Federal Court of Australia

Kim v Hodgson Faraday Pty Limited [2022] FCA 1190

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be deemed to be discontinued against the first and second respondents on and from the date of this order.

2.    The further amended originating application be dismissed.

3.    The applicant pay the third respondent’s costs as agreed or taxed.

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

REASONS FOR JUDGMENT

JAGOT J:

1.    OVERVIEW

1    The applicant is a member of a group seeking damages from the third respondent (now the only remaining respondent), Mr Yingjie (Jay) Wang, under s 12GF(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act).

2    Mr Wang was the sole director of the former first respondent, now known as a TM Index Limited. The former second respondent, TMK Index Limited, was owned by the same holding company as that which owned TM Index. The applicant and group members are residents of South Korea. As a result of certain marketing and other information provided to the group members, they invested in financial products purportedly issued by TM Index and TMK Index known as “T”, “M” or “K” financial products. They allege that TM Index and TMK Index made misleading or deceptive representations or representations likely to mislead or deceive about the investments in contravention of s 12DA of the ASIC Act. They allege that Mr Wang was involved in these contraventions and therefore is a person liable to pay damages for them as provided for in s 12GF(1) of the ASIC Act. They allege that the investments were made in reliance on the misrepresentations and members of the group suffered loss as a result.

3    TM Index and TMK Index both held Australian financial services licences (AFSLs). TM Index is in liquidation and TMK Index is de-registered. The proceeding is not pursued against TM Index or TMK Index, and on the first day of the hearing I granted leave for the applicant to discontinue the proceedings against those parties. For ease of reference, Mr Wang is still referred to as the third respondent in these reasons.

4    For the reasons that follow, I am not satisfied that Mr Wang was involved (in the requisite sense of knowing participation) in the contraventions.

2.    MR WANG, MS WEI AND MR BATTEN

2.1    Mr Wang

5    Mr Wang was born in China. He practised as a solicitor in NSW as a principal of his law firm, Wang & Associates Solicitors.

2.2    Mr Kim

6    Mr Wang accepted that the applicant, Kwangho Kim, was an honest witness, albeit that Mr Kim could not recall all details from five to seven years ago, a fact reflecting his candour. Mr Wang noted the following aspects of Mr Kim’s evidence which are not in dispute:

(a)    Mr Kim was first introduced to TM Index through Mr Shin (a long-time friend of his) and Mrs Kim (an unrelated person introduced to him by Mr Shin). All of these persons, including Mr Kim himself, were Korean;

(b)    in late January 2015, Mr Kim attended a presentation in the Gangnam district of Seoul, where he was introduced to Mr Geun Su Ha and Mrs In Sook Yoo. On this occasion, Mr Ha gave a presentation about TM Index, stating that he was an investor and that he had had a positive experience from investing in that company. Mr Ha was Korean;

(c)    following this presentation, Mr Kim undertook some research about TM Index, including watching some YouTube videos, some of which were in Korean and others were in Chinese;

(d)    Mr Kim invested in TM Index by transferring money to a bank account, the details for which he was provided. The documentary records reveal that each of the recipient bank accounts were with Korean banks: none are known Australian banks;

(e)    in May 2015, Mr Kim travelled to Manilla [sic] to attend an investor presentation, staying at the Shangri-La Hotel, the expense of which trip was paid for by others;

(f)    on that occasion, a man identified as “Mark Ryan”, the purported “CEO of TM Index”, gave a presentation, as well as a man identified as “Joshua Davison”, the purported “CEO of TMK Index”;

(g)    Mr Kim confirmed that the photograph at B1576 was a photograph of the man introduced as “Mark Ryan”;

(h)    Mr Kim confirmed that the photograph at B1579 was a photograph of both “Mark Ryan” (on the right) and “Joshua Davison” (on the left). Both of those men are clearly Caucasian. Mr Wang is Chinese;

(i)    Mr Kim confirmed that the photographs at B1587 were taken at the Manilla [sic] conference; and

(j)    the presentations delivered by “Mark Ryan” and “Joshua Davison” at the Manilla conference were delivered in English. Those presentations were then translated by Mr Se Nam Lee, who also delivered his own presentation following “Mark Ryan” and “Joshua Davison”. That person (Se Nam Lee) was Korean.

2.3    Mr Batten

7    Mr Wang also did not challenge the credit of David Batten. Mr Batten met Mr Wang in 2013. Mr Batten consulted for Mr Wang on a part-time basis from October 2014. He worked out of Level 35, St Martins Tower, 33 Market Street, Sydney. The office was the office of Forbes Capital Pty Limited, operated by Mr Wang. Mr Wang’s legal offices of Wang & Associates were located on Level 22 of the same building. Mr Batten attended the Level 35 office about two or three times a week. It was not uncommon for Mr Batten to see Ms Puimen Tang (Mr Wang’s personal assistant and practice manager of his law firm) to come up to Level 35 to see Mr Wang.

8    Mr Batten described Mr Wang as involved in the buying and selling of AFSLs (that is companies which had AFSLs) to predominantly the Asian market where Mr Wang had many contacts. Mr Batten’s job was to assess whether the entity/ies with the AFSL were in compliance with the various conditions attaching to some of those licences. His work for Mr Wang went for approximately six months. He observed that Mr Wang was frequently changing the directors of his companies or companies under his control.

9    According to Mr Batten, Mr Wang asked him in early 2015 to “find some directors and RM’s [responsible managers] for some of my companies”. Mr Batten agreed he would do so and then spoke to a former colleague, Greg Forrester from the Gold Coast in Queensland. Mr Forrester and he had worked for many years together in the finance industry. They had a conversation to the following effect:

Mr Batten:    Greg, are you available to [be] a director on a couple of dormant companies?

 Mr Forrester:    Yes, but I have some requirements.

 Mr Batten:    What are they?

Mr Forrester:    The conditions are that the companies are to remain dormant and you David are to remain involved with the compliance.

10    According to Mr Batten, he then had a conversation with Mr Wang as follows:

Mr Batten:    I found a director for your companies. But he’ll only be a director if they are not operating.

 Mr Wang:    That’s fine, they’re not operating and I’ll pay him $2,000 a month.

11    Mr Batten said that Mr Forrester was subsequently appointed director to a number of Mr Wang’s companies, including the company now known as TMK Index. Later he heard that Mr Forrester resigned directorship from all of Mr Wang’s companies due to non-payment of his fees. Mr Forrester died in 2016.

12    According to Mr Wang:

(1)    it is accepted, as was put to Mr Batten in cross-examination, that Mr Wang did ask Mr Batten to locate directors for companies associated with his clients that held an AFSL;

(2)    it is accepted that Mr Batten recalled approaching Mr Forrester about being a director of various companies, and he gave evidence as to why he recalled this approach; and

(3)    however, in relation to TMK Index specifically, Mr Wang did not ask Mr Batten to find or appoint Mr Forrester as director. This is for a number of reasons:

(a)    Mr Batten’s affidavit evidence does not rise so high;

(b)    Ms Wei (whose role is explained further below) said that she requested Mr Batten to find a director for TMK Index, albeit it was put to Ms Wei that she did not have a conversation with Mr Batten about “a TMK directorship”, which is contrary to the documentary evidence;

(c)    TMK Index was “just a run-of-the-mill” company, with nothing particularly special about that company as opposed to other companies for which Mr Batten arranged for Mr Forrester to be a director. Accordingly, it beggars belief, some seven years after the fact, that Mr Batten would have any detailed recollection of a conversation in which Mr Wang asked Mr Batten to find a director for specifically TMK Index (as opposed to a general conversation about finding persons to act as directors of companies associated with his clients);

(d)    Mr Batten did not keep any file notes of conversations and understandably, was unable to recall emails about Mr Forrester’s appointment as a director. He equally, without criticism, could recall dealing with Ms Wei about TMK Index and payment of director’s fees; and

(e)    critically, the contemporaneous documentary evidence bears out that it was with Ms Wei who Mr Batten dealt with in relation to invoices for Mr Forrester’s work as a director of TMK Index. Ms Wei was also the person arranging, at this same time, offices for TMK Index, including providing her personal credit card details. There is no correspondence between Mr Batten and Mr Wang about Mr Forrester. In cross-examination, Mr Batten attempted to assert that Ms Wei was “the pay master…she was the girl that worked in [level] 35 next door in that looked after just the accounts”. However, that was clearly wrong.

2.4    Ms Wei

13    Ms Wei’s evidence is important, so I will spend some time on it, before returning to Mr Batten’s evidence. The summary below is a summary only of Ms Wei’s evidence. As will become apparent, I do not accept essential aspects of Ms Wei’s evidence.

14    Jingli Wei is a Chinese national. Mr Wang is her cousin. She initially worked for a company called Zhuoyong Group Ltd, also known as Forpro Group Ltd (also Forpro or Fropro). Forpro is a company that was established by Mr Guofei Chen. The company mainly provided assistance and services to clients in relation to overseas companies owned by them and those companies’ registrations, annual reviews and auditing needs. It was also engaged in the business of selling to clients, and assisting clients with acquiring, financial services licences in countries outside of China.

15    Mr Wei was employed at Forpro in a sales role. During her time at Forpro, Mr Chen was involved with the purchase and sale of many financial licences, including those in Australia and New Zealand. In the course of this work she also dealt with Wang & Associates as lawyers, mainly working with two lawyers called John and Stella, as well as secretarial and administrative staff, but not Mr Wang her cousin.

16    In around October 2014 Ms Wei ceased working for Forpro and commenced working in a human resources role for Beijing Tianyi Technology Company, a technology company with its main business in software development. She continued to receive, occasionally, communications from persons seeking to acquire financial services licences because her contact number remained on Forpro’s websites.

17    According to Ms Wei, in or around early October 2014, she received a telephone call from a person who identified himself as David, who said to her (in words to this effect and in the Mandarin language):

My name is David. I got your number off a website. I, and some of my associates, am interested in acquiring financial services licences in overseas companies. Are you able to assist?

18    Ms Wei wanted to earn extra money and had her knowledge from Forpro so she agreed. She communicated with David via WeChat, a messaging platform popular in China. She has changed phones since and did not transfer historical data to her new phone so no longer has access to these messages. Shortly after David introduced himself to her, he introduced her (via WeChat) to a person called Johnson. She communicated with Johnson exclusively via WeChat and email and never spoke to Johnson, nor met him face-to-face. David told her in Mandarin that “Johnson is interested in acquiring an overseas financial services licence. Are you able to sell him one?”

19    Ms Wei then (that is, in October 2014) contacted John or Stella from Wang & Associates, inquiring whether they were aware of any company in Australia with an AFSL that she could purchase, which she could then on-sell to Johnson for a profit. By reason of those interactions, she became aware of a company called Taemas Funds Ltd. Taemas Funds is the former first respondent, which became TM Index (now known as Hodgson Faraday Ltd).

20    In around late October 2014 Ms Wei Informed David and Johnson (via WeChat) of Taemas Funds and that the purchase price was US$250,000 (a price she set). Johnson asked for the name to be changed to TM Index Ltd. She agreed. She then spoke to John at Wang & Associates saying she had a buyer interested in Taemas Funds, who wanted to change the name to TM Index and asked John to do this. According to Ms Wei she did not speak to her cousin, Mr Wang, about this transaction.

21    On 29 October 2014 she sent to Johnson, by email, a contract she had prepared for the purchase of TM Index for the sum of US$250,000. The form of the contract was drafted off those she had used during her time working for Forpro. In relation to that email and the enclosed contract, Ms Wei said:

(a)    the email address – lily@vqfx.com – is one that I use. It is an email associated with a company called Vivid Quark Technology (Pty) Ltd;

(b)    Vivid Quark Technology (Pty) Ltd is a company incorporated in the Seychelles. I am the sole director of that company. My cousin – YingJie (Jay) Wang – is the shareholder of the company. I use Vivid Quark Technology (Pty) Ltd as a vehicle to acquire companies with financial services licences and then on-sell them (at a profit) to others;

(c)    the price to be paid by Johnson was US$250,000. Due to the passage of time, I cannot recall the discussions I had with John from Wang & Associates as to the amount to be paid by me (i.e. Vivid Quark Technology (Pty) Ltd) to acquire TM Index Ltd (for the purposes of on-selling it to Johnson). To the best of my recollection, the price was around A$50,000, but possibly more; and

(d)    there was a monthly operational service fee of US$25,000. This was to cover the cost of many things, including:

(i)    the remuneration required to be paid to a person resident in Australia to be a director of TM Index Ltd;

(ii)    on-going and annual regulatory and compliance costs, including accounting costs, corporate and licence renewal fees, and legal costs; and

(iii)    an anticipated surplus, to be profit to Vivid Quark Technology (Pty) Ltd, to compensate me for my time and effort.

22    Ms Wei said that Johnson never signed the agreement. She never received any funds for the purchase of TM Index. The deal never went through. Vivid Quark Technology (Pty) Ltd did not pay any money towards the purchase of TM Index, nor sign any contract to purchase that entity. Following 29 October 2014 she was unable to obtain any responsive communications from either Johnson or David, until Johnson contacted her again in April 2015 about acquiring another company with an AFSL.

23    In or around early 2015 she was introduced to Mr Batten by either John or Stella from Wang & Associates. She recalled communicating with Mr Batten on a number of occasions, usually on the subject of whether he (in words to the effect) “was aware of any companies with AFSLs for sale” or whether he (in words to the effect) “was aware of anyone who could act as a local director for a company”.

24    In around mid to late April 2015 Johnson contacted Ms Wei via WeChat and expressed interest in acquiring another company with an AFSL. On 22 April 2015 she drafted, and sent to Johnson by email, a contract for the sale by Vivid Quark Technology (Pty) Ltd of the shares in GFT Forex Pty Ltd (to be renamed Saxon Capital Group Pty Ltd). The sale price was US$260,000. Johnson executed, and returned by email, that contract on the same day.

25    At this time, a colleague of hers – Meng Zhang (Aom) – with whom she had worked at Forpro, also had a client interested in acquiring a company with an AFSL. She spoke to Aom at this time and they agreed to sell the company GFT Forex Pty Ltd to whoever paid first. Aom’s client paid first and, as such, GFT Forex Pty Ltd was not sold to Johnson.

26    In late April 2015 Johnson contacted Ms Wei again via WeChat to purchase another company with an AFSL since the arrangement concerning GFT Forex Pty Ltd had fallen through. She did not have any companies to sell at that time, so she contacted John from Wang & Associates inquiring whether he knew of any companies available for sale. She became aware of Fish Capital Securities Ltd and informed Johnson about it. Fish Capital later became TMK Index.

27    On 15 May 2015 she prepared and sent to Johnson a contract for the sale of the shares in Fish Capital by Vivid Quark Technology (Pty) Ltd, which was the standard entity that she used for these transactions. That contract disclosed that the name of Fish Capital was to be changed to TMK Index Ltd, which was something that Johnson had instructed her to do in a WeChat message. On the same day, the sum of US$199,971.60 was received into a bank account in the name of Vivid Quark Technology (Pty) Ltd in Hong Kong with HSBC. Two further amounts were received into that account which concerned the acquisition by Johnson of Fish Capital, US$24,966.60 on 8 June 2015 and US$24,971.60 on 2 July 2015.

28    On 19 May 2015 Ms Wei executed a contract on behalf of Successway Ltd to purchase all of the shares in Fish Capital. Ms Wei is the director of Successway, with her mother (Ai Zhen Wang) being the shareholder. Successway is a company incorporated in the Seychelles. She cannot now recall why the contract was not made with Vivid Quark Technology (Pty) Ltd.

29    On 21 May 2015 the sum of A$60,000 was transferred from Vivid Quark Technology (Pty) Ltd’s HSBC account in Hong Kong to the trust account referred to in cl 3 of the sale contract executed by Ms Wei on 19 May 2015. On or around the same day, she spoke to John from Wang & Associates and told him (in words to the effect): “[t]he money has been paid. Can you please have the company name changed to TMK Index”. Shortly after this, Fish Capital was renamed TMK Index.

30    Ms Wei said she did not speak to her cousin, Mr Wang, in relation to this transaction or the change of name of Fish Capital to TMK Index.

31    Ms Wei also said that around this time, to the best of her recollection, she communicated with Mr Batten about finding a director for TMK Index. She had previously communicated with Mr Batten about such matters, and was aware that he could, for a fee, locate persons to be local directors of Australian companies in order to satisfy residency obligations.

32    Ms Wei said that following the acquisition of the shares in TMK Index, she did not receive any further monies from Johnson. She did not receive any of the monthly US$25,000 operational service fees payable pursuant to the contract with Vivid Quark Technology (Pty) Ltd. As a result, by around July 2015, she ceased paying any money to Mr Batten or on account of director fees in respect of TMK Index.

33    Ms Wei said that she had no involvement in making any presentations or representations purportedly on behalf of either TM Index or TMK Index to solicit funds or investments from investors, had not received any money from any of the applicants, and had not travelled to the Republic of Korea or the Philippines. She said that she was unaware that persons were soliciting money from others purportedly on behalf of TM Index or TMK Index until this proceeding.

2.5    Mr Batten again

34    Returning to Mr Batten, his evidence was that he knew of Ms Wei as Lily Wei. He denied that he had a conversation with Ms Wei about finding a director for TMK Index (as opposed to Mr Wang, as set out in his affidavit). This exchange occurred:

…this conversation you give evidence that occurred – this occurred a number of years ago. Correct?---Yes.

At the time it would have been a fairly innocuous conversation?---Well, no. Not really because I remember it clearly that Greg Forrester said, “I will only do it” – he doesn’t call me David. There’s a nickname, but, “I will only do it if you’re involved and the company is dormant.”

I’m not talking about what you had – the conversation you had with Mr Forrester, but Mr Wang?---Right.

Mr Wang was asking you [to] do a lot of things for companies?---Yes, yes.

AFSLs; correct?---Yes. Correct, yes.

You didn’t take file notes of all those conversations?---Me? No.

Yes. No?---No, I did not.

They were ordinary things about, for example, ensuring a company complied with its AFSL requirements?---Correct, yes.

He also discussed with you, for example, trying to find, if possible, people to become director or - - -?---Yes.

- - - responsible manager for various entities?---Yes.

And I’m putting to you that he did not have any conversation with you about finding a director specifically for TMK Index?---Well, it would have been. It would have been Mr Wang because no one else made any decisions there for his company.

When you say you would have been, do you actually have an actual recollection, or is just you sitting?---No, I – no, no. I do have the recollection of the conversation. I’m trying to – what’s the word – prop up my answer by saying no one else in Mr Wang’s employ was ever allowed to make those decisions, so for Lily to come to me to say, “Can you find some directors?” I find that hard to believe

Okay? --- - - - because Mr Wang made all those decisions.

…

And just sitting there, do you say you didn’t have any dealings with Lily Wei in relation to TMK Index? Is that what you’re saying?---I – the – the name rings a bell, but I – if you could maybe explain to me what she did because I can’t remember. There was a number of young Chinese-born girls that worked there. I don’t know which one she is. I mean, she’s not Stella. She’s not Puimen. Which one – what did Lily do? She wasn’t Mini – Minki, sorry. What did she do?

Well, I’m just – so you’ve said you recall this conversation you had with Mr Wang when he - - - ?---Yes.

- - - asked you to be a director?---Correct.

I’m putting to you, do you actually recall the conversation?---I think I’ve answered that question. There - - -

Well, do you?---And the word was yes.

Where were you sitting when it happened?---Level 35, looking out south of the city watching the planes come in.

And you say - - -?---That office.

Yes, but, Mr Batten, you’ve had - - -?---It has to be.

- - - multiple conversations with Mr Wang; correct? ---Correct, yes.

You don’t remember all of them, do you?---No.

And this conversation was not anything important at the time, was it?---Well, it was because I was giving a friend of mine, who was doing it tough, some directorships and some work, so I did remember it.

But it was nothing memorable, was it?---Pardon?

It wasn’t memorable for TMK Index as opposed to any other company, was it? --- No. TMK Index was just a run-of-the-mill – wasn’t anything special, but the whole saga was special for me because (a) I had known Greg for many years, (b) he was on hard times there because his partner in Forrester Thompson that you mentioned with the email had done something scurrilous and ended up losing his house, so for me to get him a directorship and make some money was fantastic. I also got him on a directorship for an ASX-listed company. We travelled to China.

Please, sir. Just- - -?---Yes. So it was memorable because in the fellow- - -

…

HER HONOUR: Yes?---So we went to China in November. The poor fellow was struggling with muscle dystrophy, and then, as you’ve read in the affidavit, he died in April ’16.

MR MACAULEY: That’s correct? --- So I have quite a good recollection of anything to do with Gregory Forrester.

Isn’t it the case that you dealt with Ms Lily Wei in relation to Mr Forrester?---Not that I know of, no.

…

…does this refresh your recollection that it was with Ms Lily Wei that you had dealings with in relation to Mr Forrester?---No, no. These emails now have jogged my memory. Lily was the – well, say pay master, but she was the girl that worked in – next door in 35 that looked after just the accounts. There’s no way Lily would have any authority to ask for directorships. She just did pay the invoices.

…

Are you saying that you actually had day-to-day interactions with Ms Wei? I don’t remember having day-to-day – but if it’s - - -

Well, do you say you saw her around the office?---If it’s the same – I’m not sure if it’s the same Chinese girl I’m thinking of, to be honest.

Is it very possible this is an overseas Chinese national who had reached out to you to find a director for TMK Index? Does that jog your memory?---No. No, it doesn’t. It’s- - -

Isn’t that exactly what happened?---No.

And that it was with her you knew you had to correspond with in relation to the payment of invoices for the director’s fees for Mr Forrester to act as a director of TMK Index, isn’t it?---Well, it would seem that way, yes. I mean, I had to deal with someone to get payment. But it certainly wouldn’t be – well, it certainly wouldn’t be a Chinese national based overseas that would make the decisions about who was going to be a director on a company here.

I’m not sure – with respect, I’m not asking about what you think about who would make the decisions. I’m just asking you about who you actually dealt with in relation to TMK Index?--- Okay. Well, look, I have answered this question a number of times. And I’m 100 – 1000 per cent certain it was Mr Wang.

But why were you then corresponding with Lily Wei?---Because she – she pays. She’s the one we send the invoices to, and she’s the one that pays. So she’s basically an accountant.

I’m going to put it to you that Ms Wei, around the end of May 2015, asked you to find someone to act as a director of TMK Index?--- You’re asking me, did she?

I’m putting to you that that’s what happened?--- Okay. Well, I keep telling you that’s not what happened.

I’m going to put it to you that Mr Wang did not ask you to find him a director for TMK Index?---But he did.

Okay. Ultimately, the money did not come from – the further money for the payment for Mr Forrester’s fees did not come, correct?---Eventually they dried up, yes. He stopped getting paid, yes.

35    Mr Batten was wrong about Ms Wei being the person next door on level 35 who paid the accounts, but this error is understandable in the circumstances he described. I accept Mr Batten as a witness of truth. His evidence was cogent and credible.

2.6    Ms Wei again

36    I do not accept Ms Wei as a witness of truth. Her evidence was incredible and unbelievable in key respects, specifically her controlling role in relation to the sale of the companies with an AFSL and the lack of involvement with her cousin, Mr Wang, in that regard. While I agree with the submissions for Mr Wang that some of the cross-examination of Ms Wei went nowhere or involved potential confusion (eg, about Vivid Quark Technology (Pty) Ltd as registered in the Seychelles and another separate Australian company with the same name), I am convinced that the essence of her evidence, about the lack of any dealings between her and Mr Wang and Mr Wang’s lack of any role in acquiring and selling TM Index and TMK Index, is untruthful.

37    The evidence is that Ms Wei was the sole director of Vivid Quark Technology (Pty) Ltd, a company incorporated in the Seychelles on 3 March 2014 and referred to as Vivid Quark Seychelles or VQ Seychelles. The sole shareholder of VQ Seychelles was Mr Wang.

38    Vivid Quark Technology Pty Ltd is an Australian company incorporated on 25 February 2014 and de-registered on 13 April 2015 of which Mr Wang was the sole director.

39    Further, the evidence is that on or around 11 June 2014, VQ Seychelles purchased all of the shares in the entity then known as Taemas Funds Limited from National Civil Recovery Pty Ltd. The price of the shares was $75,000. By 24 June 2014, the directors appointed by National Civil Recovery Pty Ltd had resigned, and Mr Chen and Mr Wang had been appointed as directors. A third director, Shouxin Li was also appointed. Mr Chen is the Mr Chen for whom Ms Wei worked while employed by Forpro. As noted, Ms Wei said that Mr Wang and Mr Chen knew each other.

40    As the applicants submitted, these appointments of directors could only have been made by VQ Seychelles as the new owner of Taemas Funds.

41    Ms Wei’s evidence was vague and unconvincing in this regard. While Ms Wei gave evidence through an interpreter and allowance must be made in that regard, even with such allowance being made, her evidence stretched the bounds of credulity:

(1)    she agreed that when she said “she” had a client wanting to purchase a company with an AFSL she meant VQ Seychelles had such a client;

(2)    in July 2014 she was the sole director of VQ Seychelles;

(3)    she could not recall authorising VQ Seychelles to pay $75,000 in or around June 2014;

(4)    she did not recall ever authorising Mr Chen to be a director of Taemas Funds in June 2014;

(5)    she was not sure if she knew a person called Shouxin Li;

(6)    on 4 July 2014, Mr Wang and Ms Wei emailed each other concerning an “Australian licence lease contract” for Taemas Funds;

(7)    after having this email pointed out to her, Ms Wei said she could not recall saying she had only became aware of Taemas Funds in October 2014; and

(8)    she agreed that Mr Wang and Mr Chen knew each other and were in business together, but did not know that VQ Seychelles had purchased Taemas Funds.

42    There were other parts of Ms Wei’s evidence that defied belief.

43    Ms Wei said she did no due diligence on Fish Capital before authorising VQ Seychelles to purchase its shares. She said she asked John of Wang & Associates to do everything in that regard and did not think about the cash flow projections, tax liabilities, or assets and liabilities of Fish Capital at all.

44    Ms Wei said she asked John for details of a company to buy (TM Index, then Taemas Funds) at a time when VQ Seychelles already owned TM Index and Mr Wang and Mr Chen were directors. This is in circumstances where: (a) Mr Chen ran a business out of China buying and selling companies with AFSLs, (b) it should be inferred that Mr Wang was involved in that business (Mr Wang is identified as a corporate representative of Forpro with Mr Chen on a Forpro document), (c) Ms Wei worked for Mr Chen (and accordingly, Mr Wang) in that business, (d) Mr Batten gave evidence of the close control Mr Wang had over his companies, and (e) Mr Wang, not Ms Wei, asked Mr Batten to find a director for TMK Index and Mr Batten did so.

45    Ms Wei earned about US$1000 per month when working for Forpro. Her evidence was that she offered to sell Taemas Funds to Johnson for US$250,000. Ms Wei was the sole signatory to the VQ Seychelles bank account. That account received US$199,971 on 15 May 2015. A few days later, US$180,000 was withdrawn from that account. Ms Wei could not recall what she did with that withdrawn money. This is unbelievable. I accept that there were large amounts of money moving in and out of the VQ Seychelles bank account. I agree that it was seven years ago. But the idea that a person who did all this because they wanted to earn some extra money and was so successful at doing so compared to her ordinary salary that they would not have had a close eye on and detailed recall about these transfers is unbelievable.

46    Ms Wei said that had never seen or spoken to Mr Batten. She communicated with him only via email and QQ, a Chinese messaging application. She communicated with him in English. She said she asked for his help in finding a director. She could not recall if this was via email or not. She could not recall the words used.

47    I do not accept Ms Wei’s evidence that she acted as the controlling mind of VQ Seychelles. I am satisfied that Mr Wang must have acted as the controlling mind of VQ Seychelles and that Ms Wei acted in accordance with Mr Wang’s directions. In response to the contentions for Mr Wang about the evidence of Mr Batten, and addressing the matters in the same order, I consider that:

(1)    Mr Wang asked Mr Batten to locate directors for companies that held an AFSL;

(2)    I do not accept that this request was for Mr Wang’s clients. It was for Mr Wang himself as the controlling mind of companies including VQ Seychelles. This is consistent with the evidence that Mr Wang and Mr Chen of Forpro were in business together and Ms Wei worked for Forpro. Consistent with her assistant role for Mr Chen, Ms Wei was Mr Wang’s assistant and acted under his control and direction; and

(3)    TMK Index was a company in respect of which Mr Wang asked Mr Batten to find a director and, in accordance with that request, Mr Batten found Mr Forrester. In this regard:

(a)    it is true that Mr Batten’s affidavit does not rise this high, but his oral evidence did and this is consistent with the fact that Mr Forrester did become a director of TMK Index;

(b)    Ms Wei’s evidence that she asked Mr Batten to find a director for TMK Index was denied by Mr Batten. Mr Batten’s evidence is credible whereas Ms Wei’s evidence was not;

(c)    it does not beggar belief that Mr Batten would recall arranging a paid directorship for a very ill friend. TMK Index may be “a run-of-the-mill company”, but arranging a directorship for Mr Forrester in his straitened circumstances was a good reason for this event to remain clear in Mr Batten’s mind. It is not that Mr Batten would recall the precise words used. It is that he was clear without doubt that it was Mr Wang who made the request on which Mr Batten acted. Mr Batten was also clear that it was unbelievable that anyone other than Mr Wang would make this request given his experience that Mr Wang exercised close control over his companies and was the only one who gave these kinds of directions; and

(d)    Mr Batten’s lack of written contemporaneous evidence is immaterial. So too is his error about Ms Wei’s role. What is believable is that he had nothing material to do with Ms Wei and thought Ms Wei was involved only in payments.

48    I do not accept that Ms Wei was not directly confronted with the proposition that she was not telling the truth about the essence of her evidence in respect of her lack of dealings with and lack of role of Mr Wang. It was not necessary to put to Ms Wei outright that she was a liar. For example, what was put included that:

•    MR MACK: And your evidence before that you never heard of Taemas Fund Limited until October 2014 – that was not truthful evidence, was it, Ms Wei?

THE INTERPRETER: What I said before – I don’t think I did. I can’t remember.

…

•    MR MACK: Ms Wei, Mr Jay Wang would direct you to do tasks in relation to Vivid Quark and you would obey those directions. That’s the truth, isn’t it?

THE INTERPRETER: No. I looked for clients myself.

MR MACK: If Mr Wang asked you to do something, you would obey that request; is that correct?

THE INTERPRETER: What are you referring to?

MR MACK: If Mr Jay Wang asked you to do something in relation to the affairs of Vivid Quark Seychelles, you would do what he asked you to do; is that correct?

THE INTERPRETER: So – okay. So in – in 2014 when I was in Guangzhou, I was speaking with Guofei Chen. So – sorry – just one – one bit I have to ask her to repeat. Okay. So – okay. So because your question was – so your question was asking me whether Mr Wang asked me to do certain things.

MR MACK: Yes.

THE INTERPRETER: My answer is Guofei Chen asked me to do things. He was my boss.

MR MACK: Did Mr Chen know Mr Wang?

THE INTERPRETER: Yes.

MR MACK: And Mr Chen and Mr Wang were in business together; is that correct?

THE INTERPRETER: Yes.

MR MACK: And it was – Mr Jay Wang was actually the manager of the Vivid Quark company; is that correct?

THE INTERPRETER: No. Wasn’t I the director?

MR MACK: Ms Wei, is your evidence still that you were the director of the Vivid Quark Seychelles company but did not know that they had purchased Taemas Fund Limited. Is that still your evidence to this court?

THE INTERPRETER: Yes.

…

•    MR MACK: And you never spoke to John at Wang & Associates and requested that he change the name from Taemas Funds to TM Index. That never happened, did it Ms Wei?

THE INTERPRETER: That never happened?

MR MACK: That never happened.

THE INTERPRETER: Okay, so I talked to John or Stella, but exactly who, which one, I’m not sure, but I remember I tell John to – and ask him to change the name.

…

•    MR MACK: Ms Wei, you can’t recall because you never, in fact, had a conversation with Mr Batten at all about a TMK directorship, did you?

THE INTERPRETER: I remember when I was communicating with him, most time it was on QQ, sometimes email, but I really can’t recall exactly when and how.

…

•    MR MACK: And you never, in truth, wrote anything to John in relation to a name change from Fish Capital Securities to TMK Index, did you?

THE INTERPRETER: I did tell him. So I did tell him about it, through QQ.

MR MACK: That’s not true, is it, Ms Wei? You’re lying because Mr Wang has told you to lie.

MR MACAULEY: I think there’s two questions there

MR MACK: That’s not true, is it, Ms Wei?

THE INTERPRETER: What do you mean by that?

MR MACK: And you’ve made up this communication with John because Mr Wang requested you to make up this conversation with John.

THE INTERPRETER: So it is the truth that I communicate with the solicitor John.

MR MACK: Ms Wei, did Mr Wang tell you to communicate with John?

THE INTERPRETER: No.

…

•    MR MACK: Sorry, one important question, and it was my final question I didn’t put. The email in front of you which you sent to Johnson – Mr Wei directed you to send that to Mr Johnson, didn’t he? Sorry, Mr Wang – Mr Wang directed you to send that email to Johnson.

THE INTERPRETER: Okay, so no. My client, Johnson, asked for the information, so once the name has been changed, I sent it to him.

49    Contrary to the submissions for Mr Wang, it does not matter that parts of Ms Wei’s evidence (as evidenced by contemporaneous documents) must be true. The relevant point is that I am satisfied that everything Ms Wei did she did under the control and direction of Mr Wang. This conclusion is not speculative. It is a conclusion which must be reached on the whole of the evidence. Accordingly, and for example, Ms Wei may well have communicated with “Johnson” but I infer that it was Mr Wang who was the controlling and directing mind of Ms Wei’s dealings with TM Index and TMK Index. Ms Wei also may well have communicated with Wang & Associates but, again, I infer that it was Mr Wang who was controlling what occurred.

50    Accordingly, I am satisfied that, as submitted for the applicant, Ms Wei was Mr Wang’s assistant and acted under his direction while working as his assistant at VQ Seychelles. That role extended to selling TM Index and TMK Index. This role is consistent with her previous role at Forpro (where she fulfilled the same function under Mr Chen). I do not need to rely on any inference of the kind identified in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 to reach this conclusion. I accept that Mr Wang could have given evidence but chose not to. I accept that, as a result, I can be more confident in the inference I have drawn that Mr Wang was the controlling and directing mind of VQ Seychelles and that Ms Wei acted in accordance with Mr Wang’s directions. However, as noted, I would draw that inference in any event from the objective circumstances together with the unbelievable evidence of Ms Wei.

3.    THE REPRESENTATIONS

51    The representations are (as summarised in the applicant’s submissions):

(a)    first, in January 2015, at a meeting in Seoul, conducted by Mr Geun Su Ha who showed a series of Powerpoint slides to attendees bearing the logo of TM Index and entitled “Introduction to TM Index”. This slideshow is defined in the 4ASOC [fourth amended statement of claim] as the “January 2015 Seoul Slideshow”. An English translation of these slides appear at B3425 – 3232.1 The particular representations made in the January 2015 Seoul Slideshow pressed in the 4ASOC at [7] are the:

(i)    TM Guaranteed Returns Representation, which is a representation that “an investment in any of the financial products offered by TM Index would produce a guaranteed weekly return on the investment, in that a client could request a refund if their MT4 account goes negative for over a week”. This representation appears on the slide at B3431, in the box in the bottom right hand corner which has been translated “Profit Guarantee Scheme: the client may request for a refund if the MT4 account goes negative over a week”;

(ii)    TM Trading Profit Representation, which is a representation that “TM Index achieved $205m of trading profit in 6 months in 2014, averaging a 17% return on investment weekly”. This representation appears on the slide at B3430 in the box under the subheading “2 Management Achievement”; and

(iii)    TM Index Legitimacy Representation, which is a representation that “TM Index’s investments were legitimate and regulated by ASIC”. This representation appears on the slide at B3429 and includes the following text “Foundation 14th April 2008, Australia / License acquired on 25 September 2008/ supervisory institution: Australian Securities & Investment Commission (ASIC) / License No: 326375”. The representation is also made in the “how to”.

(b)    secondly, in January 2015 in a brochure which bears the logo of TM Index and entitled “Creating Wealth, Realizing Dreams”. This is defined in the 4ASOC at [8] as the “January 2015 Brochure”. The January 2015 Brochure appears in Korean as exhibit to the Applicant’s affidavit A194 to 230 and in English at B3366 to 3402. The particular representations pressed in the January 2015 Brochure at 4ASOC [9] are the:

(i)    TM Guaranteed Returns Representation, which is repeated at B3394;

(ii)    TM Trading Profit Representation, which is repeated at B3392;

(iii)    TM Index Legitimacy Representation, which is repeated throughout the January 2015 Brochure and includes A) the text at B3318 “TM Index was founded in Australia on 14 April 2008 / Awarded a financial licence by the Australian Securities and Investments Commission (ASIC) after fulfilling strict requirements / Australian Financial Services (AFS) licence number is 326375”, B) the text at B3385 which includes instructions on “How to lookup TM Index’s ASIC financial licence”, C) the slides at B3386, 3387 and 3388 which contain extracts further information on TM Index’s AFSL and how to search for it (note a colour copy of these slides are available at A214 – 216) D) the text at B3393 “Highly regulated by ASIC”

(c)    thirdly on 28 May 2015, at a convention in Manilla [sic], where a series of PowerPoint slides were shown to attendees bearing the logo of TMK Index and entitled “TMK Index: Creating Wealth, Realizing Dreams”. These slides are defined in the 4ASOC at [12] as the “May 2015 Manila Slideshow”. An English translation of the slides appears at B3442 to B3461. The representations made in the May 2015 Seoul Slideshow pressed in the 4ASOC at [13] are the:

(i)    TM Trading Profit Representation, which is a repetition of the aforementioned “TM Trading Profit Representation”. The repetition appears at B3444, in the bottom right hand corner;

(ii)    TMK Guaranteed Returns Representation, which is a representation that “an investment in any of the financial products offered by TMK Index would produce a guaranteed weekly return on the investment, in that a client could request a refund if their MT4 account goes negative for over a week”. This representation appears on the slide at B3450 in the box in the bottom right hand corner which has been translated “Profit Guarantee Scheme: the client may request for a refund if the MT4 account goes negative over a week”;

(iii)    TMK Index Legitimacy Representation, which is a representation that TMK Index’s investments were legitimate and regulated by ASIC. This representation appears on the slide at B3460 and includes the following text “May 2015 merger proceeding TMK Index set up, licence number 314823”.

(d)    fourthly, [in] May 2015 when a brochure was made available on the website www.tm4x.com entitled “TM Index Ltd Double Profit Program”. This is defined in the 4ASOC at [14] as the “May 2015 Brochure”. A copy of this is at A238 – 245. The representations made in the May 2015 Brochure pressed in the 4ASOC at [15] are the:

(i)    TM Guaranteed Returns Representation, which is repeated at B1421;

(ii)    TMK Index Legitimacy Representation. The evidence of the Applicant was that he recalls reading the document at A238 – 245 on the company’s website and gave evidence that the website he viewed was similar to the one at A 735 (Exhibit 2) which bears the ASIC logo, the licence number 326375 and the text “Tianman International is licensed by the Australian Securities and Investments Commission to engage in financial services business. ASIC license number 326375.”

(e)    fifthly, on or about 25 June 2015 when a brochure entitled “A Doorway to Create your Wealth/ A Journey to Pursue Your Dreams” was made available at a presentation in Seoul. This brochure is defined in the 4ASOC at [17] as the “June 2015 Brochure”. A copy appears at B1572 – 1589.

52    The real dispute in this case is not about the making of the representations or that they were misleading and deceptive. The ultimate dispute is whether Mr Wang was involved in making the representations. Mr Wang’s involvement is alleged to arise from: (a) TM Index and TMK Index making the representations, and (b) Mr Wang’s relationship with and responsibility for the conduct of TM Index and TMK Index.

4.    MR WANG’S INVOLVEMENT?

4.1    The law

53    Section 5(2)(b) of the ASIC Act provides that:

(2)    Unless the contrary intention appears:

…

(b)    an expression that:

(i)    is used, but not defined, in this Act; and

(ii)    is not defined in section 761A of the Corporations Act; and

(ii)     is used in the Corporations Act;

has the same meaning in this Act as in the Corporations Act.

54    Section 79 of the Corporations Act 2001 (Cth) provides that:

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

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

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

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

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

55    Accordingly, “involvement” requires knowing and intentional participation in the contravention in the sense of “knowledge of the essential matters which went to make up the [contravention] on the occasion in question”, as opposed to knowledge that those elements constituted a contravention: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 667–668, citing Giorgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473.

56    In accordance with these requirements it has been said by Besanko J in Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449 at [336] that:

To establish accessorial liability it must be established that the relevant person knew the representation was made and the facts which made it misleading or deceptive, or likely to mislead or deceive, or false. It need not be shown that the relevant person actually drew the conclusion that the representation was misleading or deceptive, or likely to mislead or deceive, or was false.

57    See also Zervas v Burkitt (No 2) [2019] NSWCA 236 at [17] citing Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439 at [303] per Dowsett J.

58    Further, the required knowledge of the making of the representation and the facts falsifying the representation is actual knowledge. In Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175; (2004) 160 FCR 1, the Full Court of this Court explained that:

[9]    In Yorke itself the alleged accessory, an employee of a corporate respondent, was held not to be liable because although he was aware of the representations made – indeed they were made by him – he had no knowledge of their falsity. Therefore he could not be said to have intentionally participated in the contravention: 158 CLR at 668. “Knowledge” means actual and not constructive knowledge: Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at 5. What is said in Yorke about s 75B is applicable to s 80(1)(c), (d), (e) and (f).

[10]    From the interaction of these provisions three conclusions emerge. First, s 51A does not detract from the Yorke principle that actual knowledge of the essential elements of the contravention is required if s 75B or s 80 is to apply. Where the contravening conduct involves misrepresentation, whether as to a future matter or not, this principle requires actual knowledge by the accessorial respondent of the falsity of the representation. This is an essential matter which must be alleged and proved: Su v Direct Flights International Pty Ltd [1999] FCA 78 at [38], Fernandez v Glev Pty Ltd [2000] FCA 1859 at [18].

59    There is no conflict between Keller at [335] (“[k]nowledge may be considered to include wilful blindness…it does not include recklessness or negligence” per Besanko J) and Compaq Computer Australia Pty Ltd v Merry [1998] FCA 968; (1998) 157 ALR 1 at 5:

it would not be sufficient merely to show that the person charged with accessorial liability had shut his eyes to the obvious if that is intended to be a substitute for actual knowledge…Of course, where there is a combination of suspicious circumstances and a failure to make an inquiry it may be possible to infer knowledge of the relevant essential matters.

60    The distinction is between kinds of wilful blindness. As explained by White J in Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) [2015] FCA 342; (2015) 235 FCR 181 at [403]:

The determination that a person has actual knowledge in this manner is not always easy. Amongst other things, it requires consideration of the defendant’s knowledge of matters giving rise to suspicion, the circumstances in which the defendant did not make the obvious enquiry, and the defendant’s reasons, to the extent that they are known, for not making the enquiry. It is necessary to keep in mind that it may not be every deliberate failure to make enquiry which will support the inference of actual knowledge. In several cases, including Official Trustee in Bankruptcy v Mitchell (1992) 38 FCR 364 at 371; Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681 at 693–4; Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253 at [209], this Court has referred with approval to a passage from the advice of Lord Sumner in The Zamora (No 2) [1921] 1 AC 801 at 812–3, in which his Lordship noted two senses in which persons may be said not to know something because they do not wish to know it:

A thing may be troublesome to learn, and the knowledge of it, when acquired, may be uninteresting or distasteful. To refuse to know any more about the subject or anything at all is then a wilful but a real ignorance. On the other hand, a man is said not to know because he does not want to know, where the substance of a thing is borne in upon his mind with a conviction that full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests. In such a case he flatters himself that where ignorance is safe, ‘tis folly to be wise, but there he is wrong, for he has been put upon notice and his further ignorance, even though actual and complete, is a mere affectation and disguise.

In the former circumstance described by Lord Sumner, the person will not have actual knowledge of the matter. In the latter circumstance, the person does have that knowledge but deliberately refrains from asking questions or seeking further information in order to maintain a state of apparent ignorance. That is not a circumstance of constructive or imputed knowledge, but of actual knowledge reduced to a minimum by the person’s wilful conduct: Richardson & Wrench at 694 (Burchett J). It stands in contrast to the circumstance of “honest ignorance” to which Brennan J referred in Yorke v Lucas at 677.

4.2    The competing cases

61    The applicant submitted that the case involved two choices described in these terms:

(a)    on the Applicant’s case, Mr Wang caused the purchase of Taemus Funds Ltd and Fish Securities Ltd, sold the use of the names of these entities to Johnson, caused their names to be changed to TM Index and TMK Index, and otherwise controlled these entities. In selling the use of the names of these entities to “Johnson” Mr Wang knew that the Representations would be made and that they were false; and

(b)    on Mr Wang’s case, Mr Wang knew nothing about the sale of the use of the name of the Taemus Funds entity in October 2014 to “Johnson” and knew nothing about the sale of the use of the name of the Fish Capital Securities in 2015 to “Johnson”. Mr Wang would also have it that he did not control these companies or know what “Johnson” was using the companies for.

62    It was also submitted for the applicant that:

It is significant that Mr Wang has not sought to run a positive case that he was bargaining with the use of the name of the companies without fully appreciating what “Johnson” intended to do with a newly changed company name. This case is not one which Mr Wang can now run and the Court should infer that such a case was not factually open to Mr Wang. Rather, the case advanced by Mr Wang is one of total ignorance – ignorance of the control and sale of the use of the name of these companies while Ms Wei takes all the blame.

As such, the Court should put to one side that hypothetical middle ground and instead assess the relatively likelihood of each side’s case.

63    The proposed choice is false. The applicant bears the onus of proof from first to last. It does not follow from the fact that I have accepted that Ms Wei acted under Mr Wang’s control and direction with respect to the sale and associated name changes of TM Index and TMK Index that Mr Wang must have been involved (in the sense of a knowing and intentional participant) in the use of those companies, in effect, to commit fraud on investors. The relevant point is not what case Mr Wang ran or could have run – it is what the applicant has proved.

4.3    What has been proved?

64    The evidence also establishes the following (as identified in the submissions for the applicant).

4.3.1    TM Index

65    On 5 June 2014 Mr Wang emailed Stella and Ma Jia, employees of Wang & Associates the following “Stella please ask ma jia to do the contract. Jia I want the contract done by 1 pm today”. I infer from this that Mr Wang directed the purchase of Taemas Funds.

66    As noted, on or around 11 June 2014, VQ Seychelles purchased all of the shares in Taemas Funds. I infer that Mr Wang caused VQ Seychelles to purchase these shares.

67    As noted, by 24 June 2014 the directors of Taemas Funds were Mr Wang, Mr Chen and Mr Li. I infer this occurred at Mr Wang’s direction.

68    On 4 July 2014 Mr Wang and Ms Wei emailed each other concerning an Australian licence lease contract for Taemas Funds. I reject Ms Wei’s evidence, amongst other things, that she only became aware of Taemas Funds in October 2014 as a result of her own inquiries of Wang & Associates on her own account. It is not the error in date that matters. It is the circumstances in which she said she became aware of Taemas Funds which is demonstrably false.

69    On 28 October 2014 at 6:50pm Taemas Funds changed its name to TM Index. The form lodged with the Australian Securities and Investments Commission (ASIC) (showing the relevant timestamp) is a notification of resolution which records the registered agent as Mr Wang, the date of the meeting of the company (28 October 2014), and a certification by Mr Wang as the director.

70    On 28 October 2014 at 7:06pm, the AFSL for TM Index was extracted from ASIC’s database. I infer Mr Wang caused this to occur.

71    On 29 October 2014 Ms Wei sent an email to Johnson which attached a contract for sale of TM Index and a copy of the extracted AFSL which I infer to be the same copy as that which was timestamped 28 October 2014 at 7:06pm. I infer that Mr Wang provided Ms Wei with the AFSL and instructed her to send it Johnson with the contract for sale. I infer further that Mr Wang must have known of and approved the terms of the contract for sale.

72    This same timestamped AFSL extract for TM Index appears in the January 2015 Brochure.

73    On 13 February 2015 two forms were lodged with ASIC in respect of TM Index: (a) one changed the business’ registered address from one in Darlinghurst, NSW to Level 3503, 31 Market Street Sydney NSW 2000 being the same address as the registered office of Wang & Associates. The form also mistakenly changed Mr Wang’s personal address for the purposes of his directorship from an address in Drummoyne to 31 Market St. This change of address was certified by Mr Wang as being true, and (b) the other form corrected the error in changing Mr Wang’s personal address and changes it back to Drummoyne noting that “[t]he change of Officeholder Yingjie Wang’s address is incorrect. It wasn’t supposed to be changed. The correct address should be [the Drummoyne address]”. The correction was also certified by Mr Wang as being true and correct.

74    On 16 February 2015 Jenny Li at Maxmillian Management Pty Ltd sent an email recording Mr Wang’s approval to engage Maxmillian as the tax agent and accountant for TM Index.

75    On 19 February 2015 a form, certified by Mr Wang as being true, was lodged with ASIC which records that Mr Chen and Mr Li have ceased being directors of TM Index.

76    On 19 March 2015 Mr Wang signed the director’s report for TM Index and the form FS70 (profit and loss statement and balance sheet).

77    On 30 April 2015 Mr Wang signed the ASIC form 388, which lodged the 2014 end of financial year statements for TM Index.

4.3.2    TMK Index

78    On 9 March 2015 Ms Michelle Lin (a clerk at Wang & Associates) forwarded Mr Wang an email from Mr Matthew Green (accountant at Hanrick Curran) which attached the AFSL for Fish Capital (later TMK Index). The email asked if there were any clients who may be interested in acquiring the company which had a “clean history, having never traded since its establishment some years ago.”

79    On 26 March 2015 Ms Lin sent Mr Wang the financial report for Fish Capital – the “new license [sic] that we plan to purchase”.

80    On 15 May 2015 Ms Wei (I infer at Mr Wang’s direction) sent an email to Johnson attaching a contract for sale of TMK Index. I infer that Mr Wang instructed Ms Wei to send the contract for sale to Johnson. I infer further that Mr Wang must have known of and approved the terms of the contract for sale. The contract provided that the name was to be changed from Fish Capital to TMK Index. As noted, on 15 or 16 May 2015 the HSBC bank account of VQ Seychelles received the sum of US$199,971.50 on account of the purchase of the shares in Fish Capital.

81    By email dated 26 May 2015 at 12:28pm the vendors of Fish Capital via the accountant Mr Green agreed to “release the ASIC shareholder key for Fish Capital Securities Limited to John Xu, acting for the purchaser”. Mr John Xu was the lawyer employed at Wang & Associates, and forwarded that email to Mr Wang at 4:51pm. I infer that Mr Wang thereafter had control of the ASIC shareholder key for Fish Capital enabling access to ASIC’s website for information about Fish Capital including extracting the AFSL. While the email of 12:28pm was only forwarded to Mr Wang on 26 May 2015 at 4:51pm, after the name change from Fish Capital to TMK Index, I infer that Mr Wang caused the name change to occur via his assistant Ms Lin. At 4:09pm on 26 May 2015, Ms Lin emailed Mr Xu in relation to the change of name of Fish Capital to TMK Index Limited explaining “I have submitted the application form online….” (which she had done earlier that day). Relevantly, on 26 May 2015 at 3:05pm, a change of company name form to change the name of Fish Capital to TMK Index was lodged with ASIC.

82    The submission for Mr Wang that the sequence of events shows that he only knew about the name change after it occurred assumes the credibility of Ms Wei’s evidence which I have rejected. Mr Wang was in control at all relevant times. I infer that Ms Lin and Mr Xu were acting under Mr Wang’s direction in respect of the name change. The forwarding to him of the email about the ASIC shareholder key for Fish Capital after the name change was a mere formality. Further, the registered agent on the change of name form is shown as Mr Wang, despite the certification of the correctness of the information being Philip Sissons of the vendor.

83    For the same reasons, the fact that the emails circulated within Wang & Associates by Ms Lin advising of the submission of the change of name form to ASIC and of the approved change of name from Fish Capital to TMK Index were not sent to Mr Wang does not reinforce his lack of involvement. It also does not demonstrate that others within Mr Wang’s firm were able to submit documents to ASIC under Mr Wang’s account (ie, with Mr Wang recorded as registered agent) without his involvement. To the contrary, the evidence satisfies me that everything done by Wang & Associates in connection with the purchase and sale of companies with AFSLs and their name changes was done under the direction of Mr Wang and with his knowledge and authority. Mr Wang appears to have been careful not to leave too many traces of his involvement if he could avoid it, but there is enough evidence, including the credibility of Mr Batten’s evidence and the lack of credibility of Ms Wei’s evidence, to support the inference that Mr Wang was in control of all steps in relation to the purchase and sale of TM Index and TMK Index and their name changes.

84    On 29 May 2015 Mr Wang as a registered agent lodged with ASIC a form recording the appointment of Gregory Charles Forrester as director of TMK Index.

85    On 29 May 2015 Mr Wang’s assistant (Ms Tang) organised a registered office for TMK Index. Ms Tang sent an email to Ms Melissa Yong (of Regus) inquiring whether she could get another office for TMK Index Ltd. The credit card details used to obtain this office were those of Mr Wang’s cousin Ms Wei. I infer Ms Tang acted under the direction of Mr Wang in so doing.

86    Also on 29 May 2015 Mr Wang as registered agent lodged with ASIC a form registering the Regus address as the registered office of the company.

87    The June 2015 Brochure contained an ASIC extract for TMK Index dated 26 May 2015 with a timestamp of 3:30pm AEST. The change of name form from Fish Capital to TMK Index was lodged on 26 May 2015, at 3:05pm. At 3:30pm on the same day, an ASIC extract for TMK Index disclosing its AFSL was obtained from the ASIC website and, at some time, that extract was made available for inclusion in the June 2015 Brochure. The person who obtained the extract must have known that the change of name form had been lodged in order to obtain the extract showing the name TMK Index on the same day. I infer that Mr Wang must have caused the extract to be obtained from the ASIC website. I infer that Mr Wang must have caused the extract to be provided, probably via Ms Wei, to Johnson or a person on Johnson’s behalf.

88    On 14 July 2015 ASIC emailed Mr Wang, referring to his “recent appointment as contact officer for AFS Licensee, TMK Index Limited”. By further email on 15 July 2015 ASIC requested, “authority from the director of TMK index Limited (A.C.N. 123 936 336) (“TMK”) to speak on this matter prior to discussing any details within the applications”. On the same day, Mr Xu of Wang & Associates sent to ASIC an authority executed by Mr Wang (identified as the director) to act on behalf of TMK Index in relation to the applications submitted to ASIC. Mr Wang was copied into that email.

89    On 15 July 2015 Mr Wang emailed Ms Tang, asking “please get myself resign as a director”. Ms Tang responded on the same day by forwarding Mr Wang’s email to Mr Xu (copying Mr Wang in) asking him to arrange a replacement and a subsequent email stating: “[p]lease disregard, Jay is not director”.

90    On 20 July 2015 Mr Wang authorised Ms Lin to assign Maxmillian as the accountant for companies that were still pending an accountant, including TMK Index.

91    On 23 October 2015 Ms Tang forwarded an email she received from Regus to Mr Wang and Stella. The email notified that “there are 3 visitors coming to have a look at the management of TMK Index” and added that the visitors left the following message:

Name:         Mr Jo Sung and Mr Cho Sung…

Message:    We want to meet TMK Korea Management and we want to discuss this situation at Korea. They demand a meeting this coming Monday as they are flying off to Korea on Tuesday 27th October 2015…

They also asked for the address of the Korean Embassy and ASIC.

92    On 26 October 2015 Ms Tang forwarded an email entitled “REMIND MESSAGE TO TMK MANAGEMENT” from a “s-zzoo@hanmail.net” (and not the email above dated 23 October, as asserted by both parties) to Ms Stella Song (at Wang & Associates) and Mr Wang. The substance of that email does not appear in the evidence. On 27 October 2015, Ms Tang responded to indicate that “we no longer act as the legal representation for TMK Index please contact the company/company director directly”. Based on that reply, I infer that the original email must have sought to raise issues concerning the management of TMK Index.

4.3.3    Further inferences proposed by applicant

93    The applicant contends that it should be inferred that Mr Wang was in the business of acting as a director of non-active companies buying and selling non-active companies with AFSLs for profit. I agree. The evidence is sufficient to support this inference.

94    The applicant contends that the following inferences should be drawn in respect of Mr Wang and TM Index:

(a)    first, Mr Wang organised the sale of the use of TM Index to “Johnson” and organised the name change to TM Index as part of that sale;

(b)    secondly, that Mr Wang certified the name change to TM Index and extracted the timestamped version of the TM Index AFSL after making enquiries as to the purpose for which that material was to be used;

(c)    thirdly, Mr Wang organised for the timestamped version of the TM Index AFSL to be sent to Johnson; and

(d)    fourthly, Mr Wang would not have organised the sale of TM Index to “Johnson” and the provision of the timestamped AFSL to “Johnson” without knowing what “Johnson” proposed to do. It is at this point that the principles in Jones v Dunkel assume some significance. There are competing inferences that could be drawn about the degree to which “Johnson” disclosed the Representations to Mr Wang. The Court can more comfortably draw the inference that “Johnson” disclosed his proposed Representations to Mr Wang because i) Mr Wang has chosen not to give evidence and deny this and ii) Mr Wang has instead put forward his cousin to give a false account. The Court can at least draw the inference that Mr Wang knew that the TM Legitimacy representations would be made and were false.

95    The evidence is sufficient to enable inferences (a) to (c) to be drawn. The issue is inference (d).

96    The applicant contends that the following inferences should be drawn in respect of Mr Wang and TMK Index:

(a)    first, Mr Wang organised the sale of TMK Index to “Johnson” and organised the name change to TMK Index as part of that sale;

(b)    secondly, that Mr Wang changed the name to TMK Index and extracted the timestamped version of the TMK Index AFSL after making enquiries as to the purpose for which that material was to be used;

(c)    thirdly, Mr Wang organised for the timestamped version of the TMK Index AFSL to be sent to Johnson;

(d)    fourthly, Mr Wang would not have organised the sale of TMK Index to “Johnson” without knowing what “Johnson” proposed to do – for the reasons given above in relation to TM Index.

97    Again, the evidence is sufficient to enable inferences (a) to (c) to be drawn. The issue is inference (d).

98    The applicant expanded on its case for drawing inference (d) by referring to these matters, in addition to the fact that Mr Wang did not give evidence and Ms Wei’s evidence would be rejected:

(1)    TM Index and TMK Index each authorised the use of the timestamped AFSLs and authorised the use of their corporate identities, the relevant controlling mind of each at the time being Mr Wang;

(2)    the post-name change conduct relating to each company shows that control of TM Index and TMK Index was retained by Mr Wang;

(3)    “Johnson” is not the conduct of some rogue unrelated to the companies – “Johnson” was being “sold” the companies (or use of the companies’ name) by Mr Wang;

(4)    the “sale” of TM Index and TMK Index was not the normal sale of shares in a business but rather the contracts for the use of the name in a company holding an AFSL;

(5)    Mr Wang would not have directed Ms Wei to give the TM Index AFSL extract to Johnson “without knowing what was happening” (that is, for its use in the January 2015 Brochure);

(6)    Mr Wang would not have caused the TMK Index AFSL extract to be given to Johnson “without knowing what was happening” (that is, for its use in the June 2015 Brochure);

(7)    Mr Wang, as sole director of TM Index and as the person directing the affairs of TMK Index, would not have provided the timestamped AFSLs without knowing, or enquiring as to, the purpose for which the material was to be used;

(8)    Mr Wang, as the person directing the affairs of TMK Index, would not have changed the company’s name in time for it to be used in Manila without knowing, or enquiring as to, the purpose for which it was to be used at that conference (the name was changed on 26 May 2015 and the conference in Manila was on 28 May 2015);

(9)    Mr Wang knew that both TM Index and TMK Index kept their names for several months after the change. In the case of TM Index, this happened while he was the director. In the case of TMK Index, it happened while he was the de facto director and controller of the company. He never questioned why, for example, Taemus Funds was trading as “TM Index” for a period of 6 months from October 2014 to April 2015. The logical inference to draw is that he never asked why because he knew that “Johnson” was making representations that there was a legitimate business trading as TM Index;

(10)    the purpose of changing the name of each company to TM/K Index was to enable representations to be made that there was a functioning AFSL holding company with that name. That is clear from the “contracts” that are annexed to Ms Wei’s affidavit. In the case of TMK, “Johnson” paid US$200,000 for the right to change the name of the company. The construction of these agreements is particularly significant in the context of the TM/K Legitimacy representations – being in substance representations there was a legitimate AFSL business trading as TM/K Index. That is precisely what these contracts were selling – the appearance of a legitimate AFSL business trading as TM/K Index. Although the purchaser could request the shares, they were under no obligation to do so. The agreement did not provide for the purchaser to appoint a director, but rather the vendor was required to find a “foreigner” as the company’s director;

(11)    Mr Wang knew that any representations about TM/K Index being functioning companies must have been false. There were no legitimate TM/K products to offer. On his own admission, he knew that TM Index was not functioning, and if Mr Batten’s evidence is accepted he also represented to his appointed director that TMK Index was not functioning;

(12)    at the very least, Mr Wang knew that the TM/K Legitimacy representations were being made and were false. The Court does not need to go further than that. If the TM/K Legitimacy representations had not been made, Mr Kim would not have invested; and

(13)    the applicant accepts that the question of whether Mr Wang knew about the profit and guarantee representations is factually more challenging. Unlike the TM/K Legitimacy representations, there is no direct evidence connecting Mr Wang or Ms Wei to those slides in the presentation. The Court would need to infer that Mr Wang would have sought the whole presentation before authorising the name change. It is only Mr Wang’s unexplained decision not to give evidence that could allow that inference to be drawn.

4.3.4    Response for Mr Wang to further inferences

99    A number of contentions were made in response for Mr Wang. To the extent those contentions have not been undermined by my rejection of Ms Wei’s evidence and acceptance of Mr Batten’s evidence, those contentions follow in respect of TM Index:

(1)    Mr Wang was one of three directors of TM Index between 24 June 2014 and 19 February 2015, the name change from Taemas Funds to TM Index having occurred on 28 October 2014. Singling out Mr Wang as the mastermind of a fraudulent scheme is arbitrary;

(2)    the change of name from Taemas Funds to TM Index on 28 October 2014 occurred within days of the same name change occurring with respect to other unrelated foreign companies: (a) in the UK, Anne Ltd changed its name to TM Index Ltd on 20 October 2014, and (b) in Hong Kong, “Bodhi Energy Saving Technology Company Ltd” changed its name to TM Index Ltd on 23 October 2014. These companies have no relationship to Mr Wang. This reveals that the fraud being perpetrated in South Korea was a sophisticated one involving orchestrating the unwitting changes in names to foreign companies for undisclosed nefarious ends;

(3)    Ms Wei’s evidence is that she gave the AFSL extract for TM Index to Johnson in her email of 29 October 2014 and there is no suggestion that Ms Wei was part of any elaborate conspiracy with those in South Korea;

(4)    that Mr Wang was informed about an innocuous name change in relation to a proposal to sell TM Index (which did not proceed) says little. It does not get the applicant anywhere near the proof needed to make out the allegation of “knowingly concerned” in the pleaded contraventions; and

(5)    on the applicant’s case, Mr Wang was purportedly working with the rogues in South Korea to defraud investors (or at least aware of them and their activities). However, the objective evidence does not bear this out because:

(a)    on 17 April 2015, Mr Wang changed the name of TM Index from “TM Index Ltd” to “NZGFT Fund Management Ltd”;

(b)    this was before the Manila conference (28 May 2015) and the dissemination of the June 2015 Brochure;

(c)    at both the Manila conference (noting “Mark Ryan” was introduced as the “CEO of TM Index”) and in the June 2015 Brochure there were still references to “TM Index”, a company that no longer existed by that name in Australia. This fact gainsays coordination between Mr Wang and those in South Korea; and

(d)    the applicant leaves unexplained why, if Mr Wang was purportedly working with the rogues in South Korea to defraud investors, he would change the name of TM Index to NZGFT Fund Management Ltd on 17 April 2015. The consequence of this was to terminate the ability of the rogues in South Korea to use “TM Index” in any ongoing fraud. This is in circumstances where that brand and company were still actively being used to defraud investors.

100    The contentions for Mr Wang in respect of TMK Index, to the extent not undermined by my rejection of Ms Wei’s evidence and acceptance of Mr Batten’s evidence are:

(1)    even assuming Mr Wang was involved in this change of name to TMK Index, that fact cannot, either alone, or in conjunction with other facts, permit the Court to arrive at the grave conclusion that “material included in the June 2015 Brochure was provided by Wang”, let alone that Mr Wang was aware of the false representations being made in the June 2015 Brochure. That latter conclusion is premised upon a host of unarticulated suppositions, for which there is no evidence; and

(2)    there was ample time between 15 May 2015 when Ms Wei sent Johnson the contract for TMK Index and the Manila conference on 28 May 2015 for the rogue actors to use the TMK Index information to spruik the fake investment products at that conference.

4.3.5    Conclusions about Mr Wang’s involvement

101    The basic proposition for the applicant is that Mr Wang must have known what the rogues in South Korea/the Philippines planned to do with the AFSL extracts and the rights they acquired under the contracts for sale to perpetrate a fraud on investors in TM Index and TMK Index.

102    However, I have concluded that this is a case which falls on the wrong side of the wilful blindness line. What is required to fix Mr Wang with liability via his involvement in the contraventions is knowledge of the making of the representations and the facts falsifying the representations. Take the applicant’s self-described best case of the Legitimacy Representations to the effect that TM/K Index’s investments were legitimate and regulated by ASIC respectively. The applicant placed particular weight on the contracts for sale to support its case that Mr Wang must have known that the representations (at least the Legitimacy Representations) would be made and were false.

103    The contracts are styled “Off-The-Shelf Transfer Agreement Under Australian Financial Service Regulation”. The contracts provide that the purchaser shall purchase an existing overseas company and “the financial service license the company has obtained in Australia”. The purchase price is for “the Australian financial service license”. The contracts provide for an “operational service fee for the Australian financial service license”. The contracts provide for a name change to be organised by the seller. The purchaser guarantees that “the overseas company it is applying to register shall operate lawful business, and shall be liable for the company’s debts and legal responsibilities”. The seller is to provide for the purchaser “a foreigner as the company’s financial service license director”. The purpose of the seller “providing services such as setting up the Australian company, license application [and office administration] is to help [the purchaser] carry out lawful business activities within the scope of Australian laws”.

104    The difficulty is that, on the evidence and by proper application of inferences arising from the fact that Mr Wang did not give evidence, I am unable to bridge the gap from suspicion and what I infer to be a deliberate decision on the part of Mr Wang not to know what the purchasers of the rights under the contracts proposed to do, and actual knowledge of the content of the representations and the facts falsifying them.

105    Even in the case of the Legitimacy Representations, the facts are that each company held an AFSL and was authorised to carry out lawful activities in Australia. The contracts provided for those activities to be lawful. The fact that the companies were not undertaking activities does not mean that they could not be caused to carry out activities, including lawful activities in Australia, after the contracts had been executed.

106    Mr Wang tried to arrange the sale of the rights in TM Index but the sale did not proceed. In these circumstances, the continued exercise of control by Mr Wang over TM Index after the name change proves nothing relevant. Mr Wang did arrange the sale of the rights in respect of TMK Index, and the actions taken later in respect of that company in Australia, which I infer to have been done under the direction of Mr Wang, accorded with the contract for sale.

107    Further, Jones v Dunkel reasoning and the extensions of that principle in other cases do not permit me to infer that Mr Wang knew that the TM Index Legitimacy Representations (or the other, more problematic representations) would be made and were false.

108    In particular, as submitted for Mr Wang (and which I accept):

(1)    there is no evidence or pleading that Mr Wang delivered any of the presentations complained about, nor distributed or circulated any of the complained about brochures, purportedly disseminated on behalf of TM Index or TMK Index;

(2)    there is no evidence or pleading that Mr Wang was in Seoul or Manila at any of the relevant times;

(3)    there is no evidence or pleading that Mr Wang speaks or understands Korean (when the representations were made in Korean);

(4)    there is no evidence or pleading that Mr Wang knew or had any connection with any of the persons who made the presentations (eg, Mr Geun Su Ha, Mrs In Sook Yoo, Mr Mark Ryan, Mr Joshua Davison or Mr Se Nam Lee);

(5)    there is no evidence of any communication between Mr Wang and any of the various persons in Seoul or Manila involved in the presentations or the activities occurring there;

(6)    the various persons who made the relevant presentations were not officers, directors, employees or agents of TM Index or TMK Index;

(7)    there is no evidence that Mr Wang drafted or prepared any of the presentations or promotional material. There is no evidence of Mr Wang seeing or being involved in the preparation of the promotional material;

(8)    there is no evidence or pleading that Mr Wang received any of the monies paid by any of the Group Members, or received any profits from the fraud perpetrated; and

(9)    there is no evidence showing or revealing that Mr Wang was aware of the presentations in Seoul or Manila at the time, or that there were people in Seoul and Manila making presentations purportedly on behalf of TM Index or TMK Index to induce investments from unwitting members of the public.

109    I do not doubt that Mr Wang must have suspected that the contracts could enable the purchaser or a person authorised by the purchaser to represent that TM Index’s and TMK Index’s investments were each legitimate and regulated by ASIC in circumstances where that representation could be false. I also do not doubt that Mr Wang did not want to know and ensured that he did not know what the purchasers would do with the rights they acquired. All of the evidence which I have accepted above indicates this inference should be drawn. So too, as the applicant submitted, do the terms of the contracts.

110    But I cannot reach a positive persuasion that Mr Wang’s unwillingness to know resulted from “a conviction that full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests”. It is equally plausible that Mr Wang’s unwillingness to know resulted from a hope that the purchasers would comply with the contract for sale in respect of only conducting lawful activities, a hope that might well have been equal to or greater in weight than a suspicion that, if they chose, the purchasers or others with whom the purchasers might deal could use the companies and the AFSLs they held as instruments of fraud. The failure of Mr Wang to give evidence cannot fill this gap. It cannot transform mere conjecture that Mr Wang must have suspected that the sales could result in the making of the Legitimacy Representations which could be false into a “reasonable and definite inference” of the probability that Mr Wang did not merely “refuse to know any more” because he did not want to know, but was on notice of and wilfully shut his eyes to the likely fact of the making and the falsity of the representations: Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 and The Zamora (No 2) [1921] 1 AC 801 at 812–813.

111    I also cannot infer that because I have rejected key aspects of Ms Wei’s evidence as false that it must follow that Mr Wang must have something to hide and what he wants to hide is his knowing participation in the making of the misrepresentations knowing them to be false. This would be speculation based on suspicion, not inference based on rational reasoning. Mr Wang might have had many reasons for not giving evidence and Ms Wei might have had many reasons for not being candid.

112    On the evidence in this case:

(1)    I do not know and cannot infer that the person “Johnson” is a person who themselves made or was involved in the making of the representations;

(2)    as noted, TM Index and TMK Index did hold AFSLs and were authorised to conduct legitimate activities in Australia;

(3)    while Mr Wang no doubt suspected that the sales could result in the use of the companies and their AFSLs as vehicles for fraud, there is no evidence as to how the information and ASIC extracts made their way from Johnson to the fraudsters;

(4)    apart from the use of the company name and the AFSLs, there is no evidence of who created the documents containing the misrepresentations and no evidence of any connection between them and the companies;

(5)    the fact that Mr Wang again changed the name of TM Index to NZGFT Fund Management Ltd on 17 April 2015 before the Manila conference and the June 2015 brochure is difficult to reconcile with Mr Wang being a knowing participant in the making of the misrepresentations, particularly if he was benefiting from the making of the investments into a scheme that did not in fact exist; and

(6)    Mr Wang made money by the sale of the rights in the companies with the AFSLs. It is not apparent why he would also be involved (in the legal sense) in the conduct of those who purchased the rights. There is no evidence that he was so involved or obtained any benefit from such involvement.

113    Further, it is not apparent how the misrepresentations were “engaged in on behalf of a body corporate” as provided for in s 12GH(2) of the ASIC Act. It is not apparent that any such person was a director, employee or agent of the companies or was a person with the consent or agreement (whether express or implied) of a director, employee or agent of the companies, let alone within the scope of such a person’s actual or apparent authority within the meaning of s 12GH(2)(b). As such, it is not apparent how Mr Wang was involved in contraventions by TM Index or TMK Index as pleaded.

114    The problem with the applicant’s case thesis is that it depends on the notion that Mr Wang would not have provided the critical information (the ASIC extracts with the AFSL details) unless he knew the purpose for which the material was to be used (by which the applicant means the making of the misrepresentations and their falsity).

115    To the contrary, it seems to me that there was very good reason for Mr Wang to have provided that information (in the hope of obtaining or in fact obtaining money under the contracts for sale) and for Mr Wang not to have made any enquiry of the kind posited. Mr Wang would have wanted to remain in ignorance of any possible unlawful use of the material in circumstances where it could have been used lawfully or unlawfully. I infer that Mr Wang’s refusal to know more was deliberate but also “real ignorance” as described in The Zamora at 812–813, not wilful blindness of the kind that constitutes actual knowledge of any of the misrepresentations or their falsity.

116    As a consequence, I consider that the applicant’s case has not been proved.

117    Orders must be made dismissing the further amended originating application with costs. Mr Wang has also sought an opportunity to make further submissions on costs. That opportunity will be given.

Associate:

Dated:    7 October 2022