IN THE FEDERAL COURT OF AUSTRALIA)No QG 3007 of 1994 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) IN THE MATTER OF CORPLAN NOMINEES PTY. LTD. A.C.N. 010 178 784 BETWEEN: AUSTRALIAN SECURITIES COMMISSION Applicant AND: CORPLAN NOMINEES PTY. LTD. First Respondent AND: CYRIL JOHN PEARSON Second Respondent AND: CAMERON JAMES PEARSON Third Respondent AND: CORPLAN MARKETING PTY. LTD. Fourth Respondent AND: CORPLAN GROUP HOLDINGS PTY. LTD. Fifth Respondent AND: TFG MANAGEMENT LIMITED Sixth Respondent AND: PEARSON ASSOCIATES PTY. LTD. Seventh Respondent MINUTES OF ORDERS JUDGE MAKING ORDER: Drummond J DATE OF ORDER: 27 June, 1995 WHERE MADE: Brisbane THE COURT ORDERS THAT: 1. The applicant have judgment pursuant to s. 1324(10) the Corporations Law against the second respondent for $643,030.31 plus interest in the sum of $181,764.36, totalling $824,794.67. 2. The applicant have judgment pursuant to s. 1324(10) the Corporations Law against the fifth respondent for $492,500.00 plus interest in the sum of $124,139.32, totalling $616,639.32. 3. The applicant have judgment pursuant to s. 1324(10) the Corporations Law against the sixth respondent for $8,500.00 plus interest in the sum of $1,785.69, totalling $10,285.69. 4. The applicant have judgment pursuant to s. 1324(10) the Corporations Law against the seventh respondent for $39,500.00 plus interest in the sum of $13,554.52, totalling $53,054.52. 5. The judgments against the fifth, sixth and seventh respondents respectively be their joint and several liability with the second respondent in respect of the judgment against him in these proceedings and the judgment against the second respondent be his joint and several liability with the fifth, sixth and seventh respondents in respect of the judgments against them in these proceedings to the extent only of the respective amounts of those judgments but otherwise, as between the fifth, sixth and seventh respondents the judgments against them are their respective several liabilities. 6. The second respondent pursuant to s. 230 the Corporations Law be prohibited permanently from managing a corporation from the date hereof but has leave after the period of ten years from today to apply to the Court for permission to participate in the management of a corporation. 7. All moneys recovered by the applicant pursuant to the above judgments be paid to the receivers of the first respondent, or should a liquidator be appointed to the first respondent the liquidator, to be held by them or him in a separate interest bearing deposit account pending further order of the Court for disbursement on account of the beneficiaries of the Beneflex Retirement Plan. 8. The second, fifth, sixth and seventh respondents pay the applicant's taxed costs of the claims in the action against them. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) No. QG 3007 of 1994 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) IN THE MATTER OF CORPLAN NOMINEES PTY. LTD. A.C.N. 010 178 784 BETWEEN: AUSTRALIAN SECURITIES COMMISSION Applicant AND: CORPLAN NOMINEES PTY. LTD. First Respondent AND: CYRIL JOHN PEARSON Second Respondent AND: CAMERON JAMES PEARSON Third Respondent AND: CORPLAN MARKETING PTY. LTD. Fourth Respondent AND: CORPLAN GROUP HOLDINGS PTY. LTD. Fifth Respondent AND: TFG MANAGEMENT LIMITED Sixth Respondent AND: PEARSON ASSOCIATES PTY. LTD. Seventh Respondent Coram: Drummond J Date: 27 June, 1995 Place: Brisbane REASONS FOR JUDGMENT I have before me a notice of motion seeking final judgment in the action against the second, fifth, sixth and seventh respondents for various money sums. In addition, an order forever prohibiting the second respondent from managing a corporation is sought. The motion is based upon the repeated failures of these respondents to comply with procedural directions designed to progress the action. While none of these respondents entered an appearance, a defence was entered on behalf of each by legal representatives then, but no longer, retained by them. The defence to the detailed allegations of misconduct levelled by the applicant Commission against these respondents in its statement of claim was, generally speaking, most uninformative. It was essential, if the defendants were to show that they had some prospect of making out a defence to any of the claims levelled against them by the Commission, to demonstrate by way of particulars, what the grounds for any such defence might be. They were ordered late in 1994 to provide particulars sought by the Commission to expose what, if any, defences each of these respondents had to the allegations levelled against them by the Commission. The respondents failed to comply with that order and a further order extending time for the provision of those particulars was made; a third order was made earlier this year extending the time for the provision of those particulars. They have never been provided. This default is, I am satisfied, deliberate, as well as persistent, so far as each of these respondents is concerned. The legal representatives involved in the filing of the defence have withdrawn from the proceedings and this situation has been brought to a head, as I have indicated, by the Commission filing the present notice of motion. The money sums for which judgment is claimed against each of these respondents are, in effect, funds belonging to the first respondent as trustee of a superannuation fund which were improperly paid to the fifth, sixth and seventh respondents as a result of deliberate action by the second respondent to achieve that. The fifth, sixth and seventh respondents are all companies associated with the second respondent, who was the principal of what I will call the Corplan Group. The fifth, sixth and seventh respondents are, by reason of the second respondent's role as a director and principal of these companies, fixed with knowledge of the improper payment to them of the first respondent's trust moneys. I am prepared to order in each case that, pursuant to s. 1324(10) the Corporations Law, there be judgment against each of the fifth, sixth and seventh respondents for the three separate sums mentioned in paragraph 1 of the notice of motion. I am also prepared to order pursuant to s. 1324(10) the Corporations Law that there be judgment against the second respondent for the sum of $643,030.31. The bases upon which I make these orders, this being a case where it seems to me appropriate, for the reasons I have given, to give final judgment because of the persistent default by each respondent in complying with essential procedural directions, is set out in paragraphs 22 to 50 of the written submissions handed to me by counsel for the Commission, which I will make exhibit "A" in the proceedings before me today. So far as the order sought against the second respondent under s. 230 the Corporations Law is concerned, there is ample justification on the material before me for prohibiting the second respondent for a very long period of time from being involved in the management of any corporation. I refer in particular to paragraphs 51 and 52 of the written submissions, exhibit "A". I am not, however, prepared to make an order permanently prohibiting Mr. Pearson from being involved in the management of any corporation that would operate as a permanent bar, and, indeed, the Commission did not press for such an order. As presently advised, it seems to me that there is no mechanism for granting any relief from a prohibition imposed by the Court acting under s. 230 the Corporations Law, and it therefore is generally inappropriate for a permanent prohibition to be made. What I propose to order is that the second respondent be prohibited permanently from managing a corporation, subject to his having leave, once a period of 10 years has expired from today, to make application to the Court for permission to participate in the management of a corporation. What I propose to do is to order that each respondent shall pay interest at the appropriate rate fixed from time to time pursuant to O. 35, r. 8, on the amount I have adjudged each respondent liable to pay, in the case of disbursements made from the first respondent's funds in the financial year ending 30 June, 1992, from 30 June, 1992 to today, and, in respect of disbursements made from the first respondent's funds in the financial year ending 30 June, 1993, from 30 June, 1993 to today. I certify that this and the preceding four pages are a true copy of the reasons for judgment herein of the Honourable Justice Drummond. Associate: Date: 27 June, 1995