FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission, In the Matter of Richstar

Enterprises Pty Ltd (ACN 099 071 968) v Carey (No 3) [2006] FCA 433

CORPORATIONS – appointment of receivers to property of directors and officers of corporate group – members of corporate group – pending investigation by Australian Securities and Investments Commission – possible contraventions of Corporations Act 2001 (Cth) – possible liabilities of defendants to third parties – nature of application for freezing orders and appointment of receivers – nature of evidence that may be received on such application – evidence of wide spread and serious misconduct in operation of affairs of group – orders necessary and desirable – receivers appointed

Corporations Act 2001 (Cth) s 1323, s 184, s 588G

Australian Securities and Investments Commission Act 2001 (Cth) s 13(1), 13(6)

Evidence Act 1995 (Cth) s 75

Australian Securities and Investments Commission, In the Matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey [2006] FCA 366 cited

Lone Star Exploration NL v Corporate Affairs Commission (1988) 6 ACLC 1108

Cited

ASIC v Mauer-Swisse Securities Ltd (2002) 20 ACLC 1530 cited

CAC v Lone Star Exploration NL (1988) 14 ACLR 499 cited

Corporate Affairs Commission v ASC Timber Pty Ltd (1989) 7 ACLC 467 cited

Australian Securities and Investments Commission v Adler (2001) 38 ACSR 266 cited

ASIC v Burke [2000] NSWSC 694 cited

IN THE MATTER OF RICHSTAR ENTERPRISES PTY LTD (ACN 099 071 968); WESTPOINT REALTY PTY LTD (ACN 050 218 954); BOWESCO PTY LTD (ACN 008 915 357); REDCHIME PTY LTD (ACN 117 947 805)

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v NORMAN PHILLIP CAREY, GRAEME JOHN RUNDLE, CEDRIC RICHARD PALMER BECK, JOHN NORMAN DIXON, RICHSTAR ENTERPRISES PYT LTD

(ACN 099 071 968), WESTPOINT REALTY PTY LTD (ACN 050 218 954) and BOWESCO PTY LTD (ACN 008 915 357) and REDCHIME PTY LTD

(ACN 117 947 805)

WAD 83 OF 2006

FRENCH J

20 APRIL 2006

PERTH

IN THE MATTER OF RICHSTAR ENTERPRISES PTY LTD (ACN 099 071 968)

WESTPOINT REALTY PTY LTD (ACN 050 218 954)

B OWESCO PTY LTD (ACN 008 915 357)

REDCHIME PTY LTD (ACN 117 947 805)

In respect of the First to Fourth Defendants THE COURT ORDERS THAT:

A. The receiver orders:

1. Until 20 October 2006 or further order, Oren Zohar, Brian McMaster and Mark Korda of KordaMentha, Chartered Accountants, of Level 11, 37 St Georges Terrace, Perth be appointed as receivers (‘the Individual Receivers’) to all property (‘the Individual Property’) whether within Australia or overseas, of each of the First, Second, Third and Fourth Defendants.

2. The Individual Receivers have, in respect of the Individual Property, the following powers:

2.1 the power to do all things necessary or convenient to be done for or in connection with, or as incidental to, the identification, preservation and securing of all of the Individual Property for the benefit of potential creditors;

2.2 without limiting the generality of the power in the preceding subparagraph, the power to enter into possession and take control of the Individual Property to the extent that the exercise of the power is reasonably necessary to achieve the purposes set out in the preceding sub-paragraph.

2.3 The preceding powers shall not extend to the sale, letting or encumbering of such property without prior leave of the Court or the consent of the defendant whose property it is.

3. The power referred to in paragraph 2.1 above shall not prevent:

3.1 the First to Fourth Defendants carrying on any business or otherwise impeding their ability to carry on a business in an effective and efficient manner PROVIDED HOWEVER that the said limitation on the power of the Individual Receivers shall not apply to the extent that the exercise of the said power is necessary to do the things referred to in paragraph 2.1; or

3.2 any bank, building society or financial institution from:

3.2.1 exercising any right of set-off which it may have in respect of a facility afforded by it to each or any of the First to Fourth Defendants prior to the date of this Order; and

3.2.2 from processing any automatic debits to a bank, building society or financial institution.

4. Except to the extent that a claim of privilege against self incrimination or exposure to civil penalty is made by any of the First, Second, Third and Fourth Defendants, each of the First, Second, Third and Fourth Defendants shall, by 5.00pm on Thursday 4 May 2006, deliver or cause to be delivered to the Plaintiff and the Individual Receivers full and detailed affidavits sworn by each of them, setting out:

4.1 the name and address of any bank, building society or other financial institution at which there is an account in the name of or under the control of the respective Defendant, together with the number of such account, the name of such account and the balance of that account at the date of this Order;

4.2 the name and address of any person or persons indebted to the respective Defendant at the date of this Order and the amount of the indebtedness;

4.3 an itemised inventory of the respective Defendant’s assets and liabilities;

4.4 an itemised inventory of any and all property whether real or personal;

4.4.1 owned by the respective Defendant;

4.4.2 controlled by the respective Defendant; and

4.4.3 in which the respective Defendant has an interest,

and which includes details of the location of that property; and

4.5 in respect of any of the property referred to in sub-paragraphs 4.1 to 4.4 above, whether that property has been given as security for any debt, and, if so, the nature of the security and the debt so incurred.

5. In the event that any of the First, Second, Third and fourth Defendants refuse to provide in whole or in part the affidavit referred to in paragraph 4 above, based on a claim of privilege against self incrimination or exposure to civil penalty, that Defendant shall by 5.00pm on Thursday, 4 May 2006, file with the Court and serve on the Plaintiff, an affidavit specifying the grounds on which the claim is made.

PROVIDED that this Order shall not require that any of the First to Fourth Defendants disclose any information which would otherwise be protected from disclosure in accordance with the privilege which has been claimed.

6. An order that the First, Second, Third and Fourth Defendants, by themselves, their servants, agents or employees:

6.1 immediately deliver up to the Individual Receivers the books and records which relate to the Individual Property; and

6.2 otherwise use their best endeavours to assist the Individual receivers in performance of their obligations.

B. Costs of Receivers

7. The question whether the Individual Receivers’ reasonable costs and expenses properly incurred in performance of their obligations and as approved by the Court shall be payable from the collective assets of the First, Second, Third and Fourth Defendants is to be reserved for further submissions.

8. Any decision as to which if any of the First, Second, Third and Fourth Defendants is to ultimately bear the Individual Receivers’ reasonable costs and expenses is reserved.

C. The ‘travel restraint’ orders:

9. Until further order that each of the First, Second, Third and Fourth Defendants is restrained from:

9.1 leaving Australia; and

9.2 from coming within one hundred (100) metres of an Australian point of overseas departure.

10. Each of the First, Second, Third and Fourth Defendants deliver to any Registry of this Court by 4.15pm on Wednesday 26 April 2006:

10.1 all passports held by them in their possession, custody or control; and

10.2 any airline tickets concerning any travel arrangements made for the twelve (12) month period commencing from the date of these Orders.

11. All documents produced to the Court’s Registry pursuant to the orders made in paragraph 10 above, shall be held by the Court’s Registry until further order.

D. The ‘general’ orders:

12. The Plaintiff has leave to give to:

12.1 the relevant authorities that record, control and regulate the ownership of real property;

12.2 the relevant authorities that record, control and regulate the ownership of motor vehicles;

12.3 the relevant authorities that record, control and regulate the ownership of maritime vessels and craft;

12.4 any bank, building society of other financial institution with which any of the First to Fourth Defendants operates any accounts; and

12.5 any other person or entity holding or controlling property belonging to each or any of the First to Fourth Defendants,

notice of these Orders by delivering a copy of these Orders to a person apparently in the employ of that entity or person.

13. The matter is stood over before Justice French on 3 October 2006 at 9am.

14. The Defendants pay the Plaintiff’s costs of these proceedings.

15. The Parties, third parties affected by the orders and the Individual Receivers have liberty to apply to the Court on the giving of reasonable notice.

In respect of the Fifth, Sixth and Eighth Defendants THE COURT ORDERS THAT:

A. The Receiver Orders

1. Until 20 October 2006 or further order, Oren Zohar, Brian McMaster and Mark Korda of KordaMentha, Chartered Accountants, of Level 11, 37 St Georges Terrace, Perth, be appointed as receivers and managers (‘the Corporate Receivers’) to property (‘the Corporate Property’), whether within Australia or overseas, of the Fifth, Sixth and Eighth Defendants as specified in this order.

2. The Corporate Receivers have the power to appoint themselves as a required signatory to all bank accounts of the Fifth, Sixth and Eighth Defendants.

3. These orders shall not prevent the Fifth, Sixth and Eighth Defendants by their officers other than the Corporate Receivers from continuing to operate in the ordinary course of its business, provided that they must obtain the Corporate Receivers’ prior consent to any transaction that would result in the transfer or disposition of any part of the Corporate Property exceeding a value of in excess of $5,000or a series of transactions that would result in the transfer or disposition of any part of the Corporate Property totalling a value of in excess of $5,000 within any seven (7) day period.

4. In exercising the discretion to consent or not to any payment, transfer or disposition contemplated in paragraphs 2 and 3 above, the Corporate Receivers have the power to make all necessary and incidental inquiries into the affairs of the Fifth, Sixth and Eighth Defendants (including the power to make inquiries in the name of the Fifth, Sixth and Eighth Defendants), including inspecting the books and records and any other information held by the Fifth, Sixth and Eighth Defendants and or their agents relating to those affairs, and the Fifth, Sixth and Eighth Defendants must give the Corporate Receivers such assistance as is reasonably requested by them in the course of such inquiries.

5. The Fifth, Sixth and Eighth Defendants shall by 5.00pm on Thursday, 4 May 2006, deliver or cause to be delivered to the Plaintiff and the Corporate Receivers a full and detailed affidavit sworn by their proper officers, setting out:

5.1 the name and address of any bank, building society or other financial institution at which there is an account in the name of or under the control of the Fifth and Sixth Defendants, together with the number of such account, the name of such account and the balance of that account at the date of this Order:

5.2 the name and address of any person or persons indebted to the Fifth, Sixth and Eighth Defendants at the date of this Order, and the amount of the indebtedness;

5.3 an itemised inventory of the Fifth, Sixth and Eighth Defendants’ assets and liabilities;

5.4 an itemised inventory of any and all property whether real or personal:

5.4.1 owned by the Fifth, Sixth and Eighth Defendants;

5.4.2 controlled by the Fifth, Sixth and Eighth Defendants; and

5.4.3 in which the Fifth, Sixth and Eighth Defendants have an interest,

and which includes details of the location of that property; and

5.5 in respect of any of the property referred to in sub-paragraphs 5.1 to 5.4 above, whether that property has been given as security for any debt, and, if so, the nature of the security and the debt so incurred.

6. An order that the Fifth, Sixth and Eighth Defendants, by themselves, their servants, agents or employees:

6.1 immediately deliver up to the Corporate Receivers the Corporate Property and the books and records which relate to the Corporate Property; and

6.2 otherwise use their best endeavours to assist the Corporate Receivers in performance of their obligations.

B. Costs of Receivers

7. The question whether the Corporate Receivers’ reasonable costs and expenses properly incurred in the performance of their obligations and as approved by the Court, shall be payable from the assets of the Fifth, Sixth and Eighth Defendants is reserved.

8. Any decision as to which if any of the Fifth, Sixth and Eighth Defendants is to ultimately bear the Corporate Receivers’ reasonable costs and expenses is reserved.

C. The ‘general’ orders

9. The Plaintiff has leave to give to:

9.1 The relevant authorities that record, control and regulate the ownership of real property;

9.2 The relevant authorities that record, control and regulate the ownership of motor vehicles;

9.3 The relevant authorities that record, control and regulate the ownership of maritime vessels and craft;

9.4 Any bank, building society or other financial institution with which the Fifth Defendant operates any accounts; and

9.5 Any other person or entity holding or controlling property belonging to the Fifth Defendant,

notice of these Orders by delivering a copy of these Orders to a person apparently in the employ of that entity or person.

10. The matter is stood over before Justice French on 3 October 2006 at 9am.

11. The Defendants pay the Plaintiff’s costs of these proceedings.

12. The Parties, third parties affected by the ordersand the Corporate Receivers have liberty to apply to the Court on the giving of reasonable notice.

In respect of the Seventh Defendant THE COURT ORDERS THAT:

A. The mareva order

1. The Seventh Defendant (“Bowesco”), by itself, its servants agents and employees, is restrained until 20 October 2006 or further order, from removing, or causing or permitting to be removed from any State of Australia and from Australia, or selling, charging, mortgaging or otherwise dealing with or disposing of or causing or permitting to be sold, charged, mortgaged or otherwise dealt with or disposed of, all or any of its assets, whether held legally or beneficially by it.

PROVIDED that this Order:

1.1 Shall not prevent John Patrick Cronin and Shaun Robert Fraser (“the Receivers”) from exercising all rights, powers, privileges, benefits, discretions and authorities conferred upon them (either jointly or severally) by:

1.1.1 a Deed of Charge granted by Bowesco in favour of Suncorp-Metway Limited (“Suncorp”), dated 8 October 2004, registered with the Plaintiff and having charge number 1093803;

1.1.2 a Mortgage granted by Bowesco in favour of Suncorp, dated 8 October 2004, and registered in the Land Titles Office of Western Australia on and having number J056734;

1.1.3 a Deed of Appointment of Receiver made 3 April 2006 between Suncorp and the Receivers; and

1.1.4 section 420 of the Corporations Act 2001;

1.2 Shall not prevent Bowesco from paying costs reasonably incurred in these proceedings;

1.3 Shall not prevent any bank, building society or financial institution from:

1.3.1 exercising any right of set-off which it may have in respect of a facility afforded by it to Bowesco prior to the date of this Order; and

1.3.2 from processing any automatic debits to a bank, building society or financial institution.

1.4 Shall not prevent Bowesco from paying ordinary operating and living expenses up to an amount of four thousand dollars ($4,000) per week from a bank account nominated in writing to the Receivers.

2. Bowesco shall by 5.00pm on Thursday, 4 May 2006, deliver or cause to be delivered to the Plaintiff a full and detailed affidavit sworn by its proper officer, setting out:

2.1 the name and address of any bank, building society or other financial institution at which there is an account in the name of or under the control of Bowesco, together with the number of such account, the name of such account and the balance of that account at the date of this Order;

2.2 the name and address of any person or persons indebted to Bowesco at the date of this Order, and the amount of the indebtedness;

2.3 an itemised inventory of Bowesco 's assets and liabilities;

2.4 an itemised inventory of any and all property whether real or personal:

2.4.1 owned by Bowesco;

2.4.2 controlled by Bowesco; and

2.4.3 in which Bowesco has an interest,

and which includes details of the location of that property; and

2.5 in respect of any of the property referred to in sub-paragraphs 2.1 to 2.4 above, whether that property has been given as security for any debt, and, if so, the nature of the security and the debt so incurred.

2. The ‘general’ orders

3. The Plaintiff has leave to give to:

3.1 The relevant authorities that record, control and regulate the ownership of real property;

3.2 The relevant authorities that record, control and regulate the ownership of motor vehicles;

3.3 The relevant authorities that record, control and regulate the ownership of maritime vessels and craft;

3.4 Any bank, building society or other financial institution with which Bowesco operates any accounts; and

3.5 Any other person or entity holding or controlling property belonging to Bowesco,

notice of these Orders by delivering a copy of these Orders to a person apparently in the employ of that entity or person.

4. The matter is stood over before Justice French on 3 October 2006 at 9am.

5. The Defendants pay the Plaintiff’s costs of these proceedings.

6. The Parties and third parties affected by the ordershave liberty to apply to the Court on the giving of reasonable notice.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF RICHSTAR ENTERPRISES PTY LTD (ACN 099 071 968)

WESTPOINT REALTY PTY LTD (ACN 050 218 954)

B OWESCO PTY LTD (ACN 008 915 357)

REDCHIME PTY LTD (ACN 117 947 805)

REASONS FOR JUDGMENT

Introduction

1                     The Westpoint Group of Companies (Westpoint Group) has, for some years, been engaged in the business of property development and raising finance for that purpose. Its sources of funds have included banks and institutions and smaller retail investors in a form of finance known as mezzanine finance. A large number of such investors has paid a very large amount of money to Mezzanine Companies set up within the Group for the specific purpose of raising capital for particular projects. The Westpoint Group is now in a state of collapse. Many of the companies making it up are under external administration of one kind or another.

2                     The Australian Securities and Investment Commission (ASIC) commenced an investigation into the affairs of the Group in mid 2005. Its investigations have uncovered evidence suggestive of widespread and serious misconduct in the conduct of the affairs of the Group up until quite recently. As a result the position of investors and other creditors may be significantly prejudiced.

3                     ASIC commenced proceedings in this Court on 29 March 2006 seeking the appointment of receivers to the property of certain officers and former officers of companies in the Group and against four named corporate defendants which are members of the Group. The application was brought under s 1323 of the Corporations Act 2001 (Cth). Interim freezing orders affecting the property of the various defendants were made by Siopis J on 5 April 2006 and extended until today when the substantive application, which was heard on 12 April 2006, falls to be determined.

4                     The evidence placed before the Court in support of the application was extensive and detailed and was not the subject of any substantial challenge. It is indicative of serious misconduct in the affairs of the companies and the very real possibility that there have been a number of contraventions of the Corporations Act and other laws by persons involved in the Group. Indeed there are aspects of the evidence suggestive of a ruthless disregard by the Westpoint Group’s controllers of the interests of investors and other creditors in the way in which funds invested and assets of companies within the Group have been dealt with. Other aspects of the evidence, particularly emerging from examination of the former directors of the Mezzanine Companies, are indicative of a degree of carelessness and indifference on their part to their duties as directors.

5                     It is not a necessary part of the Court’s function at this stage to make a finding of any particular contravention or liability on the part of any person or company named as a defendant to the application. It is sufficient to say, for the reasons that follow, that I regard it as necessary and desirable, to protect the interests of investors and creditors of companies in the Group, that receivers be appointed to the property of each of the defendants, other than seventh defendant which already has receivers and managers appointed under an existing security, and that ancillary orders be made in aid of those primary orders. A freezing order will be made in relation to the seventh defendant.

Investigative and procedural background

6                     On 3 June 2005, 6 September 2005 and 11 October 2005 and on 7, 8 and 17 February 2006, ASIC made determinations, pursuant to subs 13(1) and 13(6) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) to investigate suspected contraventions of the Corporations Act, the ASIC Act and the Criminal Code of Western Australia by a number of companies and individuals associated with the Westpoint Property and Finance Group of companies. The investigations covered the period from 1 July 2003.

7                     The corporate entities in respect of which the determination were made fell into three groups referred to as ‘the Companies’, ‘the Mezzanine Companies’ and ‘the Wider Westpoint Group’. A complete list of the entities and persons the subject of the determinations is set out in Schedule A to these reasons.

8                     The Westpoint Property and Finance Group has until recently undertaken property development including the construction of apartment blocks in various parts of Australia. It raised finance for its undertakings from banks and other institutions subject to first ranking securities. It also raised, through so called ‘Mezzanine Companies’, finance from individual investors who were issued with promissory notes or debentures. To the extent that these investments were supported by securities held by companies in the Group, the securities ranked after those held by lending institutions, hence the reference to Mezzanine Companies.

9                     Certain individuals have been closely associated with the activities of the Group. Norman Carey was its principal. He was the sole director and shareholder of the Westpoint Corporation Pty Ltd (Westpoint Corporation). He was also a director or sole director of many of the other companies in the Group. He was directly or indirectly the owner of many of the companies. The evidence suggests that he was effectively their controller. Graeme John Rundle was the Chief Financial Officer of the Group and the secretary of many of the companies in it. Cedric Richard Palmer Beck and John Norman Dixon were directors of the Mezzanine Companies. Another former director, Ms Lynette Rochelle Schiftan, resigned in October 2004.

10                  The determination made by ASIC on 3 June 2005 was to conduct an investigation in relation to suspected contraventions by the directors of the Companies and the Mezzanine Companies of ss 184 and 588G of the Corporations Act, s 12DA of the ASIC Act and ss 373 and 409 of the Criminal Code (WA). Each of the determinations related to investigations into contraventions of those provisions. The later determinations widened the companies under investigation to cover the members of the Wider Westpoint Group as defined in the determination and additional members of the other groups of companies defined in the determinations as well as individual officers.

11                  In aid of its investigations ASIC conducted examinations of a number of persons under s 19 of the ASIC Act. They were as follows:

The second defendant, Graeme John Rundle, on 6 July 2005 and on 27 October 2005

The first defendant, Norman Phillip Carey, on 13 July 2005

The third defendant, Cedric Richard Palmer Beck, on 12 July 2005 and on 26 October 2005

Lynette Rochelle Schiftan on 23 August 2005

The fourth defendant, John Norman Dixon, on 24 August 2005 and 26 October 2005

Christopher Ezelym Fairman on 17 November 2005

At the commencement of each examination the ASIC officer conducting it directed the examinee not to disclose the questions asked or answers given in the course of the examination nor any information or documents provided to or by the examinee. The direction was said to remain in force until 31 December 2006 or further order.

12                  Many documents were produced to ASIC in the course of its investigations. These included:

1. Information Memoranda issued to prospective investors in various of the Mezzanine Companies.

2. A product disclosure statement entitled Westpoint Income Fund Product Disclosure Statement issued 19 November 2003.

3. Standard form letters to investors in various of the Mezzanine Companies.

4. Security documents and loan agreements.

5. A construction contract relating to a property development at Ann Street in Brisbane.

6. General ledger records and construction invoices.

7. Westpoint Corporation Access Database contained on a compact disc supplied to ASIC on 19 September 2005.

8. Reports from joint and several administrators of various of the Mezzanine Companies and from the liquidator of Westpoint Corporation.

9. Financial records and computerised databases for promissory notes issued by the Mezzanine Companies.

10. Computer records of various companies in the Westpoint Group.

11. Books and records in the possession of the defendants Carey, Rundle, Beck and Dixon and one Gregory John Nairn.

ASIC also undertook searches of property registered in the names of the various defendants.

13                  The investigations so far have placed in ASIC’s hands a very large number of documents, substantial transcripts of the examinations of individuals associated with the Westpoint Group and reports from receivers and managers appointed to companies within the Group and from the liquidator of Westpoint Corporation.

14                  On 29 March 2006 ASIC filed an application in this Court seeking orders under s 1323 of the Corporations Act against four officers and former officers of companies associated with the Westpoint Property and Finance Group and against four associated companies. The orders sought are for the appointment of receivers and managers of the property of the defendants. Associated asset preservation orders and orders requiring disclosure on affidavit of the assets of the defendants as well as orders requiring surrender of the individual’s passports were also sought.

15                  On 30 March 2006 Siopis J made interim orders restraining the defendants from removing any of their property from Australia or from otherwise dealing with it except to the extent set out in the order. He also directed the surrender of their passports. His Honour published his reasons for those orders on 5 April 2006 – Australian Securities and Investments Commission, In the Matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey [2006] FCA 366.

16                  On 7 April 2006 I made orders extending the operation of the interim injunctions granted by Siopis J (subject to some undisputed variations) until 5pm on 12 April 2006 which was the date set down for the hearing of the substantive application. Following the hearing of the substantive application those orders were further extended to 5pm on Thursday 20 April 2006 subject to further agreed variations. Judgment on the substantive application was reserved to 2.15pm on Thursday 20 April 2006.

17                  There was an application made on behalf of the second defendant for an order setting aside the ex parte orders made by Siopis J on the basis that there had not been full disclosure by ASIC of relevant evidence to the Court. The second defendant submitted that ASIC’s evidence predominately related to transactions involving other defendants which were not relevant to the second. I am not satisfied that any material non disclosure is shown. In any event the interim freezing orders lapse today.

The relief claimed

18                  In its originating process ASIC claims orders for the appointment of receivers in the following terms:

‘B. The Receiver orders:

6. An order, pursuant to section 1323(1)(h) of the Corporations Act, that until further order, Oren Zohar, Brian McMaster and Mark Korda of KordaMentha, chartered accountants, of Level 11, 37 St George’s Terrace, Perth, be appointed as receivers and managers (“the Receivers”) without security, to all property (“the Property”), whether within Australia or overseas, of each of the Defendants.

7. An order that the Receivers have, in respect of the Property, the following powers:

7.1 the power to do all things necessary or convenient to be done for or in connection with, or as incidental to, the collecting and securing of all of the Property for the benefit of potential creditors.

7.2 without limiting the generality of subparagraph 7.1, the power to:

7.2.1 enter into possession and take control of the Property;

7.2.2 lease, let on hire or dispose of the Property;

7.2.3 insure the Property;

7.2.4 convert the Property into money;

7.2.5 carry on the business of the Defendants;

7.2.6 execute any document, bring or defend any Proceedings or do any other act or thing in the name of and on behalf of any of the Defendants in respect of the Property;

7.2.7 use the seal of the Fifth, Sixth, Seventh and Eighth Defendants;

7.2.8 appoint a solicitor, accountant or other professionally qualified person to assist the Receivers;

7.2.9 appoint an agent to do any business that the Receivers are unable to do, or that it is unreasonable to expect the Receivers to do, in person; and

7.2.10 where a debt or liability is owed to any of the Defendants – to prove the debt or liability in a bankruptcy, insolvency or winding up and, in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme of arrangement.

8. An order that the Defendants, by themselves, their servants, agents or employees:

8.1 immediately deliver up to the Receivers the Property and the books and records which relate to the Property; and

8.2 otherwise use their best endeavours to assist the Receivers in performance of their obligations.

9. An order that the Receivers reasonable costs and expenses properly incurred in performance of their obligations, be payable from the collective assets of the Defendants.

10. An order that any decision as to which of the Defendants is to ultimately bear the Receivers reasonable costs and expenses be reserved.’

19                  ASIC also seeks Mareva type orders for the preservation of the defendants’ assets, affidavits of their assets and an order requiring the surrender, by the first to fourth defendants, of their passports and restraining them from leaving Australia or coming within one kilometre of an Australian point of overseas departure. As has already been noted, asset preservation orders and passport orders have already been made by Siopis J on an interim basis and renewed from time to time with some agreed variations pending judgment on the substantive application. Following the hearing of the application ASIC submitted minutes of proposed orders in respect of each of the defendants.

The statutory framework – the Corporations Act

20                  Section 1323 of the Corporations Act provides, inter alia:

(1) Where:

(a) an investigation is being carried out under the ASIC Act or this Act in relation to an act or omission by a person, being an act or omission that constitutes or may constitute a contravention of this Act; or

(b) a prosecution has been begun against a person for a contravention of this Act; or

(c) a civil proceeding has been begun against a person under this Act;

and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of a person (in this section called an aggrieved person) to whom the person referred to in paragraph (a), (b), or (c), as the case may be, (in this section called the relevant person), is liable, or may be or become liable, to pay money, whether in respect of a debt, by way of damages or compensation or otherwise, or to account for financial products or other property, the Court may, on application by ASIC or by an aggrieved person, make one or more of the following orders:

…

(f) an order prohibiting the taking or sending out of this jurisdiction, or out of Australia, by a person of money of the relevant person or of an associate of the relevant person;

(g) an order prohibiting the taking, sending or transfer by a person of financial products or other property of the relevant person, or of an associate of the relevant person:

(i) from a place in this jurisdiction to a place outside this jurisdiction (including the transfer of financial products from a register in this jurisdiction to a register outside this jurisdiction); or

(ii) from a place in Australia to a place outside Australia (including the transfer of financial products from a register in Australia to a register outside Australia);

(h) an order appointing:

(i) if the relevant person is a natural person – a receiver or trustee, having such powers as the Court orders, of the property or of part of the property of that person; or

(ii) if the relevant person is a body corporate – a receiver or receiver and manager, having such powers as the Court orders, of the property or of part of the property of that person;

(j) if the relevant person is a natural person – an order requiring that person to deliver up to the Court his or her passport and such other documents as the Court thinks fit;

(k) if the relevant person is a natural person – an order prohibiting that person from leaving this jurisdiction, or Australia, without the consent of the Court.

(2A) A reference in paragraph (1)(g) or (h) to property of a person includes a reference to property that the person holds otherwise than as sole beneficial owner, for example:

(a) as trustee for, as nominee for, or otherwise on behalf of or on account of, another person; or

(b) in a fiduciary capacity.

(2B) Subsection (2A) is to avoid doubt, is not to limit the generality of anything in subsection (1) and is not to affect by implication the interpretation of any other provision of this Act.

(2) An order under subsection (1) prohibiting conduct may prohibit the conduct either absolutely or subject to conditions.

(3) Where an application is made to the Court for an order under subsection (1), the Court may, if in the opinion of the Court it is desirable to do so, before considering the application, grant an interim order, being an order of the kind applied for that is expressed to have effect pending the determination of the application.

(4) On an application under subsection (1), the Court must not require the applicant or any other person, as a condition of granting an interim order under subsection (3), to give an undertaking as to damages.

(5) Where the Court has made an order under this section on a person’s application, the Court may, on application by that person or by any person affected by the order, make a further order discharging or varying the first-mentioned order.

(6) An order made under subsection (1) or (2) may be expressed to operate for a specified period or until the order is discharged by a further order under this section.

(7) Nothing in this section affects the powers that the Court has apart from this section.

(8) This section has effect subject to the Bankruptcy Act 1966.

(9) A person must not contravene an order by the Court under this section that is applicable to the person.

(10) An offence based on subsection (9) is an offence of strict liability.

Principles governing the application of s 1323

21                  The application before the Court is brought under s 1323 of the Corporations Act. Preconditions for the making of an order under that section are satisfied when:

(a) An investigation is being carried out under the ASIC Act or the Corporations Act in relation to an act or omission that constitutes or may constitute a contravention of the Act.

(b) There is an application made by ASIC or an aggrieved person for one or more of the orders that may be made under that section.

Those preconditions are satisfied in this case. There is an investigation being carried out and the relevant application has been made by ASIC.

22                  Upon an application properly before it under s 1323, the Court can make the orders for which the section provides where:

(i) There is a relevant person who is or may become liable to pay money whether in respect of a debt, by way of damages or compensation or otherwise, or to account for financial products or other property.

(ii) The liability is to another person called ‘the aggrieved person’.

(iii) The court considers it necessary or desirable to make the orders ‘for the purpose of protecting the interests of the aggrieved person’.

23                  The liabilities, actual or potential, to which the section refers, may arise from a contravention of the Corporations Act or under the general law. The Court may have regard to known facts and circumstances in assessing their existence and potential existence – Lone Star Exploration NL v Corporate Affairs Commission (1988) 6 ACLC 1108 at 1113. Von Doussa J said in that case:

‘…the Court may have regard to all the known facts and circumstances, although in a particular case the Court may think it appropriate to consider whether the actual or potential liability is connected in some way with a particular contravention of the [Corporations Act].’

24                  There is a variety of ways in which the interests of persons, to whom liabilities may be owed, can be protected by orders made under the section. The nature of the protection can vary according to the nature of the risks assessed. As Palmer J said in ASIC v Mauer-Swisse Securities Ltd (2002) 20 ACLC 1530 at [37]:

‘… there may be evidence to suggest that fraud has been perpetrated on a large scale and that many of the victims have no or little information about the extent of the fraud, no or little means for their own investigations, and no or little resources to prosecute their own claims. In such a case, the interests of such persons are protected, within the contemplation of s 1323, by enabling ASIC to conduct an investigation for the purpose of identifying the wrongdoers and exposing them not only to penalties under the Corporations Act and other legislation, but also to claims for compensation from the victims themselves.’

`

25                  The orders that can be made under the section are directed, inter alia, to the preservation of assets against which recovery may be sought in the event that liability to an ‘aggrieved person’ is established on the part of a ‘relevant person’. The orders are made in circumstances where ‘an investigation is being carried out’, ‘a prosecution has been begun’ or ‘a civil proceeding has been begun’. That is to say the orders can be made before liability is established and indeed before the evidence necessary to establish liability has been collected. While an application under the section is not interlocutory in an existing criminal or civil proceeding, it is interlocutory in a wider sense. It preserves the status quo and the assets of the relevant person pending the outcome of the investigation, prosecution or civil proceedings which are on foot – CAC v Lone Star Exploration NL( No 2) (1988) 14 ACLR 499 at 504. At the stage an order is sought the Court may not be in a position to identify with precision any particular liability owed by the person the subject of the proposed order. This consideration applies to final orders made under the section as well as to interim orders for which it expressly provides in s 1323(3). The final orders made under the section are necessarily of a temporary or holding character rather than finally disposing of the rights and liabilities of the relevant persons affected by them.

26                  The circumstances in which the Court may make orders under s 1323(1) are wide as indicated by the words ‘necessary or desirable … for the purpose of protecting the interests of a person …’. There is an element of risk assessment and risk management in the judgment the Court is called on to make. It follows, and has been accepted, that there is no requirement on the part of ASIC to demonstrate a prima facie case of liability on the part of the relevant person or that the person’s assets have been or are about to be dissipated – Corporate Affairs Commission v ASC Timber Pty Ltd (1989) 7 ACLC 467 at 476 (Powell J); Australian Securities and Investment Commission v Adler (2001) 38 ACSR 266 at [7] (Santow J).

27                  The nature and duration of orders made under s 1323(1) can be fashioned by the Court to reflect its assessment of any risk of dissipation of the assets of a person under investigation. But their legitimate purposes can go further. The interests of aggrieved persons may be protected not only by orders designed to protect dissipation of assets, but also by orders which create an opportunity for the assets of the person under investigation to be ascertained.

28                  The appointment of a receiver may offer a more flexible response to the exigencies of the case presented to the Court than the imposition or continuation of a freezing order albeit they are not mutually exclusive remedies. The receiver can be equipped with the powers necessary to enable him or her to identify and locate a relevant person’s assets and to prevent their dissipation or removal from the jurisdiction. The receiver can also ensure, without the necessity of specific applications to the Court to vary freezing orders, that bona fide dealings with assets which do not diminish the overall estate of the person under investigation and which allow that person to attend to their legitimate business affairs can be permitted. While ASIC has investigative powers which can be used to like effect, they do not necessarily give the capacity for short term responses and flexibility of action that a competent receiver armed with suitable powers may have.

29                  It is not a necessary consequence of an order appointing a receiver that the receiver should deal with or liquidate the assets in question. The interlocutory and protective character of orders made under s 1323 must be borne in mind when defining the powers of the receiver. The appointment of a receiver has rightly been described as ‘an extraordinary step’ – ASIC v Burke [2000] NSWSC 694 at [8] (Austin J). However depending upon the nature of the powers conferred on the receiver it may be less drastic than a freezing order which can only be varied by order of the Court. The interlocutory history of this case has already demonstrated that circumstances not contemplated when the original interim freezing orders were made have required their variation from time to time. I accept, with respect, the observation made by Austin J in Burke at [8]:

‘Without wishing to lay down any general rules, it appears to me that the extraordinary step of appointing a receiver may be justified, even though Mareva Orders are in place, in a case where there is real doubt about the existence and location of assets such as investments, and about the number and identity of claimants and the nature of their claims, and additionally the defendants are engaged in business activities which entail that any Mareva Orders must allow assets to be turned over in the course of business. Where these circumstances exist in combination, and especially where there are allegations of serious fraud involved, the Court may conclude …that the Mareva Orders are not enough to ensure that the assets are preserved and protected, and indeed identified and brought in for the benefit of investors.’

The decision was cited with approval by Santow J in ASIC v Adler (supra) at 268-269.

The evidence that may be relied upon

30                  Section 1323 does not make any express provision for the nature of the evidence on which the Court may act in making orders under it. Applications made under the section have an interlocutory character albeit there are no other specific proceedings to which they may relate. The section does not require concluded findings of fact about liability or whether assets have been dissipated. For the reasons already canvassed the Court, in making orders under s 1323, engages in a risk assessment and management process. The logic of the section assumes that the Court will not always have before it evidence of the kind that would be necessary and admissible in proceedings to establish definitively the nature and extent of the assets of the persons under investigation and their liability to aggrieved persons. Nor will it necessarily have before it evidence of the kind that would establish definitively that dissipation of assets has occurred or is likely to occur or that flight is imminent.

31                  The logic of s 1323 requires the Court to be able to act on evidence which might not be admissible in civil or criminal proceedings leading to a definitive determination of the rights and liabilities of the parties. Hearsay evidence may therefore be received and acted upon, not as proof of the truth of its content but as evidence of the existence of a risk or possibility that gives rise to the necessity for or desirability of a protective order. It is not necessary, in this context, to consider whether the proceedings are interlocutory for the purposes of the exception to the hearsay rule under s 75 of the Evidence Act 1995 (Cth) albeit that that exception is no doubt informed by similar considerations. Evidence may be received of the opinion of a suitably qualified person who has had the opportunity to review extensive documentation collected in the course of an investigation and to offer an overview of it for the benefit of the Court. In such a case the opinion or overview should be supported by reference to the relevant documentation and factual material. The opinion is received not for the determination of any ultimate issue of liability but as probative of the risk which the Court must assess in determining whether to make an order under the section. These considerations are relevant to the admissibility of some of the affidavit evidence which has been relied upon in this case.

32                  Specific objection has been taken on behalf of the second defendant to the use of transcripts of examinations conducted under s 19 of the ASIC Act. It was submitted that pursuant to s 68(3) of the ASIC Act such transcripts are not admissible in evidence against the person who has signed the record in a proceeding for the imposition of a penalty. It was submitted that the present proceedings are, in truth, proceedings for the imposition of a penalty. This is on the basis that if interlocutory in nature, then they are interlocutory in respect of proceedings not yet commenced but which will inevitably be penalty proceedings.

33                  Accepting that there is a possibility that penalty proceedings may be taken against one or more of the defendants in this case that does not, in my opinion, render the present application an application for the imposition of a penalty or an application incidental to such proceeding. As already noted, evidence may be relied upon of a hearsay or opinion character in these proceedings which might not be admissible in penalty proceedings. The same is true for s 19 transcripts.

34                  It was submitted for the second defendant that because ASIC seeks an order that the reasonable costs of the receivers and managers whose appointment it seeks should be payable from the collective assets of the defendants, that fact itself gives the present application the character of a penalty proceeding. In my opinion however, the submission is misconceived. An order for the payment of costs out of the collective assets of the defendants would not of itself amount to the imposition of a penalty. Although it may effectively deprive defendants of some of their property that imposition is not by way of punishment for any contravention of the law.

35                  Objection was also taken to the admissibility against the second defendant of transcripts of examinations of other parties conducted under s 19 of the ASIC Act. In this respect s 77 of the ASIC Act was relied upon. That section provides:

‘Where direct evidence by a person (the absent witness) of a matter would be admissible in a proceeding, a statement that the absent witness made at an examination of the absent witness and that tends to establish that matter is admissible in the proceeding as evidence of that matter:

(a) if it appears to the court or tribunal that:

(i) the absent witness is dead or is unfit, because of physical or mental incapacity, to attend as a witness; or

(ii) the absent witness is outside the State or Territory in which the proceeding is being heard and it is not reasonably practicable to secure his or her attendance; or

(iii) all reasonable steps have been taken to find the absent witness but he or she cannot be found; or

(b) if it does not so appear to the court or tribunal – unless another party to the proceeding requires the party tendering evidence of the statement to call the absent witness as a witness in the proceeding and the tendering party does not so call the absent witness.’

It was submitted for the second defendant that ASIC has not adduced evidence in respect of the matters set out in s 77(a) and that therefore the s 19 transcripts of those parties that are not parties to the proceeding may only be tendered if the conditions set out in par (a) are set out. Counsel for ASIC on the other hand submitted that the second defendant had not required ASIC to call any absent witness as a witness in the proceeding and that therefore the condition of admissibility under s 77(b) of the Act was satisfied. Given the urgency with which the application has been made, it is perhaps a little unrealistic to require advance notice by the second defendant of the requirement that any absent witness whose s 19 transcript is relied upon be called as a witness in the proceeding. In my opinion, however, the transcripts of the examinations conducted under s 19 can be relied upon as tending to establish the possibility that circumstances exist which give rise to the necessity or desirability of a protective order. What is in evidence here is the fact that the statement was made in the course of a s 19 examination. The fact that the statement was made, rather like the hearsay evidence referred to earlier, may support an inference that circumstances exist that make a protective order necessary or desirable. It is not necessary to rely upon such evidence for the purpose of establishing the truth of the statement made.

36                  For these reasons I reject the objections to the use of the s 19 transcript evidence which were raised on behalf of the second defendant.

37                  Objections to the admissibility of other affidavit evidence were made on the basis that it involved statements of the deponent’s belief about the purpose of transactions and argumentative opinions. So far as argumentative statements are concerned which are not able to be regarded as expert opinion or are unsupported by reference to factual material. I will disregard them. However, descriptions in the nature of syntheses or summaries, based on examination of the documentary and transcript evidence dealing with the operations of the Westpoint Property and Finance Group, its cashflows and specific transactions, will be received on the basis that they go to the existence of circumstances upon which the Court may determine that it is necessary or desirable to make orders of the kind sought in this application.

The evidence before the Court

38                  The following affidavits were read in evidence:

1. The affidavit of Oren Zohar sworn 29 March 2006. Mr Zohar is a partner of KordaMentha and one of the joint and several receivers of Westpoint Corporation with Mark Korda and David Winterbottom. Those three persons are also the receivers of another eight companies forming part of the Westpoint Property and Finance Group, having been appointed as such by Perpetual Nominees Ltd and Perpetual Trustees Company Ltd. Mr Zohar’s affidavit covers the composition and structure of the Group, the role of Westpoint Corporation and the way in which projects undertaken by the Group have been conducted. His evidence also describes the way in which the flow of funds in Group developments would typically work and the interdependence of the affairs of different entities within the Group. His affidavit sets out what he describes as examples of ‘irregular transactions’ which he has identified based upon his investigations and upon discussions with Westpoint Corporation staff presently employed by the receivers. He describes transactions ‘which appear to be designed to remove assets from Westpoint Corporation or other entities …’. These transactions include assignments of loans to the fifth defendant, Richstar Enterprises Pty Ltd (Richstar Enterprises), and a transaction which he describes as a ‘$2 million runaround’ by Bowesco Pty Ltd (Bowesco), the seventh defendant. His affidavit also refers to transactions which he describes as the ‘Renaissance Mezzanine loan transfer’, ‘the Bowesco option’ and attempts to avoid GST liability for Westpoint Realty Pty Ltd (Westpoint Realty), the sixth defendant. Other transactions involve the withdrawal of funds in connection with the Europa Development in North Perth, and the creation of security interests.

2. Supplementary affidavit of Oren Zohar sworn 6 April 2006. In this affidavit Mr Zohar deposes to the appointments of himself and Messrs. Korda and Winterbottom on 29 and 30 March 2006 as the Receivers and Managers of property of Silkchime Pty Ltd (Silkchime), Earlmist Pty Ltd (Earlmist), Westpoint Management and Forestview Nominees Pty Ltd (Forestview). On 3 April 2006 Suncorp Metway appointed McGrath Nichol as Receivers and Managers of the seventh defendant, Bowesco. An updated list of companies in the Westpoint Group subject to external administration is exhibited to the affidavit.

3. Further supplementary affidavit of Oren Zohar sworn 12 April 2006. In this affidavit Mr Zohar says that he has continued to assist ASIC in providing information and documents that may be relevant to any potential offences by any directors or employees of Westpoint Corporation. He also refers, in answering an affidavit sworn by Glenn Anthony Tully, to access arrangements for Level 7, 160 St George’s Terrace, Perth used by Mr Carey and Redchime Pty Ltd (Redchime). This use was under an arrangement with Mr Zohar as one of the Receivers and Managers of Westpoint Corporation.

4. Second further supplementary affidavit of Oren Zohar sworn 12 April 2006. In this affidavit Mr Zohar sets out his professional qualifications and experience.

5. The first affidavit of Richard Warren Gomm sworn 29 March 2006. In this affidavit Mr Gomm, who is an investigator in the Enforcement Directorate at ASIC’s Western Australian regional office, describes the processes by which ASIC sought and obtained a large quantity of documents relating to the Westpoint Group. Based on a review of the documents produced to ASIC in compliance with its various notices and directions as well as a review of ASIC’s own records, he expresses the opinion that the description in Oren Zohar’s affidavit accords with ASIC’s views in relation to the structure and composition of the Westpoint Group. I take this to be a reference to his own views. He describes the way in which the financing of each of the property developments undertaken by the Westpoint Group was effected with funds provided by retail mezzanine investors. He refers also to the Information Memoranda and Prospectuses issued in connection with the developments and describes what he calls ‘the actual flow of funds raised by Mezzanine Companies’. He describes the accounting treatment of the funds and rollovers of the mezzanine investments.

6. The second affidavit of Richard Warren Gomm sworn 29 March 2006. Mr Gomm’s second affidavit annexes transcripts of examinations conducted by officers of ASIC under notices served pursuant to s 19 of the ASIC Act. He deposes to transactions which appear to have been effected by entities within the Westpoint Group at a time when it was reasonable to expect that Westpoint Corporation and other entities would go into some form of external administration. He expresses the opinion that the transactions have had the effect of reducing the assets of the Westpoint Group available to meet the claims of third party creditors and of benefiting persons formerly in control of the Group. He specifically refers to dealings in funds received by Mezzanine Companies from investors. He describes what he calls ‘round robin transactions’ and the results of various accounting entries made and cheques drawn on companies in the Group.

7. The first affidavit of Kevin Chin sworn on 30 March 2006. Kevin Chin is also an investigator in the Enforcement Directorate at ASIC’s Western Australian regional office. In his affidavit, which includes six volumes of annexures, he sets out the investigation determinations made under s 13 of the ASIC Act and company searches relating to the various companies in the Westpoint Group. He also exhibits transcripts of examinations conducted under s 19 of the ASIC Act.

8. The second affidavit of Kevin Chin sworn 6 April 2006. In his second affidavit Mr Chin refers to a computer database maintained by ASIC and called ‘the Litigation Support System’ (LSS). The function of the LSS is to allow ASIC to record matters relating to documents which it obtains. Mr Chin, after reviewing the LSS, identifies 11 information memoranda exhibited to his earlier affidavit as memoranda issued by York Street Mezzanine Pty Ltd (York Street Mezzanine). He exhibits three additional information memoranda also issued by that company. He then describes various cheques drawn by Richstar and payable to Bowesco. An internal Westpoint Corporation document entitled ‘Seven Day Plan of Action’ evidently prepared by in-house counsel for the Westpoint Group Mr Wayne Innis, is also exhibited. There were some seven versions of this document ranging in their dates from 15 December 2005 to 6 February 2006.

9. The third affidavit of Kevin Chin was sworn on 11 April 2006 and referred to a letter addressed to Michael Lurie of Blake Dawson Waldron by the third defendant, Richard Beck, and dated 14 May 2003.

10. The affidavit of Marcus Essex Claridge sworn 30 March 2006. Mr Claridge is a Team Leader in ASIC’s Enforcement Directorate. He deposes to having carried out, or caused to be carried out, searches of databases for property held in the names of Messrs Carey, Rundle, Beck and Dixon, the first to fourth defendants. He sets out in his affidavit the results of those searches.

11. The affidavit of Calogero Tindaro Triscari sworn 11 April 2006 is relied upon by the sixth and eighth defendants. Mr Triscari is their financial officer. He deposes to Westpoint Realty’s ongoing property management activities and its selling activities and receipt of commissions. He deposes to services provided to Westpoint Realty by Redchime to ensure settlement of various purchases. His affidavit is directed to show the ongoing legitimate business activities of Westpoint Realty.

12. The affidavit of Glenn Anthony Tully sworn 11 April 2006. It is relied upon by the fifth, sixth and eighth defendants and concerns an allegedly unauthorised entry by Mr Zohar into Redchime’s premises at Level 7, 160 St George’s Terrace, Perth. Mr Zohar’s further supplementary affidavit of 12 April 2006 was sworn in response to it. I do not propose to have regard to these affidavits on this issue as they do not appear to bear in any material way on the decision which I have to make in this application.

13. The affidavit of Cedric Richard Palmer Beck sworn 11 April 2006. Mr Beck exhibits undertakings offered to the Court in lieu of the orders sought. In his affidavit he sets out what he described as his financial position. He states his preparedness to surrender his passport to the Court and to apply for its release if he wished to travel overseas. He denies the allegation made by ASIC in its submissions that, as a director of the Mezzanine Companies, he acted in accordance with instructions from Messrs Carey and Rundle.

14. The affidavit of John Norman Dixon sworn 11 April 2006. He denies the allegation that he acted in accordance with instructions from Messrs Carey and Rundle. He denies that he has taken any steps to hide or move any of his assets or those of any other person or entity out of reach of the creditors as a result of the collapse of the Westpoint Group. He proffers undertakings and is prepared to surrender his passport to the Court and to apply for its release in the event that he wished to travel overseas. He also gives details of his financial position.

15. The affidavit of Wayne John Carl Zappia sworn 11 April 2006 is relied upon by the second defendant, Mr Rundle. Mr Zappia is a legal practitioner employed by Lavan Legal. He deposes to details of facts stated to him in a telephone conversation with the second defendant, Mr Rundle. They go to Mr Rundle’s personal circumstances and property owned by him.

The structure and operation of the Westpoint Group

39                  The structure and general operation of the Westpoint Group was described in the affidavit of Oren Zohar sworn 29 March 2006. Mr Zohar has been a Chartered Accountant since 1995 and a Registered Liquidator since November 1999. He has been an Official Liquidator since August 2002. He has also been a Registered Trustee in Bankruptcy since February 2000. He has approximately 14 years experience as a corporate recovery specialist in all types of corporate and personal insolvency. He has acted as a voluntary administrator, receiver or liquidator of over 280 companies. I accept that he is appropriately qualified to identify and describe group corporate structures and operations based on an examination of public and company records. He is also qualified, in my opinion, to identify from company records financial transactions which may constitute or be indicative of contraventions of the Corporations Act or possible breaches of duty by directors or officers of the corporations worthy of further investigation.

40                  Mr Zohar exhibited to his affidavit of 29 March 2006 a schedule of companies within the Westpoint Group including details of their current directors and shareholders. He also exhibited a Schedule of Controlled Entities being companies within the Westpoint Group which were subject to some form of external administration at the time of swearing his affidavit. The latter list of companies, as updated in the supplementary affidavit of 6 April 2006, is set out in Schedule B to these reasons.

41                  Mr Zohar’s affidavit exhibited a colour-coded Corporate Structure of the Westpoint Group also updated in his supplementary affidavit. It comprises approximately 157 corporate and trust entities. Thirty are under some form of external administration. Eleven are ‘Mezzanine Companies’, nine of which are under administration. Renaissance Mezzanine Pty Ltd (Renaissance Mezzanine) and Cinema City Mezzanine Pty Ltd (Cinema City Mezzanine) are not currently under the control of any external insolvency administrator. Mr Zohar’s evidence, based on a search of the relevant company records, was that Mr Norman Carey, the first defendant, either directly or indirectly controls the four corporate defendants in the present proceedings, Richstar Enterprises, Westpoint Realty, Bowesco and Redchime. Bowesco, as noted earlier, has had a Receiver and Manager appointed to it on 3 April 2006. It is not in dispute on the material before the Court that the primary company within the Westpoint Group was Westpoint Corporation which is now in liquidation. Mr Norman Carey was its sole director and shareholder and Mr Graeme Rundle its secretary. The company was placed into administration on 24 January 2006 and a winding up order made on 16 February 2006.

42                  Based on his examination of the Group records, Mr Zohar described Westpoint Corporation as a service provider to the majority of the members of the Westpoint Group. It provided staff, premises, a treasury function, accounting services, information technology services and management services. The registered office and primary place of business for most of the Group members, including each of the corporate defendants, is Level 9, 160 St George’s Terrace, Perth. The receivers of Westpoint Corporation, including Mr Zohar, remain in possession of those offices.

43                  Major projects undertaken by the Group were generally undertaken by special purpose development companies and funded by a combination of initial loans provided by Westpoint Corporation and funds provided by Mezzanine Companies or by a third party lender who would take security over the development company’s assets. In order to understand the operations of the Group Mr Zohar spoke with a number of people including:

1. Ray Ellis, former head of treasury for Westpoint Corporation who continued to work for the corporation on behalf of the receivers until 7 February 2006 and now works for Redchime Pty Ltd with Mr Carey.

2. Brian Letts, the General Manager of Westpoint Realty, who continues to be employed by Westpoint Corporation to assist the receivers in realising and managing secured properties.

3. Brian O’Keefe, the General Manager of Finance at Westpoint Corporation who continued to work for the Corporation on behalf of the receivers until 15 February 2006.

4. Miss Tracey Fox, a chartered accountant employed by Westpoint Corporation who continues to be employed by it in order to assist the receivers in maintaining and understanding the books and records of the Group.

44                  Based upon his discussions with staff at the Westpoint Corporation and his own investigations, Mr Zohar set out his general understanding of the operation of each of the Westpoint Group projects thus:

(a) Westpoint Corporation would:

(i) provide initial funding to enable a development company to undertake preliminary work;

(ii) act as a central treasury, whereby it would lend money to Westpoint Group entities, and through the Westpoint Corporation central bank account pay the majority of the expenses of the Westpoint Group entities;

(iii) from time to time transfer money between Westpoint Group entities as required to fund any particular project. Westpoint Corporation would keep the records of the loan accounts between those entities.

(b) Westpoint Finance Pty Ltd (Westpoint Finance) would act as a licensed finance broker and earn commission revenue by finding prospective purchasers of properties the subject of the development, refer them to Westpoint Realty to sign up an agreement if they wished to proceed, and provide finance if required for the purchase of the property;

(c) generally Westpoint Constructions Pty Ltd (Westpoint Construction) would undertake the construction of the development and was entitled to pre-invoice at least 65% of the contract price in advance for any project;

(d) Westpoint Realty would act as the licensed real estate agent earning revenue from the sale and leasing of properties mainly on behalf of purchasers referred by Westpoint Finance and other Westpoint Group entities and third party owners.

45                  Mr Zohar described his understanding of the flow of funds in the Westpoint Group corporations based upon his discussions with Westpoint Corporation staff and his own investigations. This was as follows:

(a) Investors would provide funds to a Mezzanine Company which would be banked into an account held by that company.

(b) Funds would be transferred as required by Westpoint Corporation from the Mezzanine Company to Westpoint Corporation’s account and be recorded as a loan by the Mezzanine Company to the Development Company and then a loan from the Development Company to Westpoint Corporation.

(c) Westpoint Corporation would pay the majority of the expenses of any development and record those expenses against the development company loan account. These would include payments to Westpoint Realty and to Westpoint Construction to complete the development. It would also cover administrative and overhead expenses not necessarily related to the specific project.

(d) Westpoint Corporation would pay money to the Mezzanine Company by way of monthly interest and would also pay commissions to financial planners who procured investments from members of the public. These would be reflected in a loan account between the Development Company and Westpoint Corporation. As between the Development Company and the Mezzanine Company, the Development Company would record the cost as work in progress and the Mezzanine Company would record the transaction as revenue.

(e) As properties were sold the funds received on settlement would be paid to clear secured debts and pay commissions and selling expenses but any excess funds would be paid to Westpoint Corporation.

46                  Mr Zohar’s affidavit exhibited a report as to the affairs of Westpoint Corporation submitted to ASIC and dated 23 February 2006. It was signed by Messrs Carey, Rundle and Nairn. In the report 35 intercompany loans were identified as owing to Westpoint Corporation, totalling $148,761,510.09. Only $23,770,731.26 was estimated to be realisable. A further 20 related party loan accounts were disclosed under which Westpoint Corporation owed a total of $71,176,415.26. From his review of the Westpoint Corporation records, Mr Zohar found 62 related party loans which he had identified during the course of the receivership to and from Westpoint Corporation as requiring further investigation. These included 38 loans owing from related entities totalling $143,766,703.33. Only $22,389,786.64 was estimated by Mr Carey as realisable in the report as to affairs. There were 25 loans owing to related entities totalling $75,029,895.59 of which Mr Carey admitted $71,176,415.26 in the report.

47                  Mr Zohar stated that no meaningful reconciliation could be undertaken in relation to the recoverability of related party loans until a full investigation could be carried out in relation to each of the entities within the Westpoint Group given the level of intercompany indebtedness and intercompany debt assignments.

48                  In Mr Gomm’s first affidavit he referred to Mr Zohar’s affidavit and in particular his descriptions of the Westpoint Group and what he called the ‘Central Role of Westpoint Corporation’. Mr Gomm said, that based on a review of the documents produced to ASIC under various notices and directions which it issued as well as a review of ASIC’s records, he agreed with Mr Zohar’s description of the structure and composition of the Westpoint Group. He gave an account in his affidavit of the structure of the Mezzanine Companies and the way in which they operated to raise funds for Westpoint Group projects.

49                  Mr Gomm said that the funding for each of the property developments undertaken by the Westpoint Group when using funds provided by retail mezzanine investors, derived from three sources:

1. Initial equity from within the Westpoint Group to provide funding for land acquisition and preliminary expenses such as development approvals – this equity was recouped when sufficient funds were raised from mezzanine investors.

2. Debt financing from special purpose Mezzanine Companies incorporated to raise funds from retail investors by the issue of promissory notes or debentures.

3. Senior financing from a bank or other financial institution granted a first ranking security over the property. This financing became available to be drawn down during the construction phase. In some cases, and in particular the Emu Brewery and Ann Street projects, senior financing was also obtained to assist in the purchase of the land.

50                  The Mezzanine Companies had issued Information Memoranda for the offer of promissory notes to retail clients. The purpose of the raising of the funds was said to be the development of specific projects. Mr Gomm exhibited copies of the Information Memoranda produced to ASIC in the course of its investigations. By way of example, the first of those Information Memoranda exhibited to his affidavit related to a $25 million promissory note issue by Bayshore Mezzanine Pty Ltd (Bayshore Mezzanine). This referred to a 292 apartment complex to be located at 45 Bay Street in Melbourne, directly opposite another Westpoint development known as the Bayview Development. The Memorandum disclosed that the total funding required for the project was $105 million arranged as follows:

1. Bank debt - $70 million.

2. Mezzanine finance the subject of the Memorandum - $25 million

3. Project equity - $10 million

The end project value was said to be $140 million. Under the heading ‘The Promissory Note Offer’ it was stated:

‘Bayshore Mezzanine is seeking to raise $25 million by the issue of promissory notes. It will then lend this amount to the Trust to assist in funding the project on the terms and conditions set out below.’

Each promissory note was required to have a minimum face value of $50,000. The Information Memoranda stated that Promissory Notes by nature are unsecured. It went on:

‘However, to mitigate the lending risk, Bayshore Mezzanine, the issuer of the Promissory Notes and a single purpose company, will have security over the project as noted in the financing structure below.’

A diagram followed which showed the development being carried on through the Bayshore Port Melbourne Trust. The financier, namely a bank, would hold a first ranking mortgage over the property and a first ranking charge over the Trust, ie the assets of the Trust. Bayshore Mezzanine would have a second ranking fixed and floating charge over the Trust and a second ranking mortgage over the property. Westpoint Corporation and associated entities would provide a guarantee for Bayshore Mezzanine up until the redemption of all promissory notes and satisfaction of all interest payments due under those promissory notes. The Information Memorandum went on to say that the Westpoint Group would act as development manager of the project and its construction company would act as the senior contractor for the project. The Information Memorandum promised prudent financial management by the Westpoint Group, which would carefully control costs and measure profit impact. Risk would be minimised and managed by the Westpoint Group through the stringent application of a range of mechanisms which were set out. A number of risk factors were also identified.

Questionable transactions in the Westpoint Group

51                  Mr Gomm said, in his affidavit, that a review of documents in ASIC’s possession showed that moneys raised by the Mezzanine Companies were recorded in the accounting records of the Westpoint Group as having been lent to special purpose Development Companies incorporated for the purpose of undertaking that specific project. He exhibited to his affidavit copies of loan agreements entered into between the Mezzanine Companies and the Development Companies for a number of projects. The Mezzanine Companies would obtain a secondary security over the projects in exchange for the loans to the Development Companies. The moneys raised by the Mezzanine Companies were also guaranteed by entities related to the Westpoint Group. Each Development Company entered into a Lump Sum Design and Construction Contract with Westpoint Constructions for the construction of a specific project. Under a special condition inserted in some of the construction contracts, Westpoint Constructions was permitted to pre-invoice the Development Company an amount equal to or less than 65% of the value of the contract.

52                  Mr Gomm described the actual flow of funds raised by Mezzanine Companies. Application moneys received from investors were banked into the respective Mezzanine Companies’ bank accounts. He exhibited to his affidavit copies of application forms, general ledger printouts and bank statements in relation to Ann Street Mezzanine. From time to time, and sometimes daily, the money in Mezzanine Company bank accounts was paid directly to the bank account of Westpoint Corporation after deducting amounts for expenses such as commission. The funds were paid to Westpoint Corporation acting as ‘treasury’ for the Westpoint Group. There was no segregation, in Westpoint Corporation’s bank account, of funds received from the various Mezzanine Companies. Mr Gomm exhibited copies of supporting documents including invoices, cheque requisitions, remittance advices and bank statements which gave examples of payments made from Westpoint Corporation’s bank account that did not appear to relate to specific projects. His conclusion was that once moneys were received by Westpoint Corporation from the Mezzanine Companies they were used to make payments that did not necessarily relate to the specific projects for which the funds had been raised.

53                  A matter of particular concern was the treatment of investor rollovers. Mr Gomm deposed that investors were regularly ‘rolled over’ into other projects being undertaken by the Westpoint Group when their promissory notes or debentures expired or were approaching expiry dates. Where investors were rolled over from one project to another they were issued with a new promissory note relating to the second project. There was no corresponding payment of money however from entities involved with project A to entities involved with project B. The rollovers were simply accounted for by a series of journal entries. As described by Mr Gomm, these journals reflected the following:

1. A transfer of promissory note liability from Mezzanine Company A to Mezzanine Company B.

2. A decrease in the liability of Developer A to Mezzanine Company A and an increase in the amount owed by Developer A to Westpoint Corporation acting as group treasurer. This would reflect Westpoint Corporation initially assuming the liability to the investors.

3. Mezzanine Company B would record the liability to the investors as a result of them being rolled over from Mezzanine Company A and create a receivable from Developer B as if the rolled over amount had been lent to Developer B.

4. Developer B recorded a receivable from Westpoint Corporation for the amount of the promissory notes rolled over and a loan owing to Mezzanine Company B as if the amount had been borrowed from Mezzanine Company B.

5. Westpoint Corporation adjusted intercompany loan accounts by increasing the amount owing to Developer B and decreasing the amount owing to Developer A by the amount of the rollover.

54                  In his second affidavit, Mr Gomm deposed that, based upon his investigations in relation to the Westpoint Group, a number of transactions appeared to have been effected by entities within the Group at a time when it was reasonable to expect that Westpoint Corporation and other entities would shortly go into some form of external administration. These transactions were said to be funded by payments to Westpoint Corporation from various companies within the Group that had issued promissory notes and debentures to the public. The transactions were said to have had the effect of reducing the assets of the Westpoint Group available to meet the claims of third party creditors and of benefiting persons formerly in control of the Westpoint Group.

55                  Mr Gomm’s affidavit then went into detail about the transactions to which he was referring. He described first the passing of cash from Mezzanine Companies through Westpoint Corporation to ongoing operational entities. On 24 November 2005 Westpoint Corporation paid $1 million to Renaissance Mezzanine and $1,150,000 to Bowesco. It paid $1,370,000 to Richstar Enterprises on 25 November 2005. These three payments appear to have had the direct effect of reducing the cash assets available to the unsecured creditors of Westpoint Corporation by $3,520,000. Cash was passed to entities undertaking the ongoing operations of persons formerly in control of the Westpoint Group. That is said to have been done as follows:

1. Through on-payment of the $1 million received by Renaissance Mezzanine on 24 November 2005 to Rold Corporation Pty Ltd (Rold Corporation) on 25 November 2005.

2. Through the passing of $1,150,000 of cash to Bowesco as trustee for the Dyson Family Trust.

3. By passing $1,370,000 of cash previously held by Westpoint Corporation to Richstar Enterprises as trustee for the Richstar Enterprises Trust.

56                  At the time that these transactions occurred ASIC had filed its application on 22 November 2005 for orders to wind up York Street Mezzanine. Voluntary administrators were appointed to that company on 23 November 2005. York Street Mezzanine’s liabilities are guaranteed by Westpoint Corporation. Monthly interest payments for the month of November 2005, which were due for payment at the end of that month, were not made by various of the Westpoint Group Mezzanine Companies to the holders of promissory notes and debentures that they had issued. The three payments outlined above, according to Mr Gomm, appeared in large part to have been funded by payments to Westpoint Corporation from various of the Westpoint Group Mezzanine Companies.

57                  Mr Gomm pointed to evidence indicating that the three payments referred to were funded from investor moneys. The opening balance of the Westpoint Corporation bank account on 21 November 2005 was $2,173,617.61. Immediately following its payment of $1,370,000 to the Richstar Enterprises Trust on 25 November, the balance of the bank account was $1,040,675.61. He referred to records of money movements supporting the conclusion that from 21 November 2005 to 25 November 2005 deposits totalling $3,675,000 were made into the Westpoint Corporation bank account by various of the Westpoint Group Mezzanine Companies which had issued promissory notes and debentures to the public. The deposits were as follows:

(a) $700,000 deposited by Mount Street Mezzanine Pty Ltd (now in liquidation) on 21 November 2005;

(b) $1,100,000 deposited by Bayshore Mezzanine Pty Ltd (now in liquidation) on 21 November 2005;

(c) $45,000 deposited by Bayview Heritage Mezzanine Pty Ltd (now in liquidation) on 24 November 2005;

(d) $95,000 deposited by Market Street Mezzanine No 2 Pty Ltd (now in liquidation) on 24 November 2005;

(e) $150,000 deposited by Ann Street Mezzanine Pty Ltd (now in liquidation) on 24 November 2005;

(f) $640,000 deposited by Mount Street Mezzanine on 24 November 2005;

(g) $945,000 deposited by Bayshore Mezzanine on 21 November 2005.

58                  Mr Gomm then referred to an ANZ bank statement for the period 18 November 2005 to 25 November 2005 for the Westpoint Corporation bank account which included these deposits. In addition he exhibited to his affidavit memoranda from a Group Finance Manager, Chris Fairman, to the first defendant, Norman Carey, on 21 and 24 November 2005 requesting authorisation for loan advances to be made by the Mezzanine Companies referred to above together with emails from Raymond Ellis requesting that those amounts be transferred to ‘Corp’. ANZ bank statements for the relevant Mezzanine Companies at the time are also referred to. Mr Gomm noted that, of the deposits made into the Westpoint Corporation bank account between 21 November and 25 November 2005, only $381,187.37 came from bank accounts not operated by the Mezzanine Companies.

59                  Mr Gomm described two sets of ‘round robin’ transactions of $1 million each entered into in January 2006. Under the first of those transactions, on 5 January 2006, $1 million was paid by Bowesco as trustee of the Dyson Family Trust to the Westpoint Income Fund, a managed investment scheme registered under the Corporations Act with Westpoint Management Ltd. That amount was onpaid on the same day by the Westpoint Income Fund to Goldtag Pty Ltd as trustee for Cinema City Property Trust. On 9 January 2006, $1 million was paid by the Cinema City Property Trust back to the Dyson Family Trust.

60                  The second round robin transaction commenced on 13 January 2006 when another $1 million was paid by the Dyson Family Trust to the Westpoint Income Fund. On 17 January 2006 $1 million was paid by the Westpoint Income Fund to the Cinema City Property Trust and on 18 January 2006 that sum was paid in two tranches of $500,000 each by the Cinema City Property Trust back to the Dyson Family Trust. There was no net effect on the cash balances of any of the Dyson Family Trust, the Westpoint Income Fund or the Cinema City Property Trust. Mr Gomm exhibited copies of various documents including bank statements detailing these transactions.

61                  Mr Gomm also referred to a two page document originating in the Westpoint Group setting out a number of accounting (journal) entries that were to be made in the accounting records of six entities being the Dyson Family Trust, the Westpoint Income Fund, the Cinema City Property Trust, Westpoint Corporation, Lanepoint Enterprises and Centreways Refurbishment Syndicate Trust (CRST). Lanepoint Enterprises is a development company whose principal asset is a development known as ‘Regency Apartments’. Its sole director is Allan Carey, the brother of Norman Carey. Had all of the accounting entries set out in the journal listing been recorded in the accounting records of the six entities they would have had the net effect of:

(a) reducing the amount owing to the Westpoint Income Fund by Lanepoint Enterprises by $2 million;

(b) converting $700,000 of an amount owing to CRST by Westpoint Corporation into an amount owing by the Dyson Family Trust to CRST;

(c) substituting $2 million of the amount owing to the Westpoint Income Fund by Lanepoint Enterprises with a new loan in that amount to the Cinema City Property Trust;

(d) creating an amount of $2 million owing to the Cinema City Property Trust by Westpoint Corporation in respect of the $2 million received by the Cinema City Property Trust from the Westpoint Income Fund;

(e) Westpoint Corporation recognising $2,500,000 of income and the Cinema City Property Trust correspondingly incurring $2,500,000 of costs in respect of a development management fee invoice;

(f) creating an amount of $2,750,000 owing to Westpoint Corporation by the Cinema City Property Trust in respect of the development management fee invoice.

Mr Gomm pointed out that the Cinema City Property Trust had not been indebted to the Westpoint Income Fund prior to the substitution of $2 million owing to the Westpoint Income Fund by Lanepoint Enterprises with a loan from the Westpoint Income Fund to the Cinema City Property Trust in that amount. Following that substitution the $2 million owing to the Westpoint Income Fund by the Cinema City Property Trust represented 17.7% of the total assets of the Westpoint Income Fund.

62                  Mr Gomm referred to withdrawals from the Dyson Family Trust bank account (Bowesco) following the second round robin transactions. By 13 February 2006 the balance of that account had been reduced to $56,581.02. Total withdrawals from the account during the period from 19 January 2006 to 13 March 2006 amounted to $1,225,353.65.

63                  Mr Gomm expressed his belief that on 18 January 2006 the Dyson Family Trust paid $200,000 to Keypoint Developments Pty Ltd (Keypoint Developments) for the purpose of that company making payments to a number of its creditors as well as creditors of Lanepoint Enterprises and Keyworld Investments Pty Ltd (Keyworld Investments). He referred to documentary evidence in support of that conclusion including various cheques drawn on the account of Keypoint Developments.

64                  Further cheques evidencing withdrawals from the Dyson Family Trust bank account were referred to in Mr Gomm’s affidavit. These cheques evidenced withdrawals from the account following the payment of the two tranches of $500,000 on 18 January 2006. One of those cheques was for an amount of $350,000 for payment to Westpoint Constructions on behalf of Lanepoint Enterprises. Another of the cheques, dated 8 February 2006, was for an amount of $10,000 paid to Redchime. There was detailed reference to other transactions involving payments by Keypoint Developments, Keyworld Investments and transfers of amounts owing to the Westpoint Income Fund by Lanepoint Enterprises to Kingdream Pty Ltd (Kingdream).

65                  In the event, and as a result of revised draw down notices to which he referred in his evidence, and the first and second round robin transactions an amount owing to the Westpoint Income Fund by Lanepoint Enterprises was reduced from $6,606,736.75 as at 30 November 2005 to $2,309,819.88 as at 31 January 2006. That is a reduction of a debt which represented 48.2% of the total assets of the Westpoint Income Fund to a debt representing 20.5% of its total assets.

66                  Mr Zohar gave evidence in his affidavit of 29 March 2006 of what he described as ‘irregular transactions’. These were transactions which, in his opinion, appeared to be designed to remove assets from Westpoint Corporation and some of its associated entities.

67                  Following his appointment as one of the Receivers and Managers to Westpoint Corporation, Mr Zohar instructed Tracey Fox to obtain books and records relating to assignments of loans between entities in the Westpoint Group. He was informed by Ms Fox that she had been instructed by Mr Carey and Mr Nairn between December 2005 and January 2006 to effect a series of assignments of loans between entities within the Westpoint Group in anticipation of the Westpoint Corporation being placed into voluntary administration in order to:

(a) remove debts owing to Westpoint Corporation and assigning the benefit of the debt to entities of which Mr Carey or his relatives retained control; and

(b) enhance the asset position of certain entities within the Westpoint Group.

Mr Zohar exhibited to his affidavit a copy of a spreadsheet identifying the relevant transactions which he designated ‘Schedule of Assigned Loans’. The spreadsheet was prepared by one of his employees, Ms Price, based on information provided by Ms Fox and extracted from Westpoint Corporation’s books and records. Mr Zohar also exhibited to his affidavit copies of:

(a) Deeds of Assignment and Notices of Assignments for most of the assignments identified in the Schedule of Assigned Loans;

(b) General ledger journal entries for each of the assignments.

He described the effect of each of the transactions as follows:

(a) Entity A was a debtor of Westpoint Corporation. In most instances it appeared to have had sufficient assets to repay the debt to Westpoint Corporation.

(b) Entity B was a creditor of Westpoint Corporation.

(c) Westpoint Corporation purported to assign the debt owing by Entity A to Entity B.

(d) The purported consideration for the assignment was a reduction in the indebtedness of Westpoint Corporation to Entity B.

In Mr Zohar’s opinion the result of the transactions was that Westpoint Corporation had assigned what appeared to be valuable assets, by way of recoverable loans, to related entities and reduced the level of its unsecured indebtedness. Entity B had received the benefit of the assignment in consideration of the reduction of a debt owing to it by Westpoint Corporation that was essentially unrecoverable.

68                  Mr Zohar set out the effect of each of these assignments in summary form based on the information provided to him by Ms Fox and the posting dates of each of the assignments. The dates of the majority of the Deeds of Assignment and journal entries were February, June and July 2005. However Ms Fox told Mr Zohar that she had been instructed by Greg Nairn of the Westpoint Group to post the transactions in December 2005 and January 2006.

69                  By way of example the first transaction in Mr Zohar’s table was an assignment of a debt owing by Richstar Enterprises to Westpoint Corporation, the debt being assigned to Dosius Pty Ltd (Dosius). The assignment was said to arise from a deed dated 28 February 2005. Ms Fox informed Mr Zohar that Mr Nairn had instructed her to post the transaction on 3 December 2005 recording the journal date as the alleged date of the deed, namely 28 February 2005.

70                  As a result of the assignments Westpoint Corporation appears to have reduced its assets by assigning debts to a total value of $11,063,142.12, although according to the records of Westpoint Corporation their value was only $10,699,766.30.

71                  According to Mr Zohar he was informed by Ms Fox that on or about 25 January 2006, the day after his appointment, she was instructed by Mr Nairn to process, in the Westpoint Group’s books, a transfer to alter a debt owing by Westpoint Corporation to North Sydney Development Pty Ltd (North Sydney Development) in the sum of $6,570,026. The debt was to be shown as owing by Westpoint Construction to North Sydney Development. The stated reason for this transfer, according to Ms Fox, was that the debt was properly incurred by Westpoint Construction and not Westpoint Corporation. Mr Zohar, however, had been unable to verify this from his own investigation of the books and records in his possession.

72                  By a Contract of Sale dated 31 January 2002, Richstar Enterprises had purchased property, being Units 1 and 2 in 44 Wolseley Road, Point Piper in New South Wales, for $4,100,000. At the time Mr Carey was the sole director of Richstar Enterprises. According to information received by Mr Zohar, the purchase was funded as follows:

(a) HSBC Bank Australia Ltd provided a $3,720,000 loan to Richstar Enterprises with interest to be serviced on a monthly basis, with principal reductions of $45,000 to be paid quarterly.

(b) From time to time Westpoint Corporation would provide funds to service the loan payments so that as at 30 June 2004 $1,891,268 was owing by Richstar Enterprises to Westpoint Corporation as an interest free loan with no fixed term for repayment.

A copy of the financial statements for Richstar Enterprises for the year ended 30 June 2004 showed the debt of $1,891,268 owing to Westpoint Corporation.

73                  Richstar Enterprises entered into a refinancing arrangement in early 2005 and was provided with a facility of $4,550,000 by Australian Unity. Of this amount $3,231,478 was used to repay the HSBC loan. $1,256,759 was paid into the Westpoint Corporation bank account. A loan of that amount was then recorded in the Westpoint Corporation general ledger from Richstar Enterprises to Lanepoint Enterprises.

74                  Ms Fox informed Mr Zohar that although the funds were paid into the Westpoint Corporation bank account they were not directly advanced to Lanepoint Enterprises. Although some of its development expenses were paid from time to time by Westpoint Corporation on behalf of the development company, the funds sitting in the accounts were used to pay general administrative and other expenses of Westpoint Corporation. There is no written record of the receipt of $1,256,759 from Westpoint Corporation by Lanepoint Enterprises save for the posting of the journal entry and the recording of expenses to the general ledger of Lanepoint Enterprises of payments made by Westpoint Corporation on its behalf.

75                  On 29 November 2005 it appears that Ms Fox was directed by Mr Ellis to process a general ledger journal entry to record repayment of the loan from Richstar Enterprises to Lanepoint Enterprises of $1,370,000. The cash for that transaction came from a Westpoint Corporation Westpac account and was transferred to an account held by Richstar Enterprises with HSBC Bank.

76                  On or about 7 February 2006 Mr Zohar was informed by Mr O’Keefe that the Point Piper property had been sold by Richstar Enterprises for $7.5 million and that settlement was expected to occur on 31 March 2005. Australian Unity was owed approximately $4.5 million and about $3 million would be available for subsequent creditors. On or about 23 January 2006, however, Bowesco trading as the Dyson Family Trust, obtained a charge from Richstar Enterprises to secure alleged advances. From Mr Zohar’s examination of Richstar Enterprise’s records at 31 January 2006, there was no liability from Richstar Enterprises to Bowesco and therefore no apparent reason for the granting of the Richstar Enterprise’s charge. Although Westpoint Corporation had serviced the loan repayments of the Point Piper property and had advanced funds of $2,114,966.46, Westpoint Corporation, as a result of the transactions referred to, would not receive any funds following the sale of the Point Piper property.

77                  Other questionable transactions referred to by Mr Zohar in his affidavit included a series of intercompany loan transfers recorded in a document, located at Westpoint Corporation’s offices, entitled ‘The $2 million Run Around’. This referred to payments made by Westpoint Corporation to Bowesco between 11 July 2005 and 15 December 2005 totalling $2,106,932.99 which, according to Mr Zohar, were said to represent loan repayments for funds allegedly advanced by Bowesco to Westpoint Corporation. It was Mr Zohar’s evidence, by reference to the records which he examined, that Mr Carey, Mr Rundle and Mr Nairn had processed a series of transactions designed to leave debts in entities which had provided guarantees for the debts of the Mezzanine Companies and would therefore be unable to pay those debts or were not intended to continue to trade. Debts owing from entitles of which they would retain control were removed to entities which might then become subject to external administration, such as Westpoint Corporation.

78                  Mr Zohar described what he called ‘the actual cash movement’ in the series of transactions. $2 million was paid by Bowesco to Goldtag and the same amount repaid by Goldtag to Bowesco. The journal entries to support this cash transfer reflected a series of inter-entity transfers which he set out. The end result was that Bowesco received back the initial $2 million. Before the $2 million run around, Lanepoint Enterprises was indebted to the Westpoint Income Fund. At the end of the transactions it had reduced that indebtedness by $2 million and Goldtag had incurred a liability of $2 million to the Westpoint Income Fund. Lanepoint Enterprises held land assets which, after payment of secured debts, were expected to have a surplus value. Goldtag had provided guarantees for the Mezzanine Companies and had a potential liability far in excess of $200 million. There was no likelihood of Goldtag repaying the loan to the Westpoint Income Fund, whereas Lanepoint Enterprises would have had the capacity to repay.

79                  Mr Zohar also referred to a liability for $530,975.88 owed by Lanepoint Enterprises to Renaissance Mezzanine, which was transferred to Vannin Pty Ltd as trustee for the Hay Family Trust (Vannin). He instructed Ms Fox to examine the records of the Westpoint Group and provide him with a summary of the relevant transactions. He exhibited a copy of a memorandum prepared by her summarising the transfers and attaching general ledger reports for the transfers which he then explained in summary. The liability was transferred as follows:

(a) Renaissance Mezzanine lent $530,975.88 to Lanepoint Enterprises for the development of the Regency Apartment.

(b) On 29 December 2005 Mr Rundle and Mr Nairn instructed Ms Fox to transfer Lanepoint Enterprises’s liability to Renaissance Mezzanine out of Lanepoint Enterprises to Vannin via Westpoint Corporation.

(c) As a result of the transaction Vannin was recorded as a debtor of Renaissance Mezzanine for $530,975.88; and

(d) Vannin granted security over a property at Hale Road to Renaissance Mezzanine to secure the loan.

During the period 1 July 2005 to 31 December 2005 funds totalling $1,667,000 appeared to have been transferred from Renaissance Mezzanine to Westpoint Corporation with $918,000 repaid during that period by Westpoint Corporation to Renaissance Mezzanine. The balance owing by Westpoint Corporation to Renaissance Mezzanine as at 31 December 2005 was $759,000. On 17 January 2006 under instructions from Mr Nairn and Mr Rundle, Ms Fox effected journal entries as a result of which the Westpoint Corporation liability was transferred to Vannin. Mr Zohar also found amongst documents lodged to be stamped at the State Revenue Department on 27 December 2005:

(a) A mortgage from Vannin to Renaissance Mezzanine to secure an alleged loan of $2,500,000.

(b) A deed of guarantee from Westpoint Corporation, Westpoint Consulting Group, Westpoint Realty, Forestview Nominees, Earlmist and Goldtag to Renaissance Mezzanine to secure an alleged loan of $2,500,000.

(c) A charge from Vannin to Renaissance Mezzanine to secure an alleged loan of $2,500,000.

Mr Zohar pointed out that if the mortgage and charge were valid they would secure any surplus assets in Vannin after repayment of Perpetual. Those assets would include surplus equity expected to be received by Vannin upon the sale of a Hale Road property which would either be payable to creditors of Vannin in general, or given that Vannin had provided a guarantee for the debts due by the Mezzanine Companies, available to be applied to that debt.

80                  Further security documents were found by Mr Zohar at the State Revenue Department. These were allegedly executed on 23 January 2006, the day before the appointment of the administrators and receivers to Westpoint Corporation. They were lodged to be stamped on 25 January 2006. They comprised:

(a) A mortgage and loan agreement from Lanepoint Enterprises to Bowesco to secure an alleged loan of $5 million.

(b) A mortgage and loan agreement from Forestview Nominees to Bowesco to secure an alleged loan of $2 million.

(c) A mortgage and loan agreement from Warwick Entertainment Centre Pty Ltd to Rompride Pty Ltd as Trustee for the Erley Unit Trust to secure an alleged loan of $7 million.

(d) Three mortgages and loan agreements from Silkchime to Erley Pty Ltd as trustee for the Erley Unit Trust to secure an alleged loan of $250,000.

81                  Mr Carey is the sole director and shareholder of Rompride and a director and secretary and 50% shareholder of Erley Pty Ltd. It appears from the various company records that no money had been lent by Bowesco to Lanepoint Enterprises apart from $700,000 paid to Lanepoint Enterprises as part of the $2 million run around. There was no record in the management accounts of Forestview Nominees to show any funds were paid to it by Bowesco. The accounts of Warwick showed a loan owing to the Erley Unit Trust of $4,910,467.03. There was no record in the accounts of Silkchime to show any funds owing to Erley Pty Ltd or the Erley Unit Trust.

82                  This review of the affidavit evidence, particularly of Mr Gomm and Mr Zohar, does not purport to be exhaustive. It is sufficient however, in my opinion, to indicate that those who had the control of the affairs of the Westpoint Group may have been involved in serious contravention of their statutory duties as directors and officers of various companies. They may also have incurred liabilities under the general law. The range and complexity of questionable transactions is great and the potential losses to investors in the Group and other creditors are substantial. In my opinion each of the defendants is potentially liable in respect of all or some of the matters to which reference has already been made in the evidence. In so saying I express no concluded view as to whether any particular contraventions have occurred or any particular liability has been incurred.

83                  In addition to the matters referred to above, ASIC’s submissions identified other areas of potential contraventions of statutory obligations which may give rise to liability on the part of the individual defendants. Numerous Information Memoranda were issued by the Mezzanine Companies in order to attract retail investors to the Westpoint Group. York Street Mezzanine distributed at least eleven of these between May 2000 and September 2002, as well as three others which were undated.

84                  There are serious grounds for the argument developed by ASIC in its submissions that these and other Information Memoranda relied upon to attract mezzanine retail investors were misleading or deceptive in various important respects. The Information Memoranda arguably misrepresented the total funds to be used as mezzanine finance for the respective developments to which they related. For example, although Information Memoranda issued in relation to the Scots Church Development by York Street Mezzanine indicated a maximum of $40 million to be raised by that company, its database showed $118 million was received. It was submitted for ASIC that by allowing York Street Mezzanine to raise funds in excess of $40 million, the director of that company had arguably breached their duties under ss 180 and 181 of the Corporations Act to act in good faith and for proper purposes.

85                  It was also said to be arguable, and I accept, that the Information Memoranda issued by York Street Mezzanine may have falsely represented that moneys raised would be applied specifically by way of a cash loan to the relevant Development Company which was Scots Church Development Pty Ltd. However no cash funds were ever lent to that company. The investors money was paid instead to Westpoint Corporation and mixed with other funds held by it. The closest that Scots Church Development seems to have got to the money was a book entry.

86                  Many examples of express and implied representations in Information Memoranda and other documents such as Investor Updates issued by the Mezzanine Companies were identified by ASIC in its submissions.

87                  ASIC also submitted that whether or not Mr Carey was a director of the Mezzanine Companies, he was an officer or director by virtue of his control and his conduct in relation to them and this too was detailed. The involvement of the Westpoint Corporation and Mr Carey personally in the promotion of mezzanine finance raisings was evidenced in the first affidavit of Kevin Chin.

88                  ASIC also referred to evidence from transcript examinations of Messrs Beck and Dixon indicative at least of a lack of attention to the use to which money raised from investors was to be put within the Group and the content of Information Memoranda issued by the Group in the name of the Mezzanine Companies. Mr Beck himself was in a position of potential conflict as it appears he was paid commission by the Westpoint Group for fund raising including attracting retail mezzanine investors. There is evidence to suggest that the redemption of primary notes was a matter for decision by Messrs Rundle and Carey according to priorities which they determined.

89                  In the event, ASIC submitted that, given the complexity of the Westpoint Group and the questionable nature of a large number of transactions between its companies, the most appropriate method of preserving its assets would be by granting the proposed orders. There is said to be at present considerable doubt that the existence and location of many of the assets and the number and identity of claimants and the nature of their claims. ASIC submits that this, coupled with the allegation of serious wrong doing in the context of assets being dealt with, justifies the making of the orders sought on the application.

Property held by the first to fourth defendants

90                  The affidavit of Marcus Essex Claridge sworn 30 March 2006 set out the results of searches of various databases for property held in the name of the first to fourth defendants. Mr Claridge searched Land Title Registers or databases in each of the Australian States and Territories, the Register of Boats in those States and Territories, the Register of Race Horses in New South Wales and the Register of Motor Vehicles in the State and Territories.

91                  The only interest shown in the name of the first defendant, Norman Carey, was a 16.66% interest in a race horse ‘Great Nation’ registered in New South Wales.

92                  Graeme Rundle was found to be the registered proprietor of two lots on strata plans in Perth and the registered proprietor as joint tenant with Jane Rundle of two lots at Mermaid Waters and Mermaid Beach, Queensland. He is also the registered owner of a Ford Territory passenger car registered in Queensland.

93                  Mr Beck was shown to have an interest as joint tenant with Anna Harris in some 22 lots mainly in Western Australia. He was also shown as a trustee with Anna Harris of a lot situated on the Gold Coast in Queensland. In addition Mr Beck has an interest in a boat called the Sea Eagle registered in New South Wales.

94                  John Dixon is a joint tenant with Helen Mary Dixon of a quarter share of a lot in Queensland and another lot in the Mornington Peninsula in Victoria. He also has an interest in an open boat and a 2000 Porsche motor vehicle registered in Victoria.

The position of the defendants

95                  The defendants have not made any substantive or detailed response to the ASIC evidence indicative of wide ranging misconduct in the affairs of the Westpoint Group. Mr Carey has put on no affidavit evidence. Mr Rundle says, via his solicitor, that he is a person of limited means and that he has not travelled overseas since August 2001. He denies ownership of certain of the property attributed to him by Mr Claridge in his affidavit.

96                  Mr Beck denies the allegation by ASIC that, as a director of the Mezzanine Companies, he acted in accordance with instructions from Messrs Carey and Rundle. He says that he has taken no steps to hide or move any of his assets or those of any other person or entity out of the reach of creditors as a result of the collapse of the Westpoint Group. He offers undertakings and also offers to surrender his passport to the Court. He sets out his financial position, which shows assets of $2.485 million and liabilities of $4.28 million. The properties disclosed by Mr Claridge’s searches are said to be held by Mr Beck and his wife as trustees of the Beck Unit Trust. He is also a beneficiary of other discretionary trusts.

97                  Mr Dixon, like Mr Beck, denies he acted under instructions from Messrs Carey and Rundle. He denies having taken any steps to hide or move his assets or those of any other person or entity. He, like Mr Beck, offers undertakings and offers to surrender his passport.

Conclusion

98                  In my opinion ASIC has demonstrated that it is necessary and desirable, within the meaning of s 1323(1) that the Court make orders to protect potential claimants against the defendants in respect of liabilities which may be imposed upon them for contraventions of the Corporations Act and other statutes and for breach of common law and fiduciary duties.

99                  In my opinion, the misconduct indicated by the evidence is wideranging and serious. The precise locus of responsibility for that misconduct and the identification of any liabilities which may arise will require further careful investigation and in the meantime the protection of any assets that may be available to satisfy such liabilities. Although the appointment of receivers is a drastic step, I am satisfied that in the serious circumstances of this case, it is justified. I do not think that the necessary protection can be achieved by way of freezing orders or the acceptance of undertakings.

100               ASIC has submitted minutes of proposed orders in relation to the various defendants and for the most part I am content to make orders in terms of those minutes. The powers proposed for the receivers have been moderated and I have further qualified them in the orders I propose to make. One issue of concern is the proposed order that the receivers’ reasonable costs and expenses should be payable from the collective assets of the defendants. ASIC has made some submissions in that regard and I will give the defendants the opportunity to respond to those submissions before making an order as to the costs of the receivers. I will make the travel restraint orders which are sought and the general orders authorising the plaintiff to give notice of the orders to relevant authorities, banks, building societies and financial institutions. The appointment of the receivers will be limited in time rather than open-ended. I will limit their appointment in the first instance to a term of six months which may be extended upon application. It will also, of course, be possible to apply to terminate their appointments. The power of the receivers in respect of the property of the defendants will extend, as requested by ASIC, to the identification, preservation and securing of individual property for the benefit of potential creditors. It will not however extend to the ‘collecting’ of property. Affidavits of assets will also be required to be filed by each of the defendants. There will, of course, be liberty to apply to vary the orders according to changed circumstances. I will direct that the defendants pay ASIC’s costs of the application.

Associate:

Dated: 20 April 2006

SCHEDULE A

The determination made by ASIC on 3 June 2005 to conduct an investigation pursuant to s 13 of the ASIC Act identified the following entitled as ‘the Companies’ in relation to which the investigation was to be conducted:

Westpoint Corporation Pty Ltd (ACN 009 395 751)

Westpoint Constructions Pty Ltd (ACN 009 399 740)

Bayview Port Melbourne Ltd (ACN 091 344 946)

Scots Church Development Ltd (ACN 091 686 323)

Ann Street Brisbane Pty ltd (ACN 101 943 711) as trustee for Ann Street Brisbane Trust

Westpoint Management Ltd (ACN 074 148 431) as trustee for 297 Murray Street Trust and 60 Market Street Trust

Bayshore Port Melbourne Pty Ltd (ACN 090 795 734) as trustee for Bayshore Port Melbourne Trust

Emu Brewery Developments Pty Ltd (ACN 103 133 848) as trustee for Emu Brewery Developments Trust

Cinema City Development Pty Ltd (ACN 091 824 298) as trustee for Cinema City Development Trust

Grenich Pty Ltd (ACN 009 453 552) as trustee for Eastern Venture Corporation

The companies defined in the first determination as ‘the Mezzanine Companies’ were the following:

Ann Street Mezzanine Pty Ltd (ACN 102 854 866)

Bayview Mezzanine Pty Ltd (ACN 091 300 060)

Bayshore Mezzanine Pty Ltd (ACN 097 759 272)

York Street Mezzanine Pty Ltd (ACN 090 631 057)

Market Street Mezzanine Pty Ltd (ACN 091 354 513)

Market Street Mezzanine No 2 Pty Ltd (ACN 088 363 384)

Bayview Heritage Mezzanine Pty Ltd (ACN 105 235 738)

Emu Brewery Mezzanine Ltd (ACN 104 639 410)

Cinema City Mezzanine Pty Ltd (ACN 090 584 820)

The further determination to conduct an investigation made by ASIC on 6 September 2005 related to the Companies and the Mezzanine Companies but also to a larger group called ‘the Wider Westpoint Group’. The Wider Westpoint Group, as defined in the determination of 6 September 2005, comprised:

Westpoint Realty Pty Ltd (ACN 050 218 954 as trustee for Westgem Unit Trust

Westpoint Consulting Group Pty Ltd (053 799 410) as trustee for Westpoint Consulting Group Unit Trust

Forestview Nominees Pty Ltd (ACN 063 440 102) as trustee for Matheson Unit Trust

Rompride Pty Ltd (ACN 074 524 824) as trustee for Erley Unit Trust

Vannin Pty Ltd (ACN 067 610 271) as trustee for Hay Family Trust

Adus Pty Ltd (ACN 009 366 205) as trustee for Adus Family Trust

Andrianni Pty Ltd (ACN 005 458 720) as trustee for Andrianni Family Trust

Juson Pty Ltd (ACN 008 998 927)

Earlmist Pty Ltd (ACN 069 056 926) as trustee for Earlmist Unit Trust

Warwick Entertainment Centre Pty Ltd (ACN 054 246 918) as trustee for Warwick Entertainment Centre Unit Trust

Silkchime Pty Ltd (ACN 066 849 429) as trustee for Silkchime Unit Trust

Goldtag Pty Ltd (ACN 085 432 239) as trustee for Cinema City Property Trust

297 Murray St Pty Ltd (ACN 088 363 384) as trustee for 297 Murray Street Trust

Westpoint Management (Centreways) Pty Ltd (ACN 085 349 068) as trustee for Centreways Refurbishment Syndicate Trust

Kingdream Pty Ltd (ACN 092 481 377)

Swanport Nominees Pty Ltd (ACN 107 680 482)

North Sydney Development Pty Ltd (ACN 107 037 838)

Pagelight Nominees Pty Ltd (ACN 109 455 110)

Matheson Holdings Pty Ltd (ACN 009 236 177)

Quartz Nominees Pty Ltd (ACN 008 859 103)

Lanepoint Enterprises Pty Ltd (ACN 110 693 251)

Westpoint Finance Pty Ltd (ACN 072 812 803)

KIS Investments (Global) Pty Ltd

Westpoint Financial Services Pty Ltd (ACN 074 148 324)

Eastlands Pty Ltd (ACN 009 349 053)

Erley Pty Ltd (ACN 009 365 379)

Westpoint Management Ltd (ACN 074 148 431) as Responsible Entity for Westpoint Income Fund (ARSN 105 925 620)

Dosius Pty Ltd (ACN 009 449 450)

Mossregal Pty Ltd (ACN 069 056 793 as trustee for Mossregal Unit Trust

Midpride Pty Ltd (ACN 069 056 793) (sic) as trustee for Midpride Trust

Forestview Nominees Pty Ltd (ACN 063 440 102) as trustee for Matheson Unit Trust as participant in the Forestfield Joint Venture

Westpoint Corporation Pty Ltd (ACN 009 395 751) as participant in the Booragoon Joint Venture

The determination of 11 October 2005 applied to the Companies and the Mezzanine Companies with the addition to the latter of the following:

North Sydney Finance Ltd (ACN 107 354 610)

Renaissance Mezzanine Pty Ltd (ACN 110 978 491)

Mount Street Mezzanine Pty Ltd (ACN 086 176 052)

It also applied to the Wider Westpoint Group as defined in the determination of 6 September 2005 but with the following additional companies incorporated in that Group:

Westpoint Management Ltd (ACN 074 148 431) as Responsible Entity for Paragon Commercial Syndicate (ARSN 091 277 397)

Westpoint Management Ltd (ACN 074 148 431) as Responsible Entity for Warnbro Fair Syndicate (ARSN 088 635 849)

Paragon Apartments Ltd (ACN 087 200 413)

Chocolate Factory (Winthrop) Limited (ACN 090 724 011)

The further determination of 7 February 2006 applied to the same Group of corporate entities but extended to the natural persons Norman Phillip Carey, Graeme John Rundle, Cedric Richard Palmer Beck and John Norman Dixon. A further determination of 8 February 2006 applied to the same entities and individuals save that the Wider Westpoint Group the subject of that determination was extended to cover the following additional entities:

Redchime Pty Ltd (ACN 117 947 805)

Roseform Holdings Pty Ltd (ACN 117 884 652)

Ferntree Financial Services

Westpoint Management Ltd (ACN 074 148 431)

Westpoint Realty Pty Ltd (ACN 050 218 954)

Westpoint Money Management Pty Ltd (ACN 098 779 778)

Quartz Nominees Pty Ltd (ACN) as trustee for the Quartz Trust

Forestview Nominees Pty Ltd (ACN 063 440 102)

Forestfield Shopping Centre Joint Venture

Bennalong Holdings Pty Ltd (ACN 008 741 008)

Bridgeview Holdings Pty Ltd (ACN 063 407 563)

Bridgeview Family Trust

HECA Nominees Pty Ltd (ACN 053 581 874)

Foyl Pty Ltd (ACN 009 365 388)

Acebid Pty Ltd (ACN 074 566 046)

LS Family Trust

Jevwood Pty Ltd (ACN 074 525 321)

HH Unit Trust

Greenleaf Holdings Pty Ltd (ACN 055 606 507)

Greenleaf Unit Trust

Vannin Trust

Paquero Pty Ltd (ACN 003 540 556)

Etnas Pty Ltd (ACN 056 599 350)

Etnas Trust

Halewood Holdings Pty Ltd (ACN 084 686 279)

Chichester Nominees Pty Ltd (ACN 008 858 660)

Silver Fox Investments Pty Ltd (ACN 081 888 048)

Quahe Family Pty Ltd (ACN 106 994 530)

Healthcare Properties Pty Ltd (ACN 075 401 955)

Richstar Enterprises Pty Ltd (ACN 099 071 968)

Bowesco Pty Ltd (ACN 008 915 357)

Warwick Entertainment Centre Syndicate Trust

KIS Realty Pty Ltd (ACN 100 871 314)

Dyson Family Trust

Centreway Refurbishment Syndicate Trust

Westside Brisbane Developments Pty Ltd (ACN 116 479 013)

On 17 February 2006 a further determination was made relating to the same individuals and entities and picking up some additional entities under the heading ‘the Wider Westpoint Group’. They were:

Keyworld Investments Pty Ltd (ACN 106 210 968)

Keypoint Developments Pty Ltd (ACN 115 507 232)

Rold Corporation Pty Ltd (ACN 009 358 276) [formerly Rold Pty Ltd]

SCHEDULE B