became the basis for the WPO PPM. Mr Gore’s covering email said that there was a lot of work to be done and that the addressees and he should talk on the forthcoming weekend. Mrs Gore’s biography in the October 2011 draft PPM recorded that she was currently completing an executive MBA course at Bond University. The draft evolved considerably over the subsequent months. His Honour found that:

Some of the emails were also sent to Mr Stonehouse and Ms Gore. An email of 27 October 2011 from Mr Gore to Ms Gore, Mr Stonehouse, Mr Adamson and Mr Chant attached an Information Memorandum for Worldwide Property and Distressed Investment Opportunities Fund (WWPDIO Fund) and said:

I made these changes on the plane to NYC so they don’t include the changes and spelling that Marina made. Rather than me fucking it up by attempting to load them in I thought I could send them back to you and you could do so I don’t fuck up wat (sic) Marina has done.

The “Marina” to whom Mr Gore referred was Ms Gore. The email indicates that Ms Gore was providing active assistance in the development of the information memorandum. (emphasis added)

88    In fact, his Honour mistranscribed the emphasised passage in the email. The actual words in the email did not include the word “and” in the passage emphasised. Rather, Mr Gore wrote “they don’t include the changes in spelling that Marina made”. Mr Gore’s spelling and capacity to express himself in grammatical English was not his forte, as his Honour’s notation of “sic” in the quoted passage from Mr Gore’s email showed.

89    Nonetheless, apart from her visit to the BVI in 2012, referred to at [104]-[105] below, there was little evidence of Mrs Gore participating in the development of the PPMs. Mrs Gore used that evidentiary gap to argue that his Honour was wrong to infer that since each of Mr Adamson, Mr Stonehouse and Mr Burrows knew that Mr Gore’s purpose in conceiving the BVI scheme was to avoid the Australian regulatory regime, she “must also have known of this purpose”. However, it is not relevant to the issues in this appeal whether she knew that this was her husband’s purpose or not. That is because his Honour stated that he would not have been prepared to make a finding that Mrs Gore knew that the offers did require disclosure under Pt 6D.2 of the Corporations Act, had it been necessary for him to do so. ASIC did not raise a contention on the appeal that his Honour should have found that Mrs Gore knew the offers needed disclosure.

90    His Honour found that from mid October 2011 Mr Gore pursued two strategies for MOGS first, to borrow moneys raised by the use of the US Realty Memorandum, and, secondly, to develop funds in the BVI that could be a source of finance for MOGS.

91    On 19 October 2011, the LLCs entered into an agreement to lend MOGS $1 million. Mrs Gore and Mr Stonehouse signed that agreement on behalf of MOGS.

92    By 24 October 2011, Mr Gore and Mr Adamson were flying to the BVI where they stayed until 9 November 2011. They met there with Jose Santos, a member of Forbes Hare, a law firm in the BVI and, an associate of Mr Gore, Jeffrey George. They instructed Mr Santos to incorporate WPO, which occurred on 31 October 2011. The next day, Mr Gore instructed Mr Santos to establish a second fund vehicle that was registered in the BVI on 2 November 2011 and it later came to be called SPG. WPO and SPG appointed the accountancy firm, Deloitte, as their auditor. Mr Santos also recommended that an investment manager be appointed for the two fund vehicles which later led to the incorporation of Cayco in the Cayman Islands on 31 January 2012.

93    SPG acquired the shares in the four LLCs from Mr Burrows in mid-November 2011. Around 9 November 2011 Mr Gore and Mr Adamson returned to Australia and after this work began in developing the SPG PPM and the WPO PPM.

94    The issues in this appeal centre on the role that Mrs Gore had in, first, the use of the SPG PPM and WPO PPM as fundraising documents and, secondly, the making in each PPM of the representation that the moneys invested by Australian SMSFs pursuant to it, in the future, would be used for the purchase of property by its issuer, WPO or SPG, respectively.

95    On 15 November 2011, Mr Gore met with Mr Burrows, Mr Gibson, Mr Adamson and a Mr Smerdon (Mr Smerdon had introduced Mr Gore to Mr Burrows and Mr Gibson). Mr Gore discussed the proposed BVI fund structure and said that funds raised by Royale would be placed in a BVI fund account and then lent to MOGS or its subsidiaries to provide construction finance. Mr Gore said that MOGS could not give mortgages over its properties because they were “optioned”. Instead, Mr Gore said, MOGS could offer a fixed and floating charge over its assets to the lender as security. He said MOGS’ assets would include the project building sites. Mr Gore also said that both Mr Stonehouse and Mrs Gore, as directors of MOGS, would provide guarantees.

96    The primary judge found that it was improbable that Mr Gore would have suggested that guarantees would be given without having first discussed that matter with Mr Stonehouse and Mrs Gore. As Mrs Gore argued, it is difficult to reconcile his Honour’s finding about this postulated discussion with her reaction to having to sign the guarantees six months later on 10 May 2012, that is described at [124] below.

97    The minutes of a meeting of MOGS’ directors and executives on 21 November 2011 at which, among others, Mrs Gore, Mr Gore, Mr Adamson and Mr Stonehouse attended, recorded that “the proposed resolution funding was discussed and it was noted that RES [an acronym for MOGS’ business name and internet address ‘realestatestock.com.au’] should prepare for 7 build commencements during December 2011”. His Honour inferred that one or both of Mr Gore and Mr Adamson had reported on the developments relating to the BVI fundraising plans and the likely availability of finance for MOGS from that source.

98    Around 22 November 2011, the LLCs and MOGS entered into a deed of variation of the 19 October 2011 loan agreement to increase the facility to $1.47 million. Mrs Gore and Mr Stonehouse executed that deed on behalf of MOGS. Between 21 October 2011 and 28 November 2011, MOGS received $1,075,000 under this facility and some of that was paid to GFCO9.

99    Mr Gore and others continued working on finalising what became the WPO PPM during November 2011, December 2011 and January 2012. The only additional emails from this period that involved Mrs Gore, to which his Honour or the parties on appeal referred, were those to which I refer below. The first was an email dated 12 December 2011 from Mr Gore to Mrs Gore, Mr Stonehouse, Mr Adamson and Steve Chant (an employee of MOGS) that Mrs Gore forwarded back to her husband without comment on 30 January 2012. Mr Gore’s 12 December 2011 email stated:

Final version of the document for your review if [sic] it is not issued this week no further funds will flow. I am sure you are all aware of that and on top of those matters relating to the business but I thought I should raise it with you. (emphasis added)

100    The attachment was headed “Prospectus” and included a note that Australian counsel were to provide appropriate terminology relating to restrictions on the PPM’s distribution in Australia.

101    Early on 13 December 2011, Mr Stonehouse sent an email to Mr and Mrs Gore, Mr Adamson and Mr Chant headed “Royal [sic] Capital and SMSF property sales” for the MOGS board to review and discuss “URGENTLY”. The email raised three issues, namely commissions, building contracts and set up costs. Mr Stonehouse noted that, first, MOGS was due to pay 10 commissions of $15,000 in December 2011, and another 10 in January 2012 and there was “a plan to ramp it up for February to 20 a month”. He observed there was a need for careful planning and to “know where the funds are coming from to fund these plans”. Secondly, he noted that MOGS had “committed to 11 houses in Whyalla to accommodate the SMSF sales and Royal[e]” for a total expenditure of $1.47 million over the forthcoming three months. He also noted that 10 more houses were to be built in Gympie involving a liability of $1.7 million over the next four months, with 10 more per month from then onwards. He said that “[w]e need to have things in place to accommodate these actions”. Thirdly, under the heading “set up cost” he wrote:

I understand we have committed money to set up cost but it is important we have clear guidelines to this expenditure which is now in excess of 500K.

What I want to understand better is how we are going to fund these plans. Whilst [I] agree with the direction and the plans themselves I think it is important we have the funds to cover these expenses so that Royal[e] and SMSF sales can be accommodated without putting our business at risk. This is an imperative to moving forward.

Funds need to flow more consistently and more in line with the needs rather than the other way. We need a plan so Xmas doesn’t become a disaster. (emphasis added)

102    His Honour found that Mr Stonehouse’s reference in the email to “set up costs” related to the cost of establishing the BVI scheme and that he was concerned that the level of expenditure on it was putting MOGS’ core business at risk. The primary judge also found that a meeting occurred at which Mr Stonehouse’s email was discussed and that Mr Gore was likely to have provided some detail to those present about the position regarding the implementation of the BVI scheme. His Honour found that Mr Stonehouse’s statement in the emphasised part of his email, that he agreed with the direction and plans relating to the BVI scheme, showed that he had at least a general understanding of the scheme and its elements. However, the primary judge ultimately found that the evidence did not warrant a finding that Mr Stonehouse knew that the two PPMs contained the misleading representation.

103    Mr Stonehouse’s concerns about MOGS’ dire cash flow position appeared to have been well founded, for on the next day, 14 December 2011, Mr Gore sent an email to Mr Burrows. The email, headed “Cash”, pressed Mr Burrows for an advance of $300,000. There was no evidence of what, if anything, came of that request.

104    Matters progressed slowly until February 2012. Mrs Gore’s next involvement with the BVI scheme, other than her email of 30 January 2012 referred to at [99] above, was when she decided to accompany Mr Gore, with their infant and nanny, on an expensive trip to the BVI that commenced on 28 February 2012. During their first week in the BVI, Mr and Mrs Gore attended meetings with, among others, Mr Burrows, Mr Chant and professionals there who were advising on the proposed structure and documentation for the BVI scheme.

105    His Honour made these findings:

There is evidence as to Ms Gore’s purpose in travelling to the BVI. Mr Adamson said that, in a conversation before February 2012, Ms Gore had told him that she wanted to do two things:

One, she wanted to go to the BVI to make sure that what was being set up over there was appropriate. And two, she wanted to confirm that – or to enquire that what was being proposed in Australia could be done.

Later, Mr Adamson said:

We had a general discussion as to whether or not persons could invest in the PPM. It wasn’t a request for legal advice, it wasn’t a detailed discussion, it was a general discussion as to whether or not persons were entitled to invest in a PPM could invest in a PPM. And then following on from that, Marina wanted to go to the BVI to make sure that the businesses in the BVI were properly structured businesses and were with people of real value.

That evidence, which I accept, is sufficient by itself to warrant a finding as to Ms Gore’s purpose. (emphasis added)

106    In my opinion, Mrs Gore’s purpose appeared from those findings to have been to satisfy herself of the legality and appropriateness, both in the BVI and Australia, of using a fundraising scheme operated from the BVI and that the proposal was not a sham. Mrs Gore had an interest in those matters by reason of her position as a director of MOGS and its need for funds. The primary judge’s finding of her purpose is reinforced by Mr Adamson, in early March 2012, giving instructions to his firm, Evans Ellis, to prepare an advice to Forbes Hare, who were acting for SPG, concerning whether it was appropriate for Australian SMSFs to invest in SPG. Evans Ellis gave Forbes Hare advice on that topic on 6 March 2012. His Honour found that Mr Gore provided Mr Burrows with a copy of the advice on the same day.

107    ASIC’s oral and written submissions asked us to infer, from the email address used to send that advice to Mr Burrows, that Mrs Gore either saw or sent it. ASIC did not file a notice of contention, yet it asked the Full Court to consider many documents to support new findings that ASIC argued should be made on appeal or about which his Honour had not made findings. It is not appropriate to conduct an appeal in that way or to invite an appellate court to make new findings to support the ultimate result arrived at in the trial without a notice of contention that articulates clearly what additional or other finding or findings the primary judge should have made: cf Fox v Percy (2003) 214 CLR 118 at 125-126 [23] per Gleeson CJ, Gummow and Kirby JJ.

108    I am not prepared to interfere with the primary judge’s specific finding that Mr Gore sent Mr Burrows the 6 March 2012 email attaching Evans Ellis’ advice. His Honour had the benefit of hearing the full trial and receiving a significant amount of documentary evidence, coupled with oral evidence, to inform his fact finding. Only selected parts of the record at trial were before the Full Court, being the portions that the parties chose to include in the appeal papers based on the notices of appeal and cross appeal. His Honour’s detailed judgment made a limited number of specific findings as to Mrs Gore’s relevant involvement in the contraventions alleged against her. The issues on the appeal are whether those findings were open or should not have been made.

109    It was common ground at the trial that Mrs Gore had seen the SPG PPM. Indeed, she sent an email to Mr Burrows, a director and the chief executive officer of SPG, as the document stated, on 8 March 2012 in which she wrote “See attached final version”, referring to the attached SPG PPM that stated its issue date as 6 March 2012. That document stated prominently that it had not been registered in the United States of America and was not directed to persons in the United Kingdom. It also stated that the shares had “not been registered under the laws of any country or jurisdiction”. It asserted that the investment objective was “to take advantage of the significant downturn in property values particularly in the United States and Australia” and that the base currency of the SPG fund was, and the shares were to be offered in, Australian dollars. The SPG PPM stated that it provided “a significant opportunity for investments into the real estate markets” for SMSFs. It said that the SMSF market was “the fastest growing financial market in Australia”.

110    On 8 March 2012, the SPG PPM was finalised and posted on the Cayco website. In an email that Mr Gore sent that day to Mr Burrows, Mr Anderson and others he said “we are going live today”. Royale almost immediately began to market investment in SPG to SMSF investors. His Honour found that in the preceding week there had been a rush of activity before the launch of the SPG PPM.

111    His Honour found that in the first part of March 2012, Mrs Gore was involved in work that progressed the preparation of loan agreements, compliance manuals, other documents relating to the establishment of the funds to be administered by SPG and WPO and the website of Cayco.

112    On 11 March 2012, Mrs Gore sent Ms Erskine-Shaw, an employee of MOGS, a graph that showed fluctuating values for homes. Mrs Gore asked Ms Erskine-Shaw to prepare a high resolution version of the graph for the Cayco website. The graph was included in the final version of the WPO PPM. The next day Mrs Gore forwarded to Ms Boyd of Deloitte, who was assisting in developing the Cayco website, the version of the graph that Ms Erskine-Shaw had sent back to Mrs Gore. Mrs Gore also sent it to Mr Chant on 12 March 2012, saying that the graph was the one that Mr Gore wanted on the website.

113    SMSF investors began applying for shares pursuant to the SPG PPM on 14 March 2012.

114    Mrs Gore was also a copied addressee of emails of 16, 17 and 18 March 2012 that Ms Boyd exchanged with Mr Gore, Mr Adamson, Mr Chant, Mr George and others relating to development of the Cayco website. Importantly, his Honour found that Mrs Gore had been provided with copies of the draft WPO PPM on 17 and 18 March 2012 and that these were not relevantly different to the final version.

115    On 18 March 2012, Mr Gore sent an email to Mrs Gore, Mr Adamson, Mr Chant and Mr George saying, inaccurately as it happened, that “we have lift off” in relation to the WPO PPM. In fact, the WPO PPM was only finalised on 23 March 2012. It contained, as had earlier drafts, a prominent statement in block letters at the foot of the first page of its text that:

The securities described in this PPM … have not been registered or qualified for offer or sale to the public under the securities laws of any country or jurisdiction. (emphasis added)

116    The fund and shares in it were denominated in Australian dollars. The WPO PPM also said that:

the Fund has identified a unique opportunity for Australian Self Managed Superannuation Funds (“SMSFs”) to access residential and commercial property developments not normally available to SMSFs.

117    Additionally, the application form in the WPO PPM stated that:

The Subscriber understands and agrees that neither the Fund [being WPO] nor the Shares are listed with or approved by any securities regulatory authority in any jurisdiction. (emphasis added)

118    On 23 March 2012, Royale commenced almost immediately marketing investment in WPO to SMSF investors and SMSF investors began subscribing for shares pursuant to the WPO PPM.

119    The primary judge found that the marketing of both the SPG and WPO PPMs was successful and, from 14 March 2012, ActiveSuper and Royale transferred money to SPG and WPO sourced from SMSF investors. SPG and WPO transferred some of those receipts (totalling over $500,000) to a bank account of Cayco.

120    On 18 April 2012, Mr Gore became a bankrupt.

121    On 20 April 2012, Cayco transferred $69,200 to a United States bank account of Mrs Gore’s with Wells Fargo. His Honour made no finding about why Mrs Gore might have received this sum. However, prior to 10 May 2012, none of SPG, WPO or Cayco had entered into any loan agreements with anyone.

122    At Mr Gore’s direction, given in late March or early April 2012, Mr Adamson and Mr Chant travelled to the BVI to finalise loan agreements and they began doing so with Forbes Hare from about 18 April 2012.

123    23 April 2012 was the last date that his Honour found that any conduct or contravention of the Corporations Act involving the raising of money from the SPG PPM had occurred. By that date, ActiveSuper and Royale had received 53 subscriptions for shares pursuant to the SPG PPM. Those subscriptions raised about $1,020,000.

124    Importantly, on 10 May 2012, Mr Gore met in MOGS’ boardroom with Mrs Gore, Mr George, Mr Stonehouse, Mr Adamson, Mr Burrows and Mr Chant. The purpose of the meeting was the execution of loan agreements and guarantees relating to loans by SPG, WPO and Cayco. Mr Gore told the meeting that the documents were loan agreements and guarantees that MOGS was prepared to sign and that Mrs Gore and Mr Stonehouse would also sign as guarantors. His Honour found:

The execution of the documents did not proceed immediately as Ms Gore wished to speak to Mr Gore, Mr Stonehouse and Mr Adamson before doing so. She expressed concerns about signing a personal guarantee. Mr and Ms Gore, Mr Stonehouse and Mr Adamson withdrew for 15-20 minutes. Mr Adamson said that Ms Gore had a second concern namely, signing a guarantee without knowing that a lender had met all its obligations. The evidence did not disclose the discussion between Mr and Ms Gore, Mr Stonehouse and Mr Adamson but ultimately Ms Gore agreed to sign the guarantees. All those present then proceeded to sign the documents, which were positioned around the board table. (emphasis added)

125    The various loan agreements were between MOGS or one of its subsidiaries, as borrower, and subsidiaries of WPO, as lender, for loans of various amounts between $505,000 and $4,200,590. Once the documents had been signed, Mr George packed them into a suitcase and left. His Honour found that while copies of the loan agreements had been provided to ASIC, the whereabouts of the guarantees and any duplicates were unknown. Thus, there was no direct evidence of the terms of the guarantees.

126    As noted above, the last receipt complained of under the SPG PPM had occurred on 23 April 2012. His Honour did not make findings relating to SPG or its subsidiaries entering into any loan agreements or guarantees with MOGS or any of its subsidiaries.

127    By 12 June 2012, ActiveSuper and Royale had received 69 subscriptions by investors for shares pursuant to the WPO PPM. Those subscriptions raised about $1.38 million.

128    The primary judge found that all, or nearly all, of the funds raised by SPG were provided to MOGS after ActiveSuper had transferred them from SPG’s bank account to WPO’s bank account. MOGS treated the payments as loans to it as, indeed, the events of 10 May 2012 and the execution of documentation on that date demonstrated was the reality. His Honour made no specific findings as to how MOGS dealt with the total of $2.4 million raised from Australian SMSFs through both PPMs.

129    Thus, the primary judge found unfulfilled the representation in each PPM that money invested by Australian SMSFs pursuant to each of the SPG and WPO PPMs, in the future, would be used for the purchase of property by SPG or WPO respectively. That was because an advance or loan to MOGS could not be a purchase of property by SPG or WPO. The representation was as to a future matter and so the representor had to have reasonable grounds for making it by force of s 769C(1) of the Corporations Act.

130    Moreover, the primary judge found that, at the time that each PPM was published on Cayco’s website and provided to SMSF investors, “everyone involved contemplated, that the funds subscribed would be made available to MOGS and or its subsidiaries”.

131    The primary judge held that s 1324(1) of the Corporations Act operated independently of s 79 to confer a power on the Court to grant an injunction to restrain a person from engaging in accessorial conduct. He reasoned that s 79 did not impose any liability and was only definitional. He said that the question of “whether s 79 is available in relation to ss 727 and 911A does not arise because the expression “involved in a contravention” is not used in either provision”.

132    His Honour said that s 1324(1) was a remedial provision and its application was not confined to accessories who had “contravened the primary proscription”. He held that s 1324(1) did not use the expression “involved in a contravention”, unlike s 79, and that other provisions of the Corporations Act used that expression:

to establish a means of civil recovery when being involved in a contravention is not itself a contravention of the primary proscription (for example, ss 670E, 1022B, 1041I, 1043L and 1073D) and to authorise the making of other forms of remedial orders in like circumstances (for example, ss 920A, 1324B and 1325). These circumstances do not depend upon the accessory being liable as a contravenor of the primary provision. Indeed, if they did, the very wording would be unnecessary. (emphasis added)

133    His Honour identified three elements necessary to establish a contravention of s 727(1), namely, first, the principal made, or distributed, an application form for an offer of securities, secondly, the offer needed disclosure to investors under Pt 6D.2 and, thirdly, a disclosure document for the offer had not been lodged with ASIC. He held that the principal had to negative the second element. His Honour did not identify separately the mental elements necessary to establish a contravention of s 727(1).

134    The primary judge found that the relevant principles governing accessorial liability (citing Giorgianni v The Queen (1985) 156 CLR 473 and Yorke v Lucas (1985) 158 CLR 661) were as follows:

(a)    in order for a person to be knowingly concerned in a statutory contravention, the person must have been an intentional participant, with knowledge of the essential elements constituting the contravention;

(b)    it is not necessary that a person with knowledge of the essential elements making up the contravention also know that those elements do amount to a contravention;

(c)    actual knowledge of the essential elements constituting the contravention is required, but, imputed or constructive knowledge is insufficient.

135    His Honour considered whether, having regard to s 706, ASIC had to prove that, for an accessory to be liable, the accessory had to know that, first, no exemption to ss 708 and 708AA applied to the offer and, secondly, that the offer needed disclosure to investors under Pt 6D.2. He concluded that ASIC did not have to establish that the alleged accessory knew that none of the exemptions in ss 708 and 708AA was applicable to the offer. Next, he considered the decision of the Full Court in Rafferty v Madgwicks (2012) 203 FCR 1. That case concerned what intention an alleged accessory had to have in order to be found liable for being knowingly concerned in a contravention of s 51AD of the Trade Practices Act 1974 (Cth), which provided that a “corporation must not, in trade or commerce, contravene an applicable industry code”. The Franchising Code of Conduct (Cth) was such a code. The Full Court held that it was not necessary for the alleged accessory to know that the Franchising Code applied to two agreements that contravened s 51AD in order to be found liable. They held that the alleged accessory had only to know that the agreements were franchising agreements to be liable under s 51AD on the basis of being knowingly concerned in a principal’s contravention of the Franchising Code. Here, the primary judge concluded that ASIC did not have to prove that the alleged accessory knew that an offer needed disclosure under Pt 6D.2 in order to establish that the accessory was knowingly involved in a principal’s contravention of s 727. That was because he found that Rafferty 203 FCR 1 was “relevantly indistinguishable”. However, he did so after first observing that:

there is some incongruity in holding that a contravention of s 727(1) by a primary contravenor involves three elements and that an accessory must have knowledge of each but then concluding that knowledge of only two will be sufficient. This seeming incongruity is not resolved by reference to the principle that it is not necessary for an accessory to know that the conduct in question amounts to a statutory contravention.

136    The primary judge found, and made declarations when granting relief (as further explained below), that Mrs Gore was knowingly concerned in two contraventions of each of:

    s 727(1) and (2), during the period commencing no later than 13 March 2012 and concluding on or about 23 April 2012, by, first, Mr Burrows and SPG and, secondly, ActiveSuper, Royale, Mr Gibson and Cayco. The contraventions were, in the case of Mr Burrows and SPG, the making of offers and, in both cases, the distributing of application forms for offers of securities, namely shares in SPG, when such offers required disclosure to investors under Pt 6.2D of the Corporations Act and no disclosure document had been lodged with ASIC (Orders 3 and 4);

    s 1041H of the Corporations Act and s 12DA of the ASIC Act, during the period commencing no later than 25 March 2012 and concluding on or about 12 June 2012, by each of ActiveSuper, Royale, Mr Burrows, Mr Gibson, SPG and Cayco. That contravention was engaging in conduct that was misleading or deceptive or likely to mislead or deceive by making a representation that moneys invested by Australian SMSFs pursuant to the SPG PPM, in the future would be used by SPG for the purchase of property (Order 16).

137    His Honour made corresponding declarations of Mrs Gore’s accessorial contraventions in respect of WPO for the period commencing no later than 25 March 2012 and concluding on or about 12 June 2012 (Orders 5, 6 and 17).

138    Mrs Gore did not contend on this appeal that his Honour erred in making those declarations about the principal contravenors. His Honour found, and Mrs Gore did not dispute, that she knew at the relevant times that offers for shares in SPG and WPO were being made and application forms for those offers were being distributed. However, she challenged his Honour’s findings that, first, she had played an active role in the development of the two PPMs and the establishment of the Cayco website and, secondly, that she had familiarised herself with the elements of the BVI scheme and knew that the PPMs were to be provided to investors.

139    His Honour found that Mrs Gore had seen the final version of the SPG PPM (which was not in issue) and she had been provided with copies of drafts of the WPO PPM on 12 December 2011, 17 and 18 March 2012 (which was also not in issue), as well as having been copied in on emails dealing with the finalisation of that document and others associated with it. His Honour found that the final version of the WPO PPM was not relevantly different from the drafts copied to Mrs Gore on 17 and 18 March 2012.

140    Next, his Honour found in relation to the s 727 contraventions:

Ms Gore’s involvement in the establishment of SPG and WPO was so extensive that she must, as a matter of fact, have known that neither document was lodged with ASIC. I reach that finding having regard to the Briginshaw standard of proof. I consider it highly probable that Ms Gore had learnt from Mr Gore or others that a principal purpose for the establishment of the funds in the BVI was to avoid compliance with the Australian regulatory regime. That is especially so given the express statements in the SPG PPM that the fund’s shares would not be registered under the United States Securities Act 1933 and that distribution to persons in the United Kingdom was restricted without there being any reference to the counterpart position in Australia. Given the close review of the PPMs which Mr Gore required of Ms Gore, it is improbable that the possible relevance of the Australian regulatory regime escaped her attention. This is especially so given the care and attention she evidenced by travelling personally to the BVI to obtain assurance about the implementation of the scheme. The plain intention to market the funds to SMSF investors in Australia makes it probable that Ms Gore must have considered whether or not the funds were to be “registered” in Australia and that she had been told that the documents were not to be so “registered”. This inference can be drawn with greater confidence given Ms Gore’s absence from the witness box, despite her being in the courtroom for the greater part of the trial: Jones v Dunkel (1959) 101 CLR 298 at 308; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11, (2011) 243 CLR 361 at [63]-[64].

However, I would not have been prepared to make a finding that Ms Gore knew that the offers did require a disclosure under Pt 6D.2 of the Corporations Act, had it been necessary to do so. The evidence is not sufficient to support that inference, especially having regard to the Briginshaw standard. (emphasis added)

141    Finally, his Honour found in relation to Mrs Gore’s being knowingly concerned in the principals’ contraventions of s 1041H:

I am also satisfied that Ms Gore had the requisite knowledge. She had been actively involved in the preparation and finalisation of the PPMs, and the development of the Cayco website on which the PPMs were published. Ms Gore knew that the monies raised pursuant to the PPMs were being advanced to MOGS and disbursed at its discretion. She gave some of the directions with respect to that disbursal. A very strong inference arises from the evidence that Ms Gore knew at relevant times that the monies were not to be invested in real estate. Amongst other things, Ms Gore had executed in December 2011 loan agreements relating to the provision of funds to MOGS. Ms Gore was also a signatory to the loan agreements entered into on 10 May 2012 providing for the advance of monies to MOGS.

The inference that Ms Gore had the relevant knowledge can be drawn with even more confidence by reason of the Jones v Dunkel inference arising from her failure to give evidence. (emphasis added)

142    The primary judge found that Mr Stonehouse was not involved “in an active way” in establishing SPG or WPO or in developing their PPMs. His Honour found that, while Mr Stonehouse knew that shares in SPG and WPO were being offered to Australian SMSF investors, because of the limited nature of his involvement he did not have actual knowledge that each PPM had not been lodged with ASIC. As with Mrs Gore, his Honour was not satisfied that Mr Stonehouse knew that the offers required disclosure under Pt 6D.2 of the Act. He also found that there was no evidence that Mr Stonehouse had ever been provided with a draft or copy of the SPG PPM.

143    His Honour found that while Mr Stonehouse had been provided with early drafts of the WPO PPM in October and December 2011, the final version of that document was significantly different from those drafts. Accordingly, the primary judge was not satisfied that the early drafts of the WPO PPM, that Mr Stonehouse had received, contained the misleading representation as to the use of the money to be raised that was conveyed in the final WPO PPM. And he found that there was no evidence that Mr Stonehouse had ever been provided with a draft or final version of the SPG PPM. His Honour found that Mr Stonehouse had a general knowledge of what the BVI scheme involved, including in relation to SPG and WPO. However, his Honour was not satisfied that ASIC had proved that Mr Stonehouse knew that the PPMs contained the misleading representation.

144    His Honour found that the contraventions of ss 727, 1041H of the Corporations Act and s 12DA of the ASIC Act that Mrs Gore had committed were serious. He found that she had been a significant participant in the establishment and development of the BVI scheme and was a personal beneficiary of it. He found that her involvement in those contraventions had had a detrimental effect on a large number of SMSF investors, including those with limited savings, whose investments appeared to have been wholly lost. The primary judge determined that there was a real chance that Mrs Gore would engage in similar forms of activity in the future if she were not restrained by injunction from doing so.

The relief reasons

145    His Honour noted that ASIC had agreed a restraint of 10 years from engaging in dealings concerning financial services with ActiveSuper, Mr Burrows and Mr Adamson and, a restraint of 7½ years with Royale and Mr Gibson. He imposed a permanent restraint on Mr Gore. ASIC had contended that Mrs Gore should be similarly restrained, while she argued that a five year restraint ought be imposed.

146    The primary judge held that the principal purpose of injunctions under s 1324 of the Corporations Act, and its analogues, was the protection of the public but that denunciation and deterrence could also be relevant. However, he found that such injunctions were not granted for the purpose of punishment.

147    His Honour found that at the time that the SMSF investors were being induced to invest in SPG and WPO, Mrs Gore, among others, “knew that their monies would not be used for investment in real estate … but would instead be lent to MOGS or made available to persons associated with it for their personal use” and that the SPG and WPO PPMs contained representations about the intended use of invested monies which were false. He also found that Mrs Gore, among others, knew that the BVI scheme had been established with a view to avoiding compliance with the Australian regulatory regime’s provisions for protection of investors.

148    The primary judge held that the purpose of the disclosure requirements in Ch 6 of the Corporations Act was to protect potential investors from, as Barrett J had said in Australian Securities and Investments Commission v Karl Suleman Enterprizes (2003) 177 FLR 147 at 152 [17], “being enticed by contravening behaviour into subscription contracts with respect to securities”.

149    The primary judge noted that it was common ground that the principles and considerations that Santow J stated in Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 at 97-99 [56] should be applied, although Santow J was dealing with the period for which a person ought be disqualified from acting as a director of a corporation under s 206C of the Corporations Act rather than the term for which an injunction ought be imposed under s 1324.

150    His Honour found:

The evidence indicated that Ms Gore’s involvement in the development of the PPMs was significant and that she knew that SMSFs were being induced to subscribe for shares with a view to the monies being invested in real estate when that was not the case. Ms Gore profited personally to a very significant extent from the BVI Scheme. She has not provided any explanation for her conduct, nor acknowledged its wrongfulness, nor made any expression of contrition or remorse. Ms Gore’s receipt and use of some of the invested monies suggests that she acted dishonestly. Ms Gore has not attempted to provide any answer to that suggestion. Nor has Ms Gore made any attempt at reparation. (emphasis added)

151    His Honour said that although there was no evidence to support Mrs Gore’s submission, through her counsel, that her involvement in the proceedings had had a salutary effect on her, he was prepared to accept that it had to a certain extent, but continued:

However, the significance which can be attached to it is diminished by the fact that the submissions made on her behalf did not include any expression of regret, contrition or acknowledgement of the wrongfulness of the conduct. In other words, the Court was not provided with any material which may provide some assurance that Ms Gore would not engage in similar conduct in the future and the aspects of Ms Gore’s conduct referred to earlier detract from a conclusion to that effect. (emphasis added)

152    The primary judge had earlier found that Mr Gore’s conduct was the most egregious of all the defendants. He held that Mr Gore had conceived, organised and driven the implementation of the BVI scheme because he wished to avoid compliance with the Australian regulatory regime about which, on 7 October 2011, he had received advice from Minter Ellison. Mr Gore knew that the SPG and WPO PPMs were to be marketed to small, unsophisticated SMSF investors and, in the end, he used the BVI scheme to, and to allow his associates to, obtain access to funds raised for his and their personal benefit.

153    His Honour accepted that Mrs Gore’s involvement was less than her husband’s. But, the primary judge inferred, much of her conduct could be attributed to Mr Gore’s influence. However, his Honour also found that Mrs Gore reasonably relied, from time to time, on advice from Mr Adamson and she had taken some steps to satisfy herself that SPG and WPO were being properly established and audited.

154    His Honour took account of the fact that, by the time of his making final orders, Mrs Gore had been subject to some interim injunctive restraints for nearly 2½ years. The primary judge rejected ASIC’s argument that Mrs Gore should be restrained for life. He concluded that she should be restrained for a further 7½ years, being the same period that ASIC and Mr Gibson had agreed, and that the restraint be as follows:

(i)    carrying on any business in relation to financial products or financial services by providing financial product advice, dealing in financial products, and otherwise carrying on a financial services business within the meaning of Chapter 7 of the Act;

(ii)    carrying on any business related to, concerning or directed to superannuation interests within the meaning of the SIS Act;

(iii)    in any way holding themselves out as doing such things as mentioned in paragraph (ii) above;

(iv)    being in any way knowingly concerned in or a party to the conduct by another person of any business related to, concerning or directed to superannuation interests within the meaning of the SIS Act; and

(v)    being in any way concerned in the distribution of promotional documents or application forms for the offer or acquisition of securities which require disclosure to investors under Part 6D.2 of the Act, unless there has been lodged with ASIC a disclosure document for the offer or acquisition of securities as required by s 727(2) of the Act: …

155    His Honour then concluded that Mr Gore, who had not been represented for most of the proceedings, and Mrs Gore as two of the four defendants (with Mr Stonehouse and Mr Adamson) who had actively taken part in the 14 day trial should pay 80% of ASIC’s costs (other than those associated with the case against Mr Stonehouse), that ASIC should pay 45% of Mr Stonehouse’s costs (of his joint representation with Mrs Gore) and Mr Adamson pay 70% of ASIC’s costs. The primary judge then applied a further discount to recognise that some of ASIC’s costs had been incurred solely in respect of each particular defendant and ought not be borne commonly by all of the defendants who were liable for costs. He therefore ordered that Mrs Gore pay 80% of 95% of ASIC’s costs (other than those associated with the case against Mr Stonehouse) incurred after 3 December 2012.

The issues on the appeal and cross appeal

156    The following issues arose from the notices of appeal and cross appeal, namely whether the primary judge erred in finding that:

(1)    ASIC did not need to prove that Mrs Gore knew that the offers for securities in SPG and WPO required disclosure to investors under Pt 6D.2 of the Corporations Act as an essential element in order to establish that she was knowingly concerned in the principals’ contraventions of s 727(1) and (2) (the accessorial liability issue);

(2)    Mrs Gore must have known that neither of the SPG and WPO PPMs had been lodged with ASIC (the inferred knowledge issue);

(3)    Mrs Gore had actual knowledge of:

(a)    the principals’ representations to the effect that moneys invested by Australian SMSF investors pursuant to each of the SPG and WPO PPMs, in the future, would be used for the purchase of property by SPG and WPO respectively;

(b)    the principals’ lack of reasonable grounds for making each representation (the knowledge of the representation issue);

(4)    Mrs Gore should be restrained on the basis set out in [154] above for 7½ years (the length of the injunction issue);

(5)    Mrs Gore should pay 80% of 95% of ASIC’s costs from when she was joined as a defendant (the costs issue).

The accessorial liability issue – ASIC’s submissions

157    ASIC argued that the primary judge was correct in construing s 727(1) as imposing an onus on Mrs Gore to prove that an offer did not require disclosure to investors under Pt 6D.2, just as the section operated to impose such an onus in respect of a principal contravenor. It contended that it had to prove only that Mrs Gore knew the first and third elements of a contravention of s 727(1), namely that the principal had made, or distributed an application form for, an offer of securities and no disclosure document for the offer had been lodged with ASIC. It argued that what Giles JA had said in Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504 at 589 [413] supported that construction.

158    ASIC submitted that the primary judge was correct in holding that Rafferty 203 FCR 1 was relevantly indistinguishable and binding on him. It contended that the knowledge requisite for an accessory to be liable was of the facts that “must be proved to show that the [principal] offence has been committed”, relying on what Mason J had said in Giorgianni 156 CLR at 494. In addition, ASIC argued that the essential fact to establish the second element of s 727(1), was the same as that necessary to prove the first element, namely, the making of the offer for securities.

A new issue arises - the Criminal Code

159    After the Full Court reserved its decision, we became concerned that the parties had not considered at the trial or on appeal, and his Honour had not been referred to, the applicability of Ch 2 of the Criminal Code in the Schedule to the Criminal Code Act 1995 (Cth) and its requirements for proof of physical and fault elements for offences, such as those created by s 727(1) and (2) to which the Code applied by force of ss 1308A and 1311 of the Corporations Act. The Court invited further submissions on that issue and the decision of the Full Court of the Supreme Court of South Australia in R v Donaldson (2009) 103 SASR 309, concerning a criminal appeal against conviction for a contravention of s 727(1). Both parties were content to make written submissions on those additional matters.

160    ASIC argued that Ch 2 of the Criminal Code did not apply, and was not relevant, to Mrs Gore’s liability under s 1324(1)(e) of the Corporations Act. It submitted that s 727 did not create any offence and that it had not alleged that Mrs Gore had committed an offence. ASIC contended that these proceedings were civil, not criminal, and that, because s 1308A (that applied the Criminal Code to all offences against the Corporations Act), and s 1311, (that made a contravention of s 727(1), (2) or (4) an offence) were located in Pt 9.4, those provisions were entirely irrelevant to all aspects of the civil proceedings before the primary judge and on the appeal. It argued that at the trial it was common ground that, unlike the finding of the Full Court in Donaldson 103 SASR 309, for a civil contravention of s 727, it was not necessary for the applicant (i.e. ASIC) to prove knowledge or intention on the part of the wrongdoer in relation to the second element of a contravention identified by the primary judge (viz: that the offers needed disclosure to investors under Pt 6D.2). ASIC reiterated that assertion in contending that the physical and fault elements of a contravention of s 727(1), that the Full Court identified in Donaldson 103 SASR 309, were inapplicable to a civil contravention of that same section.

161    ASIC argued, in the alternative, that if the Criminal Code did apply, the analysis in Donaldson 103 SASR 309 of the physical and fault elements should be accepted. It argued that there, Duggan J (with whom Bleby and David JJ agreed) correctly characterised as a “circumstance” the third of those elements, namely (103 SASR at 323 [45]-[46]):

3    The offer was of such a nature as to require disclosure to the investor of the information prescribed by Pt 6D.2 of the Corporations Act.

The fault element for that physical element was recklessness pursuant to s 5.6(2) of the Code. However, ASIC contended:

… whatever it may be necessary for the Crown to prove in the prosecution of an alleged criminal offence based on a contravention of s 727, proof of the wrongdoer’s knowledge or intention (or recklessness) of the need for disclosure is not necessary in proceedings alleging only a civil contravention of s 727.

162    ASIC also submitted that s 79 of the Corporations Act was irrelevant to its claim for an injunction under s 1324(1)(e) on the basis that Mrs Gore was knowingly concerned in the principals’ contraventions of s 727(1) and (2) and that it had not relied on s 79 in its claims against her. ASIC’s submissions emphasised the distinction between a person’s ignorance of law, that affords no defence to criminal or civil liability, and a person’s mistaken belief that the law did not apply to an act or omission or conduct in the factual circumstances in which the person knowingly participated. It contended that in a civil case, the burden of proof of an exculpatory factor lay on a person in Mrs Gore’s position and that she had led no such evidence at the trial.

The accessorial liability issue – consideration

Accessorial liability

163    Accessorial liability, in a broad conceptual (but not necessarily precise) sense, depends upon the establishment of a contravention by a principal in which the accessory, in some way, intentionally participated. The usual spectrum of proscribed accessorial participation in Commonwealth statutes is that in s 79 and is reflected in the requirements in s 1324(1)(c)-(f). As Gibbs CJ noted in Giorgianni 156 CLR at 479-480, in United States v Peoni 100 F 2d 401 (1938) at 402 Judge Learned Hand had referred to the statutory and common law definitions of accessories (or secondary parties) where he said:

It will be observed that all these definitions have nothing whatever to do with the probability that the forbidden result would follow upon the accessory’s conduct; and [that] they all demand that he in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed. All the words used – even the most colourless ‘abet’ – carry an implication of purposive attitude towards it. (emphasis added)

164    In my opinion, for a person to be knowingly concerned in a contravention of s 727 by a principal the person must, first, know three facts namely, that the principal made an offer of securities, that the offer needed disclosure under Pt 6D.2 and that a disclosure document had not been lodged with ASIC and, secondly, in some way, directly or indirectly, by act or omission, be knowingly concerned in the circumstances that result in those three facts (ss 79(c), 1324(1)(e)).

165    The person cannot be an accessory under s 79(c) or s 1324(1)(e) or their analogues if he or she does not know the essential facts that constitute the principal’s offence or contravention. The person does not need to know that those facts amount to an offence or contravention. Rather, the person must know that the facts themselves exist. What is essential to accessorial liability, is that the accessory actually knows that he or she is participating in (or is all knowingly concerned in) the principal doing, or omitting, each of the essential facts that constitute the offence or contravention.

166    An accessory must have the intention to participate (or be knowingly concerned) in the principal’s acts or omissions that are essential facts for the principal to commit the offence or contravention. Legislation can provide that the principal can commit some offences or contraventions, even if he or she or it does not intend or have mens rea to do an act or make an omission that is an essential fact to establish criminal liability. Offences of strict liability provide instances where a person will be criminally liable simply because something happened even though the person was unaware of an essential fact that constituted the offence. But, if a person is to be found to be an accessory to such an offence, he, she or it must intend to participate in what the principal is doing, whatever the principal’s state of mind or ignorance, in doing or omitting what will constitute the essential facts of the principal’s offence.

167    Wilson, Deane and Dawson JJ made this clear in Giorgianni 156 CLR at 504-507. There, the principal offender, one Renshaw, had committed an offence of strict liability by driving a truck in a manner dangerous to the public where, unknown to the dangerous driver (principal), the truck’s brakes were defective and caused collisions resulting in five fatalities (156 CLR at 475 per Gibbs CJ). The alleged accessory was the principal’s employer and the Crown had alleged that he had procured the principal to drive the truck in its defective condition.

168    The Court held that the trial judge’s direction to the jury was erroneous. He had directed the jury that reckless behaviour on the part of the accused accessory would suffice to establish his intent to constitute him as the procurer of the culpable driving offences (see 156 CLR at 508 per Wilson, Deane and Dawson JJ). Each of the justices in the High Court held that in order to be liable as an accessory, the accused had to have knowledge of the essential matters or facts, not the law, that made the principal’s acts, that the accessory was procuring, an offence, even though in committing his offences the principal did not need to have the same state of mind (because, there, the offence was one of strict liability that did not depend on the principal’s mens rea). As Wilson, Deane and Dawson JJ said (156 CLR at 500):

It is necessary, therefore, to proceed upon the basis that the offences of culpable driving were committed by Renshaw. It is those offences which the appellant was alleged to have aided, abetted, counselled or procured. To have done so he must have intentionally participated in the principal offences and so must have had knowledge of the essential matters which went to make up the offences of culpable driving on the occasion in question, whether or not he knew that those matters amounted to a crime: see Johnson v. Youden [[1950] 1 KB 544 at 546]; Reg. v. Churchill [[1967] 2 AC 224]. As Viscount Dilhorne put it in Reg. v. Maxwell [[1978] 1 WLR [1350] at 1355; [1978] 3 All ER [1140] at 1144], “ … it is clear that a person cannot properly be convicted of aiding and abetting in the commission of acts which he does not know may be or are intended” … (emphasis added)

169    Wilson, Deane and Dawson JJ explained that (156 CLR at 504-505):

there is no basis upon which it can be said that where a statutory offence requires no proof of intent, it is unnecessary in order to establish secondary participation in the commission of that offence to prove actual knowledge of all the essential facts of the offence. Intent is an ingredient of the offence of aiding and abetting or counselling and procuring and knowledge of the essential facts of the principal offence is necessary before there can be intent. It is actual knowledge which is required and the law does not presume knowledge or impute it to an accused person where possession of knowledge is necessary for the formation of a criminal intent. Secondly, although it may be a proper inference from the fact that a person has deliberately abstained from making an inquiry about some matter that he knew of it and, perhaps, that he refrained from inquiry so that he could deny knowledge, it is nevertheless actual knowledge which must be proved and not knowledge which is imputed or presumed.

… Aiding, abetting, counselling or procuring the commission of an offence requires the intentional assistance or encouragement of the doing of those things which go to make up the offence. The necessary intent is absent if the person alleged to be a secondary participant lacks knowledge that the principal offender is doing something or is about to do something which amounts to an offence. (emphasis added)

170    Their Honours identified the requirements to establish the accessory’s actual knowledge of the essential facts so as to make the accessory liable as follows (156 CLR at 506-507):

There are, however, offences in which it is not possible to speak of recklessness as constituting a sufficient intent. Attempt is one and conspiracy is another. And we think the offences of aiding and abetting and counselling and procuring are others. Those offences require intentional participation in a crime by lending assistance or encouragement. They do not, of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under the law. The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it. It is not sufficient if his knowledge or belief extends only to the possibility or even probability that the acts which he is assisting or encouraging are such, whether he realizes it or not, as to constitute the factual ingredients of a crime. If that were sufficient, a person might be guilty of aiding, abetting, counselling or procuring the commission of an offence which formed no part of his design. Intent is required and it is an intent which must be based upon knowledge or belief of the necessary facts. (emphasis added)

171    These passages demonstrate that the actual knowledge that an accessory must have to satisfy, in the case of a criminal offence, the mens rea (or fault element) and its equivalent for a non-criminal allegation, is that the principal offender or contravenor “is doing … or is about to do something which amounts to an offence”.

172    In Yorke 158 CLR 661 the Court applied these principles to the construction of accessorial liability analogues of ss 79(a) and (c) and 1324(1)(c) and (e) of the Corporations Act. Mason ACJ, Wilson, Deane and Dawson JJ said (158 CLR at 670):

There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention.

173    They explained that this was so for two reasons, each of which related to the use of the word “knowingly” in an analogue of ss 79(c) and 1324(1)(e). First, they said, the word qualified the expression “concerned in” in the paragraph. Secondly, the word would have been an unnecessary qualification of the expression “party to” a contravention, “if his participation was in the context of knowledge of the essential facts constituting the particular contravention in question” (158 CLR at 670).

174    In Giorgianni 156 CLR at 506, Wilson, Deane and Dawson JJ rejected the Crown’s argument that even if the accused had no knowledge of the condition of the vehicle’s brakes, it was sufficient to sustain his conviction on a count of aiding, abetting, counselling or procuring the offence of culpable driving of the vehicle by another, that the accused acted recklessly in procuring that other person to drive it with grossly defective brakes. They said that acceptance of the Crown’s argument that recklessness could be sufficient, would mean proof that the accused knew “that the brakes on the vehicle were probably (or possibly) defective” would establish his intent to aid and abet the offence of culpable driving. Their Honours rejected that argument and held that an accessory had to have actual knowledge of the essential elements of the offence. In that case, those elements included that the brakes were actually, as opposed to probably (or possibly), defective (156 CLR at 506-507).

175    For as Mason CJ, Deane, Dawson, Toohey and Gaudron JJ held in Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 220, in relation to the state of mind necessary to establish that a person is knowingly concerned in a statutory contravention by another:

It is never the case that something less than knowledge may be treated as satisfying a requirement of actual knowledge.

176    Their Honours also held that, first, the question was the knowledge of the accused or defendant, not that of a hypothetical person in his or her position and, secondly, “where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available” (82 ALR at 220).

177    The foundation of accessorial liability that enlivened the Court’s remedial powers under s 1324(1) was that the principal had committed a contravention of the Act and the accessory intentionally participated in that contravention in one or other of the ways provided in s 1324(1)(c) to (e).

Essential elements of a contravention of s 727(1)

178    As I have noted, the primary judge considered that three elements had to be established in order to find that Mrs Gore was knowingly involved in the contravention of s 727(1), namely that:

    the principal made, or distributed an application form for an offer of securities;

    the offer needed disclosure to investors under Pt 6D.2; and

    no disclosure document has been lodged with ASIC.

179    In reaching that conclusion, his Honour did not consider the formulation of the physical elements of the criminal offence constituted by a contravention of s 727(1) that Duggan J identified in Donaldson 103 SASR at 323 [45]. No doubt that was because the parties did not refer his Honour (or, indeed, the Full Court) to Donaldson 103 SASR 309 or to the relevance of a contravention of s 727(1) and (2) being made a criminal offence. For the reasons that I explain below ([241]-[250]) if the elements of s 727(1) and (2) are analysed having regard to Ch 2 of the Criminal Code, the outcome of this appeal would be the same. However the parties did not conduct the case on that basis, either at trial or on appeal. Therefore, I propose to consider the correctness or otherwise of the primary judge’s conclusions on the basis upon which the case has been conducted, and then to consider the effect of the Criminal Code. This question does not arise in relation to the knowledge of the representation issue because s 1041H does not create a criminal offence.

180    Duggan J held (Donaldson 103 SASR at 314 [15]), that s 727(1) did not create an offence of strict liability and that the offence required proof of fault elements in respect of a principal offender. He said (103 SASR at 323 [45]-[46]):

The following physical elements must be proved in order to establish an offence contrary to s 727(1):

1    An offer was made to an investor.

2    The offer was in relation to a security.

3    The offer was of such a nature as to require disclosure to the investor of the information prescribed by Pt 6D.2 of the Corporations Act.

4    There was a failure to lodge a disclosure document with ASIC.

The first element consists of conduct. Intention is the fault element for that physical element (Criminal Code, s 5.6(1)).

In my view, elements 2, 3 and 4 of an offence under s 727(1) are properly characterised as circumstances … Recklessness is the fault element for those physical elements (Criminal Code, s 5.6(2)). (emphasis added)

181    Thus, Duggan J held that the prosecution had to establish each of the four respective fault elements including the third, namely that, in effect, the offer required disclosure to investors under Pt 6D.2. He held that the relevant fault element in respect of the third physical element was that the accused was reckless. As I will explain below, s 5.4 of the Criminal Code provides that proof of intention, knowledge or recklessness (as defined) will suffice to prove recklessness.

182    In the circumstances where the primary judge was not satisfied that there was sufficient evidence that Mrs Gore knew that the offers required disclosure to investors under Pt 6D.2, no question arises as to whether she may have been able to raise a defence of mistake of fact under s 9.1 of the Criminal Code or at common law. Nor did ASIC contend at trial or on appeal that Mrs Gore was reckless as to whether the offers were of such a nature that they required disclosure to investors under Pt 6D.2. Rather, the primary judge accepted ASIC’s case that she had the onus of proving affirmatively that the offers did not require such a disclosure. In substance, although Duggan J broke into two, the first element identified by the primary judge, the physical elements that the primary judge identified were substantively the same as those in Donaldson 103 SASR at 323 [45]. However, unlike Duggan J, the primary judge found that ASIC did not have to prove the fault (or mental) element to establish against Mrs Gore the element that the offers needed disclosure to investors under Pt 6D.2.

183    The physical elements of an offence under s 727(1) must be the same as the elements of a civil contravention of that provision. The decision of the Full Court in Donaldson 103 SASR 309 dealt with the interpretation of Commonwealth legislation as to the elements of a contravention of s 727(1) amounting to an offence. There is no reason to think that it is “plainly wrong” so as to justify us, as another intermediate appellate court, departing from it: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 151-152 [135] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. Indeed, for the reasons below, I consider that not only was that construction open, it is correct. Thus, it was not necessary for us to invite further submissions from the parties on the correctness of Donaldson 103 SASR 309 as the issue of what ASIC had to prove to establish that Mrs Gore was knowingly concerned in the contraventions of s 727(1) and (2) was fully argued.

184    I reject ASIC’s argument that the necessity to prove the elements of a criminal contravention of s 727(1) somehow transmute into other elements when a person seeks to prove a civil contravention of the same section. The argument has no textual support in the words of the Corporations Act: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ. The elements of a contravention of s 727(1) must be the same regardless of whether the question arises in criminal or civil proceedings: cf Yorke 158 CLR at 669 per Mason ACJ, Wilson, Deane and Dawson JJ, see too at 677 per Brennan J.

185    In the absence of clear words, it is not possible to ascribe to the Parliament a form of legislative schizophrenia, as suggested by ASIC, that the state of mind that must be established for a person to contravene a statutory provision would vary depending on whether the proceedings were criminal or civil. Such an approach to statutory construction would create incoherence in the law that would serve no rational purpose: Sullivan v Moody (2001) 207 CLR 562 at 581 [55]-[56] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ.

186    I am of opinion that consistency in the interpretation of the statute and common sense require a construction of s 727(1) and (2) that identifies the same elements as necessary ingredients which a person must prove to establish that another has contravened the relevant section. The same acts or omissions accompanied by the same state of mind should apply as elements of both a criminal and civil contravention.

Knowledge of the essential elements of the contravention

187    The first issue is whether, on his Honour’s findings, Mrs Gore could be knowingly concerned in the principals’ contraventions of s 727, when he would not have been prepared to find that she knew that the offers required disclosure under Pt 6D.2.

188    Each of s 727(1) and (2) created a criminal offence punishable by a fine of 200 penalty units or imprisonment for five years or both (see Sch 3 items 236, 237). Accordingly, each subsection must be construed by reference to the elements of the offence that it created in order to determine what ASIC had to prove in order to obtain injunctive relief under s 1324(1)(e) on the basis that Mrs Gore was directly or indirectly knowingly concerned in the contraventions of the principal contravenors.

189    It is convenient for present purposes to adopt, for the purposes of analysis, as did the parties, the three elements of a contravention of s 727(1) found by the primary judge, namely that:

(1)    the defendant made an offer of securities, or distributed an application form, for an offer of securities;

(2)    the offer needed disclosure to investors under Pt 6D.2 of the Corporations Act; and

(3)    a disclosure document for the offer had not been lodged with ASIC.

190    As I have noted above, the first of those elements conflated the first two separate physical elements that Duggan J identified in Donaldson 103 SASR at 323 [45] viz: first, an offer was made to an investor and, secondly, the offer was in relation to a security. The second element identified by the primary judge is substantially the same as the third, but more expansively stated, element in Donaldson 103 SASR at 323 [45], namely “[t]he offer was of such a nature as to require disclosure to the investor of the information prescribed by Pt 6D.2 of the Corporations Act”. The parties below, and on the appeal, and the primary judge focused on the application of s 727(1) on the basis that there was no relevant need separately to analyse s 727(2). It is also convenient to deal with the application of s 727(1) and (2) on the same basis and also to simplify the first element by referring only to the making of an offer of securities.

191    Importantly, s 706 provided that an offer of securities needed disclosure to investors under Pt 6D.2, unless ss 708 or 708AA said otherwise. That set a general rule for offers of securities to which ss 708 and 708AA provided exceptions. This construction is reinforced by s 707, which prescribed in s 707(2) that an offer of securities for sale needed disclosure where, relevantly, s 708 “does not say otherwise” and, in s 707(3), an offer of securities for sale within 12 months needed disclosure where, relevantly, ss 708 and 708AA “does not say otherwise”. Next, s 708A provided a separate exception to ss 708 and 708AA, that an offer of securities did not need disclosure if the issuer had not issued the securities with the purpose prescribed by s 707(3)(b)(i), namely that the grantee or purchaser would sell or transfer those securities.

192    Thus, the second element of s 727(1) and (2) that the primary judge used identified an essential characteristic for a contravention of each provision, namely that the offer needed disclosure unless some provision in Pt 6D.2 said, as s 706 put it, otherwise.

193    In my opinion, the primary judge found, correctly, that each of the SPG and WPO PPMs was in the nature of a prospectus that offered securities for issue to investors. Mrs Gore did not submit that either PPM satisfied the disclosure requirements for a prospectus under ss 710 or 711 of the Act. It follows that the offer of securities in each PPM needed disclosure to investors by force of the presumption in s 706 and the form of that disclosure should have been a prospectus that complied with the requirements of Pt 6D.2.

194    It would have been easy to understand a legislative command expressed in plain simple language. And, as I will explain below, the use of the language “that needs disclosure to investors under Pt 6D.2” is regrettably unclear and unsuited to a provision creating a criminal offence. It has caused the parties, the primary judge and the Full Court to spend considerable effort in trying to comprehend what the Parliament meant. The difficulty with the obscure drafting of s 727(1) is that it does not require the use of a prospectus or other identified document to make an offer. Rather, the section adds the final ingredient to the person’s making of an offer (however it is made), that if it needed disclosure, a disclosure document for the offer must be lodged with ASIC. That ingredient seems to entail that the expression “a disclosure document for the offer” refers to the use of the correct disclosure document for the particular kind of offer ascertained in accordance with ss 710-716 in Div 4 of Pt 6D.2.

195    When a person makes an offer of securities to an investor, s 706 provides that unless ss 708 or 708AA provides otherwise, the appropriate disclosure document, the form of which would be ascertained in accordance with Div 4 of Pt 6D.2, has to be used to make the required disclosure. In my opinion, the third element in s 727(1) (as identified by the primary judge) then operated to require that the correct disclosure document for the relevant type of offer had to be lodged with ASIC as a precondition of that document being the vehicle through, or associated with, which a person made the offer of securities to the investor.

196    The clause in s 727(1) “that needs disclosure to investors under Pt 6D.2” is descriptive of the offer of securities. In other words, that clause describes the characteristics of an offer of securities that are necessary to create the person’s obligation to lodge a disclosure document with ASIC. Next, s 727(2) uses the same clause and introductory proscription, “A person must not make an offer of securities or distribute an application form for an offer of securities”, to describe the three alternate disclosure documents by means of which the disclosure that Pt 6D.2 requires be made to investors can be made, namely, by a prospectus, a prospectus and profile statement, or an offer information statement. Clearly, whatever the description about Pt 6D.2 each subsection refers to by its use of this clause, it is a different concept to the straightforward identification of a document by which any offer or disclosure is, or must be, made.

197    The Delphic clause “that needs disclosure (to investors) under this Part” in s 706 and its analogues in s 727(1) and (2), that refer to Pt 6D.2, obscure the nature of what a person who offers securities to an investor has to do. Self-evidently, when a person makes an offer of securities, the offer necessarily discloses its terms and whatever else the offeror volunteers. Moreover, the nature and degree of what the three particular types of disclosure documents referred to in s 727(2) must contain are set out as to a prospectus in ss 710-713, as to a profile statement in s 714 and as to an offer information statement in s 715.

198    The Delphic clause must qualify the more general expression of “an offer of securities” by affecting or identifying those offers that the Act requires to be lodged with ASIC (s 727(1)) or that must be accompanied by one of the three classes of document set out in pars (a)-(c) of s 727(2) by reference to ss 706, 707, 708, 708AA and 708A as the note below s 727(2) suggests. Relevantly, s 706 prescribes a general obligation to make disclosure to investors under Pt 6D.2 of an offer of securities for issue (as the two PPMs did here) unless ss 708 or 708AA apply to create an exception in the circumstances.

199    The way in which s 708 operates is as follows: personal offers (within the defined meaning in s 708(2)) “do not need disclosure to investors under this Part” if “none of the offers results in a breach” of either the 20 investors or $2 million ceilings (s 708(1)). Those ceilings are defined in s 708(3) and (4). Thus, s 727(4) creates an offence where one of the ceilings is exceeded. In such a case the Crown must prove that the offers were not personal offers or that, if they were, the result of the offers was a breach of one or both ceilings – i.e. that over 20 investors accepted or over $2 million was raised by acceptance of those personal offers in a 12 month period.

200    Here, there was no dispute that over 20 investors accepted the offers in the two or three month period after the first publication of each PPM (see [123] and [127] above). Thus, whatever other operation s 708 may have had, neither set of offers in the two PPMs could have fallen within the exception to s 708(1)(a) once the 21st investor had accepted the respective offer. If, however, the offers or one of them were not personal offers, then s 708(1) would not have applied to it in any event. The offers were not personal offers, as defined in s 708(2), because both SPG and WPO published them on Cayco’s website. Thus, the respective offeror could never be said to have made the offer on the website to a particular person (as s 708(1) required) or that that person was likely to be interested in it because of some past connection with the offeror (s 708(2)).

201    Next, s 708AA provided that an offer of securities for issue did not need disclosure if it were a rights issue of securities quoted on a financial market, such as the Australian Securities Exchange, a circumstance that did not apply to securities of SPG or WPO.

202    Here, nothing in Pt 6D.2 created any exception, qualification or proviso that affected the operation of s 727(1). The primary judge’s second element in s 727(1) involved a factual matter, namely that the offer was one that needed disclosure under Pt 6D.2 of the Act. I am of opinion that in a prosecution of a person as a principal under s 727(1), the Crown would have to prove that the offer did require disclosure, including by negativing the exceptions in ss 708 and 708A. That is because s 706 amounts to a statement of the complete factual situation which must exist before disclosure under Pt 6D.2 is necessary. The provision (s 706) embodies “the principle which the legislature seeks to apply generally”: Vines v Djordjevitch (1955) 91 CLR 512 at 519 per Dixon CJ, McTiernan, Webb, Fullagar and Kitto JJ; see too Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 at 119 per McHugh J with whom Mason CJ, Deane and Gaudron JJ generally agreed (at 171 CLR at 93). Importantly, ss 708 and 708AA are not framed as defences. Moreover, a private offer that does not need “disclosure” can convert to one that does need disclosure once one of the ceilings in s 708(3) or (4) is exceeded. Indeed, s 727(4) creates an offence where that occurs.

203    While s 727(4) commences (as does s 727(5) in respect of s 708AA) with the words “if a person relies on s 708(1) to make offers of securities without disclosure to investors under Pt 6D.2”, the separate offence that it creates (see item 239 in Sch 3 to the Corporations Act) depends on the fact that an issue or transfer results in a breach of the relevant ceiling. It would be unnecessary to create a separate offence for a breach of the ceiling if the qualification in s 706, “unless section 708 or 708AA says otherwise”, merely created a special ground of excuse, justification or exculpation, for example, in respect of a personal offer that did not breach the relevant ceiling: Vines 91 CLR at 519. If ss 708 or 708AA provided an exception from the general rule in s 706, then a breach of a ceiling in s 708(1) would itself be a contravention of the general rule under s 727(1) or (2) and not a substantive criminal offence under s 727(4). For these reasons, I consider that in Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc (2009) 224 FLR 50 at 62 [40] Martin J erred in his construction that came to the contrary conclusion that the onus of proof lay on a person who was alleged to have contravened s 727(1) to prove that an exception applied.

204    I am of opinion that the use of the clause “that needs disclosure to investors under Pt 6D.2” in each of s 727(1) and (2) requires that the party alleging a contravention (whether criminal or civil) establish that the objective features of the offer, in the circumstances, engaged an obligation for the offer to make the relevant disclosure. This follows from the nature of the exceptions in ss 708 and 708AA. In particular, s 708 operates to exclude offers from the requirement of “disclosure” if the offer does not have a particular result. Thus, it is an element of a contravention that, by reason of the existence of particular facts, the offer needed disclosure.

205    However, ASIC did not make any positive allegation of why the offers needed disclosure, because it had argued that Mrs Gore had the onus of proving that they did not need disclosure.

206    Here, first, each of the offers in the two PPMs resulted in a breach of the 20 investors ceiling in the two and three month periods immediately after the first use of the offers on 8 and 23 March 2012 (thus excluding the operation of s 708). Secondly, neither offer was in the form of a personal offer under s 708. Thirdly, neither offer was in respect of a rights issue of quoted securities (thus excluding the operation of s 708AA).

207    The consequence of this construction of s 727(1) and (2) is that ASIC (or the Crown) must prove as an element of a contravention the fact or facts that make the offer one to which ss 708 and 708AA do not apply. And, for Mrs Gore to be found liable on the ground that she was knowingly concerned in such a contravention, ASIC had to prove that she knew of those facts that attracted the need for disclosure and she participated in the making of the offers knowing of those facts.

208    Once ss 708 and 708AA did not “say otherwise” in relation to the offer in each PPM, s 706 simply imposed a result or consequence that the offers needed disclosure under Pt 6D.2, because they possessed the factual characteristics of being an offer of securities for issue. For the purposes of Pt 6D.2, s 700(2) provides that offering securities for issue or sale includes inviting applications for their issue or purchase.

209    For a person to be knowingly involved in a principal’s contravention of s 727(1), the accessory is not in the same position as the principal. Importantly, in Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at 74 [48], Gummow, Hayne and Heydon JJ held that for an accessory to know the essential facts, to satisfy an analogue of ss 79 and 1324(1), the person does not need to know that those facts are capable of characterisation in the precise language of the statute. The accessory must know that the principal is doing, or intends to do, each of the acts with the knowledge of the circumstances that constitute the contravention. In other words, the accessory must know as a fact that he or she is participating in some way in what the principal is doing so as to satisfy each of the three elements of the contravention proscribed in s 727(1).

210    I am of opinion that ASIC had to prove that Mrs Gore knew that:

(1)    the principal contravenors had made an offer to investors;

(2)    the offer was an offer of securities in SPG or WPO for issue (or an invitation to apply for their issue);

(3)    the offer was of such a nature (or had the particular features) that had the legal consequence (whether or not she knew it) that it needed disclosure to investors under Pt 6D.2 and neither s 708 or s 708AA applied to exclude that obligation; and

(4)    no disclosure document for the offer had been lodged with ASIC.

211    The third of those elements identified the facts that Mrs Gore had to know about the offer that would create a legal consequence that the offer needed disclosure under Pt 6D.2 (e.g. she knew that the offer was made publicly on Cayco’s website (s 708(1)) and the offer was not of a rights issue of quoted securities (s 708AA)). Mrs Gore did not point to a feature of ss 708 or 708AA that might operate as a defence. However, ASIC should have alleged precise formulations of the contraventions of s 727(1) and (2) in which she was alleged to have been knowingly concerned. ASIC failed to plead or particularise, for example, how s 708(1) did not exclude the offers from the need for disclosure. If it had alleged that, for example, the offers were not personal offers or necessarily would breach the 20 investors ceiling, or did breach that ceiling after a time, then it would also have defined the issues as to what it needed to prove in order to establish that Mrs Gore knew a particular fact about the offer.

212    Accordingly, I reject ASIC’s argument that the primary judge was correct to hold that Mrs Gore carried an onus to negative the presumption in s 706 that an offer required disclosure. ASIC had the onus of proving that each of the SPG and WPO PPMs required disclosure to investors under Pt 6D.2.

213    However, in my opinion, ASIC proved that Mrs Gore knew the material facts that applied to each offer so that it needed disclosure to investors under Pt 6D.2. Here, Mrs Gore knew that, relevantly, the offer in each of the SPG and WPO PPMs had the material factual characteristics of an offer of securities for issue to investors made publicly (thus negating the application of s 708) and which was not a rights issue of quoted securities (thus negating the application of s 708AA) so that, her knowledge of those material facts entailed that, regardless of her knowledge of s 706 as a matter of law, the offer needed disclosure under Pt 6D.2.

214    Mrs Gore knew that the SPG and WPO PPMs would be, and had been, published on the Cayco website. Such a publication would result in the offer of securities in each PPM not being a personal offer within the meaning of s 708(2). If the offers were personal offers, then s 708(1)(a) operated, as s 727(4) provides, only after the acceptance of the 21st offer resulted in a breach of the 20 investors ceiling. That circumstance raises the question of what ASIC would have had to prove that Mrs Gore knew, and when she had to know it, about either result, in order to establish that she was an accessory had this been in issue. However, given the findings of the primary judge it is still possible to decide these issues.

215    In the circumstances, neither s 708 or s 708AA could have applied to the offers of securities in each PPM because Mrs Gore knew that, first, each PPM was not a personal offer, by reason that Cayco published it on its website and, secondly, it was not a rights issue of quoted securities because the offers did not involve quoted securities. Her knowledge of those facts meant that she knew the facts, by reference to which each of s 708 and s 708AA could not apply to the SPG or WPO PPM at any time after Cayco published it on its website.

216    It was not necessary that Mrs Gore knew or believed that the offers made in each of the SPG and WPO PPMs needed disclosure under Pt 6D.2. She could only have been knowingly concerned in a contravention of s 727(1) or (2) if she knew or believed at the time of the alleged offending that “what [s]he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence”. That is because, as Wilson, Deane and Dawson JJ reasoned, although she might not have recognised the contravention as such, to be an accessory her “participation must be intentionally aimed at the commission of the acts which constitute it”: Giorgianni 156 CLR at 506.

217    Here, I am satisfied that Mrs Gore knew the material facts that constituted the principals’ contraventions and participated in committing the acts that constituted each contravention by what she did in relation to finalising each PPM, and causing it to be published on Cayco’s website, that the principal contravenors used to offer shares for issue in SPG and WPO respectively to more than 20 investors.

218    It follows that, for different reasons than those of the primary judge, I am not satisfied that his Honour erred in making the declarations and orders that Mrs Gore was knowingly concerned in the principals’ contraventions of ss 727(1) and (2). Accordingly, I would dismiss this ground of appeal.

Rafferty

219    Nor did Rafferty 203 FCR 1 bind his Honour to find as he did. In that case, the trial judge had construed s 51AD of the Trade Practices Act 1974 (Cth) as itself creating an essential element of a contravention. That section provided that a corporation “must not, in trade or commerce, contravene an applicable industry code”. The trial judge held that an essential element of a contravention of the Franchising Code was that the Code applied to, or in relation to, the franchise agreement and that, to be liable, the accessory had to know that fact (203 FCR at 32 [114]).

220    Kenny, Stone and Logan JJ held that the trial judge had erred because the applicability of the Code was not an element of the contravention. They held that the Act gave the Code force of law (203 FCR at 62-64 [253]-[258]). In other words, s 51AD made a Code, like a statutorily made regulation, have force of law in particular factual situations. A person does not need to know that a law applies to a situation to make him, her or it liable to committing an offence or a contravention, as a principal or accessory. What is essential is that a person intends to do what the law proscribes. Statutes frequently have sections that provide that a person who breaches or contravenes “this section commits an offence”. It is not an element of such an offence that the person knows that the section creates what it proscribes as an offence.

221    Here, s 727(1), however, incorporated as an element of its proscription, a fact, namely that the offer of securities “needs disclosure under Pt 6D.2”. Some offers needed, and others did not need, disclosure under Pt 6D.2. ASIC had the onus to prove that the facts that made the offer one that needed disclosure had, first, to be proved to exist and, secondly, that Mrs Gore knew those facts (as opposed to the legal consequence that the existence of those facts meant that the offer needed disclosure).

222    All the provisions of Pt 6D.2 had force of law by reason of their inclusion in an Act of the Parliament. A contravention of s 727(1) could occur, if and only if, as a matter of fact, the relevant offer needed such disclosure because it had particular characteristics that had the legal consequence (knowledge of which was not necessary) that made it need disclosure under Pt 6D.2. And Mrs Gore could only be knowingly concerned in a principal’s contravention of s 727(1) if she actually knew the material facts that entailed (as a matter of law that she need not know) that the offer needed disclosure.

Adler

223    Nor does the decision in Adler 46 ACSR 504 support ASIC’s construction of s 727(1) and (2) so as to excuse ASIC from proving that Mrs Gore had to know that the offers needed disclosure under Pt 6D.2 in order to establish that she was knowingly concerned in the principals’ contraventions of those provisions. In that case, ASIC had alleged that a company director was an accessory to a contravention of s 260A of the Corporations Act and was liable to a civil penalty pursuant to s 260D(2) by reason that he was knowingly concerned in the contravention (46 ACSR at 586 [395]).

224    Relevantly, s 260D(2) provided that: “Any person who is involved in a company’s contravention of s 260A contravenes this subsection”. That picked up the definition in s 79 of when a person is “involved in a company’s contravention”, and so he, she or it became accessorily liable for the purposes of the Act. Relevantly, s 260A(1) provided:

(1)    A company may financially assist a person to acquire shares … in the company … only if:

(a)    giving the assistance does not materially prejudice:

(i)    the interests of the company or its shareholders; or …

225    There were several other exceptions in the balance of s 260A(1), but the issues in Adler 46 ACSR 504 concerned that in s 260A(1)(a)(i).

226    The Court of Appeal upheld the trial judge’s finding that the giving of financial assistance to the director had materially prejudiced the company so that it contravened s 260A(1) as a principal (46 ACSR at 585 [393]). Giles JA, with whom Mason P and Beazley JA agreed, also upheld the trial judge’s finding that the director had actual knowledge that the giving of the financial assistance was materially prejudicial to the interests of the company. Giles JA said that it was not necessary to decide the issue of whether ASIC (or the plaintiff) had to prove that question (46 ACSR at 587 [403]). Thus, his consideration of this issue (on which ASIC relied against Mrs Gore) was obiter dicta.

227    In essence, in Adler 46 ACSR 504 the director had argued that ASIC, or a plaintiff, had to prove that he knew that the giving of the financial assistance had prejudiced the company in order to establish his liability as an accessory under s 260D and s 79.

228    Giles JA’s obiter view rejected that argument. He said (46 ACSR at 589 [413]):

Onus of proof is more than a question of practice and procedure, and what governs the substantive question is the principle thoroughly established in Yorke v Lucas. If the burden of proving that the giving of financial assistance does not materially prejudice the interests of the company lies upon the company, upon proof of giving financial assistance and with no evidence at all on that subject the contravention is made out. Facts showing no material prejudice are not essential facts constituting the contravention, and there can be intentional participation in the contravention if there is knowledge of the giving of financial assistance without proof that the alleged participant did not know of facts negativing material prejudice. Whether the alleged participant can himself prove knowledge of facts negativing material prejudice does not arise in the present case. (emphasis added)

229    Because Giles JA’s view was not necessary to the ultimate decision, it is not a precedent. It concerned a different statutory provision to s 727(1). To the extent that his Honour’s conclusion is different to that at which I have arrived, with respect, it was wrong in principle, as the passages from Giorgianni 156 CLR 473 and Yorke 158 CLR 661 to which I have referred demonstrate.

The inferred knowledge issue – Mrs Gore’s submissions

230    Mrs Gore argued that the primary judge was wrong to infer that she must have known that no disclosure document in respect of the offers made in each of the SPG and WPO PPMs had been lodged with ASIC, so as to satisfy element (3) in s 727(1). She contended that his Honour wrongly characterised her as having had an extensive or active role in relation to the establishment of SPG and WPO PPMs (see [141] above). Mrs Gore contended that her role consisted of, first, the visit to the BVI and, secondly, a few isolated and insubstantial emails, over a lengthy period of months, in which she was either the sender or direct addressee or which she was copied on the email being sent to someone else. She argued that his Honour was not prepared to draw such an inference against Mr Stonehouse whose level of involvement was similar, except for his not travelling to the BVI or being named as a sender or recipient of the emails relating to the later drafts of the PPMs. In other words, she asserted that her and Mr Stonehouse’s state of knowledge was only that each of them was conscious that MOGS needed funds and understood that SPG and WPO would be likely to provide funds when established, and neither was aware of the misrepresentations in the two PPMs.

231    Mrs Gore said that her making changes in spelling to an early form of the WPO PPM in October 2011 (see [88] above) was misconstrued by his Honour, as his transcription of Mr Gore’s email showed, by erroneously changing her role from doing a spelling check to changing the substance of the draft PPM.

232    However, that submission failed to recognise that by engaging in the even more limited task that Mrs Gore sought to ascribe to her role, she read the document, formed an understanding of what it said and corrected it for spelling. There is no reason to think that she was not interested in reading and revising it to read well as a fundraising document.

233    Mrs Gore argued that her next involvements were receiving, with other addressees, an email from Mr Gore on 12 December 2011 containing another draft of the WPO PPM and later forwarding that email with its attachment back to him on 30 January 2012. Then she travelled to the BVI with her husband, infant and nanny for meetings concerning the establishment of SPG and WPO, the PPMs and the Cayco website. She contended that the only evidence of her subsequent involvements were on 11 and 12 March 2012, in relation to the obtaining of a high resolution image of a graph for inclusion in the WPO PPM and the Cayco website, some emails on 16, 17 and 18 March 2012 relating to development of the Cayco website and Mr Gore’s email of 18 March 2012 that erroneously asserted that the WPO PPM was ready (see [99], [100], [104]-[106], [109], [111]-[117] above).

234    Mrs Gore also argued that his Honour had no evidence to justify his inference that it was “highly probable” that she “had learnt from Mr Gore or others” that “a principal purpose of the BVI scheme was to avoid the compliance with the Australian regulatory regime” (see [140] above). She contended that his Honour did not explain who the others were or why they would only have told her and not Mr Stonehouse. She also submitted that it was insufficient for the primary judge merely to make that finding. She argued that this inference fell short of what was requisite to a finding of knowledge. She also argued that his Honour erred in concluding that she must have considered whether the “funds” were to be registered in Australia and that she had been told that the documents would not be registered.

The inferred knowledge issue – consideration

235    Because of the conclusion I have reached, that his Honour’s findings that Mrs Gore was knowingly concerned in the principal’s contraventions of s 727(1) was correct, it is necessary to decide whether he also erred in finding that Mrs Gore knew that the SPG and WPO PPMs had not been lodged with ASIC (element (3) in s 727(1)). First, as noted at [109] it was common ground that Mrs Gore had seen the final version of the SPG PPM that she forwarded to Mr Burrows in her email of 8 March 2012. That document expressly stated that it had not been registered in the United States or the United Kingdom and that shares in SPG had not been registered under the laws of any country. The SPG PPM did not state, in addition, that it had not been registered in Australia. Moreover, it was silent on whether it had been registered anywhere, other than stating that the shares had not been registered under any law.

236    In my opinion, Mrs Gore must have known, from the express terms of the SPG PPM, that it had not been registered in Australia: Rural Press 216 CLR at 74 [48]. The shares and currency of the SPG fund were denominated in Australian dollars and one of its stated objectives was to acquire property in Australia. Moreover, as the primary judge found, Mrs Gore told Mr Adamson that one of the two reasons that she wanted to go to the BVI was “to enquire that what was being proposed in Australia could be done” (see [105] above). In that context, the omission in the SPG PPM of any express reference to its registration in Australia could only have emphasised to Mrs Gore that it was not, and was not to be, registered here. She did not have to be told that fact in express words in the document because, in the circumstances, that was necessarily implied and conveyed to her by it.

237    His Honour found that, during her first week in the BVI, Mrs Gore attended meetings with, among others, her husband, Mr Burrows, Mr Chant, Forbes Hare and Deloitte in relation to the proposed structure and documentation for the BVI scheme. He also found that she had told Mr Adamson that her purpose in going to the BVI was to make sure that what was being set up there was appropriate and that the businesses were properly structured and with people of real value (see [104]-[105] above).

238    In that context, the primary judge also found that, in the first part of March 2012, Mrs Gore was involved in work preparing loan agreements, compliance manuals and other documents relating to the establishment of SPG, WPO and the Cayco website. He also referred to emails that showed that Mrs Gore had some involvement in these processes, including asking for a high resolution image of a graph that was included in the then draft (and also in the final) version of the WPO PPM to be made for use on the Cayco website (see [111]-[112], [114] above). His Honour found that Mrs Gore had been provided with drafts of the WPO PPM on 12 December 2011, 17 and 18 March 2012 and that the final version was not relevantly different to the two she received on 17 and 18 March 2012.

239    In my opinion, there was a sufficient circumstantial case, so that it was open to his Honour to make the finding that Mrs Gore had played an active role in the development of the SPG and WPO PPMs, as well as the Cayco website: R v Hillier (2007) 228 CLR 618 at 638 [48] per Gummow, Hayne and Crennan JJ.

240    In the circumstances, it was open to the primary judge to have been satisfied that Mrs Gore knew that each of the SPG and WPO PPMs had not been lodged with ASIC. I am not persuaded that his Honour erred in so finding. I would dismiss this ground of appeal.

Alternate analysis under Ch 2 of the Criminal Code

241    As I have said, the parties seem not to have raised in argument at first instance, nor on appeal, the provisions of Ch 2 of the Criminal Code. Part 9.4 of the Corporations Act, headed “Offences”, commenced with s 1308A that provided:

Subject to this Act, Chapter 2 of the Criminal Code applies to all offences against this Act.

242    A person who does an act that the person is forbidden to do by or under, or otherwise contravenes, a provision of the Corporations Act is guilty of an offence by force of s 1311(1) unless the Act otherwise provides. Relevantly, the person is liable on conviction to the penalty provided in Sch 3 for the offence (s 1311(3)(a)). Here, as noted above, first, items 236 and 237 in Sch 3 provided that the penalty for contravention of each of s 727(1) and (2) was 200 penalty units or imprisonment for five years or both, and secondly, s 79(c) provided that a person was involved in a contravention, if, and only if, the person had been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention, while s 1324(1)(e) provided the Court with power to grant an injunction where a person had engaged in conduct that constituted being in any way, directly or indirectly, in, or party to, the contravention.

243    There is no equivalent to ss 79(c) or 1324(1)(e) in the Code but it is not necessary to consider whether that circumstance attracts the operation of s 11.6(3) of the Code so as to exclude the accessorial liability offences created by Div 11 of Pt 2.4 of Ch 2 of the Code. That is because these are civil proceedings and one or other of ss 79(c) or 1324(1)(e) of the Act operates to impose, at least, civil liability on a person for the accessorial conduct to which it applies. Thus, it is useful to consider what state of mind the alleged accessory must have, for the purposes of ss 79(c) or 1324(1)(e), in respect of what amounts to a principal’s contravention of s 727(1) by reference to Ch 2 of the Code.

244    Relevantly, Ch 2 of the Criminal Code provided that:

    an offence consisted of physical elements and fault elements (s 3.1);

    for a person to be guilty of an offence, the Crown has to prove each of the physical elements and, if a physical element required a fault element, one of the fault elements for that physical element (s 3.2);

    a physical element of an offence could be conduct, a result of conduct (being a result that is a physical element of the offence (see s 16.4)) or a circumstance in which conduct, or a result of conduct, occurred (s 4.1);

    “conduct” meant “an act, an omission to perform an act or a state of affairs” and “engage in conduct” meant doing or omitting to perform an act (s 4.1(2));

    conduct could only be a physical element if it were voluntary, i.e. it was “a product of the will of the person whose conduct it is” (s 4.2(1) and (2));

    an omission to perform an act was “only voluntary if the act omitted is one which the person is capable of performing” (s 4.2(4));

    where conduct constituting an offence consists only of a state of affairs, that state of affairs is “only voluntary if it is one over which the person is capable of exercising control” (s 4.2(5));

    an omission to perform an act can only be a physical element if the law creating the offence either makes it so or provides that “the offence is committed by an omission to perform an act that there is a duty to perform by a law of the Commonwealth …” (s 4.3);

    a fault element for a particular physical element of an offence may be intention, knowledge, recklessness or negligence (s 5.1(1));

    where the law creating the offence itself does not specify any fault element for a physical element (s 5.6(1)):

(1)    intention is the fault element for a physical element consisting only of conduct;

(2)    recklessness is the fault element where the physical element consists of a circumstance or result (s 5.6(2)).

245    No physical or fault elements are specified in s 727(1) and, so, s 5.6 of the Code creates the relevant default fault elements for each of the physical elements constituting an offence against s 727(1).

246    Each of the four common law elements of a contravention of s 727(1) identified in [210] above appears to be a physical element for the purposes of the Code. Having regard to the definition of “physical element” in ss 4.1 and 4.2(1) of the Code, it seems that:

    physical element (1) is conduct;

    each of physical elements (2) and (4) is either a circumstance in which that conduct occurred (s 4.1(1)(c)) or conduct consisting only of a state of affairs (s 4.2(5));

    physical element (3) is a result of conduct or a circumstance in which that conduct or that result occurred.

247    The conduct in physical element (1) is voluntary because it was the product of the defendant’s will (as required by s 4.2(2)) to engage in the act of making the offer or distributing the application form. The fault element for this conduct is intention (s 5.6(1)). Thus, the defendant must mean to engage in the conduct of making the offer or distributing the application form.

248    If the proper characterisation of one or other of physical elements (2), (3) or (4) is that it is a circumstance or a result, then the fault element will be recklessness (s 5.6(2)) which can be established in accordance with s 5.4 by proof of any of intention, knowledge or recklessness (s 5.4(4)). If, one or other of physical elements (2), (3) or (4) is a state of affairs over which the defendant is capable of exercising control, then it is conduct (s 4.2(5)) and the fault element will be intention.

249    From the discussion above, it appears to be the case that a principal can only commit an offence under s 727(1) if each relevant fault element is proved for each of the four physical elements.

250    Thus, it seems that the same result at which I have arrived, using the four common law elements of an offence against s 727(1), would ensue for an offence by applying the physical and fault elements prescribed by Ch 2 of the Code to identify the elements of which a person must have knowledge in order to be knowingly concerned in the principal’s contravention within the meaning of ss 79(c) and 1324(1)(e). On both bases, a person in Mrs Gore’s position can only be knowingly concerned in the principal’s contraventions of s 727(1) and (2) within the meaning of ss 79(c) and 1324(1)(e) if she knew of the essential matters that went to make up each of the four common law elements or the four physical elements under the Code: Yorke 158 CLR at 670.

The knowledge of the representation issue – Mrs Gore’s submissions

251    Mrs Gore argued that the primary judge had erred in finding (235 FCR 292 at [605]) that, first, in contrast to Mr Stonehouse, she had been actively involved in preparing and finalising the PPMs and the development of the Cayco website on which they were published and, secondly, a very strong inference arose from the evidence that Mrs Gore knew at relevant times that the moneys were not to be invested in real estate (see [141] above). She contended that his Honour had failed to make a finding that she knew that the principal contravenors did not have a reasonable basis for making the representation, but rather, the primary judge had assessed whether she had a reasonable basis for the making of the representation that was made by the principal contravenors. Mrs Gore also submitted that his Honour did not make a finding that specified the element of the contraventions of s 1041H to which he had applied the principle in Jones v Dunkel (1959) 101 CLR 298. Her amended notice of appeal also had a ground that his Honour should not have found (235 FCR at 249 [377]) that she knew that each PPM conveyed a different representation to that pleaded, namely that the principal contemplated form of investment of the funds raised would be direct investment in real estate. However, that point was not pressed on the appeal.

The knowledge of the representation issue – consideration

252    As noted above, Mrs Gore received each of the SPG and WPO PPMs and was involved in their preparation. She had travelled to the BVI “to enquire that what was being proposed in Australia could be done”. That was because MOGS needed a source of funds for its operations and Mrs Gore knew, from at least 21 November 2011, that each of SPG and WPO was intended to be a source of finance for MOGS. She knew that, if the BVI scheme went ahead, MOGS would borrow money from SPG and WPO. Each PPM referred to the “significant” or “unique” investment opportunity in the fund offered to Australian SMSFs.

253    Mrs Gore did not challenge his Honour’s finding that each of the SPG and WPO PPMs conveyed the representation that moneys invested by Australian SMSFs pursuant to it, in the future, would be used primarily for the purchase of property by SPG and WPO. But, she challenged the primary judge’s findings that she was knowingly concerned in the principals’ contraventions of s 1041H(1) in making that representation. Mrs Gore could only be knowingly concerned in making the representation in contravention of s 1041H(1) if she knew that, first, the PPMs conveyed that representation and, secondly, the principals did not have reasonable grounds for making it.

254    The primary judge found that the individuals who were the controlling minds of the corporate principals did not have reasonable grounds for making the representations. Mr Burrows and Mr George were directors of each of SPG and WPO, while Mr Adamson and Mr George were directors of Cayco and, as noted above, Mr Burrows controlled ActiveSuper and, with Mr Gibson, Royale.

255    Mrs Gore sent the final version of the SPG PPM to Mr Burrows on 8 March 2012. At and after that time, as the primary judge found, she was involved in work that progressed the preparation of loan agreements, compliance manuals, and other documents relating to the establishment of SPG, WPO and the Cayco website (see [109]-[111] above). Her purpose for visiting the BVI included enquiring to ascertain “that what was being proposed in Australia could be done”. And, what was being proposed in Australia was the raising of funds from SMSFs by SPG and WPO to provide money as working capital for MOGS’ ongoing operations.

256    Mrs Gore was aware the LLCs had agreed to lend MOGS $1.47 million, if for no other reason than that on 22 November 2011 she signed the loan variation documents on behalf of MOGS together with Mr Stonehouse (see [98] above) and he had referred to this borrowing, and Royale’s involvement in it, in his email of 13 December 2011 to, among others, Mrs Gore. That email referred to incurred set up costs of over $500,000 for the BVI scheme for the purpose of securing MOGS’ cash flows on a more consistent basis (see [101]-[102] above).

257    Given that Mrs Gore had received, and was aware of the content of, each PPM at or before its issue, she knew what each document said. She knew that each of the principal contravenors, SPG, WPO, ActiveSuper, Royale, Mr Burrows, Mr Gibson and Cayco, would publish the two PPMs and use them to raise funds and that MOGS wanted to borrow the, or some of the, proceeds of the fundraising. She helped, at least, to review drafts of the PPMs and content of Cayco’s website for that purpose.

258    Mrs Gore knew that, first, MOGS wanted to borrow the, or some of the, moneys to be raised, and the corporate principals were proposing to lend those moneys to MOGS, or in Cayco’s case, to promote the PPMs for the purpose of raising those moneys, and, secondly, MOGS was not investing or intending to invest any moneys it received from those sources for SPG or WPO. His Honour’s finding, that she knew that the principals had no reasonable grounds for making the representation that SPG and WPO, in the future, would use the money to purchase property, was inevitable. A loan is not a purchase of property. Mrs Gore knew that the principals, in the future, intended to lend the, or a substantial part of the, money to MOGS and so did not intend to purchase property with it.

259    His Honour made no finding that there was any loan documentation for any payments by SPG to MOGS. But his Honour had also found that nearly all the money raised by SPG was paid into WPO’s bank account whence it flowed, at ActiveSuper’s direction, to MOGS.

260    On 10 May 2012, Mrs Gore executed loan documents on behalf of MOGS and personal guarantees in favour of WPO in respect of the substantial amounts that MOGS had received or would receive from the fundraising under, as she must then have understood, at least, the WPO PPM. Although Mrs Gore hesitated at the 10 May 2012 meeting before executing the loan documents and her personal guarantees, the fact that she signed them recognised that MOGS had been borrowing and would borrow large sums of money from WPO and that WPO was not purchasing property with that money, contrary to the representation conveyed in each PPM. She knew that those moneys were not, or would when received not be, invested in property but were loans. His Honour found that MOGS received about $2 million of the total raised by the SPG and WPO PPMs. That was in addition to $2.15 million that it received from the funds raised under the US Realty Memorandum.

261    Mrs Gore knew that on 20 April 2012 Cayco had transferred $69,200 to her own Wells Fargo bank account in the United States. She must have been aware, at least because of the role of Cayco (which was incorporated to be investment manager of SPG and WPO) and its use of its website to publish the PPMs, that the source of that money was probably one or both of SPG and WPO and that the payment to her had nothing to do with investment in property, whatever else may have been its purpose. She also knew that having the source of the funding from one or both of SPG and WPO was achieving the purpose of the BVI scheme, namely to provide MOGS with finance and cash flow. That was what had been proposed before she went to the BVI to ascertain whether it could be done lawfully and appropriately. Correspondingly, she must have known that the principals, and in particular SPG and WPO, knew that they were lending to MOGS and not investing in property.

262    Mrs Gore was in a different factual situation to Mr Stonehouse. There was no finding that he had seen the final or close to final drafts of either PPM and so knew of the false representation that, his Honour found, each conveyed. Mrs Gore did know that that representation was in the PPMs. Moreover, he had not travelled to the BVI as Mrs Gore had. The primary judge’s findings in relation to Mr Stonehouse do not aid Mrs Gore.

263    On the evidence to which I have referred, it was open to his Honour to find that Mrs Gore was knowingly concerned in the principals’ contraventions of s 1041H(1). His Honour was entitled to be more confident in drawing any inference to support that finding when Mrs Gore, as the “person presumably able to put the true complexion on the facts relied on as the ground for the inference”, did not give evidence and gave no explanation for her failure to do so: Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at 412-413 [167] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ applying what Kitto J had said in Jones v Dunkel 101 CLR at 308.

264    For these reasons, the primary judge did not err in finding, and indeed, I agree with his Honour’s finding, that Mrs Gore was knowingly concerned in the contraventions of s 1041H(1).

The length of the injunction issue – the parties’ submissions

265    Mrs Gore argued that the primary judge erred in the exercise of his discretion as to what relief under s 1324(1) was appropriate. She argued that no more than three to five years from the date of the primary judge’s orders would be appropriate as a period of restraint in the circumstances. She argued that the original period of 7½ years that the primary judge imposed for her restraint was manifestly unreasonable compared with the restraints imposed on other defendants below. She also sought that his Honour’s restraint be varied by deleting the prohibition on her being in any way concerned in the distribution of promotional documents or application forms for the offer or acquisition of securities that required disclosure under Pt 6D.2 unless a disclosure document had been lodged with ASIC under s 727(2). She argued that was appropriate if the findings that she had been knowingly concerned in contraventions of s 727 were disturbed.

266    In contrast, ASIC supported its cross appeal by asserting that his Honour’s chosen period of restraint was manifestly inadequate. It contended that Mrs Gore’s participation in the principals’ contraventions had caused a significant number of persons to suffer losses of their investments. It argued that Mrs Gore:

    had shown no contrition;

    made no effort at compensating those who had lost money by reason of her conduct;

    had been actively involved in the principals’ conduct constituting the contraventions;

    had arranged for MOGS to borrow the, or a substantial part of the, money raised;

    knew that the investors had been lied to or misled about the purpose for which the funds had been sought;

    signed the loan documents on 10 May 2012;

    received $1.54 million personally from the funds raised;

    failed to give any explanation of her conduct;

    aided her husband to exercise considerable control and influence over MOGS’ affairs;

    posed a real chance of engaging in further contravening conduct in the future; and

    had given no assurance that she would not engage in similar conduct in the future.

267    ASIC also contended that his Honour erred in having found that a permanent restraint was not appropriate because much of Mrs Gore’s conduct could be attributed to the influence of her husband. It submitted that this finding, of the effect of Mr Gore’s influence, aggravated, rather than mitigated, Mrs Gore’s conduct and called for a greater period of restraint. It contended that his Honour had found her conduct was suggestive of dishonesty. It contended that his Honour had no basis to find that Mrs Gore’s involvement in the proceedings had had some salutary effect on her.

268    ASIC submitted that one purpose of the power to grant injunctions conferred by s 1324(1) and its analogues was to punish the person enjoined. It relied on what McHugh J said in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at 156-157 [56]. It argued that the primary judge erred by rejecting that submission and holding that the purpose of orders under s 1324(1) was protection of the public although they may have the, or an, effect of denunciation and deterrence.

269    ASIC also argued that his Honour gave too great a weight to the principle of parity in fixing Mrs Gore’s period of restraint. It contended that his Honour should not have used the consent orders against Mr Gibson as a yardstick for the “penalty” that he imposed on Mrs Gore. It submitted that the consent orders were made in different circumstances that included that each of Mr Burrows and Mr Gibson had co-operated with ASIC, agreed to the orders against him without the need for a lengthy trial and gave his consequent acknowledgment of having contravened the law. ASIC pointed out that Mrs Gore’s case involved none of those mitigating features.

270    In response to the Full Court having raised the principle of parity or equal justice as explained by French CJ, Crennan and Kiefel JJ in Green v The Queen (2011) 244 CLR 462 at 472-473 [28], ASIC argued that Mrs Gore’s circumstances made her conduct as an accessory more reprehensible than the principal contravenors’, such as Mr Burrows or Mr Gibson.

271    Mrs Gore retorted that ASIC had argued, successfully, in support of the primary judge’s decision to admit, pursuant to s 68(3) of the ASIC Act, evidence of the transcript of her examination under s 19 of that Act on the basis that the proceedings were not ones for the imposition of a penalty but were remedial in character. She noted that ASIC had shifted its position as to the non-penal character of the proceedings at the time of making submissions on relief to his Honour.

272    Mrs Gore argued that the primary judge had not found that:

    she had or was likely to have a high propensity to engage in similar conduct in the future;

    she had intended to defraud;

    she had wilfully contravened the law; and

    she had any prior history of civil or criminal contraventions.

She submitted that his Honour had found that:

    at times she had acted on legal advice from Mr Adamson and that it was reasonable for her to have done so; and

    she had taken some steps to satisfy herself that SPG and WPO were properly established and audited.

273    Mrs Gore contended that her conduct and responsibility were distinct from that of her husband, against whom the primary judge had made much more serious findings and that those were over four more sets of contraventions.

274    She also argued that Mr Gibson had consented to six more declarations that he had contravened the law in numerous respects and that she was found liable as an accessory in only four of the eleven declarations made against him as a principal. She contended that his activities as a principal contravenor were more substantial than hers as an accessory.

275    Mrs Gore submitted that his Honour made no findings to apportion any amounts paid to MOGS or others by SPG or WPO pursuant to her contravening conduct. She argued that, by her counsel’s submissions below and before the Full Court, she had acknowledged that the findings of her contraventions were serious. However, she submitted that her contravening conduct was not at the worst, or most culpable, level. And, once again, she contended that the Full Court should infer that the proceedings had been a salutary lesson for her and that she would have learned a hard and valuable lesson. She argued that such an inference should be drawn and that it was not necessary for Mrs Gore to give evidence about those matters.

276    Mrs Gore submitted that a total restraint of five years would be appropriate on the basis that the 2½ years during which she was restrained by interlocutory orders before his Honour made final orders should be included in that assessment.

The length of the injunction issue – consideration

277    Under s 68(3)(b) of the ASIC Act a statement in a s 19 examination was:

… not admissible in evidence against the [examinee] in:

(a)    a criminal proceeding;

(b)    a proceeding for the imposition of a penalty … (emphasis added)

278    The primary judge explained that at the hearing in 2013 he had admitted the transcript of Mrs Gore’s s 19 examination and reserved giving his reasons for doing so. He explained that decision in his principal reasons, by which time he noted that Gordon J had decided in Australian Securities and Investments Commission v Monarch FX Group Pty Ltd (2014) 103 ACSR 453. There, her Honour held that s 68(3) of the ASIC Act, when read with s 1349 of the Corporations Act, precluded the admission of a s 19 transcript in a proceeding seeking a restraining order under s 1101B or s 1324 of the Corporations Act where the examinee had claimed, as Mrs Gore had, privilege. Relevantly, the privilege was against self-exposure to a penalty.

279    His Honour decided not to seek further submissions from the parties but instead determined that he would rely very little on the s 19 transcript. He explained that he had made his original decision on the understanding that proceedings for an injunction against a person pursuant to ss 1101B or 1324 were not proceedings for positive orders of disqualification or prohibition and so, while such proceedings may have had a deterrent effect, they were not proceedings “for the imposition of a penalty” within the meaning of s 68(3) of the ASIC Act. The primary judge said that s 1349(4) of the Corporations Act had been inserted to address the decision in Rich 220 CLR 129 and the amendment had not excepted proceedings under ss 1101B and 1324 from the general prohibition in s 68(3)(b) against the admissibility of statements made in a s 19 examination, in contrast to a large number of other proceedings under that Act in which such statements were made admissible by that amendment. He reasoned that the Parliament must have considered that proceedings under ss 1101B and 1324 were not ones for the imposition of a penalty.

280    The primary judge recognised that if the construction of s 68(3) of the ASIC Act favoured by Gordon J were correct, rather than his own, the parties may have been affected. He decided not to invite further submissions because he said that “I have relied very little on the s 19 transcripts and I think it undesirable that judgment in this matter be prolonged.”

281    Having persuaded his Honour to that view, in order to benefit from its tender of Mrs Gore’s s 19 transcript, ASIC now argues, as it did when seeking final relief from his Honour, that the proceedings were indeed for the imposition of a penalty. ASIC’s blowing hot and cold on this significant point was not explained. ASIC stands in the position of the Crown and is bound by the same standards that Griffith CJ identified when a similar change of stance occurred in Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 at 342. He said, in the following well-known passage that remains the position today:

It used to be regarded as axiomatic that the Crown never takes technical points, even in civil proceedings, and a fortiori not in criminal proceedings.

I am sometimes inclined to think that in some parts – not all – of the Commonwealth, the old-fashioned traditional, and almost instinctive, standard of fair play to be observed by the Crown in dealing with subjects, which I learned a very long time ago to regard as elementary, is either not known or thought out of date. I should be glad to think that I am mistaken. (emphasis added)

282    ASIC made a deliberate forensic choice in seeking to tender and rely on the s 19 transcripts on the basis that the proceedings against all the 18 defendants were not “for the imposition of a penalty”. Having conducted itself during the trial on that basis, the other parties were entitled to expect that it would have remained consistent in its approach on the basis that Griffith CJ expressed. Nonetheless, because ASIC has argued that s 1324(1) should be used to impose a penalty on Mrs Gore, it is necessary to decide whether s 68(3) of the ASIC Act made her s 19 transcript inadmissible.

283    On its face, s 1324(1) is a provision of general application conferring power to the Court to grant an injunction on such terms as it thinks appropriate, if a jurisdictional precondition in any of subparagraphs (a)-(f) has been satisfied. The precondition is that an actual or attempted contravention of the Corporations Act has occurred or that a person has been an accessory or a party to a conspiracy to contravene the Act.

284    There are many situations in which an injunction could be sought and granted under s 1324(1) in which no-one could suggest that the proceeding in which that relief was sought was “for the imposition of a penalty”. For example, a liquidator might seek to enjoin a person claiming to be entitled to take an enforcement process against a company’s property contrary to s 471B or a shareholder might seek to enjoin the holding of a meeting of a company because of a contravention of the Act.

285    On the other hand, proceedings seeking to interfere with an important common law right of a person to carry on business (Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 252 per Deane, Dawson, Toohey and Gaudron JJ citing Commonwealth v Progress Advertising and Press Agency Co Pty Ltd (1910) 10 CLR 457 at 464 per O’Connor J) or to pursue his or her livelihood free from restraint of trade (as recognised in Buckley v Tutty (1971) 125 CLR 353 at 373 per Barwick CJ, McTiernan, Windeyer, Owen and Gibbs JJ) can have the character of being “for the imposition of a penalty”.

286    The principle that applies for construing s 1324(1) is that stated by Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ in Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 namely:

It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.

287    The general application of s 1324(1) should not be circumscribed by characterising proceedings in which relief is sought under s 1324(1) as presumptively purely remedial or, because of the potential reach of the section, capable of being “for the imposition of a penalty”. The section is inherently neutral in its potential reach. The prohibition in s 68(3) was directed to the purpose for which the proceedings were instituted, not to the range of possible uses that a statutory remedy, such as s 1324(1), might be conscripted by the applicant or court to serve.

288    A common law action in tort, in general, is not one that could be characterised as for the imposition of a penalty. But, if the plaintiff seeks punitive or exemplary damages, the character of the proceeding and the purpose of the remedy changes. As Mason CJ, Brennan, Deane, Dawson and Gaudron JJ said in Lamb v Cotogno (1987) 164 CLR 1 at 9:

The object, or at least the effect, of exemplary damages is not wholly punishment and the deterrence which is intended extends beyond the actual wrongdoer and the exact nature of his wrongdoing: see Uren v. John Fairfax & Sons Pty. Ltd. [(1966) 117 C.L.R., at p 138]; Luntz, Assessment of Damages for Personal Injury and Death, 2nd ed. (1983), pp. 66-67; Street, Principles of the Law of Damages (1962), pp. 33-34; cf. Costi v. Minister of Education [(1973) 5 SASR 328]. It is an aspect of exemplary damages that they serve to assuage any urge for revenge felt by victims and to discourage any temptation to engage in self-help likely to endanger the peace: cf. Merest v. Harvey [(1814) 5 Taunt. 442 [128 ER 761]].

289    Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ held in Rich 220 CLR at 146 [35] that it is erroneous to make an a priori classification of proceedings as being either protective or penal, since those categories are not necessarily mutually exclusive. They said there:

Just as a law may bear several characters, a proceeding may seek relief which, if granted, would protect the public but would also penalise the person against whom it is granted. That a proceeding may bear several characters does not deny that it bears each of those characters [Stone, Legal System and Lawyers’ Reasonings (1964), pp 248-252]. (emphasis added)

290    Here, the objective purpose for which ASIC sought relief against Mrs Gore under s 1324(1) was to prevent her from engaging in the earning of her livelihood for a future period, not just in the contravening manner she had acted, but also in any other way in a large field of activity that she otherwise could have pursued without contravening any law. ASIC, as a statutory regulator, sought that the latter consequence be inflicted on her on account of her wrongdoing in contravening the Act. If inflicted, the consequence of an injunction was a penalty: Rich 220 CLR at 144 [29], 147 [37].

291    The omission of s 1324 from the list of provisions in the Corporations Act, in which s 68(3) of the ASIC Act would not operate to prevent the admission into evidence of statements in or transcripts of a s 19 examination, was consistent with the reasoning in the joint judgment in Rich 220 CLR 129. The Parliament left s 1324(1) unfettered, but recognised that there would be proceedings where a s 19 transcript could be admitted into evidence (for example, where an investor sought an injunction and wished to use an admission in the transcript against the examinee to support that case) and others where it could not (for example, because a regulator sought the injunction to prevent the examinee engaging in otherwise lawful conduct by reason of his or her past contravention of the law that the statement in, or transcript of, the s 19 examination may tend to prove).

292    It follows that, where Mrs Gore claimed privilege in her s 19 examination, her statements made under that claim were not admissible against her in the proceedings below. However, even though, as a result of this conclusion, the proceedings against Mrs Gore were for the imposition of a penalty, his Honour dealt with her and all of the other defendants on the basis that he was not granting relief for the purposes of imposing a punishment.

293    In any event Mrs Gore did not appear to object to his Honour’s use of any part of the s 19 transcript. She referred to the matter only to demonstrate that ASIC had changed its position. In those circumstances, it is not necessary to identify and deal with any reliance on that transcript.

294    I have proceeded on the basis that where an injunction or similar order will have the effect of restraining conduct which would otherwise be lawful, or compelling conduct which the relevant person would not otherwise be obliged to perform, the order is punitive in effect, whatever the purpose for which it is imposed. Similarly, if an order restrains conduct which would otherwise be unlawful, or compels conduct pursuant to an existing duty, it is not punitive in effect. In this context I consider that the restraining order made against Mrs Gore (by virtue of order 19(n) of the orders made on 29 May 2015) was punitive in effect, although it was made for other purposes.

295    The primary judge made the restraining orders for the principal purpose of protecting the public. His Honour also had in mind denunciation and deterrence. He was not seeking to punish. I do not see any error in that approach. Nonetheless, as I have observed, such restraints are likely to have a punitive effect. Given that the principal purpose is protection of the public, the length of any restraint should identify a period which will serve that purpose but also recognise the need for denunciation and deterrence. Given that the primary purpose is protection, it may be that parity of treatment amongst co-offenders is not as important as it is in connection with punishment. Nonetheless, it is still a relevant consideration. Apparent inconsistency may undermine the public’s confidence in the judicial system. The need to have regard to parity does not mean that the primary judge or an appellate court has to assume the correctness of the periods of restraint imposed on others who consented to that outcome and, as it were, start from that point. The mere fact that they consented to particular orders, or have not appealed against orders, does not mean that his Honour had to approach fixing Mrs Gore’s period of restraint upon any such assumption of correctness: cp: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 at 490-492 [53]-[59] per French CJ, Kiefel, Bell, Nettle and Gordon JJ.

296    The primary judge’s six declarations comprised two courses of conduct, namely the use of each of the SPG and WPO PPMs to persuade vulnerable SMSF investors to part with some or all of their superannuation savings and invest them in shares issued by each of SPG and WPO on the faith of the misrepresentation that the money would be used by each for the purchase of property.

297    The misrepresentations in the PPMs as to how the investors’ money would be invested, to the extent that the investors acted on them, directly caused significant losses. The misrepresentation in each PPM was intended to induce the investors to entrust SPG and WPO with their money. The misrepresentations were intended to cause those misinformed investments. Mrs Gore’s participation, by her being knowingly concerned in the principal contravenors’ s 727 misconduct was no doubt motivated by a desire to avoid ASIC’s attention. It was open to his Honour to take that factor into account in assessing Mrs Gore’s overall culpability.

298    Mrs Gore was aware that she was assisting the principals and her husband, Mr Gore, to set up two fundraising schemes, using the SPG and WPO PPMs. Those schemes were to raise money, apparently outside Australia through BVI and Cayman Island entities, from Australian SMSF investors and that the moneys raised, or a substantial part of it, would then be used to fund the Australian company, MOGS, in Australia. Mrs Gore went to the BVI to assure herself that “what was being proposed in Australia could be done” (see [105] above). She considered that it was desirable that she ensure that, “what was being proposed in Australia” could be done overseas, perhaps because she understood that it could not be done in Australia. She assisted SPG, WPO and Cayco in putting forward in each PPM a representation that she knew to be false, for the purpose of inducing SMSF investors to invest in shares in SPG and WPO.

299    Mrs Gore assisted in the development of each PPM and its dissemination with that knowledge. She knew that the PPMs were to be used to raise money from Australian SMSFs, and that the principal contravenors proposed to lend or pay the proceeds, or a substantial part of the proceeds, of that fundraising to MOGS. That conduct was dishonest by the standards of ordinary decent people: cf Farah Constructions 230 CLR at 162 [173] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ; see too: Peters v The Queen (1998) 192 CLR 493 at 504 [18] per Toohey and Gaudron JJ with whom Kirby J agreed at 556 [145].

300    Mrs Gore personally received $69,200 from Cayco, on 20 April 2012. That amount was paid into her United States bank account with Wells Fargo when both PPMs were still being used to raise funds. While his Honour did not identify the payees of all of the $2.4 million raised by SPG and WPO through the PPMs, the evidence provided a sound foundation for his finding that Mrs Gore profited personally from the BVI scheme (see [150] above). In addition to her unexplained receipt of $69,200 in a foreign bank account, his Honour found that in the financial year ended 30 June 2012, the MAC Trust, which Mrs Gore controlled, received $465,863 from MOGS (or the unit trust of which it was trustee). She also received from MOGS in that financial year loans of $241,044 personally, and $188,292 through the MAC Trust, in addition to her salary of $320,418.

301    While it is likely that a substantial amount of Mrs Gore’s salary was paid before proceeds began to flow to MOGS from the funds raised by each PPM, her receipt of at least part of those payments depended on MOGS having sufficient cash flow and available funds so that it could continue to operate. The purpose of the BVI scheme was to ensure that continuity of funds. Mrs Gore executed the loan agreements and guarantees in favour of WPO on 10 May 2012 to secure the continuing flow of money to MOGS from SPG and WPO, and to acknowledge MOGS’ indebtedness. She did so after enquiring whether the “lender” had met all its obligations (see [124] above).

302    His Honour considered that Mrs Gore’s involvement in the proceedings had produced a salutary effect on her, although to a limited extent, and that she had acted under the influence of her husband. The primary judge treated these matters as mitigating circumstances. I accept his Honour’s view, but note the limits which he placed upon it. In my view, Mrs Gore has shown little or no insight or contrition. She has given no explanation for her dishonest, contravening conduct, has made no offer to recompense those who lost their savings and has not acknowledged her wrongdoing. His Honour found, and I agree, that if left unrestrained, there is a real chance that Mrs Gore may engage in similar forms of activity in the future. His Honour considered that a further restraint for 7½ years was appropriate to achieve that purpose, taking into account the fact that she had already been restrained for 2½ years.

303    The parties have said much about the need for consistency in the imposition of restraints upon the future conduct of the various respondents. The primary judge considered that Mrs Gore’s position was substantively different from those of ActiveSuper, Mr Burrows and Mr Adamson. Each consented to a period of restraint of 10 years. Her position was also different from those of Royale and Mr Gibson. Each consented to a restraint period of 7½ years. ActiveSuper, Royale, Mr Burrows and Mr Gibson did not contest the proceedings. His Honour noted that the cases against Royale and Mr Gibson were separated from the balance of the proceedings because of Mr Gibson’s ill health. At the time at which his Honour published his primary judgment, those proceedings had not been heard. However, after his Honour published the primary reasons each consented to a 7½ year period of restraint. On the second day of the trial, Mr Adamson consented to orders against him.

304    The active defendants in the trial were Mr Stonehouse, who was found not to be liable, Mr and Mrs Gore and, to a limited extent, Mr Adamson. Thus, the individual defendants who were found liable were Mr and Mrs Gore, Mr George (who did not appear at the trial) and, by their consent, Mr Burrows, Mr Gibson and Mr Adamson.

305    Mr Gore accepted that he should be subject to a permanent restraint. His conduct was dishonest and involved his taking money for his own use and benefit. His Honour found that although Mr Burrows was involved in more contraventions than was Mr Gore, he was not as culpable. Mr Gore had been the originator and prime mover of the BVI scheme, had much greater corporate experience than Mr Burrows, had not made a public admission of the wrongfulness of his conduct and consented to the relief against him, and had, together with those associated with him, profited personally to a greater extent than Mr Burrows. Further, Mr Burrows had agreed the period of restraint and co-operated with ASIC.

306    Opinions may vary as to the extent of Mrs Gore’s involvement and the relative seriousness of her misconduct. Her actual, physical involvement seems to have been limited and there is no reason to doubt her explanation for the trip to BVI. As a director of MOGS, she wanted to ensure the efficacy of the proposed course of action. There is also no reason to doubt that she was otherwise active in the conduct of the affairs of that company. The way in which she performed her role as a director is a primary consideration in fixing the period of restraint, as are the aspects of her involvement in the relevant transactions. The period of restraint may act as a deterrent to other potential offenders, but I must keep in mind that such orders are primarily protective. See Director, Fair Work Building Industry Inspectorate 326 ALR at 482 [24] and 490 [55]. In fixing the period of restraint, the Court must seek to identify a period which is likely to minimise the risk of further injury to the investing public, having regard to the seriousness of the misconduct and other relevant considerations. That period should be substantial, given the demonstrated capacity of Mrs Gore’s conduct to cause harm. It must also be sufficient to demonstrate denunciation of her conduct and to offer deterrence to others.

307    The evidence does not demonstrate that Mrs Gore was implicated in the initial conception and design of the schemes. Rather, she assisted in their implementation and facilitated the derivation and distribution of the substantial benefits derived from them. In those circumstances, it cannot be inferred that Mrs Gore will necessarily engage in such conduct in the future. It is necessary to balance the need to protect the public against her capacity to earn an income. That capacity may well be constrained by any injunctive relief. She has no long history of misconduct or dishonesty.

308    The primary judge fixed a period which he considered to be appropriate for the protective purpose of an order under s 1324(1), based upon his detailed knowledge of the facts of the case. The above discussion of the various factual considerations identified by the parties has not revealed that his Honour erred in the exercise of his discretion under s 1324(1) to fix the period during which Mrs Gore should have been restrained or the conditions of that restraint. Of course, it is necessary for a party to demonstrate that the primary judge made an error before an appellate court can interfere in such a discretionary judgment: House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ. I am not persuaded that his Honour did make errors of the opposing kinds that Mrs Gore and ASIC alleged.

309    Moreover, having considered the facts and arguments of the parties independently (having regard to the necessity to decide whether his Honour fixed a period of restraint and conditions that was or were excessive or inadequate), I am satisfied that the primary judge arrived at a result that was appropriate in all of the circumstances and his order should not be disturbed.

The costs issue – Mrs Gore’s submissions

310    Mrs Gore argued that it was manifestly unreasonable for the primary judge to order her to pay 80% of 95% of ASIC’s costs. She contended that there were 18 defendants, and that she had only been found liable in respect of two categories of contraventions. Further, there was other conduct in issue, involving other defendants in relation to the US Realty matter. She argued that, at the trial, ASIC had failed to establish that she was knowingly concerned in contraventions of s 911A. Mrs Gore submitted that, first, his Honour estimated that the trial had taken an extra 12 days because she, Mr Gore and Mr Stonehouse contested ASIC’s allegations, and that his Honour then apportioned those costs to arrive at his costs order. She argued that ASIC still had to prove its case against Mr Gore and Mr Stonehouse (against whom it failed) as well as the many defendants who did not appear, and that it was not appropriate to treat her and Mr Gore as being in substantially the same positions. She contended that the liability for costs should have been divided severally between all liable defendants.

The costs issue – consideration

311    While costs will usually follow the event, the outcomes on distinct issues in the litigation may make it appropriate to depart from that general rule: Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192 at 193 [6] per French CJ, Kiefel, Nettle and Gordon JJ. However, where there are competing considerations, the order for costs will be decided so as to “reflect a broad evaluative judgment of what justice requires”: Gray v Richards (No 2) (2014) 315 ALR 1 at [2] per French CJ, Hayne, Bell, Gageler and Keane JJ.

312    ASIC’s case at trial against Mr Gore appeared superficially to be broader than that against Mrs Gore, and ASIC failed in its claim against her under s 911A. However, the Full Court is not in the position of the primary judge. That makes it difficult to assess with any degree of confidence how any such apparent differences could reveal that his Honour’s discretionary apportionment was erroneous. Although I have some concern that his Honour may not have sufficiently distinguished the liability for costs of Mrs Gore from that of her husband, I am not persuaded that he erred. I would dismiss this ground of appeal.

The costs of the appeal and cross appeal

313    The appeal and cross appeal each failed. Costs should follow the event in each.

Associate:

Dated:    13 February 2017