FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Caddick [2021] FCA 1443

ORDERS

In these orders:

Investor Funds means the monies received by either the first or second defendant from investors as itemised in Updated Annexure I, including amounts paid as “management fees”.

Out of Pocket Investors includes the investors whose “total estimated amount” owing is greater than zero as identified by the Receivers in the last column of Updated Annexure I.

Receivership Property means all property (as defined in section 9 of the Corporations Act 2001 (Cth) of the first defendant.

Receivers’ Report means the report prepared by Bruce Gleeson and Daniel Robert Soire as receivers of the property of the first defendant dated 15 February 2021.

Updated Annexure I means the updated version of annexure I to the Receivers’ Report, a confidential copy of which is attached to the affidavit of Bruce Gleeson sworn 12 May 2021 in this proceeding and identified with the heading “Updated Annexure I” (as updated from time to time).

THE COURT DECLARES THAT:

1.    Each of the defendants, by providing financial product advice and dealing in a financial product, contravened s 911A of the Corporations Act in that they carried on a financial services business without holding an Australian Financial Services Licence:

(a)    in the case of the first defendant, from about October 2012 and continuing until about November 2020; and

(b)    in the case of the second defendant, from about June 2013 and continuing until about November 2020.

THE COURT ORDERS THAT:

2.    Leave be granted to the plaintiff to file and serve a third further amended originating process in the form provided to the Court on 30 June 2021, to be filed electronically by 5.00 pm on 23 November 2021.

3.    Leave be granted nunc pro tunc to the plaintiff, pursuant to s 471B of the Corporations Act, to continue this proceeding against the second defendant.

4.    Pursuant to s 1101B(1) of the Corporations Act, Bruce Gleeson and Daniel Robert Soire of Jones Partners of Level 13, 189 Kent St, Sydney NSW 2000 be appointed as joint and several receivers (Receivers) of the Receivership Property for the purpose of:

(a)    identifying, collecting and securing the Receivership Property;

(b)    to the extent necessary, ascertaining the total quantum of Investor Funds and any funds advanced by any interested party to the first defendant and the identity of all investors who, in the Receivers’ view, ought to be included as an Out of Pocket Investor as well as any interested party who may be a creditor of the first defendant;

(c)    subject to Order 6 below, taking possession of and realising the Receivership Property;

(d)    to the extent necessary, establishing an interest-bearing account with an authorised deposit taking institution nominated by the Receivers for the purposes of holding any net proceeds of realisation of the Receivership Property (Receivers’ Trust Account); and

(e)    subject to Order 7 below, seeking directions in relation to the distribution of funds in the Receivers’ Trust Account.

5.    The Receivers have the following powers:

(a)    the power to do all things reasonably necessary or convenient to be done, in Australia and elsewhere, for or in connection with, or as incidental to the attainment of, the objectives for which the Receivers are appointed;

(b)    the powers under s 1101B(8) of the Corporations Act;

(c)    the powers set out in s 420 of the Corporations Act save for the powers set out in subs 420(2)(d), (h), (j), (m), (n), (o), (s), (t) and (u) and provided that, wherever in that section the word ‘corporation’ appears, it shall be taken to include reference to the first defendant;

(d)    the power to seek directions from the Court regarding any matter relating to the exercise of the Receivers’ powers; and

(e)    the power to require, by request in writing, any employee, agent, banker, solicitor, stockbroker, accountant, consultant or other professionally qualified person who has provided services or advice to the first defendant, to provide such reasonable assistance (including access to any documents, books or records to which the first defendant has a right of access or control) to the Receivers as may be required from time to time.

6.    Before taking possession of or realising any of the Receivership Property, the Receivers shall:

(a)    give notice to any interested party of their intention to do so and inform those parties in writing that they should:

(i)    advise the Receivers within 15 business days if they object to the taking possession of or sale of any of the Receivership Property and specify the basis of their objection; and

(ii)    provide documentary evidence in support of their objection; and

(b)    seek directions from the Court in relation to their intention to do so.

7.    Before making any distribution of funds in the Receivers’ Trust Account, the Receivers shall:

(a)    give notice to any interested party of their intention to do so and inform the said parties in writing that they should:

(i)    advise the Receivers within 15 business days if they object to the distribution of funds in the Receivers’ Trust Account and specify the basis of their objection; and

(ii)    provide documentary evidence in support of their objection; and

(b)    seek directions from the Court in relation to their intention to do so.

8.    The above Orders do not affect the rights of any secured creditor holding a mortgage or other security interest over any of the Receivership Property.

9.    For the avoidance of doubt, nothing in these Orders is intended to limit the right of the Receivers to seek directions from the Court.

10.    Immediately upon Order 4 above taking effect, the appointment of Bruce Gleeson and Daniel Robert Soire of Jones Partners of Level 13, 189 Kent St, Sydney NSW 2000 as receivers pursuant Order 5 of the Orders made on 15 December 2020 (Interim Receivers) be terminated.

11.    Pursuant to s 461(1)(k) of the Corporations Act, the second defendant, Maliver Pty Ltd (ACN 164 334 918), be wound up.

12.    Bruce Gleeson and Daniel Robert Soire of Jones Partners of Level 13, 189 Kent St, Sydney NSW 2000 be appointed as joint and several liquidators of the second defendant (Liquidators).

13.    Order 7 of the Orders made on 10 November 2020 be varied and leave be granted to the plaintiff to provide the Liquidators with unredacted copies of the affidavits filed by the plaintiff in this proceeding.

14.    The remuneration, costs and expenses of the Interim Receivers for the period from 15 December 2020 to 22 February 2021 be fixed in the sum of $188,017.84 inclusive of GST.

15.    Paragraphs 9E, 9H, 19D and 26 of the plaintiff’s third further amended originating process and paragraphs 2-4 of the Interim Receivers’ interlocutory application filed on 2 March 2021 be stood over to a date to be notified.

16.    Any party who wishes to make submissions in relation to the outstanding questions of costs referred to in Order 15 above is to file and serve written submissions, not exceeding four pages in length, by 13 December 2021.

THE COURT NOTES:

17.    The redactions made in the copy of the reasons for judgment to be published on 24 November 2021 at 2.15 pm AEDT are made in accordance with the non-publication orders of this Court made in this proceeding.

18.    The undertaking proffered by Bruce Gleeson and Daniel Robert Soire of Jones Partners that, if a possibility of conflict in or as between their roles as Receivers and Liquidators arises, they will approach the Court and give notice to the plaintiff and investors of that circumstance.

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

Table of contents

REASONS FOR JUDGMENT

MARKOVIC J:

1    For many years Melissa Louise Caddick and Maliver Pty Ltd, the first and second defendants respectively (together the defendants), operated what might be described as a financial services business. However, as the events described below show, that business was not what it seemed.

2    On 10 November 2020 the Australian Securities and Investments Commission (ASIC) commenced this proceeding and obtained ex ‍parte orders including orders restraining the defendants from dealing with their assets and requiring Ms Caddick to deliver up her passports. On 11 November 2020 ASIC served those orders on Ms Caddick at her residential address (Caddick Residence) and executed search warrants issued pursuant to s 39D of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) including at that address.

3    On or about 13 November 2020 Ms Caddick’s partner, Anthony Koletti, informed the Australian Federal Police that he believed his wife to be missing. It was common ground between the parties that, since about 12 November 2020, Ms Caddick has been missing. That fact is not only a matter of understandable concern to a number of interested parties, including Ms Caddick’s family and clients of the financial advice business described below, but has also affected the conduct of this proceeding, the issues that arise for the Court’s consideration and their resolution.

1.    History of the proceeding

4    As set out above this proceeding was commenced by ASIC on 10 November 2020 at which time it sought and obtained orders on an ex parte basis against Ms Caddick and Maliver. Thereafter, the proceeding was listed before the Court on a number of occasions in November and December 2020. Given her disappearance Ms Caddick did not appear but was, for a time, represented by her brother, Adam Grimley, pursuant to an enduring power of attorney in his favour. There was no appearance on any occasion for or on behalf of Maliver.

5    On 15 December 2020, on ASIC’s application, orders were made (December Orders) including:

(1)    an order pursuant to s 1323(1)(h)(i) of the Corporations Act 2001 (Cth) appointing Bruce Gleeson and Daniel Robert Soire of Jones Partners as joint and several receivers (Interim Receivers) of the Property (as defined) of Ms Caddick for the purpose of:

(a)    identifying, collecting and securing the Property of [Ms Caddick];

(b)    approving or making the payments from the Property of [Ms Caddick] permitted by Order 11 of the Orders made on 10 ‍November 2020 as varied;

(c)    ascertaining the amount of money received by [Ms Caddick] from funds paid to [Maliver] by investors for investment (Investor Funds);

(d)    identifying any Investor Funds held by [Ms Caddick], any Property acquired by [Ms Caddick] with Investor Funds and any payments made by [Ms Caddick] to third parties with Investor Funds and any other dealings by [Ms Caddick] with Investor Funds; and

(e)    ascertaining whether any money was paid directly to [Ms Caddick] by investors for investment and identifying the matters set out in paragraph (d) above in relation to any such money.

(2)    an order requiring the [Interim Receivers] to provide to the Court and to ASIC a report regarding:

(a)    the assets and liabilities of [Ms Caddick];

(b)    an opinion as to the solvency of [Ms Caddick];

(c)    the amount of Investor Funds received by [Ms Caddick];

(d)    any Investor Funds held by [Ms Caddick], any property acquired by [Ms Caddick] with Investor Funds and any payments made by [Ms Caddick] to third parties with Investor Funds and any other dealings by [Ms Caddick] with Investor Funds;

(e)    any money paid directly to [Ms Caddick] by investors for investment and any property acquired, any payments made and any other dealings, by [Ms Caddick] with such money; and

(f)    the [Interim Receivers’] remuneration, costs and expenses.

(3)    an order pursuant to s 472(2) of the Corporations Act appointing Messrs Gleeson and Soire as joint and several provisional liquidators (Provisional Liquidators) of Maliver and requiring them to provide a report to the Court and to ASIC in relation to the provisional liquidation of Maliver including:

(a)    the persons who have paid money to [Maliver] for investment, the amounts they invested, and whether, and to what extent, these amounts have been repaid;

(b)    identifying any bank accounts in which Investor Funds are held, any Property acquired with Investor Funds or any other dealings with Investor Funds;

(c)    the assets and liabilities of [Maliver], including any assets in which [Maliver] has any legal or beneficial interest and an estimate of the value of each asset;

(d)    an opinion as to the solvency of [Maliver];

(e)    an opinion as to whether [Maliver] has proper financial records;

(f)    an opinion as to the claims that may be available to the Liquidators for the recovery of funds for the benefit of creditors, including claims pursuant to Pt 5.7B of the Act;

(g)    the likely return to creditors;

(h)    any other information necessary to enable the financial position of [Maliver] to be assessed;

(i)    an opinion as to whether [Maliver] has contravened any provisions of the [Corporations Act] and/or any other legislation; and

(j)    any suspected contraventions of the [Corporations Act] by any directors or officers of [Maliver].

6    On 24 February 2021 the Interim Receivers and the Provisional Liquidators each filed their reports dated 15 February 2021 with the Court (respectively Interim Receivers’ Report and Provisional Liquidators’ Report and collectively Appointees’ Reports).

7    On 1 March 2021 the Interim Receivers filed an interlocutory application seeking a number of orders including an order that their remuneration, costs and expenses incurred in that capacity for the period 15 December 2020 to 2 February 2021 be fixed in the sum of $189,148.09 inclusive of GST or such other amount as the Court considers fit and proper and that the sum be paid out of Ms Caddick’s property in priority.

8    On 24 May 2021, among others, an order was made pursuant to s 23 or alternatively s 37P of the Federal Court of Australia Act 1976 (Cth) (FCA Act) for the appointment of counsel nominated by the President of the Bar Association of New South Wales to act as contradictor for the purposes of making submissions as contradictor to ASIC’s application for relief against Ms Caddick. I will refer to counsel so appointed as the Contradictor.

9    On 15 June 2021 leave was granted to ASIC to file a second further amended originating process.

10    On 29 June 2021, the first day of the hearing, I granted leave pursuant to r 2.13 of the Federal ‍Court (Corporations) Rules 2001 (Cth) (Corporations Rules) to Barbara and Edward ‍Grimley, Ms Caddick’s parents, to be heard in the proceeding without becoming a party to it.

2.    Relief sought by ASIC

11    By its second further amended originating process ASIC sought:

(1)    declarations of contravention of s 911A of the Corporations Act against each of Ms Caddick and Maliver;

(2)    an order pursuant to s 1101B(1) of the Corporations Act appointing Messrs Gleeson and Soire as joint and several receivers (Receivers) of the Receivership Property (as defined) for the purpose of, among other things, identifying, collecting, taking possession of and realising that property and distributing the proceeds of its realisation to Investors (as defined) and any Interested Party (as defined), in accordance with this Court’s directions;

(3)    an order that before realising any of the Receivership Property the Receivers shall:

(a)    give notice to any Interested Party of their intention to realise the property and inform the said parties in writing that:

(i)    Interested Parties should advise the [Receivers] within 10 business days if they object to the sale of any of the property, specify the precise nature of the property and the basis of their objection and provide documentary evidence in support of their objection;

(ii)    in the case of the Real Property, that they seek the written consent of the occupiers of any such property, which is to be provided by the occupiers within 28 days of the date of the [Receivers] giving such notice, that they will vacate the said property by a date acceptable to the [Receivers];

(iii)    in the event Interested Parties advise the [Receivers] of any objection to sale, the [Receivers] are required by the Court to re-list the matter and seek further directions from the Court in which case the Interested Party may be susceptible to an adverse order for costs.

(b)    in the event the [Receivers]:

(i)    receive no objections to the sale of the property within the notice period referred to in sub-paragraph 9C(a)(i) above; and

(ii)    in respect of the Real Property, obtain the written consent of the occupiers of the Real Property to vacate the said property in accordance with sub-paragraph 9C(a)(ii);

the [Receivers] shall as soon as practicable following the expiry of the notice period referred to in sub-paragraph 9C(a)(i), and the agreed date for vacation of the Real Property, take steps to realise that property;

(c)    in the event objections are received within the notice period referred to in sub-paragraph 9C(a)(i) above, or in the event the [Receivers] do not procure the written consent of the occupiers of the Real Property to vacate the property within the time period, and as provided for, in subparagraph ‍9C(a)(ii), the [Receivers] shall seek directions from the Court as to whether they are justified in taking all necessary steps to realise the property (in respect of which objections have been received or which the occupants have not agreed to vacate) having regard to the said objections and in doing so join all parties they consider necessary to be joined to any such application.

(4)    an order pursuant to s 461(1)(k) of the Corporations Act that Maliver be wound up and that Messrs Gleeson and Soire be appointed as liquidators; and

(5)    an order pursuant to s 90-15(1) of the Insolvency Practice Schedule, being Sch 2 to the Corporations Act, that the liquidators not take any steps to pursue any claims through any court proceedings that may be available to Maliver against any person or issue any examination summonses under Part 5.9 Division 1 of the Corporations Act without first seeking the Court’s approval and that they provide no less than 14 days’ written notice to ASIC of any such proposed application.

12    The second further amended originating process includes the following definitions:

“Interested Party” includes Anthony Koletti, [REDACTED], Adam Grimley and Edward and Barbara Grimley, National Australia Bank Limited as the mortgagee of the Real Property and the Investors identified by the [Receivers] from time to time.

“Investors” means the parties set out in Updated Annexure I.

“Real Property” means the real property located at [REDACTED] [REDACTED] [REDACTED] and contained in folio identifier [REDACTED] and [REDACTED] [REDACTED] and contained in folio identifier [REDACTED].

“Receivership Property” means:

(a)    the Real Property;

(b)    the Motor Vehicles;

(c)    the Shares;

(d)    the Caddick Services Trust Property;

(e)    such of the Jewellery identified in Annexure B to Annexure H “Pickles Valuations Appraisal Report” of the [Interim Receivers’ Report] as is identified in the affidavit of Bruce Gleeson to be sworn in these proceedings as having been purchased using Investor Funds;

(f)    any further real or personal property of the First or Second Defendant that the [Receivers] may determine was purchased using Investor Funds or funds provided by Edward Grimley, Barbara Grimley or Adam Grimley;

(g)    any other personal property of the First Defendant that the [Receivers] may identify.

    (Underlining omitted.)

13    In the course of the hearing ASIC sought leave to file a third further amended originating process. The key amendments are:

(1)    the definition of “Receivership Property” has been amended to mean “all property (as defined in section 9 of the [Corporations Act]) of [Ms Caddick]”;

(2)    an amendment to the date from which the declaration of breach of s 911A of the Corporations Act is sought against Ms Caddick;

(3)    an amendment to para 9A(h) so that it is in the following terms:

(4)    to the extent necessary seeking directions in relation to the distribution of funds in the Receivers’ Trust Account.

(5)    amendments to para 9B which concerns the powers to be given to the Receivers, if appointed;

(6)    the addition of para 9DD which provides:

(7)    For the avoidance of doubt, nothing in these orders is intended to limit the right of the [Receivers] to seek directions from the Court.

(8)    the deletion of para 9M which sought to curtail the steps that the Liquidators could take if appointed such that they could not issue examination summons or pursue any claims available to Maliver through court proceedings without first seeking the Court’s approval and giving notice to ASIC.

14    The filing of the third further amended originating process should be allowed. Only Ms Caddick’s parents made submissions in relation to its filing. However, those submissions address the relief sought by the third further amended originating process, rather than the question of leave to file it, and are set out at [309]-[314] below.

3.    The evidence

15    ASIC relied on a significant volume of evidence which, in broad terms, included evidence given by: ASIC as to documents obtained and findings from its investigations into Maliver and Ms Caddick; the director of the entity that held the Australian Financial Services Licence (AFSL) which Ms Caddick claimed to hold; four investors regarding their dealings with Ms  Caddick; officers of CommSec regarding the existence of CommSec Accounts referred to in documents provided by Ms ‍Caddick to investors; and the Interim Receivers and Provisional Liquidators in relation to the work they have undertaken. It is neither possible nor, indeed, desirable to set out that evidence in full. It is summarised below to the extent it is relevant to the issues that arise for resolution.

3.1    Maliver

16    Maliver was incorporated on 18 June 2013. Ms Caddick is the sole director, secretary and shareholder of Maliver.

17    ASIC is the authority that regulates the Australian financial services industry and is responsible for the supervision and granting of AFSLs pursuant to Pt 7.6 of the Corporations Act. Details of all AFSL holders and their authorised representatives are maintained by ASIC in registers within databases maintained by it pursuant to s 1274 of the Corporations Act which include the Australian Securities Commission on Time (ASCOT) database and the Seibel database.

18    Based on searches undertaken by ASIC on the ASCOT and Seibel databases, neither Ms Caddick nor Maliver currently hold or have previously held an AFSL, Maliver is not and has never been an authorised representative of an AFSL holder and since 9 October 2009 Ms Caddick has not been and is not presently an authorised representative of an AFSL holder.

3.2    Documents provided to investors by Maliver

19    Isabella Lucy Allen is an investigator in ASIC’s financial services enforcement team as part of the Office of Enforcement. Ms Allen has been the case officer in charge of the investigation into Maliver and Ms Caddick since its commencement on 8 September 2020. Ms Allen explains that as part of its investigation ASIC has obtained more than 50,000 documents which relate to Identified Investors, who are the 72 investors listed in the document described as “Updated Annexure I” to Mr Gleeson’s affidavit sworn on 12 May 2021 and which is described at [180] below. Those documents were obtained from the following sources:

(1)    voluntary production by Identified Investors;

(2)    14 devices seized under a search warrant issued under s 39D of the ASIC Act at the Caddick Residence;

(3)    Ms Caddick’s email account; and

(4)    notices issued under s 30 of the ASIC Act.

20    Based on her review of documents obtained from the sources referred to in the preceding paragraph, Ms Allen has identified that:

(1)    on and from Maliver’s incorporation, Ms Caddick generally provided the following documents to investors prior to the commencement of their investment:

(a)    a financial services guide from Maliver (Maliver FSG);

(b)    an appointment letter;

(c)    a letter of authority;

(d)    a document titled “Fact Finder”; and

(e)    a document titled “Investor Risk Profile”;

(2)    usually at the end of each month Identified Investors were provided with the following documents that appeared to be a summary of their investment:

(a)    a document titled “Portfolio Statement” which purported to be a print out from an Identified Investor’s CommSec account listing that investor’s current shareholding; and

(b)    a document titled “Transaction Summary Statement” which purported to be a print out from an Identified Investor’s CommSec account listing the shares that had been purchased or sold during a specified period through that investor’s CommSec account;

(together, Portfolio Valuations); and

(3)    certain investors were also provided with the following documents:

(a)    a document titled “Appointment & Implementation of Maliver Pty Ltd as your Adviser”;

(b)    a document titled “Statement of Advice”; and

(c)    a document titled “Request for personal information form”.

The documents listed at (1) and (2) above are more fully described below.

21    Based on her review of the documents obtained by ASIC, Ms Allen has ascertained in relation to the Identified Investors that 24 of them received a Maliver FSG, 27 of them received an appointment letter, 31 of them received an authority letter, 10 of them received a “Fact Finder”, nine of them received an “Investor Risk Profile” and 30 Identified Investors did not receive any of these pre-investment documents. Ms Allen provides the following explanation for the latter:

(1)    seven of those Identified Investors became clients and made their investments prior to Maliver’s incorporation; and

(2)    the balance were, for the most part, related to other Identified Investors (e.g. they were family members or a related entity, such as a self-managed super fund, of an existing investor). It appears that where that occurred, Ms Caddick did not reissue pre-‍investment documents setting up the client relationship, providing information about Maliver and seeking information about the client.

3.2.1    Maliver FSG

22    During the period 28 July 2018 to 11 November 2020 Ms Caddick provided a number of investors with the Maliver FSG. Based on Ms Allen’s review of the documentation obtained by ASIC there were five versions of the Maliver FSG, identified as follows:

(1)    Maliver Financial Services Guide v 1.0.pdf;

(2)    Maliver Financial Services Guide v 1.1.pdf;

(3)    Maliver Financial Services Guide v 1.3 0814;

(4)    Maliver Financial Services Guide v 1.8 0717; and

(5)    Maliver Financial Services Guide v 1.8 012020.

23    Each version of the Maliver FSG included the following:

(1)    under the heading “What is a financial services guide?”

The Financial Services Guide (FSG) is an important document. It is designed to provide information about the financial services provided by Maliver and its representatives. It aims to assist you in deciding whether to use the services we offer. It also provides you with an understanding of what to expect from your dealings with Maliver.

(2)    under the heading “Who is responsible for the services you receive?”:

Maliver is an independent financial planning company and the holder of an Australian Financial Services Licence (AFSL); Licence Number [REDACTED]. As an AFSL holder it is Maliver who is responsible for the services that are provided to you. Your Adviser will be acting on behalf of Maliver when recommending both strategic solutions and products. Your Adviser does not act as a representative of any other licensee in providing financial services to you.

(3)    under the heading “Who is my Adviser?”

Your Adviser is Melissa Caddick, who operates under the business name Maliver Pty Limited (A.C.N 164334918). Maliver is the holder of an Australian Financial Services Licence as issued by the Australian Securities and Investments Commission (ASIC); Licence Number [REDACTED].

(4)    under the heading “Remuneration received by Maliver”:

Maliver charges a yearly Portfolio Management Fee based on:

Total Funds Under Management at 0.75% inclusive of GST

3.2.2    Appointment letter

24    The purpose of the appointment letter was to authorise the establishment of a CommSec account in the name of a particular investor. Such a letter, examples of which were in evidence before me, provided (with personal identifiers omitted):

3.2.3    Letter of authority

25    The letter of authority sought confirmation from a new client that he or she had read the documentation provided. Such a letter, examples of which were also in evidence before me, were addressed to Maliver and relevantly provided (with personal identifiers omitted):

3.2.4    Fact finder and investor risk profile

26    The fact finder sought information from investors about their personal circumstances and financial situation. The investor was asked to complete the document by providing information including their full name, date and place of birth, nationality, marital status, contact details, employment status and details, and whether they have a will or insurance. It also contained a section for “adviser notes” and a table for the investor to list his or her assets and liabilities.

27    An investor risk profile sought to understand the risk appetite of the particular investor. It included at its commencement:

Your attitude to risk is probably the most important factor to consider before investing. To achieve higher returns, you will have to be prepared to accept a higher risk of capital loss. This is because the funds and assets that offer high returns are generally more volatile than those producing lower returns. It is what we call ‘risk/return trade off”.

We will recommend investment strategies to match your investments to your risk profile. Investing across the various investment sectors according to your risk profile is called diversification. For example, instead of investing only in property, or only in shares, you might invest proportion in both, or even include cash or fixed interest to create a balanced portfolio.

The workbook will help us to understand what type of Investor you can afford to be and will enable us to recommend a personal asset allocation tailored to your needs. Please complete questions below by circling the answer that most closely describes you for each question.

There followed a series of questions to which the client was asked to respond by picking the answer he or she considered to be most appropriate in each case.

28    The last page of the investor risk profile included the “investor profile” to be assessed against four categories: conservative, moderate, balanced, growth and high growth. Based on the answers given to each of the questions an investor was allocated points, the total of which determined which of these categories applied to the investor.

29    Finally, by signing the investor risk profile, the client was asked to acknowledge the following (as written):

I/We confirm that I/We have read though the Personal Risk Profile Questionnaire and I/We are comfortable with the above Personal Risk Profile selection.

I/We have discussed the potential risks fully with our Advisor and I/We fully accept the consequences of my/our

3.2.5    Portfolio Valuations

30    Ms Allen has located multiple Portfolio Valuations for each Identified Investor which, based on her review, she says were emailed by Ms Caddick to each Identified Investor. Ms Allen has extracted from the documents obtained by ASIC a copy of a covering email and attached Portfolio Valuation for each Identified Investor. An example of an email and the accompanying Portfolio Valuation for one of the Identified Investors, Katherine Horn, who has also given evidence (see below), is as follows:

(1)    the covering email dated 31 March 2016 from Ms Caddick to Ms Horn provides:

Dear Kate,

attached please find portfolio valuations for the period ending 31 March 2016.

In the first 10 weeks of 2016, share markets were regularly described as turbulent. Globally, shares shed 11$ of their value between the start of the year and mid February. Predictions of a global recession were frequent and shrill. Oil and iron prices tanked. Adding further to the gloom, reports did their rounds of predicting a collapse in Australian house prices and bank shares.

Then, the widespread gloom dissipated. By mid March, key share indexes in the US and Australia, and surprisingly, those in emerging economies – had recovered most of their earlier losses. Bulk commodity prices shot upwards, with iron ore up by an impressive 66% from its low point. Bank shares were keenly sought.

Periodically, claims are made that Australian housing is in a bubble, house prices are about to crash and the prices of bank shares will crumble because of bad debts.

When sentiment on the global economy is fragile, the accumulation of even mildly negative news can drive share markets a lot lower and we have experienced this albeit with recovery since January 1, 2016.

There is now a more balanced outlook, with shares of companies with strong growth earnings. It is important to remember that it (sic) times of market stress, sensible diversification makes sense, which is how your portfolio is positioned.

Lets arrange a lunch or a Friday night dinner - let me know your schedule, missing you!!!!!

Kind Regards

Melissa Caddick

(2)    the email attached:

(a)    a single cover page on Maliver letterhead stating: “[a]ttached please find portfolio valuation for the period ending 31 March 2016”;

(b)    a summary document titled “Kate Horn – RETURN V’S ALL ORDINARIES INDEX”;

(c)    a CommSec portfolio statement showing shareholdings as at 31 March 2016;

(d)    a CommSec transaction summary statement for the period 1 July 2015 to 31 March 2016;

(e)    a CommSec portfolio statement summary for the period 1 July 2015 to 31 March 2016 showing dividend payments and cash deposits and withdrawals; and

(f)    a CommSec portfolio statement dividend summary for the period 1 July 2015 to 31 March 2016.

31    By way of illustration, reproduced below are the documents referred to at [30(2)(b) and (c)] above:

And:

3.3    [REDACTED] and [REDACTED]

32    [REDACTED] is a certified financial advisor and the sole director and owner of [REDACTED] which provides financial planning, investment, superannuation and insurance advice services.

33    [REDACTED] first met Ms Caddick in about 2003 when she was the New South Wales Development Manager of Tandem Advice Pty Ltd which held an AFSL and was a dealer group owned by ING. [REDACTED] explains that a dealer group is a group of authorised representatives licensed to provide financial advice under a single AFSL. [REDACTED]’s role was to support and develop the businesses that were being brought under Tandem’s AFSL. This role required her to coach businesses to improve their processes and procedures and to assist with their growth, compliance and business development.

34    In that capacity [REDACTED] had frequent dealings with Wise Financial Services, which was part of the Tandem dealer group, and, in particular, with two of Wise Financial’s advisors, one of whom was Ms Caddick. [REDACTED] understood that Ms Caddick was a shareholder in Wise ‍Financial which predominantly arranged superannuation for employees of its corporate clients but, over time, became more tailored in its offering and provided advice to individuals as well as corporate members.

35    [REDACTED] recalls that in 2005 Ms Caddick informed her that she was leaving Wise Financial. Thereafter, she had infrequent contact with Ms Caddick until about 2007 or 2008 when she bumped into her and they again established more regular contact.

36    In 2008 [REDACTED] established [REDACTED]. Her husband is its general manager and it does not currently have any employees. [REDACTED] and her husband work as consultants to [REDACTED].

37    From about 2009 [REDACTED] arranged personal insurance for Ms Caddick and members of Ms Caddick’s family.

38    In about 2009 [REDACTED] recalls having discussions with Ms Caddick during which Ms Caddick mentioned that she wanted to start her own advice business focusing on investment advice and assisting high net-worth clients. Beyond that [REDACTED] had no insight into Ms Caddick’s proposed business.

39    Initially [REDACTED] operated under the AFSL of [REDACTED] as a corporate authorised representative. However, in 2013 [REDACTED] applied for and obtained its own AFSL which permits it to provide investment, insurance, superannuation and direct equities advice. [REDACTED] has never appointed anyone as an authorised representative to provide service on its behalf under its AFSL and neither [REDACTED] nor her husband have allowed anyone to provide any service on behalf of [REDACTED] other than in the case of para-planning, compliance reviews and audits, for which external providers are usually hired.

40    By letter dated 20 June 2013 from [REDACTED], [REDACTED] informed Ms Caddick that [REDACTED] had recently been issued with its own AFSL by ASIC. The letter included:

As of 1st July 2013 I will no longer be licenced by our current Financial Services Licence provider, [REDACTED], rather I will operate under [REDACTED]’s new AFSL. [REDACTED]’s AFSL number as issued by ASIC is [REDACTED].

This in no way changes our relationship as your Financial Adviser, nor the plans we have put in place. Everything will stay the same unless you opt to retain PATRON Financial Advice as your Financial Services Licensee.

In this event please notify me within 30 days and I will advise PATRON who will allocate another adviser to look after you.

41    On 2 July 2013 [REDACTED] sent Ms Caddick a copy of the financial services guide developed for [REDACTED] titled “FINANCIAL SERVICES GUIDE Version 1.0 – 1 July 2013 [REDACTED]” and displaying AFSL number [REDACTED] ([REDACTED] FSG). As Ms ‍Caddick was a client of [REDACTED], [REDACTED] understood that she was obliged to share the document with her. [REDACTED] explained that when a financial advice business comes under a new AFSL it has to advise all of its clients of the change to ensure that they are aware of a number of things including how to find the business, make a complaint and any material changes such as a change in licence number, services or fees.

42    The [REDACTED] FSG included the following:

(1)    under the heading “What is a financial services guide?”:

The Financial Services Guide (FSG) is an important document. It is designed to provide information about the financial services provided by [REDACTED] and its representatives. It aims to assist you in deciding whether to use the services we offer. It also provides you with an understanding of what to expect from your dealings with [REDACTED].

(2)    under the heading “Who is responsible for the services you receive?”:

[REDACTED] is an independent financial planning company and the holder of an Australian Financial Services Licence (AFSL); Licence Number [REDACTED]. As an AFSL holder it is [REDACTED] who is responsible for the services that are provided to you. Your Adviser will be acting on behalf of [REDACTED] when recommending both strategic solutions and specific products. Your Adviser does not act as a representative of any other licensee in providing financial services to you.

(3)    under the heading “Who is my Adviser?”

Your Adviser is [REDACTED], who operates under the business name [REDACTED]. [REDACTED] is the holder of an Australian Financial Services Licence as issued by the Australian Securities and Investments Commission (ASIC); Licence Number [REDACTED].

43    In or around July 2013 [REDACTED] had a telephone conversation with Ms Caddick during the course of which they had an exchange to the following effect:

Ms Caddick:    Would you consider having me under your licence?

[REDACTED]:    Let me talk to [my husband], I will think about it.

44    A day or so later, after speaking with her husband, [REDACTED] telephoned Ms Caddick and explained that she would not authorise or permit her to provide financial services on behalf of [REDACTED]. [REDACTED] recalls that at the time she said words to the following effect to Ms Caddick:

We don’t want any risk. Having advisors doing whatever they want under our licence is a risk and I never wanted that.

And:

I never wanted to start a dealer group and I didn’t want the responsibility of supervision of other advisers.

[REDACTED] recalls that Ms Caddick said words to the following effect:

That okay, no hard feelings. I understand and I will get my own AFSL.

45    [REDACTED] did not have any further discussions with Ms Caddick in relation to her request to operate under [REDACTED]’s AFSL and at no time has [REDACTED] given Ms Caddick or Maliver permission to operate under [REDACTED]’s AFSL.

3.4    Maliver’s client relationships

46    Annexure A to each of the Interim Receivers’ Report and the Provisional Liquidators’ Report is identical. According to the Interim Receivers and Provisional Liquidators, it sets out the typical steps undertaken by Maliver to procure an investment from its clients or investors. It is based on the Interim Receivers’ and Provisional Liquidators’ investigations as at the date of their respective reports, 15 February 2021, including interviews, analysis of bank and shareholding statements, meetings and correspondence with investors. The file note reflects the Interim Receivers’ and Provisional Liquidators’ understanding and, as ASIC accepted, is their opinion of the way in which Maliver and Ms Caddick operated, particularly in their characterisation of some of Ms Caddick’s conduct. While it must be viewed in that light, it provides a useful starting point to consider Maliver’s client interactions.

47    Annexure A includes:

1.    Investors would generally be introduced to Ms Caddick via word of mouth / contacts.

2.    Some investors were known to Ms Caddick in her day-to-day life and she built strong personal relationships with them.

3.    Some investors were part of Ms Caddick’s immediate and extended family.

4.    Ms Caddick would often provide a background story as part of her sales pitch to the investors which involved her:

a.    receiving a big payout from her previous employment;

b.    having a restraint of trade after leaving her previous employment;

c.    managing a limited number of investors and only having space when investors closed their portfolios; and

d.    boasting about her existing clients and their satisfaction with the returns achieved.

5.    Ms Caddick would then discuss with the investors their personal financial position (if she did not know already), their goals and develop with them an investment strategy and risk profile.

6.    Investor would be asked to sign a letter to CommSec authorising Melissa Caddick of [Maliver] to establish a CommSec Trading Account in the name of investors. The letter also authorised [Maliver] to act as the investor’s advisor. …

7.    Depending on the type of investment (e.g., individual or SMSF), and existing bank accounts, investors would take steps to transfer funds to [Maliver’s] bank account or their SMSF bank accounts to commence investment. For certain investors, Ms Caddick and the investors would both attend the branch to open bank accounts which Ms Caddick was a signatory.

8.    The Financial Services Guide provided by Ms Caddick to Investors … noted an AFSL of [REDACTED]. It also advised that the adviser (being Ms Caddick) will be acting on behalf of [Maliver]. [Maliver] charged an Annual Portfolio Management Fee on total funds under management at 0.75% inclusive of GST.

9.    Certain sole beneficiary investors established their SMSF through Ms Caddick and had Ms Caddick as one of the Trustees as there is a requirement to have two (2) Trustees for a sole member SMSF.

10.    Ms Caddick would organise the process of setting up the SMSF including any rollover from existing accounts. Documents would be signed by the investors to facilitate the rollover.

11.    Investors would also sign a letter saying they have read the Financial Services Guide, Implementation, Fees & Brokerage and Fact Find. …

12.    Once the funds were received by [Maliver] or into bank accounts controlled by Ms Caddick, there would be a portfolio statement in the name of the superannuation fund provided to the investor showing the initial investment and portfolio composition. …

13.    The investor would then receive a … monthly portfolio statements from [Maliver]. This would be enclosed in a letter from [Maliver] with a summary of their investment including the details of funds transferred, any withdrawals of their investment and portfolio composition (e.g., cash and shares) and a comparison between the investor’s ‘return’ and the All Ords Index return. …

14.    For the SMSFs, every year a checklist would be sent to the Trustees in order for the superannuation accounting firms to complete the required financials and tax lodgements.

15.    Investors would be sent a yearly invoice (on the anniversary of the initial investment) for the portfolio management fees that would be paid separately by the investors.

16.    If the investors wanted to invest more, they did so and their monthly portfolio statements would be updated to reflect same.

48    ASIC relied on the evidence of four of the Identified Investors: Katherine Anne Horn, Cheryl ‍Olga Kraft-Reid, Susan Margaret Coetzee and David John Wilson. I will refer to this subset of Identified Investors collectively as the Investor Witnesses. In summary, each of the Investor Witnesses describes how they met Ms Caddick, their decision to either, in the case of Ms Horn, engage Ms Caddick as her advisor or, in the case of the other Investor Witnesses, become a client of Maliver including the material they received, the establishment of self-‍managed superannuation funds, bank accounts and share trading accounts, and how reports were provided on investments and the client relationship was thereafter managed. In a number of respects their experiences were similar and bear out the general description included in Annexure A to the Appointees’ Reports. I set out below a summary of their evidence.

3.4.1    Ms Horn

49    Ms Horn is a [REDACTED] and currently works as a [REDACTED]. She does have not a detailed understanding of investment products or the financial services industry. Prior to investing with Ms Caddick she held her superannuation in an industry super fund and also held some shares.

50    Ms Horn has known Ms Caddick for many years. She lived three doors down from Ms Caddick while growing up and she and Ms Caddick attended the same preschool and high school. Ms Caddick moved overseas when Ms Horn was in her 20s but upon Ms Caddick’s return to Australia they became “quite good friends”.

51    Ms Horn believes that she started investing with Ms Caddick prior to the incorporation of Maliver. She recalls hearing about Maliver in late 2014, sometime after she had made her first investment and soon after Ms Caddick married. In any event, Ms Horn considered that as far as her investments were concerned Maliver and Ms Caddick were one and the same.

52    Ms Horn recalls that in about 2012, just after Ms Caddick returned from overseas, she visited her at her home and they had a conversation during which Ms Caddick said words to the following effect:

I am starting up a business for people in similar positions to you and me.

And:

Are you interested in investing your superannuation though me?

And:

I will invest your superannuation in shares.

And:

I will charge you a fee of 0.5 percent of funds under management. This is less than I charge other people, because you are my friend.

53    About a month later Ms Caddick again raised with Ms Horn the issue of investing her superannuation with her and they had another conversation about the topic during which Ms Caddick said words to the effect that “it is all very low risk and simple”. Ms Caddick did not provide Ms Horn with any documents, advertising or other informational material during their discussions. All of the information Ms Horn had about what Ms Caddick was intending to do came from their conversations.

54    Shortly thereafter Ms Horn agreed to take Ms Caddick up on her offer. She thought, given Ms Caddick’s experience in the finance industry, that she could achieve better returns than she would by investing with an industry fund. Ms Horn recalls that Ms Caddick’s explanation of how she would invest her superannuation in shares sounded very simple.

3.4.1.1    Establishment of and investment by the [REDACTED]

55    In about October 2012 Ms Caddick assisted Ms Horn to set up a self-managed superannuation fund styled “[REDACTED]” (KH Super Fund) and an account with the Commonwealth Bank of Australia (CBA) styled “[REDACTED]” (KH Super Fund Account) and with the rollover of her superannuation from First State Super to the KH Super Fund Account. Ms Horn recalls that the latter was done in two tranches: an initial amount was rolled over in October 2012; and the balance was rolled over in 2013.

56    Ms Caddick provided advice on the contributions Ms Horn should make to the KH Super Fund and assisted her with its administration and management including organising for its audit by a superannuation accounting company.

57    Monthly statements for the KH Super Fund Account were provided to Ms Caddick. Initially Ms Horn sent a copy of each statement to Ms Caddick and, from a time in 2019 or 2020, they were sent directly to Ms Caddick at her post office box address which was the address listed on the account. Ms Horn did not allow Ms Caddick to access the KH Super Fund Account. She transferred funds as required by cheque or electronic funds transfer to accounts nominated by Ms Caddick.

58    In the period from October 2012 to June 2018 Ms Horn transferred $135,300 from the KH Super Fund Account to Ms Caddick and Maliver for investment and, in the period October 2013 to October 2019, Ms Horn transferred $14,461.26 from the KH Super Fund Account to Ms Caddick and Maliver for annual management fees.

3.4.1.2    Ms Horn’s personal investments

59    About one month after Ms Horn started investing her superannuation with Ms Caddick, Ms Caddick inquired whether she would like to create an investment portfolio to be managed by her, outside of her superannuation investments. Ms Horn recalls that Ms Caddick informed her that the dividends from any shares purchased would go into the cash section of her investment portfolio and that she would then reinvest those amounts. As a result Ms Horn did not expect to have funds transferred back into her account.

60    Ms Horn informed Ms Caddick that she was happy for her to create and manage an investment portfolio for her. She trusted that Ms Caddick had her best interests at heart and understood that she had experience in investing. Ms Horn’s goal was to build up sufficient funds to enable her to assist her children to pay for a deposit on a house when they were older and she believed that Ms Caddick may be able to help her to do that.

61    Ms Horn had a CBA Smart Access account in her name (CBA Personal Account). In the period from November 2012 to March 2019 Ms Horn transferred $488,050 from that account to Ms Caddick and Maliver, either via cheque or electronic funds transfer, for investment in her name. In the period October 2013 to October 2019 Ms Horn also paid approximately $16,600 in annual account management fees.

62    Ms Horn recalls that Ms Caddick only asked her to invest more money with her on one occasion when, in about March 2019, she told Ms Caddick about a term deposit she had. At the time Ms Caddick said words to the following effect:

The interest rate isn’t very good. I can invest this for you.

After this conversation Ms Horn withdrew $170,000 from the term deposit and provided that amount by bank cheque, which appears to have been facilitated via the CBA Personal Account, Ms Caddick. This amount, which is included in the total referred to in the preceding paragraph, was the last amount Ms Horn invested with Ms Caddick. This was because she was happy with the value of her investment based on the quarterly updates (i.e. the Portfolio Valuations) she had been receiving.

63    In 2019 and 2020 Ms Horn was aware of payments being made by her family into her personal investment portfolio. According to Ms Horn, these payments were not paid by her via the CBA Personal Account but were paid by Ms Horn’s family members directly to Ms Caddick for the purpose of investment into Ms Horn’s investment portfolio. Although the evidence is unclear, they appear to comprise:

(1)    two payments of $100,000 each made by Ms Horn’s mother on 23 September 2019 and 6 December 2019 respectively. Ms Horn identified these payments into her investment portfolio, which she believes were from the proceeds of sale of her father’s bank note collection after his death, in quarterly reports she received from Ms Caddick; and

(2)    a payment of $500,000 made by Ms Horn’s mother on 6 May 2020 recorded in a Portfolio Valuation for the period ending 29 May 2020. Ms Horn recalls speaking with her brother, David Wilson, about an amount of $500,000 that her mother intended to transfer to her investment portfolio.

3.4.1.3    Interactions between Ms Horn and Ms Caddick

64    During the period in which she made her investments, Ms Horn had the following interactions with Ms Caddick:

(1)    she spoke with Ms Caddick about once a fortnight. Ms Horn described these conversations as mostly personal in nature. It was uncommon for them to discuss business;

(2)    she received emails, usually on a quarterly basis, with updates on her investments. There were two documents or sets of Portfolio Valuations provided, one for the CommSec account set up for the KH Super Fund and the other for her personal investments; and

(3)    she met with Ms Caddick every year around October for an annual review of her investments, usually over lunch in the Sydney suburb of Brighton Le Sands which was halfway between Ms Horn’s and Ms Caddick’s homes. During these meetings Ms Caddick would inform Ms Horn which shares she had invested in, sometimes telling her why she had done so.

3.4.1.4    Summary of funds invested

65    By way of summary Ms Horn gives the following evidence:

(1)    since 2012 she has paid $149,761.26 from the KH Super Fund Account and $504,637.97 from the CBA Personal Account to Ms Caddick and Maliver, inclusive of $31,099.23 in annual management fees. I pause to observe that there are a number of discrepancies in Ms Horn’s evidence regarding the total sums paid from those accounts;

(2)    of that amount the KH Super Fund received a payment of $15,000 from Ms Caddick or Maliver to assist in paying a tax liability. No other amounts have been received. However, Ms Horn did not expect that investment returns would be paid because of her earlier conversation with Ms Caddick (see [59] above);

(3)    the monies referred to at (1) above represent Ms Horn’s life savings and the majority of her superannuation; and

(4)    as at 30 September 2020, based on the Portfolio Valuations she received, Ms Horn was under the impression that the KH Super Fund’s investment portfolio was valued at $831,688.06 and her personal investment portfolio was valued at $1,960,976.72.

3.4.2    Mr Wilson

66    Mr Wilson is a [REDACTED] who operates as a sole trader and is Ms Horn’s brother. Mr Wilson has a general understanding of financial products and investing. Prior to making investments with Ms Caddick he invested in shares both personally and via his self-managed superannuation fund.

67    Mr Wilson has known Ms Caddick since he was about eight or nine years old when his family lived a few doors down from Ms Caddick’s family. He recalls that Ms Caddick and her brother, Adam Grimley, attended the same primary and high schools as he did, that he and Mr Grimley were in the same school year and that Ms Caddick was in the same school year as Ms Horn. In about the late 1970s Ms Caddick’s family moved house and after that Mr Wilson did not see Ms Caddick regularly. He described his relationship with Ms Caddick as mostly professional.

68    On 7 November 2007 Mr Wilson established his self-managed superannuation fund styled the “[REDACTED]” (Wilson Super Fund), at the suggestion of his father and with the assistance of his accountant.

69    Mr Wilson’s father passed away in 2008 and Mr Wilson thereafter took responsibility for looking after his mother’s retirement savings. From 2008 to 2015 he managed those investments, which were primarily investments in shares.

70    Mr Wilson recalls that in about 2012 he learnt from Ms Horn that she had invested through Ms Caddick’s business. In about 2013 Ms Horn asked Mr Wilson to look at a set of documents provided by Ms Caddick in relation to her investment with Maliver. Mr Wilson recalls that he reviewed the documents, which appeared to be print outs from a CommSec account and a bank statement, and that he had a conversation with Ms Horn which included informing her that “it all adds up and everything seems fine”. Based on his conversation with Ms Horn, Mr Wilson understood that Ms Caddick had established a company, Maliver, through which she was offering financial advice and investment services.

71    In about late 2014 Mr Wilson had a conversation with his brother about, among other things, his role in managing their mother’s retirement savings. He recalls that his brother made a suggestion in words to the following effect:

Why don’t you think about giving the money to Melissa and then you don’t have the headache of looking after it?

Mr Wilson understood the reference to Melissa to be a reference to Ms Caddick.

72    At about the same time Mr Wilson recalls having a conversation with Ms Horn about the performance of her investments being managed by Ms Caddick and that Ms Horn informed him that they were “performing well”.

73    Mr Wilson believes that his brother made a phone call to Ms Caddick to arrange an in person meeting.

3.4.2.1    Mr Wilson’s first meeting with Ms Caddick

74    On 6 May 2015 Mr Wilson and his brother attended a meeting with Ms Caddick at the Caddick Residence. Mr Wilson recalls that the following exchanges took place at that meeting:

(1)    he asked Ms Caddick how she would invest their money and recalls that Ms Caddick said words to the effect of her being “only interested in Australian equities, and only about ten”. By this Mr Wilson understood Ms Caddick to mean that she was only following and investing in about 10 Australian stocks at that time;

(2)    he also asked Ms Caddick how she charged for her services to which Ms Caddick replied that she “charged an annual management fee of 0.75% of the total funds managed”; and

(3)    he asked Ms Caddick whether she was a member of a professional body for financial advisors in response to which Ms Caddick said words to the following effect:

Well are you a member of your professional organisation?

Mr Wilson replied that he was not. By this exchange Mr Wilson understood that Ms ‍Caddick had decided not to join a professional body and that membership was a matter of choice.

75    During the meeting Ms Caddick showed Mr Wilson and his brother documents relating to a sample portfolio of shares to explain what she planned to do with their investments and the sort of documentation they could expect to receive. Mr Wilson recalls that he told her about his financial circumstances and that Ms Caddick drew up a draft investment strategy incorporating the relevant figures. Mr Wilson understood that the strategy was for Ms Caddick to make a selection from 10 Australian shares and invest on Mr Wilson’s behalf using a CommSec account and an associated CBA Commonwealth Direct Investment Account (CDI Account) which she would establish in his name.

76    During the meeting Ms Caddick also provided Mr Wilson with a copy of a Maliver FSG. Mr ‍Wilson recalls seeing an AFSL on the first page of that document.

3.4.2.2    Appointment of Maliver as advisor for the Wilson Super Fund

77    On 11 May 2015 Mr Wilson received an email from Ms Caddick attaching a document titled “David Wilson SF DRAFT Recommendation” which, in turn, attached a number of documents including:

(1)    a file note of Mr Wilson’s discussion with Ms Caddick outlining his financial situation and objectives;

(2)    a pro-forma will;

(3)    a document appointing Maliver as his advisor;

(4)    an authorisation for Ms Caddick or Maliver to establish a CommSec account in the name of the Wilson Super Fund; and

(5)    a “personal portfolio summary”.

Mr Wilson recalls that he read the documents provided and that he understood that to buy Australian equities Ms Caddick would establish a CommSec account in his name and an associated CDI Account.

78    On 22 May 2015 Mr Wilson signed a document authorising Ms Caddick or Maliver to establish a CommSec account in the name of the Wilson Super Fund. He understood that by doing so he was permitting Ms Caddick to establish that account in his name.

3.4.2.3    Appointment of Maliver as advisor for Mr Wilson’s personal investments

79    In about August 2016 Mr Wilson decided to ask Ms Caddick to invest his personal savings in the same way as she was already doing for the Wilson Super Fund. Mr Wilson recalls he made his decision to do this after reviewing the CommSec printouts he had regularly received from Ms Caddick in relation to the performance of the Wilson Super Fund, noting that the returns were significantly better than those for his personal share portfolio which he was managing himself.

80    On 22 August 2016 Ms Caddick sent an email to Mr Wilson which included:

lovely chatting with you earlier today.

I have put together a short form recommendation for you. What I mean by short, is that I haven’t included the FSG, renumeration (sic) structure as you are an existing client and the service you will receive on this additional portfolio will be same as current. However, if you are not satisfied with the service received or wish to change the regularity of reporting please don’t hesitate to discuss with me.

I have had a look at my diary, presently I am available to meet with you as follows:

...

Attached to the email was a document on Maliver letterhead bearing an AFSL number [REDACTED] which set out a proposed asset allocation for an initial contribution by Mr Wilson of $200,000 for four Australian listed securities and recommended fund allocation ranges for each security.

81    At the time Mr Wilson was using CMC Markets as his stockbroker which required him to have a Bankwest trading account connected to its platform. When Ms Caddick agreed to manage his personal investments, Mr Wilson set about liquidating his shares held on the CMC Markets platform so that he could transfer a sum of money to Ms Caddick for the purposes of her trading on his behalf.

82    Although Mr Wilson can no longer recall the exact date, he met with Ms Caddick on a date after 23 August 2016 at which time, he recalls, he signed documents.

83    On 30 August 2016 Mr Wilson signed documents provided to him by Ms Caddick in relation to the establishment of what he understood was to be his personal investment portfolio. Included with those documents was a letter authorising Ms Caddick “to establish a CommSec Trading Account in the name of [Mr Wilson] under the Corporate Entity of [Maliver]”. On the same day Mr Wilson paid $260,000, by way of cheque, to Maliver to be invested on his behalf.

3.4.2.4    Moneys invested

84    According to Mr Wilson, in the period from 10 June 2015 to 18 March 2020 he transferred a total of $1.32 million to Maliver comprising:

(1)    $630,000 by way of contribution to the Wilson Super Fund; and

(2)    $690,000 for his personal share portfolio.

85    Mr Wilson made each of the payments referred to in the preceding paragraph based on what Ms Caddick had told him at the meeting on 6 May 2015 and the documents subsequently provided to him. He understood that Ms Caddick or Maliver would invest the funds on his behalf and on behalf of the Wilson Super Fund. Mr Wilson would not have transferred any money to Ms Caddick or Maliver had he known that those monies were not to be invested in that way. Mr Wilson also understood that Ms Caddick would transfer the money from the Maliver account to a CDI Account which she had established in his name and which was linked to a CommSec trading account also established in his name. He understood that upon transferring the money from the CDI Account to the CommSec trading account Ms Caddick would buy and sell shares on his behalf for the purposes of receiving a return on the invested funds.

3.4.2.5    Maliver’s management of the investments

86    Mr Wilson had the following interactions for the purpose of Maliver’s management of both his personal investments and those made by the Wilson Super Fund:

(1)    on 11 May 2016, he met with Ms Caddick for his first annual meeting to discuss the Wilson Super Fund. At the meeting he authorised Ms Caddick to pay the yearly management fee by electronic funds transfer;

(2)    in about May 2016, a “Tax Receipt” dated 9 May 2016 was issued for yearly management fees charged by Maliver to the Wilson Super Fund which was as follows:

(3)    on 20 July 2016, Mr Wilson received an email from Ms Caddick attaching end of year financial year documentation for his records and for provision to his accountant;

(4)    in about February 2017, Mr Wilson signed documents authorising Edmond Ong of Superannuation Accounting Services Pty Ltd to complete the annual accounting and auditing for the Wilson Super Fund and authorising Mr Ong to direct all correspondence to Ms Caddick;

(5)    on 5 June 2017 Mr Wilson attended an annual meeting with Ms Caddick;

(6)    in about June 2017 Mr Wilson was issued with two tax invoices dated 5 June 2017 from Maliver for yearly management fees for:

(a)    the Wilson Super Fund. The tax invoice was in substantially the same form as the document set out at [86(2)] above but stated that the funds invested by the Wilson Super Fund had a market value of $721,436.20 as at 5 June 2017 and provided for a management fee, based on that sum, of $5,951.58 (incl GST);

(b)    his personal investment. Once again the tax invoice was in substantially the same form as that set out at [86(2)] above but stated that the funds Mr Wilson had invested had a market value of $307,809.30 as at 28 April 2017 and provided for a management fee, based on that amount, of $2,539.51 (incl GST);

(7)    on 5 June 2017 Mr Wilson received tax receipts dated 5 June 2017 for payment of the management fees referred to at [86(6)] above;

(8)    between July and September 2017 Mr Wilson received copies of documents in relation to the end of year reporting being undertaken by Superannuation Accounting Services for the Wilson Super Fund;

(9)    in about April 2018 Mr Wilson received tax invoices dated 30 April 2018 from Maliver for yearly management fees for the Wilson Super Fund and for his personal investments. Once again those tax invoices were in substantially the same form as set out at [86(2)] above. The invoice for the Wilson Super Fund stated that the funds invested had a market value of $785,349.35 as at 30 April 2018 and, based on that amount, a management fee of $6,479.13 was payable and the invoice for Mr Wilson’s personal investments stated that the funds invested had a market value of $402,803.54 as at 30 April 2018 and, based on that amount, a management fee of $3,213.13 was payable;

(10)    on 7 May 2018 Mr Wilson attended the Caddick Residence for an annual meeting;

(11)    between July and September 2018 Mr Wilson received correspondence in relation to the end of year reporting for the Wilson Super Fund;

(12)    in about May 2019 Mr Wilson received tax invoices dated 7 May 2019 from Maliver for yearly management fees for the Wilson Super Fund and his personal investments, substantially in the form of the invoice at [86(2)] above. The tax invoice for the Wilson Super Fund stated that the funds invested had a market value of $992,950.22 as at 7 May 2019 based on which a management fee of $8,191.84 was payable and the tax invoice for Mr Wilson’s personal investment stated that the funds invested had a market value of $454,633.01 as at 7 May 2019 based on which a management fee of $3,750.72 was payable;

(13)    on 15 May 2019 Mr Wilson attended the Caddick Residence for an annual meeting;

(14)    between July 2019 and August 2019 Mr Wilson received correspondence in relation to the end of year reporting for the Wilson Super Fund;

(15)    on 30 April 2020 Mr Wilson received an email from Ms Caddick attaching tax invoices dated 30 April 2019 for Maliver’s annual portfolio management fees and Portfolio Valuations. The tax invoice for the Wilson Super Fund stated that the funds invested had a market value of $1,003,002.78 as at 30 April 2020 based on which a management fee of $8,274.77 was payable and the tax invoice for Mr Wilson’s personal investments stated the funds invested had a market value of $947,232.29 based on which a management fee of $7,814.67 was payable;

(16)    on 4 May 2020 Mr Wilson had an annual meeting with Ms Caddick which was held by telephone due to the COVID-19 pandemic; and

(17)    between July 2020 and September 2020 Mr Wilson received correspondence in relation to the end of financial year reporting for the Wilson Super Fund.

87    In the period from 2015 to 2020 Mr Wilson also received regular updates about the investments made by the Wilson Super Fund and on his own account. Those updates generally included:

(1)    printouts from the CommSec accounts set up in the name of the Wilson Super Fund and in his name, titled “Portfolio Statement” and “Transaction Summary Statement”;

(2)    a document titled “EOFY Economic Commentary” which was a four or five page document from Maliver setting out insights into the economy; and

(3)    documents sent at the end of the financial year comprising a CDI Account statement, holding statement, CommSec tax invoices and an investment strategy agreement.

88    Mr Wilson did not ask for or receive any payments from returns on his investments throughout the investment period.

89    On 30 April 2021 Mr Wilson contacted the Cronulla branch of the CBA to confirm the status of his accounts. Upon enquiring whether the two CommSec accounts and the two CDI Accounts in his name and the name of the Wilson Super Fund existed, he was informed that they did not.

3.4.3    Ms Kraft-Reid

90    Cheryl Olga Kraft-Reid is a [REDACTED].

91    Ms Kraft-Reid first became aware of Ms Caddick and her services through her sister in about December 2013. At the time her sister mentioned that Ms Caddick was running a business called Maliver, that she had invested money with Ms Caddick but that Ms Caddick was not taking on any new clients. Ms Kraft-Reid requested that her sister speak with Ms Caddick about taking her and her wife, [REDACTED] (who without meaning any disrespect and for convenience I will refer to as [REDACTED]), on as clients. Sometime after this conversation Ms Kraft-‍Reid’s sister informed her that Ms Caddick had agreed to do so. However, Ms Kraft-‍Reid did not contact Ms Caddick at that time.

92    It was not until 9 November 2015 that Ms Kraft-Reid contacted Ms Caddick by telephone to gain an understanding of the investment services she provided. Following their call Ms ‍Kraft-‍Reid received an email from Ms Caddick setting out the documents which she required her and [REDACTED] to bring to a meeting which had been scheduled, namely tax returns, superannuation statements, loan statements and cash balance. Ms Kraft-‍Reid recalls going through her files to locate these documents.

3.4.3.1    Initial meeting with Ms Caddick

93    On 10 November 2015, Ms Kraft-Reid and her wife met with Ms Caddick at the Caddick Residence. Ms Kraft-Reid recalls that during the meeting:

(1)    she asked Ms Caddick how many clients she had and what she was doing for those clients. In response Ms Caddick said words to the following effect:

I am wealthy in my own right. I don’t need to do this – I’m doing it to help people, and it’s very much restricted to family and friends. I only have about 50 clients.

(2)    she asked Ms Caddick how investing with her worked. Ms Kraft-Reid recalls that, in response, Ms Caddick said words to the following effect:

You would be investing with Maliver directly.

    And:

You need to set up a self-managed super fund and be the trustees. You then need to transfer the money from your existing superannuation accounts to Maliver. I will then use the money to trade shares on your behalf on the stock market and the income from that will grow your super fund.

There was then discussion about the possible names for the proposed self-managed super fund, the amount that they had already accumulated in superannuation at the time and the performance of Ms Kraft-Reid’s superannuation account which at the time was held with AMP. Ms Kraft-Reid recalls that Ms Caddick said words to the following effect:

I can do better than your current super with AMP.

And:

There isn’t someone like me at AMP watching the market and investing in shares to grow your super the way I can.

94    Ms Kraft-Reid recalls that she had a conversation with Ms Caddick to the following effect:

Ms Kraft-Reid:    I am sitting on about $330,000 in super and I want to retire when I’m 60. What I want is for, by that time, the amount in my super account to be comfortable.

Ms Caddick:        That is do-able.

Ms Kraft-Reid:    I have 15 years to work and as close to one million would be great for me. I would be willing to go a bit higher in risk to get that.

Ms Caddick:        That is achievable.

Ms Kraft-Reid:    [My wife] and I would like to live off the growth of our super, not the principal.

Ms Caddick:        That is absolutely possible.

95    The conversation then turned to compliance issues. Ms Kraft-Reid said words to the following effect:

Because we would be the trustees on the super fund but you would be operating on our behalf, how would be sure you would be meeting all the compliance requirements for a self-managed super fund?

In response Ms Caddick opened the cupboards in her office to show Ms Kraft-Reid folders relating to investments made by her family members, including their contents. Ms Kraft-Reid was left with the impression that Ms Caddick’s filing system was meticulous and efficient.

96    Ms Caddick also informed Ms Kraft-Reid that there would be an auditor, its role and the annual fee that the auditor would charge. Ms Kraft-Reid recalls asking in relation to the auditor “what do they check”. In response Ms Caddick said words to the following effect:

They check I’m managing your fund because you’re the trustees and I would be operating on your behalf.

And:

They will check the transfers from your existing super funds to Maliver, that all required taxes are being paid, and the money from my trading is going back into the self-managed super fund account.

And:

They will check Maliver’s trading and management of your account is meeting all the requirements.

97    Ms Kraft-Reid understood that their Maliver managed superannuation fund account would be separate to the bank account which she and her wife would have to set up as trustees of their self-‍managed super fund and into which funds from their existing superannuation accounts would be transferred.

98    Ms Kraft-Reid recalls that she and her wife asked further questions about the work of the auditor. In response, Ms Caddick took another client file and showed them some of the auditor’s reports that had been prepared for that client, including a compliance check list.

99    Ms Kraft-Reid recalls that there were three chairs and a long table in Ms Caddick’s office and that Ms Caddick showed her and [REDACTED] her set up. Ms Kraft-Reid observed that there were two very large screens on Ms Caddick’s desk: one showing the CommSec platform and the other showing what Ms Kraft-Reid understood to be the ASX. Ms Kraft-Reid told Ms Caddick that she had a personal CommSec account because she traded shares herself and inquired whether Ms Caddick could invest on her behalf through that account. Ms Caddick said that she could not and that she would set up an account for Ms Kraft-Reid.

100    During the meeting Ms Caddick provided Ms Kraft-Reid with the following documents in a plastic folder: a Maliver FSG (Verison 1.3 – August 2014) bearing AFSL [REDACTED]; a five-page document bearing a handwritten annotation “SAMPLE CLIENT REPORT”; a two-page document titled “PROPOSED ASSET ALLOCATION & MANAGEMENT RULES FOR CLIENT & ADVISER”; and a three-page document titled “APPOINTMENT & IMPLEMENTATION OF MALIVER PTY LTD AS YOUR ADVISER” which displayed at the bottom of each page “Maliver Pty Ltd (AFSL [REDACTED]) – Implementation, Fees, Brokerage, Vision, Value”.

101    Ms Caddick informed Ms Kraft-Reid that Maliver would be remunerated by way of an annual fee of 0.75% on the total funds under management and that there would be a brokerage fee of $100 for trades.

102    Ms Kraft-Reid recalls that [REDACTED] inquired of Ms Caddick whether she was insured to which Ms Caddick responded “of course” and referred them to page 6 of the Maliver FSG. Under the heading “Resolution of Complaints” included on that page is information about the Financial Ombudsman Service Limited and ASIC. A section titled “Compensation Arrangements” appearing on page 7 of the Maliver FSG includes the following:

Maliver is covered by professional indemnity insurance satisfying the requirement under the Corporations Act for compensation arrangements. This cover is designed to compensate retail clients for losses they suffer as a result of a breach by Maliver in the obligations outlined in the Corporations Act.

103    During the meeting Ms Caddick started to complete a “fact finder” document which was about Ms Kraft-Reid’s and [REDACTED]’s reasons for investing and assessment of their risk tolerance. Ms Kraft-Reid and [REDACTED] took the document with them and completed it over that afternoon and the following day and returned it to Ms Caddick.

104    Ms Kraft-Reid recalls that at the conclusion of the meeting Ms Caddick summarised her answers to questions that she had asked throughout the meeting, including in relation to the steps involved in establishing a self-managed super fund and applying for a tax file number (TFN), ABN and bank account. Ms Caddick told Ms Kraft-Reid and [REDACTED] that they should arrange to meet her at the bank to go through how to open the necessary account and they discussed when to transfer money from their existing individual superannuation accounts to Maliver, the paperwork involved and Ms Caddick’s role in the paperwork.

3.4.3.2    The decision to invest with Maliver

105    Following their meeting Ms Kraft-Reid and her wife decided to invest approximately $440,000 of their superannuation with Ms Caddick. That decision was based on: Ms Caddick’s qualifications listed on pages 2 and 3 of the Maliver FSG; Ms Kraft-Reid’s belief that there was independent oversight of Ms Caddick’s business based on the audit reports that Ms Caddick had shown her in the course of their meeting and the section at pages 6-7 of the Maliver FSG on complaint handling and compensation; Ms Caddick’s apparent high level of organisation and efficiency, which Ms Kraft-Reid inferred from her observations of Ms ‍Caddick’s office set up and files; the fact that Ms Caddick had been closely linked to Ms ‍Kraft-Reid’s family for about 25 years, having been close friends with her sister, who had invested with her, as had her brother; and Ms Caddick’s remarks to the effect that her management of their self-managed super fund would make Ms Kraft-Reid’s retirement at 60 “doable” and that growth in her superannuation to about $1 million was “achievable”.

106    Having made the decision to proceed, Ms Kraft-Reid and her wife rang Ms Caddick to inform her that they would like her to manage their superannuation fund. Ms Caddick informed them that she would send them some documents to sign, including a trust deed.

3.4.3.3    Establishment of the self-managed superannuation fund and associated bank account

107    Ms Kraft-Reid set about working with Ms Caddick to set up the [REDACTED] (Kraft-Reid Super Fund):

(1)    on 2 February 2016, Ms Kraft-Reid signed a letter, which had been drafted by Ms Caddick, addressed to Edmond Ong of Superannuation Accounting Services which enclosed a completed Superannuation Accounting Services form titled “Set-up a new SMSF” for the establishment of the Kraft-Reid Super Fund. The form was signed by Ms Kraft-Reid and her wife and dated 11 October 2015. The covering letter also provided:

Please be advised that we request all correspondence in regards to establishing, conducting the annual compliance service, notice of TFN and ABN together with all ATO notices for the [Kraft-Reid Super Fund] be forwarded to:

Primary Contact Details

Mrs Melissa Caddick

PO Box W4

WATSONS BAY NSW 2030

…

Please note that Melissa will be responsible for providing Superannuation Accounting Services with EOFY documentation to enable completion of accounts. If you have any queries during this period please refer all enquiries to Melissa.

Melissa looks forward to receiving the Trust Deed for the [Kraft-Reid Super Fund].

(2)    on 10 February 2016 Ms Caddick sent an email to Ms Kraft-Reid reporting that she had received the trust deed for the Kraft-Reid Super Fund and that a pack of documents was being sent for her and her wife’s signature and return. Ms Caddick also noted that she was awaiting the TFN and ABN;

(3)    upon receipt of the pack of documents referred to in the preceding subparagraph, Ms Kraft-Reid and her wife signed and returned them to Ms Caddick. They were a document titled “[REDACTED] application for membership”, a deed poll, a document titled “resolution of the trustees of the [REDACTED]”, a trustee declaration and a superannuation trust deed;

(4)    on 2 March 2016 Ms Kraft-Reid was informed by email from Ms Caddick that she had received the TFN and ABN for Kraft-Reid Super Fund and that the next step was to establish a bank account.

108    On 22 March 2016 Ms Kraft-Reid and her wife attended the Five Dock branch of the CBA with Ms Caddick for the purposes of establishing a CDI Account. Ms Kraft-Reid describes her time at the bank setting up the account in some detail. Among other things, she recalls that:

(1)    Ms Caddick explained that the purpose of the account in words to the following effect:

We need a bank account associated with the SMSF to facilitate the transfer of the money. To release money from your super account it will have to go to another account affiliated with the SMSF.

And:

The money in the account will used to pay fees.

And:

You will need a cheque book and a deposit book.

(2)    she was clear that she and her wife did not want Ms Caddick to have the authority to withdraw or transfer any money without their signatures; and

(3)    when setting up the mailing address to receive correspondence Ms Caddick said that “it would be better for it to go to my PO Box at Watson’s Bay. Then every month I’ll send you the account statements”. Ms Kraft-Reid does not recall having any concerns about this because, as part of the account set up, she arranged for the new account to be added to her existing CBA Net Bank portal which would enable her to check the account online whenever she wished. Accordingly, she nominated Maliver’s post office box as the mailing address for the account as suggested by Ms Caddick.

109    The CDI account styled “Kraft-Reid Super Fund Account” (Kraft-Reid CDI Account) was used as a conduit for transferring funds from Ms Kraft-Reid’s and her wife’s pre-existing superannuation funds to Maliver. At the time, their existing superannuation funds redeemed their investments by depositing the funds into the Kraft-Reid CDI Account. Between April and June 2016, following the rollover of funds from their existing superannuation funds as described below, Ms Kraft-Reid made out three cheques for a total of $440,000 from the Kraft-‍Reid CDI Account to Maliver and posted those cheques to it at its post office box address.

110    In October 2018 Ms Kraft-Reid electronically transferred a further $50,000 from the Kraft-‍Reid CDI Account to Maliver’s account.

3.4.3.4    Rollover of funds to the Kraft-Reid Super Fund

111    On 23 March 2016 Ms Caddick sent an email to Ms Kraft-Reid and [REDACTED] which, among other things, attached documents from AMP for signature by Ms Kraft-Reid for the purpose of effecting a rollover of the funds in her superannuation account held with AMP to the newly established Kraft-Reid Super Fund. Ms Kraft-Reid signed and returned the documents on 27 March 2016.

112    On 15 April 2016 Ms Caddick sent an email to Ms Kraft-Reid and [REDACTED] which included:

Attached please find documentation in relation to [REDACTED]’s [REDACTED] Redemption.

We banked the cheque today to the SMSF CBA bank account.

Please retain a copy of this on file.

Once the funds have cleared (allow up to 3 business days), please draw a cheque as follows:

Maliver Pty Limited $100,000.00

You can return this to me in one of the Express Post Envelopes that I sent to you earlier this week.

Upon receipt I shall attend to establishing the SMSF trading accounts.

Prior to establishment of the Kraft-Reid Super Fund, [REDACTED] superannuation was held with [REDACTED].

113    On 19 April 2016, Ms Kraft-Reid sent a cheque drawn on the Kraft-Reid CDI Account for $100,000 to Maliver. Ms Caddick confirmed receipt of the cheque by email dated 23 April 2016.

114    By email dated 24 April 2016 Ms Kraft-Reid informed Ms Caddick that her “super has moved into our account” and that “$338,977.30 was deposited on the (sic) 22 April”. This represented the amount rolled over from Ms Kraft-Reid’s AMP account. In response Ms Caddick sent an email which included:

Please draw a cheque for $300,000.00 payable to Maliver Pty Limited.

Forward in one of the Express post envelopes I sent to you.

Upon receipt I shall advise and establish the trading account. We are very very close to getting fully set up and operational!

Ms Kraft-Reid understood the reference to “establish the trading account” to mean that Ms Caddick would establish a CommSec account in the name of the Kraft-Reid Super Fund for the purposes of using the fund’s assets to buy and sell shares on behalf of her wife and herself.

115    On or about 26 April 2016, Ms Kraft-Reid wrote a cheque for $300,000 in favour of Maliver and posted it to Maliver at its post office box address.

116    On 28 April 2016, Ms Kraft-Reid received an email from Ms Caddick which included:

please be advised that we have today received cheque for $300,000.00 and this has been banked.

Once the funds are cleared we will attend to placing in the market.

Based on what Ms Caddick had told her during their initial meeting, Ms Kraft-Reid understood that when Ms Caddick used the words “placing in the market” this meant she would start buying shares and using those funds in the share market.

3.4.3.5    Ongoing relationship and dealings with Maliver

117    In about May 2016 Ms Kraft-Reid and [REDACTED] met with Ms Caddick at the Caddick Residence for an annual meeting. During that meeting they discussed the amount that [REDACTED] would be able to withdraw from the Kraft-Reid Super Fund as a monthly pension payment once she retired. Ms Kraft-Reid recalls that they had a conversation to the following effect:

[REDACTED]:    How much can I take?

Ms Caddick:    How much would you like?

[REDACTED]:    $1,100 per month

Ms Caddick:    We’ll that’s achievable

[REDACTED]:    Is there a maximum I can take out before I start getting taxed?

Ms Kraft-Reid could not recall Ms Caddick’s answer to the last question posed but does recall that during the meeting it was agreed that [REDACTED] would take $1,200 a month.

118    [REDACTED] retired in July 2017 and, from that point on, Maliver deposited monthly pension payments for her into the Kraft-Reid CDI Account.

119    During the meeting referred to at [117] above, Ms Caddick provided a handwritten note to Ms Kraft-Reid and [REDACTED]. The note set out the following:

1.    [REDACTED] – set up a $200 p/m direct debit to SMSF CBA investment acct.

2.    Ch/Fa - $40,000 to be drawn via cheque to Maliver - express post envelope.

3.    call Adam

120    Ms Kraft-Reid understood this note in the following way:

(1)    by the first point [REDACTED] was to set up a direct debit from her company bank account to the Kraft-Reid CDI Account which would be contributions to her superannuation. Those funds would then be transferred to Maliver. In fact from 17 June 2016 to 17 April 2017, on the 17th day of each month, $200 from [REDACTED]’s company account was transferred into the Kraft-Reid CDI Account. Those funds remained in the Kraft-Reid CDI Account and were never transferred to Maliver;

(2)    by the second point Ms Kraft-Reid understood that, as a further $40,000 had been rolled over from AMP and deposited into the Kraft-Reid CDI Account, she or [REDACTED] should write a cheque for $40,000 to Maliver and send it by express post to Ms Caddick; and

(3)    by the third point Ms Kraft-Reid understood that she should call their accountant, Adam ‍Murphy, to inform him that [REDACTED] was retiring so that he could arrange [REDACTED]’s affairs and ensure that everything else was ready for her to do so.

121    Maliver continued to manage the Kraft-Reid Super Fund’s investments. Ms Kraft-Reid sets out correspondence received from, and other interactions with, Ms Caddick in relation to those investments commencing in June 2016 as follows:

(1)    on 6 June 2016 Ms Kraft-Reid received a copy of a statement for the Kraft-Reid CDI Account for May 2016 which showed a balance of $50,672.29;

(2)    on 3 July 2016 Ms Kraft-Reid requested Ms Caddick to withdraw $35,000 from the Kraft-‍Reid Super Fund and that it be paid into [REDACTED]’s personal account to enable [REDACTED] to purchase a car. Ms Caddick replied by email of the same date which included:

Just as a thought, I have had a look at your CBA DIA account we set up together at Five Dock. As at 31 May the account balance was $50,672.29.

I am about to send out the 30 June 2016 Portfolio Valuations. You will see that I did commence purchasing for your fund last week and am still sitting on approx $150k cash.

I’d suggest at this time do an EFT from the CBA DIA. BSB [REDACTED] Account No.: [REDACTED].

Let me know your thoughts.

(3)    by email dated 18 July 2016 Ms Caddick provided three letters in relation to the $200 monthly contributions to be made by [REDACTED] into the Kraft-Reid Super Fund for signing by [REDACTED] and return to her;

(4)    under cover of a letter dated 25 October 2016 from Maliver, Ms Kraft-Reid was provided with a “Rollover cheque from AMP for the amount of $2,796.29, together with a copy of the original AMP Rollover Benefit Statement” and asked to deposit the cheque into the Kraft-Reid CDI Account;

(5)    by email dated 29 May 2017 Ms Caddick provided the “yearly invoice”. The attached tax invoice was issued by Maliver and was for “Yearly Review & Portfolio Management Fee” at “0.75% of Funds Under Management”. It included:

Initial Investment     $ 440,000.00

Market Value @     $ 495,880.00

Total (ex-GST)         $ 3,719.10

GST 10%         $ 371.91

Invoice Total         $ 4,091.01

(6)    on 18 May 2017 Ms  Kraft-Reid and her wife attended an annual review with Ms Caddick at the Caddick Residence;

(7)    on 8 July 2017 Ms Kraft-Reid received an email from Ms Caddick informing her that she had “facilitated the transfer of $15,000.00 from the CBA trading account to [her  wife’s] CBA working cash account” as the pension payment for [REDACTED] for the 2017-‍2018 year;

(8)    on 11 April 2018 Ms Kraft-Reid received an email from Ms Caddick attaching a tax receipt for payment of Maliver’s annual fee which stated that the funds invested currently had a market value of $520,580 and that the management fee of 0.75% had been calculated based on that sum;

(9)    on 30 September 2018 Ms Kraft-Reid and Ms Caddick exchanged emails. Ms Kraft-‍Reid inquired whether the sum of $50,000 she had transferred from her superannuation held with AMP to the Kraft-Reid CDI Account should be left there or should be “put to use in investments”. Ms Caddick responded that “[w]e can certainly place the funds in the market” and provided details of Maliver’s bank account to facilitate transfer by EFT;

(10)    on 15 April 2019 Ms Kraft-Reid received an email from Ms Caddick attaching a tax receipt for payment of Maliver’s annual fee services which stated that the funds invested had a market value as at 5 April 2019 of $715,900 and that a 0.75% management fee had been charged based on that figure;

(11)    on 15 October 2019 Ms Caddick sent an email to Ms Kraft-Reid and her wife which included:

just a heads up, I have liquidated APT from the portfolios. The reason being there have been a few negative reports out in the past 2 weeks. One of the found (sic) directors has left and now has the ability to dump his stock and 2 analyst reports are siting (sic) it as very over valued and could decrease by 50% in the next 12 months. Thought it better to lock in profit than for it go backwards.

(12)    on 27 April 2020 Ms Kraft-Reid received an email from Ms Caddick attaching a “portfolio valuation and yearly tax invoice for our telephone meeting scheduled on Wednesday 29 April 2020 @ 11am”. The Portfolio Valuation for April 2020 and tax invoice showed that as at 27 April 2020 the market value of the Kraft-Reid Super Fund’s investment with Maliver was $814,050. The tax invoice calculated a fee of 0.75% plus GST on that amount payable for services provided by Maliver;

(13)    on 29 April 2020 Ms Kraft-Reid and her wife participated in a telephone call with Ms Caddick in which they discussed transferring [REDACTED]’s pension payments in a lump sum of $30,000 to the Kraft-Reid CDI Account for the period July 2020 to June 2021. Later that day Ms Caddick confirmed by email that the transfer had been effected;

(14)    by email dated 24 August 2020 Ms Caddick informed Ms Kraft-Reid that:

we have spoken with AMP this morning.

Your account balance as at 20 August 2020 is $49,102.46.

What I suggest is that we transfer $40,000.00 to the self managed superannuation fund. Retaining a balance of $9,102.46 so as to retain all your current insurances.

We will complete the forms and send to you via express post to sign and return in an enclosed express post envelope.

(15)    in about September 2020 Ms Kraft-Reid and [REDACTED] participated in a telephone call with Ms Caddick during which they discussed the value of their portfolio, which was about $922,000, and the shares in which Ms Caddick had invested, how particular companies were doing well, the sale of their Afterpay shares during the previous period, Ms Kraft-‍Reid’s plans for retiring in seven years and that they were on track to do so with their portfolio potentially being valued at $1 million plus, [REDACTED]’s annual drawdown being left at $2,000 per month with Ms Caddick confirming, in response to [REDACTED]’s inquiry, that she was only drawing down the investment growth and not the superannuation base and their agreement to carry on “as is” with no new changes or investments.

122    Ms Kraft-Reid also notes that over the period she invested the funds of the Kraft-Reid Super Fund with Maliver, she received Portfolios Valuations and copies of account statements for the Kraft-Reid CDI Account.

123    On Monday 30 November 2020, after there had been media coverage about Ms Caddick, Ms Kraft-Reid contacted CommSec to inquire about their trading account, During her conversation, the representative of CommSec with whom she spoke said words to the following effect:

The numbers aren’t real.

And:

Your account doesn’t exist.

124    In total Ms Kraft-Reid and her wife invested $490,000 with Maliver, [REDACTED] received the sum of $123,200 and they are therefore out of pocket in the sum of $366,800. In addition Ms ‍Kraft-‍Reid and [REDACTED] have paid $9,469.99 to the Australian Taxation Office (ATO), $7,490 to Superannuation Accounting Services and $21,007.89 to Maliver in management fees.

3.4.4    Mrs Coetzee

125    Susan Margaret Coetzee was also a client of Maliver. She is married to [REDACTED].

126    In 2009 Mr and Mrs Coetzee purchased a [REDACTED] business. Mrs Coetzee has worked at that business since that time as an office assistant.

127    Mr and Mrs Coetzee lived in the same part of Sydney as Ms Caddick’s parents who they first met in 1997 and with whom they became friends. It was through that connection that they first met Ms Caddick around Christmas time in 1998 when attending a function at her parents’ home. Over the years Mrs Coetzee would see Ms Caddick socially at various events organised by her parents.

128    From Mrs Coetzee’s interactions with Ms Caddick’s mother, she became aware that Ms Caddick was working in financial advice and funds management and that she had been a partner at Wise Financial but had sold her shares in the business to her then business partner.

129    In about 2014 Mrs Coetzee became aware that Ms Caddick was providing financial advice services. She understood that Ms Caddick would be able to assist her and her husband by managing the investments of their self-managed super fund, [REDACTED] (TC Super Fund). Based on her discussions with Ms Caddick’s parents, she understood that Ms Caddick offered a tailored service, offering financial and investment services to a small client base.

3.4.4.1    Initial meeting with Ms Caddick

130    In about October 2014 Mrs Coetzee received a call from Ms Caddick during which Ms Caddick said words to the following effect:

I have an opportunity to take on more investors and wanted to offer an investment opportunity to you and [your husband]. Mum mentioned to me that you may be interested.

Thereafter Mrs Coetzee discussed the opportunity with her husband and set up a meeting with Ms Caddick.

131    Mr and Mrs Coetzee met with Ms Caddick on 23 October 2014. At the time Mrs Coetzee provided Ms Caddick with information about the TC Super Fund and informed Ms Caddick that her husband intended to retire within 10 years and that they were looking to build up their superannuation to facilitate retirement. At the time of this meeting TC Super Fund had approximately $917,000 in assets held mainly in cash with a small proportion held in shares. Mrs Coetzee recalls that during the meeting she had a conversation with Ms Caddick to the following effect:

Mrs Coetzee:    [My husband] and I have been thinking of investing in property rather than shares, what do you think about that?

Ms Caddick:    I would advise against investing in property. You can expect much better returns when investing in shares. When investing in shares you have much more flexibility, and the asset can be liquidated quickly. As you are approaching retirement, I would strongly advise you to invest in shares, rather than in property.

132    Mrs Coetzee also recalls that during the meeting Ms Caddick discussed the benefits of investing a greater proportion of TC Super Fund’s assets in shares. She recalls they had a conversation to the following effect:

Ms Caddick:    You currently only have approximately 15% of your super fund’s assets allocated to shares. At the moment, the cash assets in the fund are not giving you a good return. I would suggest that you allocate 70-‍80% of the fund’s assets towards purchasing shares. This approach will offer you a significantly better return on your investment. Giving (sic) that you are looking to retire you will want to take advantage of that.

Mr Coetzee:    I think at this stage, we want to invest more in shares, but we would only want to invest 50% of the fund’s assets in shares which is $450,000.

Mrs Coetzee:    Yes, I think for the time being, let’s start with 50% and we will see how that goes.

Ms Caddick:    That’s fine, we can discuss this again down the road.

133    During the meeting Ms Caddick also advised Mr and Mrs Coetzee that she would charge an annual management fee which would equate to 0.50% of their total holding.

134    At the conclusion of the meeting Mr and Mrs Coetzee agreed to retain Ms Caddick’s services. Mrs Coetzee recalls that Ms Caddick gave her a form to sign, although she cannot recall what it was, and told them that further paperwork would be provided via email.

3.4.4.2    Engagement of Maliver as financial advisor

135    On 27 October 2014 Ms Caddick sent an email to Mrs Coetzee titled “Financial Advice” which included:

attached please find Financial Advice based on our meeting held last Thursday 23 October 2014.

The document is somewhat lengthy and includes all authorities together with blank Binding Death Benefit Nominations for [REDACTED] if required.

Please don’t hesitate to contact me with any queries prior to our next scheduled meeting on Thursday 6 November 2014. I will have the original document together with authorities that we may review and sign together.

I look forward to meeting with you then and proceeding to implementation.

Hoping you are both well and had a lovely albeit very hot weekend.

Attached to the email were the following documents:

(1)    a file note of the meeting held on 23 October 2014 on Maliver letterhead bearing AFSL [REDACTED];

(2)    a death benefit nominations form;

(3)    an authority letter to Maliver dated 6 November 2014 authorising Ms Caddick to establish a CommSec account in the name of TC Super Fund and Mr Coetzee;

(4)    a proposed asset allocation for each of TC Super Fund and Mr Coetzee dated 27 October 2014;

(5)    a copy of the Maliver management rules which recorded on each page AFSL [REDACTED];

(6)    a Maliver FSG dated August 2014; and

(7)    an acknowledgement and engagement letter addressed to Maliver dated 6 November 2014.

136    Mrs Coetzee makes the following observations:

(1)    she recalls seeing the AFSL number and finding it in the file note and financial services guide attached to the email referred to in the preceding paragraph. She says that having seen this she assumed that Maliver and Ms Caddick had the necessary licence to carry out the services to be provided; and

(2)    the information sheet attached to the email indicated a 0.50% management fee. Mrs Coetzee said that this was usually invoiced after they had their annual meeting with Ms Caddick each year and paid directly, rather than being deducted from their investment.

137    Upon reviewing the documents attached to the email sent on 27 October 2014 Mr and Mrs Coetzee signed the authorities from TC Super Fund to CommSec and Maliver, the proposed asset allocation document for the TC Super Fund and the acknowledgment and engagement letter addressed to Maliver and returned those documents to Ms Caddick.

138    Prior to investing with Ms Caddick and Maliver, Mr and Mrs Coetzee had obtained advice and agreed to change the trustee of the TC Super Fund to [REDACTED]. After making the change in trustee they applied to Macquarie Bank Limited for the issue of a new cheque book for the [REDACTED] held with that bank reflecting the change. It was agreed with Ms Caddick that this account would be used to transfer funds to and from Maliver as required. As a new cheque book had not arrived by 6 November 2014, the proposed further meeting with Ms Caddick scheduled to take place on that day was postponed. However, as Mr and Mrs Coetzee had signed all the requisite authorities and disclosure forms, Ms Caddick collected the documents from them and subsequently confirmed their receipt by email dated 7 November 2014.

139    On about 20 November 2014 Mrs Coetzee received the new cheque book from Macquarie Bank and drew a cheque in the sum of $450,000 which Ms Caddick collected that afternoon.

140    On 26 November 2014 Mrs Coetzee received an email from Ms Caddick which relevantly included:

Just letting you know that the accounts have been established and I have commenced purchasing stocks.

As end of month is later this week I will forward you the reports then as currently a work in progress.

3.4.4.3    Ongoing relationship

141    Mrs Coetzee never received confirmation from the CBA that a CommSec account had been established but she assumed that it had from the monthly reports emailed to her by Ms Caddick which included the CommSec account details. Mrs Coetzee did not have access to the CommSec account and did not speak to the CBA about it prior to 27 November 2020.

142    Mrs Coetzee believed, based on the monthly reports she received from Ms Caddick, that their money had been transferred to the CommSec account for the purpose of share trading and that all returns from trades went straight to the CommSec account. Relevantly, at the end of each month Ms Caddick would send an email to Mrs Coetzee attaching reports about the investments with Maliver, namely a Portfolio Valuation. Upon receiving the reports it was Mrs Coetzee’s practice to review them with Mr Coetzee. The reports, some of which were in evidence before me, were in the same form as set out at [31] above.

143    Mrs Coetzee trusted Ms Caddick to make changes to the TC Super Fund share portfolio as she saw fit. From time to time Ms Caddick would call her to discuss changes she proposed to make to the share portfolio and, at the end of each financial year, Ms Caddick would provide her with an investment strategy document for review and signature by her and Mr Coetzee. The investment strategy document dated 30 June 2016 was in evidence before me. It set out investment objectives, circumstances of the fund, member insurance, members’ investment profile, investment strategy, asset allocation and review and monitoring.

144    Apart from the monthly reports, once a year Ms Caddick sent Mrs Coetzee an “Economic Insights Document” summarising her views on the market for the preceding 12 months. In addition, from 2014 until 2020, at the end of each financial year Ms Caddick sent Mrs Coetzee or the accountants for Mr and Mrs Coetzee an email attaching copies of the CDI Account bank statements for the financial year, the CommSec financial year summary report, holdings statements and dividend statements.

145    During the period in which Mr and Mrs Coetzee made their investments they met with Ms Caddick at least once a year to review their portfolio. These meetings took place on 26 November 2015, 21 February 2017, 4 June 2018 and 27 August 2020. As far as Mrs Coetzee can recall there was no annual meeting with Ms Caddick in 2016 or 2019. During those meetings:

(1)    Ms Caddick discussed how their investments were progressing and addressed any queries;

(2)    according to Mrs Coetzee Ms Caddick appeared to be very organised and professional and took detailed notes of their discussions. Following the meeting Ms Caddick would email a file note of their discussions to Mrs Coetzee;and

(3)    Ms Caddick would provide her annual invoice and, on some occasions, would also email a copy of the invoice to Mrs Coetzee. After payment of the invoice Mrs Coetzee would receive a tax receipt for her records.

146    Apart from their annual meetings Mr and Mrs Coetzee would intermittently meet with Ms Caddick to discuss their investments. During these meetings, Ms Caddick would often advise them to invest more money into shares.

147    Mrs Coetzee says that, having reviewed the monthly reports, within the first few months of her and her husband’s decision to invest with Ms Caddick in 2014, she was pleasantly surprised by the returns they were receiving on their investment. Upon receiving the monthly reports she would sometimes compare the number of shares and their market value in those reports against the prices listed on the ASX website. According to Mrs Coetzee she never observed any inconsistencies between the figures and, as it appeared that their investment was doing well, she and her husband wanted Ms Caddick to continue to provide them with her services. However, despite the fact that their initial investment was doing well and Ms Caddick’s suggestions to the contrary, Mrs Coetzee did not want to invest any more money into shares. They were nearing retirement and Mrs Coetzee was comfortable with the TC Super Fund having a 50% shareholding and 50% cash holding and did not wish for this allocation to change. Accordingly, they did not increase their initial investment from the original $450,000.

3.4.4.4    TC Super Fund ceases its investment with Maliver

148    On or about 19 February 2019 Mr and Mrs Coetzee had a meeting with Ms Caddick to discuss their investment plan. Mrs Coetzee does not recall what was discussed but she recalls that at the conclusion of the meeting Ms Caddick said words to the following effect:

I am concerned about how far behind your accountant is with completing the tax returns for the [TC Super Fund]. I think it best that we close your account for the time being to enable you and [Mr Coetzee] to resolve the accounting matters, once that is settled and once you and [Mr Coetzee] decide what you want to do about your retirement, we can revaluate (sic) and reinvest.

149    By email dated 21 February 2019 Ms Caddick informed Mrs Coetzee that:

as per our meeting, CBA account has been closed, an amount of $100,000.00 and $92,293.83 has been EFT’d to the Macquarie Bank Account.

We have sold total holdings of NUF, JBH, NCM & MQG all funds will be forwarded to Macquarie Bank account (see attached contract notes).

These transactions close the account that was under my adviser number.

Funds will be in Macquarie Bank account as follows:

22/2/19 $41,490.01 Sale of NUF

25/2/19 $616,607.96 Sale of JBH NCM MQG

Prior to reinvesting we need to get a plan in place on what you and [your husband] are proposing re: retirement. We will then evaluate the market and reinvest by setting up a new account that your accountant can have access to.

Have a nice afternoon.

Based on her review of the bank statements for the Macquarie Bank cash management account Mrs Coetzee observed that Ms Caddick had deposited a total of $850,391.80 into that account over the period 19 February 2019 to 25 February 2019.

3.4.4.5    TC Super Fund retains Maliver again

150    Mrs Coetzee was extremely happy with the return that she and her husband had received on their initial investment and wanted to retain Ms Caddick’s services once more. In June 2019 Mrs Coetzee contacted Ms Caddick by email about renewing their investment.

151    On 24 June 2019 Ms Caddick sent two emails to Mr and Mrs Coetzee. In the first she confirmed that she would be happy to reinvest the funds. In the second she wrote:

Happy to reinvest, however have your SMSF accounts been completed?

We would require Superannuation Accounting to do the accounts for [the TC Super Fund]. This would mean we would require a copy of the completed accounts and audit as at 30 June 2019 from you accountant.

We would require a copy of the Macquarie Bank Statement on a monthly basis so that we could conduct the monthly reconciliation of the fund. Superannuation Accounting charge $1,125 per annum to prepare the accounts and audit. We provide Superannuation Accounting with all required compliance documentation.

If you can let me know how much you would like to reinvest that would be terrific. We are currently investing into Bingo (BIN) Afterpay (APT) Macquarie (MQG) and waiting for a few other stocks to come off.

Look forward to hearing from you soon and we can make a time to catch up.

Have a good day.

152    On 4 July 2019 Mr and Mrs Coetzee met with Ms Caddick to re-establish their investment for the TC Super Fund. At that meeting they provided Ms Caddick with a series of documents and signed a retainer for Superannuation Accounting Services. On 9 July 2019, Mrs Coetzee drew a cheque in the sum of $450,000 in favour of CommSec and provided it to Ms Caddick.

153    Mrs Coetzee recalls that on 10 July 2019 Ms Caddick telephoned her and said words to the following effect:

Sue, I am very sorry but my dog has somehow gotten a hold of the cheque you gave and chewed it up, I won’t be able to deposit it.

And:

I am sorry to ask you this but would you be able to draw a replacement cheque made out to the Maliver Trust? I can come by and collect it this afternoon.

Mrs Coetzee says that she was a little taken aback by this request and had some reservations about making the cheque out to the Maliver Trust but, due to her longstanding relationship with Ms Caddick, she proceeded to make out a second cheque as requested.

154    Mrs Coetzee recalls Ms Caddick called her again on 10 July 2019 and that during that conversation she said words to the following effect:

I have commenced purchasing stocks. I will send a monthly report to you in a few weeks (sic) time.

155    From 20 July 2019 Superannuation Accounting Services was retained to prepare the annual returns for the TC Super Fund. Mrs Coetzee did not deal with Superannuation Accounting Services directly, all dealings were through Ms Caddick. On 25 August 2020 Mrs Coetzee received an email from Ms Caddick which, in turn, attached the TC Super Fund financial statements, tax return, member statements and an ATO payment slip for the 2020 financial year as well as an invoice from Superannuation Accounting Services for preparation of the accounts for the TC Super Fund for the year ended 30 June 2020. The latter document is the only invoice Mrs Coetzee has received from Superannuation Accounting Services.

156    Mrs Coetzee’s last contact with Ms Caddick was on 2 November 2020 when she received an email from her attaching a Portfolio Valuation for the month ended 30 October 2020.

157    On 27 November 2020 Mr and Mrs Coetzee attended the Kogarah branch of the CBA to access the CommSec accounts which had been set up by Ms Caddick. At the time they had a conversation with Mr Kumar, an employee of the CBA. Among other things, Mr Kumar informed them that they did “not have any records of those accounts on [their] system” and that “these accounts were never opened with us”.

158    Mr and Mrs Coetzee, via the TC Super Fund, invested a total of $900,000 with Maliver, having invested $450,000 in 2014 and a further $450,000 in July 2019. Following the sale of their share portfolio in February 2019 Mr and Mrs Coetzee received the sum of $850,391.80 from Ms Caddick. Accordingly, Mr and Mrs Coetzee are currently out of pocket in the sum of $49,608.20 and for the management fees paid to Ms Caddick in the period from 2014 to 2020.

3.5    Evidence given by officers of CommSec

159    David Campbell Smith is the head of compliance for Commonwealth Securities (referred to as CommSec) and Jennifer El-Azzi is a CommSec compliance manager. They each gave evidence.

160    CommSec is Australia’s largest online stock broking firm which, among other things, offers brokerage services through its trading platform. It opens and closes accounts on behalf of its customers and accepts instructions for the purchase and sale of securities through these accounts.

161    Mr Smith has access to and is familiar with CommSec’s computer systems and electronic databases that maintain records of account holders and documents used in the course of and for the purposes of CommSec’s business. CommSec maintains business records in its internal databases called CommSee and Customer Service Console (CSC). Mr ‍Smith explains that the CommSee systems stores, among other things, account opening and account maintenance documentation and the CSC database is used for the maintenance of trading histories, account statements and order audit trails. Relevant records are retrieved by staff by entering a customer’s identifying details, such as name or account number, into the relevant user interface. It is then possible to generate copies of records associated with the customer or the customer’s account, including the details of trades transacted on the account.

162    On 15 March 2021 ASIC provided Mr Smith with a bundle of Portfolio Valuations (i.e. ‍documents titled “Portfolio Statement” and “Transaction Summary Statement”) for particular individuals and a copy of a spreadsheet comprising 125 rows and divided into columns from A to K of which:

(1)    columns A to D set out personal information such as name, date of birth and ACN or ABN, where known and/or applicable;

(2)    columns E and F set out the identifiers for the Portfolio Valuations referrable to each individual or entity, assigned by ASIC;

(3)    columns G and H, headed respectively “Caddick Portfolio Valuation account number” and “Caddick Portfolio Valuation account name”, include the account number and account name taken from the Portfolio Valuations for each individual or entity; and

(4)    columns I, J and K , headed respectively “Does the Portfolio Valuation account number match a CommSec account number for the individual?”, “Is there a genuine CommSec account that matches the Caddick Portfolio Valuation account number?” and “Comments”, were empty.

163    Mr Smith requested Ms El-Azzi to undertake an investigation in order to complete the spreadsheet provided to him by ASIC by populating columns I, J and K with her findings. Ms El-Azzi did so by conducting searches on the CSC database and recording her findings on the spreadsheet in columns I, J and K. The completed spreadsheet was tendered in evidence. I will refer to it as Exhibit DCS-1.

164    In summary, the results of Ms El-Azzi’s investigations as recorded in Exhibit DCS-1 were as follows:

(1)    there was one instance in which the account number recorded in the Portfolio Valuation documents matched, and the account name substantially matched, the account details within the CSC database. However, the information concerning the securities held in that account as recorded in the Portfolio Valuations did not match the information on the CSC ‍database;

(2)    in most cases the account numbers recorded in the Portfolio Valuations matched a genuine CommSec account within the CSC database. However, the account details recorded in the CSC database did not match the name included in the Portfolio Valuations. That is, the account numbers in the Portfolio Valuations were genuine CommSec account numbers but the names recorded in the Portfolio Valuations for those account numbers did not match the CommSec investor recorded in the CSC database; and

(3)    in some cases the account numbers included in the Portfolio Valuations did not match any account number in the CSC database.

165    On 26 April 2021 ASIC provided Ms El-Azzi with four further sets of Portfolio Valuations for two additional investors. Ms El-Azzi conducted searches of the CSC ‍database in relation to the account number and investor name included in those additional documents. She found that, while the search results in each case returned a valid CommSec share trading account, the account details included in the CSC database for those accounts did not match the names recorded on the Portfolio Valuations provided to her.

166    Ms El-Azzi was instructed by Mr Smith to undertake a comparison of the Portfolio Valuations against documents he described as an “authentic CommSec Transaction Summary Statement” and an “authentic Portfolio Statement” (together, CommSec generated statements). The CommSec generated statements, both of which displayed details from a dummy CommSec account, were generated by Ms El-Azzi using the CSC ‍database.

167    Ms El-Azzi is not a forensic document expert and it seems that her comparison of the Portfolio Valuations and the CommSec generated statements was based on her visual inspection of the documents. For reasons that were not explained, Ms El-Azzi reported the results of her comparison exercise to Mr Smith who then gave evidence about the differences Ms El-Azzi had observed. They included:

(1)    for the transaction summary statement:

(a)    the version in the Portfolio Valuations includes the note “INT=Internet” and “BRK=Broker”. There is no such note in the CommSec generated document;

(b)    the version in the Portfolio Valuations includes the field “Payment Method for Cash Withdrawals”. This field is not included in the CommSec generated document;

(c)    the version in the Portfolio Valuations divides transactions under the headings “Total Buys” and “Total Sells”. This division does not exist in the CommSec generated document. In the latter, transactions are arranged based on the date the trade was executed beginning with the latest trade.

(2)    for the portfolio statement:

(a)    the version in the Portfolio Valuations includes a table with the fields “Contract no.”, “Transaction Date”, “Description”, “Debit”, “Credit”, “Balance” and “Closing Balance”. These categories do not exist in the CommSec generated document;

(b)    the version in the Portfolio Valuations includes the columns “Stock Code”, “Closing ($)”, “Units”, “Market Value”, “Profit ($)” and “Return (%)”. These columns do not exist in the CommSec generated document. A CommSec portfolio statement has four columns: “Code”, “Units”, “Price ($)” and “Value ($);

(c)    the version in the Portfolio Valuations displays the date and time that the statement was generated in, by way of example, the format “20/12/16 6:00 PM (Sydney time)” while a CommSec generated portfolio statement would have displayed the same date and time in the format “Thurs 20 Dec 2016 6:00PM (Sydney time)”; and

(d)    the version in the Portfolio Valuations does not include the “Share Holdings Summary Charts” which are incorporated in the CommSec portfolio statement.

168    Mr Smith concluded, based on the comparison of the characteristics of the CommSec generated documents against the Portfolio Valuations provided by ASIC undertaken by Ms El-‍Azzi, that the Portfolio Valuations provided by ASIC are not genuine.

3.6    Mr Gleeson’s evidence

169    Mr Gleeson gave evidence in his capacity as joint receiver of Ms Caddick’s property and as a provisional liquidator of Maliver in support of ASIC’s application.

170    Since the completion of the Appointees’ Reports Mr Gleeson has undertaken further work aimed at:

(1)    identifying and verifying the amounts advanced by “Investors” (as defined) prior to the incorporation of Maliver and the accounts into which those amounts were paid;

(2)    finalising the summary of the amounts advanced by “Investors” to Ms Caddick or Maliver and the amounts returned to Investors (which is recorded in Updated Annexure ‍I as to which see [180] below);

(3)    determining the extent of “false and misleading documents” supplied to Investors;

(4)    verifying Ms Caddick’s ownership of assets and ascertaining whether she holds any assets not previously identified in the Interim Receivers’ Report;

(5)    tracing what happened to “Investor Funds” (as defined) after they were received by Ms ‍Caddick or Maliver;

(6)    determining the source of deposits into Ms Caddick’s bank accounts to identify whether she had any other sources of income or assets to acquire property;

(7)    liaising with Investors/creditors; and

(8)    liaising with ASIC regarding investigations and findings.

171    Mr Gleeson says that the further tasks he has undertaken have enabled him to progress his analysis and reach conclusions in relation to Ms Caddick’s and Maliver’s assets and liabilities, in particular in relation to:

(1)    the identity of Investors, the amounts invested by them and the funds returned to them;

(2)    tracing monies used for the purchase of assets held by Ms Caddick or Maliver;

(3)    ascertaining that Ms Caddick and Maliver had no substantial income from October 2012 other than monies advanced by Investors or funds received as a result of property acquired with “Investor Funds” (as defined); and

(4)    reviewing and updating key preliminary findings in the Appointees’ Reports with a view to reaching final conclusions in respect of a number of matters.

172    Relevantly, Mr Gleeson defines:

    Investors to mean individuals, companies or self-managed super funds who advanced money to Ms Caddick and, following its incorporation, Maliver for the purpose of those funds being invested in their names, predominantly in shares, to generate financial returns; and

    Investor Funds to mean money received by Ms Caddick or Maliver from Investors, including money purportedly paid for management fees.

I will adopt these terms for the purpose of setting out Mr Gleeson’s evidence.

173    Based on his investigations Mr Gleeson has identified 37 accounts in the name of Ms Caddick or Maliver or operated by Ms Caddick. In the latter category are credit card accounts and accounts in the names of members of Ms Caddick’s family or jointly held by Ms Caddick and a member of her family. The 37 identified accounts include:

(1)    a National Australia Bank (NAB) account in the name of “ML Caddick” with BSB [REDACTED] and Account No. [REDACTED] (Caddick NAB Primary Account);

(2)    an NAB account in the name of Ms Caddick with BSB [REDACTED] and Account No. [REDACTED] (Caddick CDI Account);

(3)    an NAB account in the name of Ms Caddick with BSB [REDACTED] and Account No. [REDACTED] (Caddick 4254 NAB Account);

(4)    an NAB account in the name of Maliver with BSB [REDACTED] and Account No. [REDACTED] (Maliver NAB Primary Account);

(5)    an NAB account in the name of Maliver with BSB [REDACTED] and Account No. [REDACTED] (Maliver NAB Secondary Account);

(6)    an American Express credit card account in the name of Ms Caddick for the card ending [REDACTED] (Caddick AMEX); and

(7)    a Citibank account in the name of Adam Grimley with BSB [REDACTED] and Account No. [REDACTED] (Grimley Citibank Account).

174    Staff under Mr Gleeson’s supervision and direction analysed the bank statements in relation to the bank accounts held or controlled by Ms Caddick. That analysis sought to identify:

(1)    the source of deposits into Ms Caddick’s bank accounts for transactions generally above $5,000 on a materiality basis focussing on:

(a)    Investor Funds;

(b)    deposits from CommSec accounts;

(c)    deposits by Mr Grimley and by Ms Caddick’s parents;

(d)    the identification of any other sources of amounts paid into the accounts;

(e)    deposits from the sale of Ms Caddick’s assets;

(f)    reconciling transfers between other bank accounts controlled by Ms Caddick; and

(g)    deposits of less than $5,000 “made on a constant and prolonged basis” such as child support payments made by her former husband;

(2)    withdrawals and payments from Ms Caddick’s bank accounts of $1,000 or above on a materiality basis focussing on:

(a)    Investor repayments;

(b)    payments attributable or traced to assets such as jewellery, artworks and luxury goods;

(c)    credit card payments;

(d)    mortgage repayments;

(e)    reconciling transfers between other bank accounts controlled by Ms Caddick;

(f)    cash withdrawals/advances; and

(g)    travel expenses;

(3)    the source of deposits into Maliver’s bank accounts for transactions focussing on:

(a)    Investor Funds;

(b)    reconciling transfers between other bank accounts controlled by Ms Caddick; and

(c)    identifying whether there were other sources of funds paid into the accounts; and

(4)    withdrawals and payments from Maliver’s bank accounts of $10,000 or above on a materiality basis focussing on:

(a)    Investor repayments;

(b)    payments attributable to asset purchases;

(c)    credit card payments;

(d)    mortgage repayments; and

(e)    reconciling transfers between other bank accounts controlled by Ms Caddick.

175    Based on the analysis undertaken, the only sources of funds into the 37 identified bank accounts in the period between October 2012 and December 2020 are:

(1)    Investor Funds in the sum of $30,195,674;

(2)    net proceeds of sale from Ms Caddick’s Kensington property in about April 2014 in the amount of $430,572.81;

(3)    Ms Caddick’s parents on 7 April 2017 in the amount of $1,154,390.48;

(4)    “Hock Your Frocks” in the amount of $35,195.50 between December 2019 and November 2020;

(5)    Mr Grimley in the amount of $126,000 between November 2018 and August 2020 which are described as rental payments, $18,000 between June and October 2020 and $125,000 between August 2012 and September 2014;

(6)    Ms Caddick’s former husband in the amount of $71,398 for child support between February 2013 and October 2020; and

(7)    dividends from shares, proceeds from the sale of shares, proceeds from “Flog Your Furniture”, proceeds from the sale of a diamond ring and cash advances from credit cards.

176    Mr Gleeson sets out the following matters by way of summary:

(1)    the amounts received from “Hock Your Frocks” and the sources identified at [175(7)] above would not have been possible but for the Investor Funds received when allowing for Ms Caddick’s pattern of personal expenses between 16 October 2012 and 15 December 2020;

(2)    given the relatively insignificant amount Mr Gleeson is of the view that it is not commercially viable to further investigate whether the goods sold by Ms Caddick through “Hock Your Frocks” were purchased with Investor Funds;

(3)    the proceeds of sale from the Kensington property in about April 2014 were exhausted in meeting Ms Caddick’s living expenses or used to purchase assets, such as shares, that are no longer owned by Ms Caddick. In addition Ms Caddick used Investor Funds to pay her former husband a sum of $402,000 to satisfy her obligations under a binding financial agreement pursuant to s 90C of the Family Law Act 1975 (Cth) dated 25 January 2013;

(4)    the amount advanced by Ms Caddick’s parents was used by Ms Caddick to pay for living expenses, for purchase of a diamond ring and was transferred between accounts controlled by Ms Caddick including CBA direct investment account no [REDACTED] which was linked to a CommSec account and a CommSec US dollar account, both of which were in Ms Caddick’s name and comingled with other moneys in that account, including Investor Funds provided for the purchase of shares. However, Mr Gleeson notes that Ms Caddick’s parents assert that the funds advanced by them give rise to an entitlement to a property situated at [REDACTED] (Edgecliff Property); and

(5)    moneys paid by Mr Grimley were used by Ms Caddick to pay for her living expenses and intermingled with funds held in other accounts operated by Ms Caddick which contained Investor Funds. The extent of the intermingling of moneys in the relevant accounts means tracing has not been reasonably possible.

177    Mr Gleeson says that:

(1)    subject to the claim made by Ms Caddick’s parents in relation to the Edgecliff Property, he is able to reasonably conclude that the assets currently held by Maliver or Ms Caddick that were purchased after October 2012 were purchased using Investor ‍Funds or with the proceeds from property acquired with Investor Funds;

(2)    the view he expressed in the Interim Receivers’ Report, that most but not all of the assets held in the name of Ms Caddick have been sourced from Investor Funds, continues to be correct. There is evidence that assets such as jewellery and artworks were purchased prior to October 2012 and the receipt of Investor Funds;

(3)    at all relevant times Maliver had no source of funding other than Investor Funds and the motor vehicles acquired by it were acquired with Investor Funds; and

(4)    Maliver and Ms Caddick received the benefit of Investor Funds from 16 October 2012 and used those funds to purchase various assets.

178    Mr Gleeson’s investigations have revealed that when Investor Funds were paid either into the Grimley Citibank Account or the bank accounts of Maliver or Ms Caddick, they were used to pay for living expenses, meet mortgage payments for the Edgecliff Property and the Caddick Residence or to purchase property in the name of Maliver or Ms Caddick. Mr Gleeson says that Investor Funds were also transferred to other bank accounts controlled by Ms Caddick and that the frequent transfers between accounts means that Investor Funds have been intermingled with a number of accounts which has made it difficult to determine for what particular amounts advanced by Investors were ultimately used. In Mr ‍Gleeson’s opinion the extent of the intermingling of funds supports the conclusions in the Appointees’ Reports that Ms Caddick treated the financial affairs of Maliver and her personal affairs as one.

179    Mr Gleeson’s investigations have confirmed that Investors advanced money to Ms Caddick and, following its incorporation, Maliver for the purpose of those funds being invested in their names, principally in shares, to generate financial returns. However, that money was not so invested but, instead, was used to meet Ms Caddick’s personal expenses and to purchase assets in her name.

180    Since 15 February 2021 Mr Gleeson and his team have prepared a further detailed excel spreadsheet which updates the Investor information set out in Annexure I to the Interim Receivers’ Report. It is this document that is referred to as Updated Annexure I. Updated Annexure I sets out the Investors who contributed funds for investment with Ms Caddick or Maliver; whether the Investors invested as individuals, companies or through a self-managed superannuation fund; for each Investor, the amounts paid, including for management fees; the date on which payments were made by each Investor to Ms Caddick or Maliver; the bank accounts into which each Investor paid the relevant portion of Investor Funds; and the amounts, if any, returned to Investors by Ms Caddick or Maliver.

181    Mr Gleeson says that in summary Updated Annexure I shows that between 2 August 2011 and 11 November 2020 Investors:

(1)    advanced a total of $30,195,674 to Maliver or Ms Caddick for investment purposes;

(2)    advanced an amount of $501,784 for management fees charged by Maliver based on purported portfolio values; and

(3)    received repayments of $8,526,787.

182    Mr Gleeson observes that of the amount:

(1)    repaid to Investors (see [181(3)] above) an amount of $1,419,450 was paid to certain Investors over and above their total investment i.e. they received a profit on their total investment. In Updated Annexure I, Investors in this category have been noted as having a nil claim; and

(2)    of the amount paid for management fees (see [181(2)] above) an amount of $35,200 was paid by Investors who received a profit on their total investment. In Updated Annexure I those Investors have also been noted as having a nil claim.

183    Mr Gleeson says that, after deducting the amount repaid to Investors (excluding the profit elements referred to in the preceding paragraph), the total amount owed to the remaining Investors referred to as Out-‍Of-Pocket Investors is $23,554,921. I observe that that amount does not account for potential unjust enrichment or uncommercial transaction claims regarding any fictitious and possible inflated returns paid to investors which, as the Provisional Liquidators note, would need to be investigated in a liquidation.

184    Mr Gleeson has undertaken a tracing exercise and gives evidence explaining his analysis of the sources of funds received by Maliver and the uses to which those funds were put which underpin his conclusion that the assets held by Ms Caddick and Maliver were acquired with Investor Funds. It is only necessary to set that evidence out in relation to the acquisition of the Edgecliff Property.

3.6.1    The Edgecliff Property

185    Mr Gleeson undertook a tracing analysis in relation to the funds used to purchase the Edgecliff ‍Property and to meet payments under the loan taken out for its purchase of that property, referred to as the MC Home Loan. His analysis was undertaken by reference to three categories of funds: the deposit funds, the settlement funds and the loan repayments.

186    The contract for sale of the Edgecliff Property shows Ms Caddick as purchaser, a purchase price of $2,550,000 and a 10% deposit of $255,000.

187    On 29 November 2016 a cheque for $255,000 payable to Sotheby’s, the vendor’s agent, was drawn on the Caddick NAB Primary Account for the deposit. Mr Gleeson has identified that between the period from 22 November 2016 to 28 November 2016, prior to the drawing of that cheque, four deposits were made into the Caddick NAB Primary Account as well as the sources of the funds for those deposits.

188    The funds required to settle the purchase of the Edgecliff Property were to be funded as to:

(1)    $1.8 million from the MC Home Loan; and

(2)    $621,012.60 by Ms Caddick.

189    As to the amount provided by Ms Caddick Mr Gleeson’s investigations have revealed that on 18 January 2017 an amount of $627,813.35 was debited from the Caddick NAB Primary Account with the narration “Balance Required for Settlement”, that the balance of that account immediately prior to the withdrawal was $630,846.24 and, of that amount, $625,000 was transferred from the Maliver NAB Primary Account on 16 January 2017. In turn, the monies from the Maliver NAB Primary Account were transferred from the Maliver NAB Secondary Account.

190    Mr Gleeson’s tracing analysis shows that the monies which were transferred into the Maliver NAB Primary Account originally came from deposits in the Caddick CDI Account via the Caddick NAB Primary Account which were sourced from the sale of shares through CommSec.

191    Lastly, Mr Gleeson analysed the source of funds for payments made towards the MC Home Loan, which was an interest only loan for the first five years. It is not necessary to set out the movements in that account save to note that, according to Mr Gleeson’s analysis, monthly interest payments were accrued and were direct debited from the Caddick 4254 NAB Account which, in turn, was serviced mainly by payments from the Caddick NAB Primary Account and also from the Maliver NAB Primary Account.

192    Ms Caddick’s parents have lodged two caveats over the Edgecliff Property dated 7 and 18 December 2020 respectively. In the first caveat they claim a beneficial interest under a resulting trust arising from their payment of part of the purchase price paid by Ms Caddick on purchase of the Edgecliff Property and in the second caveat they claim, by reason of an agreement between them and Ms Caddick, an estate or interest in the Edgecliff Property as joint tenants for life or their earlier vacation of that property.

193    In a letter dated 21 December 2020 from William James (William James December Letter), Ms Caddick’s parents’ lawyers at the time, those lawyers set out the basis upon which Ms ‍Caddick’s parents make their claim to have an interest in the Edgecliff Property. Relevantly ‍that letter includes:

(1)    as to the first caveat:

In respect of the property … (the Edgecliff Property), we are instructed that:

a.    on 7 April 2017, Mr and Mrs Grimley sold the … (Connells Property) and at settlement, were provided with a bank cheque in the amount of $1,154,717.09, $1,000,000.00 of which was provided to Ms Caddick to apply in and to the purchase of the Edgecliff Property, which Mr ‍and Mrs Grimley would have an interest in with Ms Caddick. Mr and Mrs ‍Grimley were also to live in the property for the rest of their lives or until they decided to vacate the Edgecliff Property to live somewhere else, an event which has not happened. Mr and Mrs ‍Grimley have lived in the Edgecliff Property since its acquisition. To that end, please find enclosed:

a.    an email dated 28 November 2016 and attached thereto, a spreadsheet recording the source(s) of the funds to be contributed towards the purchase price of the Edgecliff Property; and

b.    a settlement statement dated 7 April 2017 in respect of the sale of the Connells Property;

b.    the $1,000,000 was applied towards the purchase price in circumstances where it was always Ms Caddick’s, and Mr and Mrs ‍Grimley’s, intention that that money be strictly for their benefit and not for the benefit of Ms Caddick in any way; and

c.    notwithstanding that Ms Caddick is the legal owner of the Edgecliff Property, it was always the intention of Ms Caddick and Mr and Mrs ‍Grimley, that Mr and Mrs Grimley own the Edgecliff Property to the extent of their respective initial contributions to the purchase price (i.e. 37.37%).

(2)    as to the second caveat:

The interest supporting the Second Caveat is borne out in the enclosed email dated 22 November 2016 from Ms Caddick to Mr Grimley. This email records the following agreement:

a.    that Mr and Mrs Grimley would contribute $1,000,000 to the purchase of the Edgecliff Property and thus, along with Ms Caddick, be owners;

b.    that Ms Caddick would remain as sole proprietor of the Edgecliff Property upon the understanding that she grants an estate or interest in the land to Mr and Mrs Grimley, as joint tenants, for life, or their earlier vacation of the land (we note that this arrangement is also reflected in clause 48 of the enclosed Last Will and Testament of Melissa Louise Caddick);

c.    that the aforementioned life interest be enjoyed, rent free, by Mr and Mrs Grimley but that on their death, or earlier vacation of the Edgecliff Property, their interest is to be left to Ms Caddick and her brother Mr Adam Grimley, as joint tenants; and

d.    that, to begin with, Ms Caddick would pay utilities and improvements in respect of the Edgecliff Property but, as a matter of fact, in respect of the utilities listed below, on and from the dates listed below, Mr and Mrs Grimley would thereafter pay same:

i.    Woollahra Municipal Council rates from 31 August 2018 to 20 November 2020 in the amount of $3,557.02;

ii.    Sydney Water charges from 24 April 2017 to 3 November 2020 in the amount of $2,472.21; and

iii.    Energy Australia gas charges from 31 January 2018 to 14 July 2020 in the amount of $1,627.06,

(please see enclosed spreadsheet outlining individual payment dates, amounts and confirmation numbers).

We also note that, although not reflected in the above agreement, Mr Adam Grimley has been satisfying the mortgage repayments in respect of the Edgecliff Property from, on or around, November 2018, in the amount of $6,000 per month. Accordingly, Mr Adam Grimley may have an interest in the property however, to what extent, we are uncertain.

    (Emphasis in original.)

194    In a letter dated 8 June 2021 from Baker McKenzie (Baker McKenzie June Letter), Ms ‍Caddicks’ parents’ current lawyers, those lawyers further elaborated on Ms Caddick’s parents’ claim regarding the Edgecliff Property. Relevantly, that letter includes:

Primary Claim: Edgecliff Property

Our clients’ primary claim is that part of the Edgecliff Property was and remains held on (constructive) trust for them. This is based on our instructions that our clients have contributed about $1,122,500 to the Edgecliff Property on the following bases.

1.    There was an agreement between our clients and Ms Caddick that they would contribute $1 million towards Ms Caddick’s purchase of the Edgecliff Property in return for a corresponding interest of at least 37.37% in the Edgecliff Property and a tenancy for life (the Agreement);

2.    In accordance with, and in reliance upon, the Agreement and Ms Caddick’s representations to the same effect as the Agreement (the Representations), our clients:

a)    sold their family home located at [REDACTED] (the Connells Point Property);

b)    paid $32,450.40 (the balance of the deposit from the sale of the Connells Point Property) to Ms Caddick towards the equity in the Edgecliff Property;

c)    paid $1 million from the sale of the Connells Point Property to Ms Caddick to be applied towards the equity in the Edgecliff Property;

d)    have resided, rent-free, in the Edgecliff Property from 17 March 2017 to date;

e)    since 22 February 2017 have paid for repairs; significant renovations to the kitchen, bathrooms and balcony; utilities and strata fees for the Edgecliff Property totalling almost $90,000.

3.    If it was not for Ms Caddick’s Representations and the Agreement, our clients would have sold the Connells Point Property in due course and purchased a more affordable property in Sydney’s southern suburbs in their own names.

    (Emphasis in original.)

195    Based on work undertaken by him, Mr Gleeson makes the following observations in relation to the Edgecliff Property and the claim made by Ms Caddick’s parents in relation to it:

(1)    Ms Caddick’s parents paid the following sums into the Caddick NAB Primary Account:

(a)    $32,450.40, being half the deposit from the sale of their property situated at Connell’s Point (Connell’s Point Property), on 3 April 2017; and

(b)    $1,154,390.48, from the sale of the Connell’s Point Property, on 7 April 2017;

(2)    the Edgecliff Property was purchased by Ms Caddick before the Connell’s Point Property was sold. Therefore Ms Caddick’s parents did not contribute to the purchase price for the Edgecliff Property;

(3)    based on his analysis of amounts paid out of the Caddick NAB Primary Account after Ms Caddick’s parents deposited $1,154,390.48 from the sale of the Connell’s Point Property in to it, that money was used by Ms Caddick to pay for living expenses and to purchase a diamond ring, was transferred between other bank accounts controlled by Ms Caddick and was comingled with other funds in that account including Investor Funds. Mr Gleeson observes that while an amount of $580,000 was paid into the MC ‍Home Loan, the same amount was withdrawn within one month, comingled with other funds and used to pay Ms Caddick’s living expenses and to fund share purchases;