District Court New South Wales Medium Neutral Citation: Mayne v Australian Securities and Investment Commission [2023] NSWDC 154 Hearing dates: 2-3 March 2023, 14-16 March 2023 Date of orders: 16 March 2023 Decision date: 16 March 2023 Jurisdiction: Criminal Before: Neilson DCJ Decision: I set aside the conviction recorded and the penalty imposed by the Downing Centre Local Court on 27 June 2022. Catchwords: CRIME – ALL GROUNDS APPEAL – Offence against failure to comply with obligations of officer in Corporations Act 2001 to deliver books in the officer's possession. Legislation Cited: Corporations Act 2001 (Cth) Criminal Code Act 1995 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Nil. Texts Cited: Nil. Category: Principal judgment Parties: Appellant– Scott Lawrence Mayne Respondentuh – Australian Securities and Investment Commission Representation: Appellant – Fernon, A. SC. Respondent – Gopal, D. File Number(s): 2021/00015145 Publication restriction: Nil. Decision under appeal Court or tribunal: Local Court of NSW Jurisdiction: Crime Date of Decision: 27 June 2022 Before: Greenwood LCM File Number(s): 2021/00015145 Judgment 1. HIS HONOUR: By Court Attendance Notice filed in the Local Court at Sutherland on 16 January 2021 the Australian Securities and Investments Commission ("ASIC"), the present respondent, charged Scott Lawrence Mayne, the present appellant, with an offence under the law of the Commonwealth. The address given for the Appellant in the Court Attendance Notice was the number of a house in South Street, Bellerive, a suburb of Hobart. At the hearing of this matter, I was bemused, and I remain bemused, as to why ASIC should charge a resident of Bellerive in the Local Court at Sutherland rather than, for example, in the Downing Centre Local Court, the main Local Court for this city, or in the Hobart Magistrates Court, with the offence in question. 2. The offence pleaded in the court attendance notice is this: "Officer of FLY365 PTY LTD ACN: 606 601 521 did by virtue of section 1311(1)(b) of the Corporations Act 2001 (the Act) commit an offence by contravening subsection 530A(6) of the Act by failing to comply with the requirements of subsection 530A(1) of the Act, to deliver to the liquidator all books in the officer's possession that relate to the company AND, if the officer knows where other books relating to the company are, tell the liquidator where those books are, as soon as practicable after the winding up of the company on 21 February 2020." 1. The proceedings in the Local Court were eventually transferred to the Downing Centre Local Court on 2 December 2021. When the proceedings came on for hearing before her Honour Greenwood LCM on 27 June 2022, her Honour found the offence proved, convicted the Appellant and imposed a fine of $10,500. This is an appeal against the recording of that conviction. 2. There are only two exhibits before me. The first is the conviction appeal bundle prepared by the Commonwealth Crown, and the second exhibit is an extract of a transcript of evidence given by the Appellant in an examination hearing in the Supreme Court on 4 August 2020. Exhibit 1 contains all the material that was before the Local Court as well as the transcript of proceedings in that Court. Exhibit 2 in the Local Court was a current and historical company extract of Fly365 Pty Ltd. 3. That company was incorporated in this State on 23 June 2015. The company has one paid-up $1 share. The original shareholder was Mr Yusuf Dik, of Kanangra Crescent, Clontarf in this State, and that share was, at some stage, transferred to ADG EnerTech Limited of Suite 701, 7/f, 6 8 Pottinger Street, Central Hong Kong. Mr Yusuf Dik was also the first director of the company. According to the search, Mr Dik was born on 1 January 1971 in Turkey. He would now be 52 years old. Mr Dik was also the first secretary. He ceased to be the director and secretary of the company on 8 February 2016. 4. In his place was appointed Mustafa Can Filizkok, who's address is given in the search as Suite 401, Al Zarouni Building, Sheikh Zayed Road, Al Barsha 1, in Dubai in the United Arab Emirates. Mr Filizkok was born in Sydney on 25 February 1977, and would now be aged 46 years. 5. Antecedent to the appearance of Mr Filizkok on the record of the company was the appointment of the present Appellant, Scott Lawrence Mayne, who was made a director on 21 September 2015. According to the search, Mr Mayne was born in Hobart and would now be 53 years old. The address given for him in the company search is House 7, 13 Kirkdale Road, Chapel Hill in the State of Queensland. I understand that to be a suburb of Brisbane. 6. According to the search the original principal place of business of the company was in Canrobert Street, Mosman. However, the principal place of business changed on 23 June 2015 to an address is Fortitude Valley, another suburb of Brisbane. It would appear that the Appellant was appointed as a director after the principal place of business moved to Fortitude Valley. The principal place of business moved to an address in Chapel Hill in Queensland on 19 October 2017. On 7 February 2020, its principal place of business was given at an address is Station Street Parramatta. However, its registered address commencing on 16 November 2017 was at the premises of Hirn Newey Pty Ltd in Sandgate Road, Nundah in Queensland, which I also understand to be a suburb of Brisbane. 7. The evidence before me suggests that the company was in the business of selling airline tickets to members of the public. According to the evidence given by the Appellant in the Supreme Court, the company carried on business from Brisbane in 2015 but the business commencing sometime in 2016 was carried out from Cairo, the capital of Egypt. In 2017, business was carried on from Dubai and in 2018 and 2019 it may have been carried out in both Egypt and Dubai. Mr Mayne said that in 2019 he spent one month in Australia. Whether that was on a holiday or for business purposes is unclear. 8. On 21 February 2020, Mr Nicarson Natkunarajah of Roger and Carson Pty Ltd of Wolseley Street, Drummoyne, was appointed as a liquidator to the company. He was replaced by Mr Vincent Joseph Pirina and Mr Ian Malcolm Niccol of the Aston Chace Group of Pitt Street, Sydney on 2 March 2020. I understand that Mr Natkunarajah was appointed as the liquidator by the shareholder of the company, but Messrs Pirina and Niccol were appointed by the Supreme Court. 9. It is clear from the evidence that since 2016 the operations of this company and of other companies which may or may not be related to it was carried out in the Middle East, either in Cairo or the United Arab Emirates, probably Dubai, mainly because the cost of doing business in those places was much less than the cost of doing business either in Sydney or Brisbane. What is pointed to by the evidence is the lower cost of paying wages. 10. The major part of the evidence in the Local Court comprised Exhibit 1. Exhibit 1 contained four statements made by Mr Ian Niccol. The first is dated 26 March 2020, the second is dated 30 July 2020, the third is dated 23 November 2020, and the fourth is dated 7 July 2021. There are a number of documents annexed to each of those statements. Annexed to Mr Niccol's statement on 26 March 2020 are a number questionnaires. They all appear to have been completed by Mr Filizkok rather than by the Appellant, and that is shown by an email from Mr Matthew Gradidge of Messrs Yates Beaggi, a firm of solicitors, to the court appointed liquidators, bearing date 11 March 2020. 11. The first questionnaire is headed "Basic Information Sheet". That records that the annual turnover for the financial year ending 30 June 2019 was $187,208,315. Next to that sum has been written the words "total transaction value". The then current trading address was given as being Level 15, 60 Station Street, East Parramatta. In answer to a question as to what was the company email address or addresses, the following has been written in: "All email addresses are @fly365.com but not owned by the company in liquidation". The website address given was "au.fly365.com". The telephone service provider was identified as ACE Communications of Narre Warren in the State of Victoria. The document says that the company had no employees and that there was accordingly no superannuation fund. The only property alleged to have been owned by the company was "air tickets". An inquiry as to the social media accounts of the company has been answered "all cancelled". The name and address of any internet service provider was answered in this fashion: "N/A - Not owned by company in liquidation". 1. An inquiry as to the registered domain name or names of the company was answered in a similar fashion: "N/A - all domains are owned and hosted by third party service providers." 1. An inquiry as to all security agreements including leases, hire purchase and rental agreements and the names/addresses of credit providers or owners or secured parties and information of a similar nature has been answered in this fashion: "Servcorp - shared workspace. Agreement attached. no assets on site." 1. The next questionnaire is one to be answered by directors and officers. Its shareholder is ADG EnerTech Limited. It shows that the person responsible for the day-to-day management of the company was the current Appellant, but it must be recalled that this document was not prepared by him but by Mr Filizkok. It states that directors' meetings were held "as and when required". In answer to a question "Were minutes kept?" the answer given is "not applicable". A question was asked as to who prepared the income tax returns for the company. That has been answered "Last lodged tax returns were prepared by[…] Hirn Newey." What I have replaced by suspension points in that quotation may be a reference to somebody with the surname Dik. According to this questionnaire, the accounts of the company were never audited. The answer to the question "What remuneration have you received from the company during the three years prior to my appointment by way of either directors' fees and expenses, salary, allowances of fringe benefits?" was answered, "Nil." 2. The 23rd question in this questionnaire is this: "Describe steps you took to ensure that the company would keep financial records that correctly record and explain its transactions and financial position and performance; and would enable true and fair financial statements to be prepared and audited?" That question has been answered in this fashion: "All transactions were made electronically with supporting info provided to the accountants to record and report." 1. The 25th question asked this: "Do you know of any books, records, documents or correspondence of the company which are not now in the possession of Roger and Carson Pty Ltd?" That question has been answered "Yes." The next part of the question was if the answer was yes. to provide a description of such records and details of their location. That question has been answered in this fashion: "- All day to day operations/transaction records - Both in hard copy and electronic". The next question asks if any records or documents had been lost or destroyed. That has been answered yes and the explanation was "Destroyed as and when redundant." 1. The name of the bank disclosed in this questionnaire was the CBA, which I assume is the Commonwealth Bank of Australia, rather than the old Commercial Banking Corporation of Australia. The signatories to the company's cheque accounts were both directors. 2. Questions about rented premises were answered positively. The shared workspace was provided by Servcorp. The amount paid to it was $950 per month. The final question in this questionnaire was this, and the answer given to it is what follows: "What do you consider were the causes of the failure of the company, and when did they became apparent?" Beneath that "Airline tickets were being sold under cost. Upon realisation of the loss, we appointed liquidators." That document has been signed by Mr Filizkok and dated 8 March 2020. 3. There are further questionnaires, namely ASIC Form 507 and a statement verifying report under s 475(1) of the Corporations Act 2001. Part B of the form tells me that electronic copies were kept and hard copies were kept in Dubai in the United Arab Emirates. Question B18 was: "In the last four years, has the Company entered into any financial transactions with a related party, including acquiring any property or businesses?" That has been answered in the affirmative and the details given are these: "Payments made. Related party name - (1) Fly365 services DMCC. (2) Fly365 Egypt, (3) ADG EnerTech Limited." The address given for Fly365 Services DMCC is Dubai, the United Arab Emirates. The address given for Fly365 Egypt is in Cairo in that country, and the address given for ADG EnerTech Limited is in central Hong Kong. The value of those transactions was given as $7,731,398 and was in respect of "human resources". If I understand that correctly, it would appear that the cost of those providing services to the company was provided by the three companies, one in Dubai, another in Cairo and a third in Hong Kong. This scheme was said to have existed between 2017 and 2020. 1. Section 530A(1) of the Corporations Act 2001 provides this: "(1) As soon as practicable after the Court orders that a company be wound up or appoints a provisional liquidator of a company, or a company resolves that it be wound up, each officer of the company must: (a) deliver to the liquidator appointed for the purposes of the winding up, or to the provisional liquidator, as the case may be, all books in the officer's possession that relate to the company, other than books possession of which the officer is entitled, as against the company and the liquidator or provisional liquidator, to retain; and (b) if the officer knows where other books relating to the company are—tell the liquidator or provisional liquidator where those books are." Section 9 of the Act defines the word "books" to include: "(a) a register; and (b) any other record of information; and (c) financial reports or financial records, however compiled, recorded or stored; and (d) a document; but does not include an index or recording made under Subdivision D of Division 5 of Part 6.5." 1. Section 86 of the Act defines "possession" to mean "a thing that is in a person's custody or under a person's control …" Section 1311(1) of the Corporations Act 2001 relevantly provides that: "(1) A person who: … (b) does not do an act or thing that the person is required or directed to do by or under a provision of this Act; or (c) otherwise contravenes a provision of this Act; is guilty of an offence by virtue of this subsection…" 1. Section 1308A of the Corporations Act 2001 provides that Chapter 2 of the Criminal Code Act 1995 applies to all offences against the Act, subject to any contrary provisions of the Act. Subsection 530A(6A) of the Corporations Act 2001 provides that the offence is one of strict liability and, pursuant to s 6.1(6) of the Criminal Code Act 1995, there are no fault elements for any of the physical elements of the offence, and the defence of mistake of fact under s 9.2 of the Criminal Code Act 1995 is available. Subsection 530A(6B) states that an offence does not apply to the extent that the person has a reasonable excuse, and the Defendant bears an evidentiary burden for that reasonable excuse. 2. Those statutory provisions were drawn to my attention by the Respondent. The Appellant drew to my attention the provisions of s 198G of the Corporations Act 2001. That provision is this: "Powers of officers while company under external administration (1) While a company is under external administration, an officer of the company must not perform or exercise a function or power of that office. Offence (2) A person commits an offence if: (a) the person is an officer of a company; and (b) the company is under external administration; and (c) the person purports to perform or exercise a function or power of that office. Penalty: 30 penalty units. Exceptions (3) Subsections (1) and (2) do not apply to the extent that the officer of the company is acting: (a) as the external administrator of the company; or (b) with the written approval of the external administrator of the company or the Court; or (c) in circumstances in which, despite the fact that the company is under external administration, the officer is permitted by this Act to act. Note: In proceedings to determine whether a person has committed an offence under subsection (2), a defendant bears an evidential burden in relation to the matters in subsection (3), see subsection 13.3(3) of the Criminal Code. (4) Subsections (1) and (2) do not apply if the company has executed a deed of company arrangement and the deed has not yet terminated. Note 1: Section 444G deals with the effect of a deed of company arrangement on various persons. Note 2: In proceedings to determine whether a person has committed an offence under subsection (2), a defendant bears an evidential burden in relation to the matters in subsection (4), see subsection 13.3(3) of the Criminal Code. Functions and powers of liquidator or provisional liquidator prevail in case of conflict (5) If subsection (3) applies and there is a conflict between a function or power of the external administrator of the company and a function or power of the officer in relation to the company, the external administrator's function or power prevails. Effect of section (6) This section does not remove an officer of a company from office. (7) For the purposes of this section, a person is not an officer of a company merely because he or she is a managing controller, appointed under a power contained in an instrument, of property of the company. (8) Nothing in this section affects a secured creditor's right to realise or otherwise deal with the security interest. Definitions (9) In this section: external administration of a company has the same meaning as in Schedule 2. external administrator of a company has the same meaning as in Schedule 2." 1. Mr Gopal of the Commonwealth Office of Director of Public Prosecutions, conveniently provided me with the elements of the offence. I quote what he stated: "The elements of an offence against section 1311(1) (with section 530A(1)) of the Act are as follows: i. Element 1 A court orders a company to be wound up, or appoints a provisional liquidator, or the Company resolves that it be wound up (circumstance) Fault: Strict Liability (s530A(6)(A) of the Act and 6.1(1) of the Code. ii. Element 2 At the date a court orders a company to be wound up, or appoints a provisional liquidator, or the company resolved that it be wound up, the Appellant is or was a former officer of the company (circumstance) Fault: Strict Liability (s530A(6)(A) of the Act and 6.1(1) of the Code. iii. Element 3 The Appellant fails to deliver to the liquidator or provisional liquidator, as soon as practicable after the Court orders the company be wound up or appoints a liquidator or provisional liquidator, all books in the Appellant's possession that relate to the company, other than books possession of which the Appellant is entitled, as against the company and the liquidator or provisional liquidator to retain (530A(1)(a)) (conduct) Fault: Strict Liability (s530A(6)(A) of the Act and 6.1(1) of the Code. AND/OR iv. Element 4 Where the Appellant knows where other books relating to the company are, the Appellant fails to tell the liquidator or provisional liquidator as soon as practicable where those books are (530A(1)(b)) (conduct) Fault: Strict Liability (s530A(6)(A) of the Act and 6.1(1) of the Code." Mr Fernon SC, who appeared for the Appellant, did not cavil with that itemisation of the elements of the offence. 1. On 13 March 2020, Mr Ian Niccol, joint and several liquidator of Fly365 Pty Ltd, served a statutory demand upon the Appellant. It is this: "Pursuant to subsections 530A(2) and 530A(3) of the Corporations Act 2001, you are required to provide the information and documentation details below about the Company's business, property, affairs and financial circumstances by close of business Friday, 20 March 2020. The information and documentation must be given to the Liquidators' office on or before close of business Friday, 20 March 2020. The information and documentation must be given to the best of your knowledge and belief. The required information and documentation is as follows: Financial Information 1. Access to any management account software utilised by the Company. 2. Copies of any financial statements including balance sheets, profit and loss statements and cash flow statements for the financial years ended 30 June 2017, 30 June 2018, 30 June 2019 and as at 21 February 2020. 3. Copies of any asset registers for the financial years ended 30 June 2017, 30 June 2018, 30 June 2019 and as at 21 February 2020. Major External Stakeholders 4. Copies of any incentive, commission and/or rebate agreements between the Company and payment aggregators, ticket consolidators, global distribution systems, meta search engines and/or airlines. 5. All correspondence exchanged between the Company and the International Air Transport Association during 21 February 2019 to 21 February 2020. 6. All correspondence exchanged between the Company and the Australian Federation of Travel Agents during 21 February 2019 to 21 February 2020. 7. All correspondence exchanged between the Company and Skyscanner, Kayak and any other meta data search engine provider during 21 February 2019 to 21 February 2020. 8. All correspondence exchanged between the Company and Corporate Information Travel and any other travel agency during 21 February 2019 to 21 February 2020. 9. All correspondence exchanged between the Company and Air Tickets, Express Travel Group and CVFR Travel Group during 21 February 2019 to 21 February 2020. 10. All correspondence exchanged between the Company and any other ticketing issue agency or consolidator during 21 February 2019 to 21 February 2020. 11. All correspondence exchanged between the Company and the following airlines during 21 February 2019 to 21 February 2020; (a) Emirates (b) Etihad (c) Qatar Airways (d) Singapore Airlines (e) Thai Airways (f) Cathay Pacific (g) Qantas (h) Malaysian Airlines (i) Air New Zealand (j) China Airlines Intellectual Property 12. Details of any intellectual property registered in the Company's name and access to same. Information Technology (IT) 13. A schematic of the software systems (front end, storage, database, business logic) and how they interconnect and where they are hosted. 14. Server and location of same, including details of any internet service providers and details of management email addresses and passwords. 15. Listing of IT software and equipment utilised. 16. The login details including username, password and any other information necessary to login into all Company's accounts including those held or previously held with Amazon Web Services, DataDogHQ, Litmus, Mailchimp, MongoDB, OnlyDomains, Spotlight Reporting NZ, Sonar Source, TravelPay, Twilio, SendGrid. 17. Back-ups of software, computer records and data, including the provision of all IT hardware i.e. computers, laptops, USB's, external hard drives, etc. Internal Operations and Related Parties 18. Copies of the terms and conditions that customers acknowledge when booking flights / purchasing tickets from the Company. 19. Details of locations of all offices in Australia and overseas used by the Company since incorporation to 21 February 2020. 20. Details of call centres engaged (if any). 21. Listing of entities in Company group structure and their relationships. 22. Details of the Company's dealings with ADG Enertech Limited, Fly365 Services and Fly365 Egypt. 23. All correspondence exchanged between the Company and ADG Enertech Limited, Fly365 Services and Fly365 Egypt during 21 February 2019 to 21 February 2020. Employees, Subcontractors and External Consultants 24. Listing of employees and subcontractors (if any) engaged during 21 February 2019 to 21 February 2020, including details of any employees and/or subcontractors owed monies as at the date of liquidation. Other Records 26. Any other books and records in your possession in relation to the business, property, affairs and financial circumstances of the Company. If you fail to deliver these records by close of business Friday, 20 March 2020, I will have no alternative but to report this matter to the Australian Securities and Investments Commission and request prosecution action to be taken against you. Dated this 13th day of March 2020." 1. On 3 July 2020, an order for production was made in the Corporations List of the Equity Division of the Supreme Court of this State. The order was addressed to the Appellant at an address in Chapel Hill, Queensland, the address shown for him in the company search. The notice was given under Uniform Civil Procedure Rules 2005 (NSW) r 40.7(3). The documents which the Appellant was required to produce are these: "All documents in the period 23 June 2015 to 15 May 2020 being, recording, evidencing or referring to: 1. the Books and Financial Records of the Company; 2. goods or services sold by the Company subject to GST, and expenses or acquisitions made by the Company in respect of which the Company paid GST, and the amount of GST paid, including supporting documents such as a list of taxable supplies, tax invoices and receipts, bank or financial statements; 3. correspondence, including emails, letters, text messages, WhatsApp messages and/or other messaging app messages and facsimiles, recording or referring to the Company or between the Company and any of the FLY365 Related Companies; 4. incentive, commission, rebate and other arrangements (contractual or otherwise) between the Company and: a. Customers; b. Consolidators; c. Airlines; d. Metasearch Engine Providers; e. any of the FLY365 Related Companies. 5. monthly reports to the board of directors, minutes of meetings of the board of directors, and any minutes of meetings of any subcommittees of the Company; 6. all correspondence, including emails, letters, text messages, WhatsApp messages and/or other messaging app messages and facsimiles recording or referring to loans between the Company and Scott Mayne, and/or loans between the Company and Related Entities of or controlled by Scott Mayne; 7. funds transferred from the Company to any one of the FLY365 Related Companies, including the purpose of the transfer and intended use of those funds by the FLY365 Related Companies and any transaction records, bank statements, invoices, remittance advice, and receipts; 8. any assets and/or funds received by Scott Mayne from the Company and the use of those funds by Scott Mayne, including transaction records, bank statements, invoices, remittance advices, PAYG statements, and receipts; 9. details of the booking systems and other intellectual property utilised by the Company but subject to the ownership of the FLY365 Related Companies including, but not limited to, a schematic of software systems (front end, storage, database, business login), how they interconnect and where they are hosted; 10. the group structure involving the Company and the FLY365 Related Companies, each fLY365 Related Company's business activities and their relationship with the Company in terms of directorships, shareholdings and intergroup services provided and received; 11. any assets received by the FLY365 Related Companies from the Company, including transaction records, bank statements, invoices, remittance advices, contracts and receipts; 12. the assets (including cash, real properties, financial instruments or investments, motor vehicles, personal effects, jewellery and other collections) and liabilities of Scott Mayne; and 13. tax returns (completed or draft) of Scott Mayne, bank statements, mortgages or loan statements, credit card statements, certificates of title, motor vehicle registrations." 1. The relevant part of the document commences on p 126 and continues to p 129 of the court book and it commences on p 126 with the following words: all documents in the period 23 June 2015 to 15 May 2020 being, recording, evidencing or referring to, then are listed 13 categories of documents and then are given definitions used in that schedule of documents. 2. The order which I have just quoted followed upon a "final demand" made on 8 June 2020 by Mr Niccol as the joint and several liquidator of Fly365 Pty Ltd. Annexed to that was a schedule which contains three columns. The first column is headed "Category of Records", the second column is headed "Books and Records Previously Requested Via Written and Verbal Communications" and the third column is headed "Status of Books and Records Provided To My Office". That schedule is this: Category of Records Books and Records Previously Requested via Written and Verbal Communications Status of Books and Records Provided to My Office Financial Information Access to any management accounting software utilised by the Company. Not provided to my office. I am currently liaising with Xero to access the Company's management accounts maintained via their software. Copies of any financial statements including balance sheets, profit and loss statements and cash flow statements for the financial year ended 30 June 2019 and as at 21 February 2020. Limited financial statements provided to my office, including copies of the Company's depreciation schedule as at 30 June 2018 which indicates that the Company may own depreciating assets Copies of any asset registers for the financial years ended 30 June 2019 and as at 21 February 2020. Limited financial information provided to my office, including a copy of the Company's depreciation schedule as at 30 June 2018 which indicates that the Company may own depreciating assets. Major External Stakeholders Copies of any current or historical incentive, commission and/or rebate agreements between the Company and payment aggregators, ticket consolidators and Travelport Galileo Global Distribution System (GDS). Limited Records provided to my office, including commission grids internally generated via Microsoft Excel. You claimed that there were no current incentive, commission and/or rebate agreements in place. My investigations indicate that the Company held an agreement with Travelport to receive rebates through its GDS. All correspondence exchanged between the Company and the International Air Transport Association (IATA) since incorporation. Not provided to my office. You claimed there was no correspondence with IATA. All correspondence exchanged between the Company and the Australian Federation of Travel Agents (AFTA) since incorporation. Limited correspondence provided to my office, including membership renewal notifications. My investigations indicate that the Company corresponded with AFTA regularly during mid-to-late 2019. All correspondence exchanged between the Company and Skyscanner, Kayak and any other meta data search engine provider since incorporation. Limited correspondence provided to my office, including marketing/promotional emails, website outage notifications and invoice payment remittance. All correspondence exchanged between the Company and Corporate Information Travel and any other travel agency since incorporation. Not provided to my office. All correspondence exchanged between the Company and Air Tickets, Express Travel Group and CVFR Travel Group since incorporation. Limited correspondence provided to my office, including invoices and statements. All correspondence exchanged between the Company and any other ticket issuing agency or payment consolidator since incorporation. Limited correspondence provided to my office, including merchant facility statements from the Commonwealth Bank of Australia. All correspondence exchanged between the company and Emirates, Etihad, Qatar Airways, Singapore Airlines, Thai Airways, Cathay Pacific, Qantas, Malaysian Airlines, Air New Zealand and China Airlines since incorporation. Limited Correspondence provided to my office, including agency debit memos and marketing/promotional emails. You claimed that there was no correspondence between the Company and listed airlines. Intellectual Property Details of the registered owner of intellectual property that was used by the Company and ADG EnerTech Limited, Fly365 Services DMCC, FlyEgypt of Fly365 Egypt, Bizler Investments Limited, Dostan Investments Limited, Sagitta IP Holdings Limited, Sagitta Travel Group Limited, Sagitta Travel Holdings Limited and SML Investments (Qld) Pty Ltd (collectively, the Related Entities), including the FLY365.com website. Not provided to my office. You claimed that the Company does not hold any intellectual property. The Company is a registered owner of the trademark for "Fly365". Information Technology (IT) A schematic of the software systems (front end, storage, database, business logic) used by the Company and Related Entities, detailing how they interconnect and where they are hosted. Not provided to my office. You claimed that the Company does not own any software. Details of the servers utilised by the Company and Related Entities, including details of any internet service providers and the management of the Company's email addresses and passwords. Not provided to my office. You claimed that the Company does not own any servers. A listing of IT software and equipment utilised by the Company and Related Entities, including any backups of software, computer records and data. Not provided to my office. You claimed that the Company does not own ant software or equipment. The login details including username, password and any other information necessary to access the Company's accounts currently and previously held with Gmail, Global Distribution Systems i.e. Sabre, Galileo and Amadeus, Hub i.e. the Company's booking platform, Quip, Travelport, Amazon Web Services, DataDogHQ, Last Pass, Litmus, Mailchimp, MongoDB, OnlyDomains, Spotlight Reporting NZ, Sonar Source, TravelPay, Twilio, SendGrid. Not provided to my office. You claimed that the Company held subscriptions with TravelPay and Mailchimp but you have not provided me with relevant login credentials. Backups of software, computer records and data used by the Company and Related Entities, including the provision of all IT hardware. Not provided to my office. You claimed that he Company does not own any IT hardware. Internal Operations and Related Entities Copies of the terms and conditions that the customers acknowledge when booking flights / purchasing tickets from the Company. Provided to my office (i.e. the terms and conditions document). Details of locations of all offices in Australia and overseas used by the Company since incorporation. Provided to my office (i.e. a listing of trading locations). Details of call centres engaged. Not provided to my office. You claimed that the Company did not have any call centres. My investigations indicate that the Company utilised a call centre located at Mazaya Business Avenue, AA1 Building, first Al Khail Street, Jumeirah Lake Towers, Opposite Bonnington Tower, Dubai. PO Box 116171. This is also supported by reference to the "Guest Support Centre" in the Company's Terms and Conditions document. Listing of entities in the Company's group structure and their relationships. Not provided to my office. Details of the Company's dealings with the Related Entities. Not provided to my office. All correspondence and agreements exchanged between the Company and the Related Entities. Not provided to my office. Employees, Subcontractors and External Consultants Listing of employees and subcontractors engaged by the Company, including details of any employees and/or subcontractors owed monies as at the date of the Liquidation. Not provided to my office. You claimed that the Company did not engage any employees and/or subcontractors. My investigations indicate that at least one (1) Sydney-based employee known as Taner Uzelakcil was employed by the Company until 2020. Details of analyst(s) and/or consultant(s) engaged prior to Liquidation in order to identify issues with respect to the customer booking process, calculating pricing/margins, etc. Not provided to my office. You have acknowledged that the Company engaged analyst(s)/consultant(s). Other Records Any other pertinent books and records in your possession in relation to the business, property, affairs and financial circumstances of the Company. Limited other records provided, including various internal correspondence (e.g. ticketing policies) and correspondence with an insurance broker. 1. After the making of the order by the Supreme Court, Messrs Johnson Winter Slattery, acting for the liquidator, wrote to the Appellant's solicitor a letter bearing the date 23 July 2020. It is this: "1. We refer to the Order for Production served on your clients on 17 June 2020 issued by the Supreme Court of New South Wales on 17 June 2020 (Order for Production). 2. In response to the Order for Production, your clients produced three boxes of hard copy documents, one being the production from Mr Filizkok and the remaining two being the production from Mr Mayne. We note, approximately 308 documents were produced with a substantial number of documents being duplicates. 3. The documents produced by your clients in response to the Order for Production include, in summary: (a) Invoices issued by suppliers including consolidators AirTickets and Express Travel Group and Metasearch Engine Providers, Skyscanner (Supplier Invoices); (b) Limited email correspondence relating to Supplier Invoices; (c) Email correspondence with Corporate Information Travel with enclosed Agency Debit Memos issued to the Company for the period of January to February 2020; (d) Two spreadsheets relating to commissions on offer to the Company by various airlines for 2020; (e) Correspondence relating to Public Liability Insurance and Professional Indemnity Insurance taken by the Company; and (f) Other assorted, unrelated emails including internal correspondence from Yates Beaggi Lawyers. 4. However, the Order for Production required the production of documents responsive to thirteen different categories. The categories of the Order for Production were prescriptive, requiring your clients to produce numerous types of documents from the period 23 June 2015 to 15 May 2020. Copies of the Order for Production issued to each of your clients are enclosed with this correspondence for your reference. 5. Your clients' limited production indicates that they have failed to comply with the Order for Production. In particular, your clients' have failed to produce any documents recording, evidencing or referring to: (a) All the Books and Financial Records of the Company including financial reports, balance sheets and other financial records; (b) Correspondence, howsoever recorded, including by text messages, letters and emails between the Company and FLY365 Related Companies (as that term is defined in the Order for Production); (c) monthly reports to the board of directors, minutes of meetings of the board of directors, and any minutes of meetings of any subcommittees of the Company We note that this list is not exhaustive but simply indicates obvious gaps in your clients' production; (d) funds and/ or assets received by Scott Mayne, Mustafa Filizkok and the FLY365 Related Companies and the use of those funds or assets and related records; (e) the assets, liabilities and tax returns of Scott Maybe and Mustafa Filizkok. 6. We note, this list is not exhaustive but simply an illustration of the noticeable gaps in your clients' production. 7. Further we note, your clients have had ample opportunity to fully comply with the Order for Production being that this was served on 17 June 2020. Additionally, your clients have not raised any issue with the categories of documents requested nor outlines any grounds upon which they might apply to have the Order for Production set aside. 8. Therefore, please provide all documents in compliance with the Order for Production by no later than Monday 27 July 2020. Should your clients fail to comply, our client will take steps to have the matter re-listed before the Court to enforce compliance." 1. There follows a series of emails. The letter was, in fact, emailed to the Appellant's solicitors on 23 July 2020 at 9.58am. At 1.59pm on the same day the Appellant's solicitors replied thus: "Thank you for your letter. We'll review and reply shortly however note that some of the areas you have raised have been addressed by our earlier correspondence in which we noted that our clients no longer have access to the Xero software (for financial records) either (a) because of the ongoing fees weren't paid and (b) because someone from your client's office obtained access and locked our clients out. We'll respond more fully on Monday (with other pressing commitments today and tomorrow)." 1. There is no communication before me from the Appellant's solicitors to the solicitors for the liquidator on the following Monday 27 July. On Tuesday 28 July 2020 at 1.18pm, the solicitor for the liquidator wrote to the solicitor for the Appellant this: "We refer to our letter dated 23 July 2020 and your email of that date. We have not as yet received any further documents from your clients in compliance with the Orders for Production. As previously stated the production to date is deficient. Given your clients are the directors of the Company, they should have in their possession a variety of financial records including, invoices and working papers provided to the Company's accountants that form the basis for the company's financial statements and which are responsive to our request in the Orders for Production. Therefore, your clients' explanation that they do not have any financial records because they no longer have access to the company's Xero accounts is inadequate. Further, it is clear your clients to have access to records of the Company as they issued emails to customers of the Company in relation to a proposed deed of company arrangement. Furthermore, production was sort [sic] of communications (such as texts and whatsapp messages) which would still be in your client's possession. Further, as outlined in our letter, the Orders for Production require the production of a variety of documents in addition to the Company's financial records. We request your clients comply with the Orders for Production by no later than 4pm tomorrow, Wednesday 29 July 2020. Should your clients fail to comply, our client will take immediate steps to have the matter re-listed before the Court this week." 1. At 7.18pm that evening, the Appellant's solicitor replied to that communication in this fashion: "Thank you. (a) the position with the accounting records is as earlier stated / the position doesn't alter simply because your clients say it is in adequate. If your clients wish access then they are able through Xero; (b) the customers our clients have approached are from the same list provided to Mr Raja [Mr Natkunarajah] in the excel Spreadsheet at the commencement of the Liquidation ie it is a record you already hold; (c) the email handle you seek records from is not an email handle owned by the company in liquidation. Please let us know if and when you have the proceedings relisted so that we may appear. Also, please let us have the MS Teams link and Examination Bundle in anticipation of the public examinations commencing on Monday." 1. On 30 July 2021, there was another letter written by the solicitors for the liquidator which was also sent by email to the Appellant's solicitor. It is this: "1. We refer to our previous correspondence and in particular your email dated 28 July 2020 (Email). Your response to the Orders for Production 2. The explanations outlines in the Email regarding your clients' failure to produce documents in response to the Orders for Production are unsatisfactory. 3. First, the request for Nooks and Financial Records of the Company at category one of the Orders for Production was not limited to records that could be obtained from the Company's Xero account. Therefore, the issue of your clients' access to the Company's Xero account is irrelevant for the purposes of determining the adequacy of your clients' production. 4. Secondly, your clients are required to produce all documents in their possession or control which are responsive to the Orders for Production even if: (a) they have already provided these to the liquidator; or (b) the documents are not property of the Company. 5. Hence, the fact your client may have provided the Liquidators with an excel spreadsheet listing the customers of the Company or that emails responsive to the Orders for Production are contained on an 'email handle' not owned by the Company is irrelevant. 6. To be clear, your clients are required to produce any documents in their possession or control which are responsive to any category of the Order for Production. The only grounds upon which are clients are entitled to resist production of a document is if they assert a claim of legal professional privilege overt that document. To date, your clients have not done so nor have they outlined any other legal basis upon which they rely to resist production. 7. Additionally, the explanations provided in your previous correspondence including the Email, only explain your clients' lack of production in respect of aspects of some of the categories included in the Orders for Production. To date, your clients have provided no explanation for their failure to produce documents responsive to each and every category of the Orders for Production. 8. Therefore, your clients' response to the Orders for Production is inadequate. Documents requested in the Orders for Production 9. As outlined in our letter fated 23 July 2020 (Letter), the documents which your clients have produced are responsive to only some of the categories of the Orders for Production. 10. While the documents produced are relevant to category one of the notice, they largely related to the six month period before the Company was placed in liquidation and have not been provided for the entire period requested, namely, 23 June 2015 to 15 May 2020. 11. Furthermore, your clients have clearly not provided any documents responsive to eleven different categories namely, categories two to three and five to thirteen of the Orders for Production. As outlined already in our Letter this includes: (a) correspondence, howsoever recorded, including by text messages, letters and emails between the Company and the FLY365 Related Companies (as that term is defined in the Order for Production); (b) monthly reports to the board of directors, minutes of meetings of the board of directors, and any minutes of meetings of any subcommittees of the Company (we note that this list is not exhaustive but simply indicates obvious gaps in your clients' production); (c) funds and / or assets received by Scott Mayne, Mustafa Filizkok and the FLY365 Related Companies and the use of those funds or assets and related records; (d) the assets, liabilities and tax returns of Scott Maybe and Mustafa Filizkok. 12. We reiterate that this list of examples above is not exhaustive. 13. Additionally, we note specifically regarding categories twelve and thirteen of the Orders for Production, your clients should have no issue producing documents given this category requires the production of documents recording, referring or evidencing their personal assets and liabilities and tax returns, bank statements, mortgages or loan statements, credit card statements, certificates of title and motor vehicle registrations. 14. Therefore, our clients will seek to have the matter listed before Senior Deputy Registrar Hoskinson prior to the listing of the Examinations next Tuesday, 4 August 2020. 15. Should your clients not produce documents before such time or provide a fulsome explanation as to why they are unable to produce further documents, our client will seek orders that: (a) your clients produce the documents the subject of the Orders for Production; or (b) to the extent your clients assert they are unable to produce the documents, a direction that your clients' provide an affidavit attesting to the reasons why they are unable to produce the documents." 1. As I have previously mentioned, the public examination of at least the Appellant was conducted in the Supreme Court on 4 August 2020. The position adopted by the Appellant is contained in a letter bearing date 20 August 2020 addressed to the Registrar of the Supreme Court, a letter that was delivered by hand to the registrar. The substance of that letter is this: "MUSTAFA FILIZKOK & ANOR -V- FLY365 PTY LTD (IN LIQ) & ANOR | SUPREME COURT PROCEEDINGS NO. 2020/225555 We act for Mr. Scott Mayne. Since public examination hearing, Mr. Mayne has not received any correspondence from the Liquidators by which they identify particular records they seek (as represented they would by their legal representatives during the course of the public examination). Notwithstanding, and in answer to the Order for Production issued 17 June 2020, and adjourned to 21 August 2020, Mr. Mayne answers: Order 1: he has nothing to produce to the Liquidators. The Laptop upon which all records were held (and which was not property of the company in liquidation) was left by him in offices of a company domiciled in the UAE on or around the date of Liquidation. Order 2: he has nothing to produce to the Liquidators. The Laptop upon which all records were held (and which was not property of the company in liquidation) was left by him in offices of a company domiciled in the UAE on or around the date of Liquidation. Order 3: he has nothing to produce to the Liquidators. The Laptop and mobile phone upon which all records were held (and which was not property of the company in liquidation) were left by him in offices of a company domiciled in the UAE on or around the date of Liquidation. Order 4: he has nothing to produce to the Liquidators. The Laptop upon which all records were held (and which was not property of the company in liquidation) was left by him in offices of a company domiciled in the UAE on or around the date of Liquidation. Order 5: he has nothing to produce to the Liquidators. The Laptop upon which all records were held (and which was not property of the company in liquidation) was left by him in offices of a company domiciled in the UAE on or around the date of Liquidation. Order 6: he has nothing to produce to the Liquidators. The Laptop upon which all records were held (and which was not property of the company in liquidation) was left by him in offices of a company domiciled in the UAE on or around the date of Liquidation. Order 7: he has nothing to produce. Order 8: he has nothing to produce. Order 9: he has nothing to produce. Order 10: he does not hold any such records. Order 11: he does not hold any such records. Order 12: he does not hold any such records. Order 13: relevant records held in his possession produced herewith (PAYG Summary, Tax Return, and ANZ Bank Statements). Mr. Mayne remains available to assist the Liquidator or the Court as and where required / possible." 1. Alas, an impasse was reached which led to the issuing of the Court Attendance Notice. The only oral evidence given in the Local Court was that of Mr Niccol. The evidence was given on 27 June 2022, the same day that her Honour made her decision. On p 22 of the transcript, the following is recorded: Q. So it's correct isn't it Mr Niccol that in response to your request for identified and specified documents you have been provided with a detailed response by Yates Beaggi in relation to each category and identifying a number of documents that didn't exist? A. I wouldn't call it detailed but he provided a response. Q. Well he provided a very clear response in relation to documents where he said didn't exist, didn't he? A. I just from experience and working on these matters where you are looking for things and you are trying to identify things director's saying that they don't exist doesn't necessarily [mean] it does exist. Q. Well that's what you have been told? A. Correct. Q. And whether they exist or don't exist, you just don't know? A. Which is why I need the director's help and assistance to provide that information. Q. So you accept that you don't know whether these documents that haven't been produced exist or not? A. Correct." 1. The third element of the offence requires the Appellant to deliver to the liquidator "all books in the appellant's possession that relate to the company". There must be documents, even electronic documents, that are in the possession or power of the Appellant. The sworn evidence is that it is unknown whether any of the documents being sought by the liquidator existed or not. In other words, it is a good answer to a question requiring one to produce something in one's possession, that one does not have that thing in his possession, power or control. 2. I have carefully read the Magistrate's decision. That commences on p 45 of the transcript of 27 June 2022. I have looked through it to find out what document or thing her Honour found to exist that had not been produced by the Appellant to the liquidator. Her Honour identifies no document whatever. She appears to have assumed that the documents existed and that the excuse put forward by the Appellant for not producing them was inadequate. 3. It is clear that the Appellant had used a computer or laptop or iPad in the course of his work for the company. It is clear that the laptop was in an office in Dubai. When I go to Exhibit 2, the extract of evidence given by the Appellant in the Supreme Court on 4 August 2020, there are a number of disclosures. I must indicate that in respect of nearly every question put to him, the Appellant claimed privilege before giving his answer. For ease, I shall omit that word but it must be noted that the evidence that he gave is clearly the subject of his claim for privilege. The extract commences on p 21 of the transcript in the Supreme Court. On p 23, the Appellant gave this evidence: "Did you keep an electronic file, such as on an iPad or a laptop in relation to your communications with Mr Filizkok? ...yes." He went on to say that he usually communicated with Mr Filizkok in person rather than electronically or by text message. At p 24, this evidence was given: Where is your work laptop? ...my work laptop is currently in Dubai. Where in Dubai is your work laptop? ...my work laptop is currently, from memory, would be in the Dubai office." 1. The address given for the office was 3106 Mazaya Business Avenue, AA1, Jumeirah Lakes Towers, Dubai. Questions were then asked about Mr Yusuf Dik and his brother Ahmet Dik. It would appear that they both had some continuing relationship to the Fly365 business but they were in Dubai. The question then arose why the Appellant could not obtain the laptop from the office in Dubai. The answer to that question given in the papers before me was that the laptop itself did not belong to the Appellant nor did it belong to Fly365 Pty Ltd but it belonged to some other company. 2. In any event, the Appellant could not return to Dubai and retrieve the uptop because on 25 March 2020, the then Minister for Health of the Commonwealth of Australia made the "Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Overseas Travel Ban Emergency Requirements) Determination," cl 5 of which bears a heading Persons Not To Travel Outside Australian Territory After 12pm, 25 March 2020. The clause is this: "(1) An Australian citizen or permanent resident (the person) must not leave Australian territory as a passenger on an outgoing aircraft or vessel on or after the time this instrument commences unless: (a) an exemption set out in s 6 applies to the person; or (b) an exemption is granted to the operator of the aircraft or vessel or the person by an APS employee in the Australian Border Force under s 7. (2) An operator of an outgoing aircraft or vessel must not leave Australian territory on or after the time this instrument commences with any passenger who is an Australian citizen or permanent resident (the person) on board the aircraft or vessel unless: (a) an exemption set out in s 6 applies to the person; or (b) an exemption is granted to the operator by a person by an APS employee in the Australian Border Force under s 7." 1. Exemptions are provided in cl 6 and 7 of the determination but they do not at all appear to be relevant. There was a compilation of that order registered on 30 September 2020, the compilation itself being dated 18 September 2020 which extended the requirement of the order as I understand during the continuation of what was the coronavirus pandemic and certainly applied throughout 2020 and 2021. There is no suggestion that the Appellant could travel to Dubai and retrieve the laptop if whoever its legal owner was permitted him to do so. 2. It is one of the basic principles of our law that nemo dat quod non habet, one cannot give what one does not have. The Appellant could not obtain access to electronic records because the laptop which he used to do so was in Dubai. The submission on behalf of the Respondent is that the Appellant did not need that laptop in order to have access to any electronic records because he could access it by using some other computer. I am aware that such things are possible provided that the system is enabled to do so. For example, I am provided by the Crown with a laptop computer which I use in Chambers. On it, I received emails and work documents, however there are certain programs which I, as a judge, cannot use albeit that my Associate can use. I am aware that I can arrange, if I wish, to have electronic access to that computer from, for example, a notebook which I might carry around with me or from my home computer. However, I have not made the necessary arrangements to enable me to do so. 3. In any event, it was up to the Respondent as the Prosecutor to adduce evidence before the learned Magistrate that that possibility was open to the Appellant but no such evidence was adduced. I, again, point out that Mr Niccol, who was the liquidator of Fly365 Pty Ltd, did not know whether the documents which he was seeking actually existed. The learned Magistrate made no finding of what documents did exist and how they might be within the Appellant's power or control, that is, within his custody or possession. Her Honour merely assumed that there were and found that the excuse proffered by the Appellant was not an adequate one but, indeed, in doing that, she misconstrued what the evidence was. Although the Appellant had a laptop computer or iPad or some device, she thought that the one device was used by both the Appellant and Mr Filizkok and perhaps others who were working for Fly365 Pty Ltd but that was a false assumption. 4. In my view, the Prosecution was doomed to failure when one realised that the Respondent was unable to prove that documents existed and that they were in the possession or power of the Appellant to produce. I should indicate that put into evidence in the Local Court were copies of the orders made by the Federal Minister or at least the attention of the learned Magistrate was drawn to them. They, as a matter of law, were probably not something that needed to be tendered. 5. I have inquired of the representatives of the parties whether any further reasons for judgment are required. I am told that none is so required. For those reasons, I set aside the conviction recorded and the penalty imposed by the Downing Centre Local Court on 27 June 2022. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 May 2023