Supreme Court New South Wales Medium Neutral Citation: In the matter of Idylic Solutions Pty Ltd - Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106 Hearing dates: 14 and 17 December 2012 Decision date: 21 February 2013 Jurisdiction: Equity Division - Corporations List Before: Ward JA Decision: Imposition of disqualification orders and pecuniary penalties against first, third and eighth defendants; disqualification orders against fourth defendant; costs. Catchwords: CORPORATIONS - multiple civil penalty contraventions and other contraventions of Corporations Act and ASIC Act (in relation to operation of unregistered managed investment scheme, provision of financial services without an Australian Financial Services Licence, misrepresentations, improper use of corporate position to obtain benefits at the detriment of companies) - relief and consequential orders following findings of liability - consideration of relevant principles and factors in determination of penalties - power to make disqualification orders under s 1324 where no declaration of contravention of s 1101B - principles applicable in relation to exercise of discretion for grant of declaratory relief - appointment of receiver to assets of defendants in jurisdiction - costs Legislation Cited: Australian Securities and Investments Act 2001 (Cth) Civil Procedure Act 2005 Companies Act 1986 (Cth) Companies Act 1993 (NZ) Corporate Law Reform Act 1992 Corporate Law Reform Bill 1992 Corporate Law Reform Bill Explanatory Memorandum 1992 (Cth) Corporations Act 2001 (Cth) Corporations Act Explanatory Memorandum 2001 (Cth) Financial Advisors Act 2008 (NZ) Securities Industry Act 1980 (Cth) Uniform Civil Procedure Rules 2005 Cases Cited: ACCC v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 ACCC v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10;(1992) 175 CLR 564 Airpeak Pty Ltd v Jetstream Aircraft Ltd (1997) 73 FCR 161 Allen v Atalay (1993) 11 ACSR 753 ASC v Form-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 ASIC v Adler (No 5) [2002] NSWSC 483; (2002) 42 ACSR 80 ASIC v Citrofresh International Ltd (ACN 064 551 426) (No 3) [2010] FCA 292; (2010) 268 ALR 303 ASIC v Loiterton (2004) [2004] NSWSC 897; 50 ACSR 693 ASIC v Nandan (1997) 23 ACSR 743 Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663 Australian Competition and Consumer Commission v 1MB Group Pty Ltd (1999) ATPR 41-688, [1999] FCA 313 Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; 190 ALR 169 Australian Competition and Consumer Commission v Ozdirect Online Brands Pty Ltd [2009] FCA 1604 Australian Securities & Investments Commission v McDougall [2006] FCA 427; (2006) 229 ALR 158 Australian Securities & Investments Commission v West [2008] SASC 111; (2008) 100 SASR 496 Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43; (2012) 287 ALR 693 Australian Securities and Investments Commission v Beekink [2007] FCAFC 7; (2007) 238 ALR 595 Australian Securities and Investments Commission v Cyclone Magnetic Engines Inc [2009] QSC 58; (2009) 224 FLR 50, (2009) 71 ACSR 1 Australian Securities and Investments Commissionv Elm Financial Services Pty Ltd [2005] NSWSC 1065; (2005) 55 ACSR 544; [2005] NSWSC 1065; Australian Securities and Investments Commission v Forge [2007] NSWSC 1489 Australian Securities and Investments Commission v Fuelbanc Australia Limited [2007] FCA 960; 162 FCR 174 and, as amended, in [2006] FCA 940 Australian Securities and Investments Commission v Gramax Investment Club Ltd [2005] FCA 1708 Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; (2011) 196 FCR 430; (2011) 284 ALR 734 Australian Securities and Investments Commission v MacDonald (No 12) [2009] NSWSC 714; (2009) 73 ACSR 638 Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd [2002] NSWSC 741; (2002) 42 ACSR 605 Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373 Australian Securities and Investments Commission v Parkes [2001] NSWSC 377; (2001) 38 ACSR 355 Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561 Australian Securities and Investments Commission v Preston [2005] FCA 1805 Australian Securities and Investments Commission v Soust (No 2) [2010] FCA 388; (2010) 76 ACSR 1 Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 Australian Securities and Investments Commission V West & Anor [2008] SASC 111; 100 SASR 496 Australian Securities and Investments Commission v White [2006] VSC 239; (2006) 58 ACSR 261 Australian Securities Commission v Donovan (1998) 28 ACSR 583 Australian Securities Commission v Nandan(1996) 23 ACSR 743 Australian Softwood Forest Pty Ltd v Attorney-General (NSW) [1981] HCA 49; (1981) 148 CLR 121 Brian Cassidy Electrical Industries Pty Ltd (in prov liquidation) and another v Attalex Pty Ltd [1984] 3 NSWLR 52 Broken Hill Pty Co Ltd v Bell Resources Ltd (1984) 2 ACLC 157 Brookfield Multiplex Ltd v International Litigation Funding Partners Pty Ltd (2009) 180 FCR 11 Caines v Australian Securities and Investments Commission [2012] AATA 289 Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075 Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 322 Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 Gillfillan v ASIC [2012] NSWCA 370 Hanson v Radcliffe UDC [1922] 2 Ch 490 Hawkins (1993) 67 A Crim R 64 Hayes v ASIC [2006] AATA 506 Ibeneweka v Egbuna [1964] 1 WLR 219 ICI Australia Operations Pty Limited v TPC (1992) 38 FCR 248 In the matter of Melinda Scott and Roach Graham Scott Pty Ltd [2012] NSWSC 1643 Jimmy v the Queen [2010] NSWCCA 60 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; (1990) 97 ALR 45 Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362; 20 ACLC 58 McDougall and Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (ACN 106 761 826) [2006] VSC 192; (2006) 57 ACSR 553 Mercedes Holdings Pty Ltd v Waters (No 2) [2010] FCA 472; (2010) 186 FCR 450 Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128 Mill v R [1988] HCA 70; (1988) 166 CLR 59; 83 ALR 1 NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 Oates v Hawkins [2010] NSWSC 491 Ohn v Walton (1995) 36 NSWLR 77 Oil Basins Ltd v Commonwealth [1993] HCA 60; (1993) 178 CLR 643; 117 ALR 338 Old v McInnes and Hodgkinson [2011] NSWCA 410 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; (1998) 152 ALR 83 Pearce v R (1998) 194 CLR 610; 156 ALR 684; [1998] HCA 57 Postiglione v R [1997] HCA 26; (1997) 189 CLR 295 Rahme v R (1989) 43 A Crim R 81 Re Austral Knitting Mills Ltd (1926) 43 WN (NSW) 131 Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257 Re McDougall [2006] FCA 427; 229 ALR 158 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 Russian Commercial and Industrial Bank [1921] 2 AC 438 Seagrim v Australian Securities and Investments Commission [2012] AATA 583 Triton Underwriting Insurance Agency [2003] NSWSC 1145; (2003) 48 ACSR 249 Texts Cited: Austin and Black, Annotations to the Corporations Act Austin and Ramsey, Ford's Principles of Corporations Law (15th edn) Lang Thai, "Statutory injunction - call for amendment to s 1324 of the Corporations Act" (2006) 24 C&SLJ 41 Thomas, Principles of Sentencing 2nd edn 1979 Thomson Reuters, Annotated Corporations Act, 2012 edn Category: Consequential orders Parties: Australian Securities and Investments Commission (Plaintiff) David John Hobbs (First Defendant) Min Hua Li (Second Defendant) David John Collard (Third Defendant) Huimin Wu (Fourth Defendant) Con Koutsoukos (Fifth Defendant) Brian John Wood (Sixth Defendant) Jimmy Truong (Seventh Defendant) Jacqueline Hobbs (Eighth Defendant) Idylic Solutions Pty Ltd ACN 121 960 754 (Ninth Defendant) 888 Management Inc (Tenth Defendant) Geneva Financial Ltd (Eleventh Defendant) Barclaywest Ltd (Twelfth Defendant) Preserved Investment Group Ltd (Thirteenth Defendant) North Wave Ltd (Fourteenth Defendant) G P Global Ltd (Fifteenth Defendant) Representation: J A Halley SC with J R Clarke (Plaintiff) Ms G Hayden, Solicitor for Australian Securities and Investments Commission (Plaintiff) File Number(s): 07/258119 Judgment 1HER HONOUR: On 24 October 2012 I published my reasons for judgment in proceedings brought by ASIC against various individual and corporate defendants in respect of alleged breaches of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Act 2001 (Cth) (Australian Securities and Investments Commission v Hobbs [2012] NSWSC 1276). Those breaches related to the involvement of the defendants, in various capacities, in investment schemes through which investors' funds were pooled for the purpose of investment into the offshore wholesale market. The fourteen individual investment schemes the subject of these proceedings together constituted a single managed investment scheme that was required to be (but was not) registered under the Corporations Act (the Hobbs Scheme). (Had the individual schemes not formed part of a single collective scheme, then only two of the individual schemes (the Integrity Plus and Super Save schemes) would have been required to be registered.) 2After a hearing commencing on 4 July 2012 and concluding (with some adjournments during that period) on 12 September 2012 (at which none of the defendants had legal representation, other than a brief appointment of Counsel on a pro bono basis for the giving of advice on a limited issue to Ms Wu), I found that contraventions had been committed of a variety of statutory provisions, including, in a number of instances, civil penalty provisions of the Corporations Act. I then fixed the matter for a separate penalty hearing (and for submissions as to the other relief sought) on 14 and 17 December 2012. 3Due to the earlier discontinuance of the proceedings against three of the defendants, and the fact that others had been deregistered at various times prior to the hearing (and, indeed, prior to the commencement of the proceedings), substantive relief was sought by ASIC only as against Mr and Mrs Hobbs, Mr Collard and Ms Wu (though some of the declaratory relief that is sought relates to the conduct of the other defendants). Consequential relief to dispose of the proceedings and to facilitate the winding up of the Hobbs Schemes was also sought. 4There was no appearance by Mr and Mrs Hobbs or by Mr Collard during the penalty hearing on 14 and 17 December 2012. (Although there was also no appearance by Ms Wu on 14 December 2012, her husband (Mr Zhang) was in attendance in Court and made some oral submissions on behalf of his wife on that occasion.) ASIC filed affidavit evidence as to its communications with Mr and Mrs Hobbs, Mr Collard and Ms Wu seeking to ascertain their intentions in relation to attendance at the penalty hearing. Mr Collard's response made it clear that he did not intend to attend or be represented at the hearing. As to Mr and Mrs Hobbs, an email communication was sent to my chambers on 14 December 2012 informing the Court that Mr and Mrs Hobbs would not be attending court for health and financial reasons. 5In those circumstances I proceeded on 14 December 2012 to hear ASIC's with its application to seek final relief and orders against Ms Wu and Mr Collard, in their absence. I then stood the matter over to 17 December 2012 for oral submissions in relation to the orders sought against each of Mr and Mrs Hobbs, making directions to allow for medical evidence to be given on Mr Hobbs' behalf, if there were to be an application at that late stage to vacate the penalty hearing on medical grounds (a possibility having regard to the content of some of the written submissions that had been received on his behalf). There was no such application. Accordingly, on 17 December 2012, I proceeded to hear oral submissions as to the penalties to be imposed on Mr and Mrs Hobbs. 6Drafts of the declarations and orders sought by ASIC had been provided in advance to Mr and Mrs Hobbs, Mr Collard and Ms Wu. They were the subject of some amendment during the course of the oral submissions at the penalty hearing on 14 December 2012. Transcript of the oral submissions on 14 December and 17 December 2012 was provided to Mr and Mrs Hobbs at my direction and at no cost to them. Pursuant to directions made at that time, I gave Mr and Mrs Hobbs an opportunity to make further submissions by 21 January 2013 (a date Iater extended at their request to 25 January 2013). Written submissions were served by Mr and Mrs Hobbs pursuant to those directions and, by leave, on 4 February 2013 ASIC served short submissions in reply thereto. 7A complication that had by then arisen, in terms of finalising the relief to be granted in these proceedings, was that on 29 January 2013 I became aware of a facsimile transmission dated 25 January 2013 that had been sent to the Court by two investors in the Pinnacle Fund (Mr Ze Ning He and Mr Feng Gao), seeking the payment to them of moneys held in Court referable to the Pinnacle Fund. I caused each of ASIC, Mr and Mrs Hobbs, Mr Collard and Ms Wu to be notified of, and copied with, that communication and listed the matter for directions on 1 February 2013. I did so because the relief for which Messrs He and Gao were seeking (in their then informal application to the Court) was inconsistent with (and would be rendered futile by) the orders sought by ASIC for the appointment of a liquidator to wind up the Pinnacle Fund (as part of the winding up of the overall Hobbs Scheme) and for the payment to the liquidator of all of the funds held in Court referable to the Hobbs Scheme. 8Pursuant to directions made on 1 February 2013, on 7 February 2013 Messrs He and Gao filed a notice of motion seeking orders under Part 55.11 of the Uniform Civil Procedure Rules 2005 (NSW) for payment to them of the moneys held in Court that are referable to the Pinnacle Fund and joining as respondents to that application each of Mr Hobbs, Ms Wu and the only other investor (according to the s 50 summaries admitted as Ex A in the proceedings) in the Pinnacle Fund (Ms Suzan Ou, both personally and through a company HLD Corporation). That notice of motion was returnable on 11 February 2013. The difficulty with proceeding with the payment out application on that day was that Ms Ou had not been properly served in accordance with the Rules (the documents being sent by express post to an address obtained by reference to identification documents of Ms Ou, the provenance of which was not made clear). There was no evidence of recent attempts to contact Ms Ou in order to ascertain or confirm her current whereabouts (though attempts had been made in the past by reference to a mobile phone number on which she had previously been contactable). I made further directions in relation to service on Ms Ou and stood that application over to 21 February 2013, at the same time listing these proceedings for judgment on the penalty hearing on that day (with a view to hearing the application for payment out of Court and then delivering judgment on the penalty hearing, with any modification of orders as might be necessary having regard to the outcome of the application by Messrs He and Gao). Ms Ou has since served an affidavit in which she indicates her consent to the payment out orders sought (on the basis, as I understand it, that she receive a share of the funds proportionate to her investment to the fund). 9As to the amounts paid into Court, handed up as an aide memoire during the course of the hearing was a list of the amounts paid in (from the various Cadent and Technocash accounts as well as from various of the corporate administrators of the Schemes, totalling AU $19,383,475.20 and US $1,580,593.02). Of those amounts a total of AU $18,953,475.20 has been paid out to the liquidator of the Super Save and Integrity Plus funds and the investors in Procash; and a further US $963,833.74 to the liquidator of the Master Fund. Remaining in Court are the sums of AU $430,000 and US $616,759.28 (together with any interest that may have been accrued thereon). Of that amount a sum in the order of US $215,617.77 is acknowledged by ASIC to be referable to the Pinnacle Fund. This is the amount in respect of which Messrs He and Gao have made their application under Rule 55.11. Summary 10For the reasons set out below, I am of the view that declarations largely in the terms sought by ASIC should be made; that each of the first, third, fourth and eighth defendants should be disqualified on a permanent basis from operating or carrying on the Hobbs Scheme or any other unregistered managed investment scheme and from providing any financial services without an Australian Financial Services Licence; and that, in addition to those disqualification orders: * disqualification orders should be made on a permanent basis against Mr Hobbs from managing any corporation, operating or carrying on any other managed investment scheme (i.e. even if that be registered) and from providing financial services; and he should be ordered to pay the Commonwealth a total penalty of AU $500,000 in respect of his numerous contraventions of ss 180, 181 and 182 of the Corporations Act; * permanent financial services disqualification orders should be made against Mr Collard; as to managing corporations he should be disqualified for a period of 20 years from the date of these orders and he should be ordered to pay the Commonwealth a penalty in total of $150,000 in total in respect of his many civil penalty contraventions; * Ms Wu should be restrained for a period of four years from managing corporations and a period of eight years from providing financial services; and * Mrs Hobbs should be restrained from managing corporations for a period of six years and from providing financial services (and related financial services disqualifications) for a period of eight years; and should pay the Commonwealth the sum of $20,000 in total by way of pecuniary penalty for her various contraventions of s 182 of the Corporations Act. 11There should be costs orders against each of those defendants, limited in the case of Ms Wu and Mr Collard to the period in which they actively contested the claims against them. 12I will make other consequential orders to provide for the winding up of the Hobbs Scheme (and the individual schemes comprised therein) and to dispose of the proceedings. I will make a final determination as to the orders in relation to the Pinnacle Fund after determining the notice of motion by Messrs He and Gao. The orders that are presently in the attached Schedule of Declarations and Orders include those that, but for and subject to the outcome of that application, I propose to make in relation to the Hobbs scheme and component funds, including the Pinnacle Fund. 13For convenience, I set out below a schedule of contents of these reasons. CONTENTS Summary [10] Background [14] Relief sought [21] Relevant Legal Principles [24] Declaratory relief [25] Disqualification orders (ss 206C and 206E) [41] Disqualification orders (ss 1101B and 1324) [58] Section 1101B [59] Section 1324 [64] Scope of s 1324 in light of s 1101B [72] Are the Adler factors applicable? [92] Pecuniary penalties sought under s 1317G [107] Multiple Contraventions [112] Appointment of receiver pursuant to ss 1101B and 1323(1) [117] Reasons Declaratory relief [119] Disqualification/Penalty orders Contraventions [122] Mr Hobbs [124] Mr Collard [126] Ms Wu [128] Mrs Hobbs [129] Identification of contraventions for purpose of imposition of civil penalties [131] Disqualification orders under ss 206C and 206E [160] Seriousness of contraventions Departure from standards expected [161] Potential/actual consequences [169] Disqualification orders under s 1101B and/or 1324 [182] Mr Hobbs Conduct of Mr Hobbs [186] Submissions made as to penalty by Mr Hobbs [193] Mr Hobbs' affidavit/January statement [195] Contrition [197] Mr Hobbs' further arguments as to findings [211] Mr Hobbs' financial position [238] Mr Hobbs' medical condition [243] Impact of the proceedings [249] Mr Hobbs' position as to penalty [265] Character Evidence [275] Should disqualification orders be made against Mr Hobbs? [280] Period of disqualification orders [288] Mr Collard Conduct [318] Mr Collard's submissions [326] Should disqualification orders be made? [340] Period of disqualification [342] Ms Wu Conduct [350] Ms Wu's submissions [356] Should disqualification orders be made? [365] Period of disqualification [368] Mrs Hobbs Conduct [375] Submissions on behalf of Mrs Hobbs [384] Should disqualification orders be made/period [400] Pecuniary penalties [404] Mr Hobbs [407] Mr Collard [438] Mrs Hobbs [449] Appointment of receiver [460] Other orders [470] Costs [479] Conclusion [494] Schedule of Representations Schedule of s 182 Commissions and Payments Schedule of Declarations and Orders Background 14The events leading up to the proceedings are set out in detail in my principal reasons for judgment and are not repeated here. In these reasons I have adopted the same definitions and abbreviations as those used in my principal reasons. The relevant contravening conduct of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs is set out later in these reasons. By way of brief introduction, however, I note as follows. 15From around 2002, Mr Hobbs promoted in Australia (through FTC and the FTC executives) individual "white label" or generic investment funds that constituted a financial product for which an Australian financial services licence was required. No such licence was held by anyone involved in the operation of the schemes. As a consequence, there was a breach of s 911A of the Corporations Act by Mr Hobbs (as well as a breach by him in his capacity as a de facto director of FTC and shadow director of the relevant corporate administrators, Mr Hobbs having caused or permitted the respective corporations similarly to contravene s 911A of the Act). The financial services in question related to the marketing of the respective individual investment funds through a combination of the sale of FTC subscriptions and the OEM/KLM process. This led to the making of offers and issue of unit certificates, or the confirmation of investments, in this jurisdiction (albeit generally in the name of an IBC that was registered offshore). (There were similar contraventions by Mr Collard and Ms Wu.) 16There was also a breach of s 601ED(5) of the Corporations Act by Mr Hobbs (and others) by reason of the operation within this jurisdiction of the Hobbs Scheme (that scheme comprising the individual managed investment schemes and the process in which FTC and OEM/KLM were engaged in promoting and marketing the individual schemes); the Hobbs Scheme being an unregistered managed investment scheme within the meaning of the Act. 17ASIC established numerous contraventions by each of Mr Hobbs and Mr Collard relating to the making of misrepresentations as to the Hobbs Scheme to potential investors (including misrepresentations specific to one or more of the individual investment schemes); and breaches by them of breaches of duties owed under s 180 and 181 of the Corporations Act (having caused or permitted similar representation contraventions by the corporate administrators to whom such duties were owed); and breaches of s 182 of the Corporations Act in relation to benefits obtained by improper use of their position as directors or officers of various of the corporate administrators to the detriment of the relevant companies. 18Similar contraventions of ss 911A and 601ED(5) and similar representation contraventions in relation to particular investment schemes were found to have been committed by each of Ms Li, Mr Koutsoukos, Mr Wood and Mr Truong (though these findings were relevant only insofar as they were necessary to establish the liability of others in respect of those contraventions, since the proceedings had either been stayed or discontinued against those defendants). 19ASIC established a lesser number of contraventions of one or more of the same statutory provisions by each of Ms Wu (an officer or de facto officer of two of the corporate administrators, Barclaywest and 888 Vanuatu) and Mrs Hobbs (Mr Hobbs' wife and a de facto director or officer of another corporate administrator, Geneva Financial). 20Contraventions were also established of s 911A of the Corporations Act by each of the remaining defendants (being the corporate administrators of the various investment funds), though only ISPL and North Wave were still registered as at the time of the hearing. Relief sought 21In broad terms, the relief that ASIC has sought encompasses: declarations as to the various contraventions as well as disqualification or banning orders restraining particular defendants (Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs) from a range of conduct (operating or promoting the Hobbs Scheme, or any of the individual schemes comprised within that scheme, or any managed investment scheme (registered or unregistered); managing corporations and providing financial services) for various periods (ranging from permanent disqualification to disqualification for a specified period of time); pecuniary penalty orders (pursuant to s 1317G of the Corporations Act) against each of Mr Hobbs, Mr Collard and Mrs Hobbs (not Ms Wu); the winding up of the Hobbs Scheme (and those of the individual schemes comprised therein that have not already been the subject of winding up orders); the appointment of a receiver to any assets located in this jurisdiction of Mr and Mrs Hobbs (in order to investigate whether there are any such assets that were derived from the individual schemes and to the assets of Ms Wu); and costs. 22Consequential orders are sought as to the discharge of various asset preservation and related orders made (and the release from certain undertakings given) during the course of the proceedings; as well as orders to preclude any later revival by the individual defendants of the now deregistered corporate defendants and orders for the discontinuance of the proceedings against those deregistered corporate defendants. 23ASIC seeks that the proceedings remain stayed (presumably indefinitely) as against the second defendant (Ms Li), who is presently in prison in China, so as to be able to rely on the commencement of these proceedings against her within the relevant limitations period(s) should ASIC later be in a position (and consider it appropriate to do so) to press the claims made against her. Relevant Legal Principles 24I set out first the relevant legal principles to be applied when determining whether to grant declaratory relief and to impose disqualification orders and pecuniary penalties before turning to the submissions made as to the relief to be granted in the present case. (i) Declaratory relief 25Section s 1317E of the Corporations Act requires the court to make a declaration of contravention if satisfied (as is the case here) that a person has contravened a civil penalty provision, specifying, among other things, the civil penalty provision that was contravened, the person who contravened the provision, the conduct that constituted the contravention and the corporation to which the conduct related (s 1317E(2)). 26There is no element of discretion in the grant of declaratory relief of this kind. To the extent that the declarations sought by ASIC go beyond those mandated by s 1317E, however, the making of such orders is a matter within the discretion of the court. 27There is no doubt that the court has a wide discretion to grant declaratory relief (Hanson v Radcliffe UDC [1922] 2 Ch 490, at 507; Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421, at 438; Ibeneweka v Egbuna [1964] 1 WLR 219, at 225; Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257; Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10; (1992) 175 CLR 564, at 581, per Mason CJ, Dawson, Toohey and Gaudron JJ; Oil Basins Ltd v Commonwealth (1993) 178 CLR 643 at 649; 117 ALR 338 per Dawson J). In Ainsworth, the plurality (adopting the language of that in Forster v Jododex) said that it was neither possible nor desirable to fetter the inherent discretionary power of superior courts to grant declaratory relief by laying down rules as to the manner of its exercise. 28In Forster v Jododex, it was said that it was necessary that there be a real and not a theoretical question before the Court; that the person raising it must have a real interest to raise it and that there must be someone presently existing who has a true interest to oppose the declaration sought (as judicial pronouncements ought not to be issued unless there are circumstances that call for their making) (at 435-436). Those principles were included with approval in the summary of relevant principles by Lockhart J (with whom Spender and Cooper JJ agreed) in Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663 at 670-671. 29In the present case, the declaratory relief that is sought as a matter of the Court's discretion (i.e. not the declaratory relief that is mandated by s 1317E) does not involve the determination of abstract or hypothetical questions. Where the declaratory relief is directed to conduct of defendants against whom no substantive relief is now sought (such as those against whom the proceedings have been discontinued or stayed) or which are no longer in existence (being deregistered companies), the declarations go to matters relevant to the determination of claims against other defendants which are productive of real consequences for the parties. 30ASIC seeks that further declaratory relief on the basis that, as a regulator exercising its statutory function, it has a real interest in obtaining such relief (referring to the recognition of the regulator's interest therein in Australian Securities & Investments Commission v West [2008] SASC 111 at [207] and Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43 at [271]). Reference was also made to the recognition in Australian Securities & Investments Commission v McDougall (2006) 229 ALR 158 at [55] (the court there citing Australian Softwood Forest Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121 at 125) that the seeking of declarations by regulators serves important law enforcement purposes. 31Insofar as the requirement that there be a proper contradictor to the grant of declaratory relief (Forster v Jododex; Russian Commercial and Industrial Bank [1921] 2 AC 438 at 448; Ainsworth; Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596), in the sense of someone presently existing who has a true interest to oppose the declaration sought is concerned, it is not necessary that the contradictor actually oppose the declaratory relief sought (ACCC v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378; ACCC v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 at [44]). 32In the present case, the allegations as to the various contraventions were opposed throughout the proceedings by Mr and Mrs Hobbs (and, at the close of the hearing, to some extent in the submissions pressed on behalf of Ms Wu). (Though Mr Hobbs was ultimately prepared, as his alternative position, to accept that certain findings of contravention could be made against the various corporate/scheme administrators, Mrs Hobbs continued to press her defence of those allegations against her.) Furthermore, Mr Collard (though entering a submitting appearance in April 2012) was personally in attendance throughout most of the hearing and was in the position of someone with a true interest in opposing the claims against him (as evident by his attempt, albeit unsuccessful, at a late stage of the hearing to withdraw his submitting appearance and reinstate his earlier defence). 33As to the utility of the declaratory relief sought, ASIC concedes that ordinarily the court will not grant declarations that are of little or no utility but refers to Transphere (at 608) for the proposition that, even if the declaratory relief may have only slight utility, the public interest in determining and declaring a contravention of statutory provisions is an appropriate basis for such relief. Although one way that utility may be measured is in terms of the effectiveness of the declaratory relief in quelling the dispute between the parties and preventing further litigation (Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075, at [28] per Brereton J), this is not determinative of the exercise of the court's discretion. 34Mr Halley SC (Senior Counsel appearing for ASIC with Mr Clarke of Counsel at both the hearing and the penalties hearing) submits that there is a public interest in the making of declarations of contravention of the kind now sought on the following five bases. 35First, that this is an appropriate means by which to record the Court's disapproval of the contravening conduct (as was recognised in McDougall at [55]). Second, that this will vindicate ASIC's claim as to the commission of the contraventions in question and may assist ASIC in carrying out its statutory duties and functions as regulator (including as a means of deterrence) (reference there being made to Australian Lending Centre at [272]). Third, that this may assist in clarifying the law (as recognised in Australian Lending Centre at [272])). Fourth, that significant contraventions of law may be exposed through the regulator bringing the decision to the community's attention (Australian Competition and Consumer Commission v Ozdirect Online Brands Pty Ltd [2009] FCA 1604 at [53]). Fifth, that this may serve to warn others of the dangers from the contravening conduct (Australian Competition and Consumer Commission v 1MB Group Pty Ltd (1999) ATPR 41-688, [1999] FCA 313 at [21]), particularly where (as here) the contravening conduct was directed to a large section of the public over a significant period of time. 36Each of those submissions has force in the present case having regard to: the scope (and seriousness) of the conduct comprising the contraventions; the section of the public to whom that conduct was quite clearly directed (financially unsophisticated investors targeted by word of mouth or through relatives and friends of Scheme administrators to whom the prospect of a significant return on their investment would (as Mr Hobbs well appreciated) be likely to prove highly attractive and many of whom (at least in the Li/Collard Schemes) spoke little or no English and hence were unlikely to be in a position to understand the documentation in relation to the investments without assistance); the manner in which at least some of the investment documentation was executed (giving investors little or no opportunity to absorb, or obtain legal or other advice as to, the information provided in the scheme memoranda); the fact that two of the schemes were expressly directed to the investment of superannuation funds; and in circumstances where, in the context of the disqualification orders that have been sought, Mr Halley has drawn to my attention some legal issues on which it appears clarification may be useful. 37ASIC accepts (as recognised in Transphere at 608) that a legitimate and powerful factor against the grant of declaratory relief would be the possibility of embarrassment in a practical sense to a non-party. It is not suggested that the making of the declarations sought in the present case would give rise to such a risk. While I accept that the making of declarations extending the conduct of Ms Li (who has not been in a position to defend the allegations against her), may give rise to some embarrassment, no issue estoppel would arise to preclude a later defence by her of the allegations and it does not seem to me that the making of the declarations is likely to lead to any embarrassment beyond that which would already have arisen by the making of the findings already made in my principal judgment. As to the position of Messrs Koutsoukos, Wood and Truong, in respect of whom these proceedings were discontinued in circumstances where criminal proceedings had been instituted against them, they gave evidence voluntarily in ASIC's case. It was not suggested that the making of declarations relating to their conduct in the present proceedings should be avoided having regard to the existence of those criminal proceedings (the present status of which I am unaware). 38The declarations sought by ASIC have been framed in accordance with the approach adopted by Brereton J in Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373. There, where there had been contraventions of various civil penalty provisions (and both declaratory relief and pecuniary penalties were sought against some of the defendants), his Honour noted that it would generally be inappropriate to make declarations of contravention that treated the relevant course of conduct of the defendants as directors of the relevant group over the whole period of the operation of the schemes both as a single contravention of s 180 and then as another contravention of s 181 ([146]). 39In Maxwell, his Honour was of the view that, generally, there should be a separate declaration of contravention in respect of each act or default (though noting that in the circumstances of the case before him it did not operate to the prejudice of the defendants to treat as one contravention what may have been multiple contraventions). His Honour went on at [148] to say: ... the same conduct should be treated as constituting one contravention only, and not separate contraventions of ss 180 and 181. Sections 180, 181 and 182 of the Corporations Act are intended to give statutory recognition to the general law duties of company directors, and to make available additional sanctions for their breach, but not to create a regime of multiple jeopardy. The same conduct may constitute a breach of the duty to act in good faith as well as of the duty of care and diligence. At general law, what mattered was that the conduct was in breach of a director's duties; and although the same conduct might have been characterised as a breach of more than one of those duties, it constituted only a single breach. Bearing in mind that at least ss 181 and 182 have criminal as well as civil sanctions, and on well-established principles, the same conduct should be penalised only once. I have addressed this by consolidating the proposed declarations of contravention of the different sections into one declaration of contravention. (my emphasis) 40I have adopted that approach in the present case. (ii) Disqualification orders (from managing corporations) sought under ss 206C and 206E 41Insofar as orders are sought against various defendants to disqualify them from managing corporations (either for a period of time or, in the case of Mr Hobbs and Mr Collard, permanently), ASIC invokes the powers conferred by ss 206C and 206E of the Corporations Act. Those sections are as follows: 206C Court power of disqualification - contravention of civil penalty provision (1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: (a) a declaration is made under section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. 206E Court power of disqualification - repeated contraventions of Act (1) On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if: (a) the person: (i) has at least twice been an officer of a body corporate that has contravened this Act while they were an officer of the body corporate and each time the person has failed to take reasonable steps to prevent the contravention; or (ii) has at least twice contravened this Act while they were an officer of a body corporate; or (iii) has been an officer of a body corporate and has done something that would have contravened subsection 180(1) or section 181 if the body corporate had been a corporation; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. 42The power conferred by s 206C of the Corporations Act is thus predicated on the making of a declaration, pursuant to s 1317E of the Act, of contravention by the relevant defendant of a civil penalty provision and the court being satisfied that the disqualification is justified. As already noted, the making of such declarations is mandated by s 1317E where a contravention of such a provision has been found. Since declarations of that kind will now be made, the relevant threshold question is as to whether in the present case the disqualification is "justified". 43The power pursuant to s 206E of the Corporations Act to make such a disqualification order arises where, relevantly, the person has at least twice been an officer of a body corporate that has contravened the Corporations Act (this not being limited to a contravention of a civil penalty provision) and has each time failed to take reasonable steps to prevent the contravention (my emphasis) or the person has, while an officer of the corporation, at least twice contravened the Corporations Act (again, not limited to contravention of civil penalty provisions). Again, it is necessary that the court be satisfied that the disqualification is "justified". 44In Gillfillan v ASIC [2012] NSWCA 370, Sackville AJA noted, at [193], that insofar as s 206C of the Corporations Act empowers the court to disqualify a person from managing a corporation for a period only if it is satisfied that "the disqualification is justified", this means that the court must be satisfied not only that an order for disqualification should be made against the contravenor, but also that the period of disqualification is "justified". 45The reference in ss 206C and 206E to disqualification "for a period that the court considers appropriate" encompasses the making of an order for permanent disqualification (Australian Securities and Investments Commission v Elm Financial Services Pty Ltd (2005) 55 ACSR 544; [2005] NSWSC 1065; Australian Securities and Investments Commission v White (2006) 58 ACSR 261; [2006] VSC 239). 46Here, there have been multiple contraventions by each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs (while directors or officers of different companies) of various provisions of the Corporations Act (satisfying the requirement set out in s 206E(1)(ii)). In addition, s 206E(1)(i) has been satisfied as each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs, in their respective capacities as de facto or shadow directors or officers (in the case of Ms Wu, she was an officer not a director); have at least twice been officers of companies who have contravened the Act and, far from taking reasonable steps to prevent those contraventions by the respective corporations, the individual defendants each played a role in causing or facilitating the contraventions. 47In determining whether disqualification is justified for the purposes of ss 206C and 206E, regard may be had to the person's conduct in the management, business or property of any corporation (not just the corporation committing the contravention (ss 206C(2) and 206E(2)). 48In Gillfillan, it had been submitted that the primary judge had erred (when imposing particular periods of disqualification for non-executive directors of the company), by commencing the analysis required by s 206C(2) of the Corporations Act not by a consideration as to whether disqualification was justified having regard to the individual director's conduct in relation to the management, business or property of any corporation and other appropriate matters but, instead, by comparison with the period of disqualification attributed to another defendant (that then being discounted by applying the parity principle). That approach was found to be in error, not because regard had been had to the penalties to be imposed on other contraveners, but by reference to the manner in which that process of comparison had been carried out. At [194]-[195], Sackville AJA said: The language of s 206C(2) of the Corporations Act gives the court broad scope in determining the matters to take into account in deciding whether a period of disqualification is appropriate for a contravention of the legislation. As the propositions stated by Santow J in ASIC v Adler recognise, the nature of the contravention and its seriousness are critical considerations. But they are not the only relevant matters. The terms of s 206C(2) are wide enough to permit the court to have regard to penalties imposed or to be imposed on other contravenors whose contraventions are the same or at least very similar. However, if the penalty imposed on one contravenor is to be regarded as the yardstick for the penalty to be imposed on another contravenor, care must be taken to identify the points of similarity and difference. If identical penalties are to be imposed, attention should be directed to whether the contravenor's circumstances warrant equal treatment. If the penalty imposed on one contravenor is taken as a comparator for the penalty to be imposed on another contravenor, but adjustments are thought to be necessary, the circumstances that justify and explain the differential treatment should be identified. (my emphasis) 49When Sackville AJA came to approach that exercise afresh, his Honour commenced by first considering the examination of the nature and seriousness of the particular contravening conduct. 50The seriousness of the contravention is to be determined by reference to the degree by which the officer of the relevant corporation has departed from the requisite standard of care and diligence and the potential or actual consequences of the contravention(s) (Vines v ASIC, per Ipp JA (at [229])). 51The importance of general deterrence and the need to uphold proper standards of corporate behaviour are factors in determining whether a disqualification should be imposed and, if so, for what period (in Gillfillan, at [183]; see also Australian Securities and Investments Commission v Beekink (2007) 238 ALR 595 at [83]; Australian Securities and Investments Commission v MacDonald (No 12) (2009) 73 ACSR 638). It is recognised that disqualification itself has a punitive effect and that retribution is one of the objectives of such a provision (Australian Securities and Investments Commission v Forge [2007] NSWSC 1489; Macdonald; Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 at [35]). It is necessary to balance the objectives of general and specific deterrence with the need not unfairly to disadvantage the penalised person or to impose a penalty so large as to overreach what is the necessary object of such an order. Thus, hardship is a relevant factor in determining penalty though it plays a lesser role than that of deterrence (Forem-Freeway, Middleton J at 349-50) citing NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285; Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1996) 23 ACSR 743 at 752 per Merkel J). 52Where, as here, both pecuniary penalties and disqualification orders are sought, the approach by the court should be to consider the issue of disqualification before that of pecuniary penalty. McHugh J in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [48] (having referred to the Explanatory Paper accompanying the first draft of the Corporate Law Reform Bill 1992 in relation to the predecessors to ss 206C and 206E) said: It is expected that in settling an appropriate [civil penalty] order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant's conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. (my emphasis) (See also Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 at [101]; (2011) 284 ALR 734; Australian Securities and Investments Commission v Soust (No 2) [2010] FCA 388 at [20].) 53McHugh J went on to refer to an expectation that the Court would consider imposing a pecuniary penalty only where a disqualification order would provide an inadequate or inappropriate remedy. That said, there is no doubt that the seriousness of the relevant contravention(s) may warrant the imposition in an appropriate case of a pecuniary penalty in addition to a disqualification order. At [330] in Gillfillan, Sackville AJA said: I accept that a pecuniary penalty should be imposed on the appellants only if an order for disqualification is an inadequate or inappropriate remedy: CA Penalty Judgment, at [131], per curiam. However, I think that the seriousness of each contravention warrants an additional pecuniary penalty, even if of a relatively modest amount. While the appellants have correctly submitted that a pecuniary penalty is not required in the interests of personal deterrence, it is necessary to take into account the objective of general deterrence and the need for the court to match the disapproval of conduct involving such a marked departure from the standards to be expected of directors of public companies. (my emphasis) 54The principles and factors to be taken into account by the court in exercising the power of disqualification in the context of the management of corporations were set out by Santow J, as his Honour then was, in ASIC v Adler (No 5) (2002) 42 ACSR 80 (a judgment described by McHugh J in Rich at [48]-[49]) as the leading authority on the reasons for the exercise of the power of disqualification under ss 206C and 206D). (As will be seen below, it is also the yardstick by which disqualification orders under other provisions have been considered by later Tribunals and by this Court.) 55Though these principles have been widely reproduced (and applied) in other cases (see, for example, the authorities listed in Austin and Black's Annotations to the Corporations Act at [2D.206C]), it is useful to set out in full the relevant passage (at [56]) from Santow J's judgment in Adler (since ASIC's submissions are directed to the factors recognised as leading to the varying disqualification periods referred to in that judgment and it may assist the self-represented defendants in this case to understand the way in which those factors have been found to apply to them). Nevertheless, the principles summarised by Santow J are guidelines only; each case turning upon its own considerations (Beekink). In Forge, White J (noting at [106] that Santow J had not purported to lay down three separate and water-tight categories of case leading to disqualification orders) considered that there would inevitably be cases where the appropriate period of disqualification would fall outside any of the periods considered in Adler. 56At [56] in Adler, Santow J noted that his review of the cases on disqualification revealed the making of such orders for periods ranging from life disqualification to three years and went on to say: The propositions that may be derived from these cases include: (i) Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards: Australian Securities and Investments Commission v Hutchings (2001) 38 ACSR 387 at 395 Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 349-50 Australian Securities Commission v Donovan (1998) 28 ACSR 583 at 602 Australian Securities Commission v Roussi (1999) 32 ACSR 568 at 570-1 Re Strikers Management Pty Ltd; Australian Securities Commission v Dimitri (unreported, Fed C of A, Burchett J, No NG 3789 of 1996, 7 May 1997, BC9702133) Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1997) 23 ACSR 743 at 751. (ii) The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office: Australian Securities Commission v Roussi, above, at 570; Re Gold Coast Holdings Pty Ltd; Australian Securities and Investments Commission v Papotto (2000) 35 ACSR 107 at 112. (iii) Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors: Australian Securities Commission v Roussi at 570; Re Gold Coast Holdings Pty Ltd, above, at 112; Re Tasmanian Spastics Association, above, at 751. (iv) The banning order is protective against present and future misuse of the corporate structure: Australian Securities Commission v Donovan, above, at 603. (v) The order has a motive of personal deterrence, though it is not punitive: Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203 at 205; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd, above; Australian Securities Commission v Donovan at 607; Re Tasmanian Spastics Association at 751;42 ACSR 80 at 98. As Austin J noted in Australian Securities and Investments Commission v Vines [2006] NSWSC 760; (2006) 58 ACSR 298 at [35]-[36], this proposition must be read as subject to what was said in Rich v ASIC (infra) such that a disqualification order should now be regarded as involving the imposition of a penalty. (vi) The objects of general deterrence are also sought to be achieved: Australian Securities Commission v Donovan at 602. (vii) In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company: Australian Securities Commission v Donovan at 607. (viii) Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty: Australian Securities Commission v Donovan at 605-7. (ix) In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public: Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd; Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355 at 386; Australian Securities Commission v Forem-Freeway Enterprises; Australian Securities Commission v Roussi at 570-1. (x) It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct: Australian Securities Commission v Donovan at 607; Australian Securities and Investments Commission v Parkes, above, at 386. (xi) A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming: Australian Securities Commission v Forem-Freeway Enterprises at 351. (xii) The eight criteria to govern the exercise of the court's powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess: · character of the offenders; · nature of the breaches; · structure of the companies and the nature of their business; · interests of shareholders, creditors and employees; · risks to others from the continuation of offenders as company directors; · honesty and competence of offenders; · hardship to offenders and their personal and commercial interests; and · offenders' appreciation that future breaches could result in future proceedings. Australian Securities Commission v Roussi at 570-1; Re Gold Coast Holdings Pty Ltd at 111; (xiii) Factors which lead to the imposition of the longest periods of disqualification (that is disqualifications of 25 years or more) were: · large financial losses; · high propensity that defendants may engage in similar activities or conduct; · activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy; · lack of contrition or remorse; · disregard for law and compliance with corporate regulations; · dishonesty and intent to defraud; · previous convictions and contraventions for similar activities. Australian Securities and Investments Commission v Hutchings; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd; Australian Securities Commission v Parkes; (xiv) In cases in which the period of disqualification ranged from 7-12 years, the factors evident and which lead to the conclusion that these cases were serious though not "worst cases", included: · serious incompetence and irresponsibility; · substantial loss; · defendants had engaged in deliberate courses of conduct to enrich themselves at others' expense, but with lesser degrees of dishonesty; · continued, knowing and wilful contraventions of the law and disregard for legal obligations; · lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform; Australian Securities Commission v Forem-Freeway Enterprises; Australian Securities Commission v Donovan; Australian Securities Commission v Roussi; Re Strikers Management Pty Ltd; Re Gold Coast Holdings Pty Ltd. The difficulty with Roussi's case is that disqualification for 10 years was ordered, as this was the period of disqualification that the ASC had sought. Had a longer period been applied for, Einfeld J may have considered giving a longer period: Australian Securities Commission v Roussi at 571; (xv) The factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were: · although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated; · the defendants had no immediate or discernible future intention to hold a position as manager of a company; · in Donovan's case, the respondent had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings; Australian Securities Commission v Donovan; Re Tasmanian Spastics Association. 57In Vines, Austin J (having had regard to the above principles) summarised afresh the factors to be taken into account in determining the period of disqualification for managing corporations (at [43]) as including: whether the defendant now is or will in the future be a fit and proper person to manage corporations; the size of any losses suffered by the corporation, its creditors and consumers; the legislative objectives of personal and general deterrence; contrition on the part of the defendant; the gravity of the misconduct; the defendant's previous good character; prejudice to the defendant's business interests; personal hardship; and the willingness of the defendant to render assistance to statutory authorities and administrators. (iii) Disqualification orders (from other conduct, including the provision of financial services) sought under ss 1101B and 1324 58As well as orders disqualifying the particular defendants from managing corporations, disqualification orders are sought by ASIC against those same defendants to restrain them from carrying on a business in relation to financial products or financial services, or from being involved in the carrying on of a financial services business by someone else, or from the promotion, establishment or carrying on of the business of a registered managed investment scheme (again such orders are variously sought ranging from orders on a permanent basis to those for a period of years). I refer to disqualification orders in respect of conduct of this kind collectively as financial services disqualification orders. Section 1101B 59Section 1101B appears under the heading "Power of Court to make certain orders". Sub-section (1) commences with the sub-heading "Court's power to make orders in relation to certain contraventions" (my emphasis). Under this provision the court is empowered, on the application of ASIC, to make such orders as it considers fit where it appears to the court, relevantly, that a person (a)(i) has contravened a provision of this Chapter [7], or any other law relating to dealing in financial products or providing financial services; ... 60The term "dealing" (relevant when considering what is encompassed by the reference in (a)(i) to an "other law relating to dealing in financial products") for the purposes of Chapter 7 of the Act is defined in s 9 as including conduct of the following kind: (1)(a) applying for or acquiring a financial product; (b) issuing a financial product; (c) in relation to securities or managed investment interests, underwriting the securities or interests; (d) varying a financial product; (e) disposing of a financial product, and, in (2), arranging for a person to engage in such conduct unless the actions concerned amount to providing financial product advice. 61By way of (non-exhaustive) example of the orders that the court may make pursuant to s 1101B (and expressly without limiting sub-section (1)), sub-section 1101B(4) provides that the court may make: (a) an order restraining a person from carrying on a business, or doing an act or classes of acts, in relation to financial products or financial services, if the person has persistently contravened, or is continuing to contravene: (i) a provision or provisions of this Chapter; or (ii) a provision or provisions of any other law relating to dealing in financial products or providing financial services;... 62Austin and Black (at [7.1101B]) note that injunctions have been granted under s 1101B (and its predecessors) restraining unlicensed persons from carrying out a financial services business and restraining the conduct of unregistered managed investment schemes (referring, by way of example, to various cases including McDougall and Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (ACN 106 761 826) (2006) 57 ACSR 553; [2006] VSC 192). 63There is no issue as to the court's power under s 1101B to make the financial services disqualification orders sought against Mr Hobbs and Mr Collard in light of their contraventions of ss 911A and of one or more of ss 1041E, 1041G and 1041H of the Corporations Act. Section 1324 64Section 1324(1) of the Corporations Act is a more general provision permitting the court to grant an injunction preventing a person from contravening the Act on such terms as the court thinks appropriate. It provides, relevantly, that: (1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: (a) a contravention of this Act; or (b) attempting to contravene this Act; or (c) aiding, abetting, counselling or procuring a person to contravene this Act; or (d) inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or (f) conspiring with others to contravene this Act; the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. ... (6) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised: (a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and (b) whether or not the person has previously engaged in conduct of that kind; and (c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind. (my emphasis) 65In Triton Underwriting Insurance Agency (2003) 48 ACSR 249 at [22]), the Court noted that the discretionary jurisdiction conferred by s 1324(1), to make orders where in the opinion of the court it is desirable to do so, turns upon an assessment by the court of the broad concept of what is "desirable". 66The jurisdiction which the court exercises under s 1324 is a statutory jurisdiction, (Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605) and hence the court is not confined by the considerations which would be applicable if it were exercising the traditional equity jurisdiction. Palmer J, in Mauer-Swisse, considering an application for an injunction in relation to a contravention of s 911A of the Act, referred to Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 and Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355, to the effect that s 1324 was drafted with the intent that a court should grant an injunction in circumstances where a court of equity would ordinarily have refused to grant such an injunction; the operative principle underlying s 1324 being for the remedies available to the court to be used in such a way that would serve some utility or purpose within the contemplation of the Corporations Act (such as protecting the community from a real risk of wrongdoing where a person has a propensity to contravene the Act or to mark the disapproval of the court and community with the actions of the defendant) (at [11]). 67That said, s 1324 does not displace the court's equitable jurisdiction (Mauer-Suisse; Parkes) and it has been said that equitable principles represent a sound basis for undertaking a preliminary assessment which should then be reviewed against the statutory role ASIC plays and the wider question of what is "desirable" in the statutory context (Triton Underwriting Insurance Agency at [25]; see also Liquorland (Aust) Pty Ltd v Anghie [2001] VSC 362; 20 ACLC 58 in the context of an application for an interlocutory injunction under that section). 68As to the general principles application where injunctive relief is sought under s 1324, Palmer J, in Mauer-Suisse, said (at [36]) in the context of an application for injunctive relief: - amongst the considerations which the Court must take into account in an application for an injunction under s.1324 CA are the wider issues referred to by Austin J in Sweeney and Parkes, and by Davies AJ in Pegasus; they may be gathered under the broad question whether the injunction would have some utility or would serve some purpose within the contemplation of the Corporations Act; (my emphasis) ... - where there is an appreciable - that is, not fanciful - risk of particular future contraventions of the Corporations Act by a defendant, it would serve a purpose within the contemplation of the Corporations Act that the Court grant not only a permanent injunction but, in an appropriate case, an interim injunction restraining such conduct. Section 1324 evinces an intention that the possibly severe consequences and the relative promptness of proceedings for contempt of Court be added to criminal prosecutions as a deterrent to contraventions of the Corporations Act (my emphasis) 69ASIC submits, and I accept, that the Corporations Act is concerned primarily with the protection of the public interest in the prevention of particular conduct (Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 at [109]) and that (as was recognised to be the position in relation to the former Trade Practices Act) the statutory jurisdiction to grant an injunction is essentially a public interest provision. Hence, considerations of public policy are relevant in the exercise of the discretion whether to grant such relief (as explained in ICI Australia Operations Pty Limited v TPC (1992) 38 FCR 248). 70In that regard, ASIC contends that it is appropriate for it, as regulator in the exercise of its statutory functions to take civil proceedings for declaratory and injunctive relief in respect of past events, even if there is no risk of repetition, where the outcome may establish that the conduct complained of was wrongful (and thereby mark the court's disapproval of that conduct) and may deter other wrongdoers (as was said to be the case in Sweeney at [35]). 71Two issues arise in considering ASIC's application for financial services disqualification orders (those being the issues on which it was suggested there was room for judicial clarification). First, there is a question as to the court's power to grant such relief under s 1324 of the Corporations Act (an issue that only has a critical impact in respect of the relief sought against Mrs Hobbs, since s 1101B is clearly an applicable source of power in the case of each of Mr Hobbs, Mr Collard and Ms Wu). Second, it was submitted that there is no authority that expressly addresses the question as to whether the principles identified in Adler in the context of determining orders for disqualification from managing corporations are applicable on an application for financial schemes disqualification orders. I consider each in turn. * Scope of s 1324 in light of s 1101B 72The financial services disqualification orders as against Mr Hobbs and Mr Collard are sought pursuant to both ss 1101B and 1324 of the Corporations Act. However, in the case of Mrs Hobbs, such orders are sought solely under s 1324(1) of the Corporations Act, for the reason that no contravention of a provision of Chapter 7 of the Corporations Act (or other law relating to the dealing in financial products or the like) has been found against Mrs Hobbs. 73This requires consideration as to the scope of s 1324, in light of s 1101B; in particular, as to whether, where there is a specific power for the court to make financial services disqualification orders in relation to particular contraventions of the Act, the court has power under s 1324 to make the same or similar orders where there has been a different contravention of the Act. In other words, in circumstances where ASIC is seeking orders under s 1324 against Mrs Hobbs that would have the effect of restraining her from the provision of financial services, but where there has been no finding of any contravention by Mrs Hobbs of a provision of Chapter 7 of the Corporations Act, is there power under s 1324 to make such an order or does s 1101B operate as a code for the making of such orders? 74The suggestion that s 1101B does operate (at least in some contexts) as a code arises from dicta in Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128. There, Young J (as his Honour then was) considered the question whether s 1324 of the then Corporations Law gave standing to a company's shareholders or creditors to seek an injunction against an alleged contravention of the statutory duty (imposed under s 232 of that legislation) of an officer of a corporation to act honestly in the exercise of his or her powers in the discharge of the duties of that office. 75His Honour noted the legislative history to the insertion of the civil penalty provisions into the Corporations Law (by the Corporate Law Reform Act 1992 which was introduced by the Corporate Law Reform Bill 1992), and that the Explanatory Memorandum to the 1992 Bill contained the statement that "[t]he sanctions available in relation to a contravention of subsection 232(2) will therefore be determined in accordance with Divisions 2 and 3 of Part 9.4B" (my emphasis). 76His Honour then considered whether the provisions of Part 9.4B of the Corporations Law constituted an exclusive part dealing with contraventions of s 232(2) or whether provisions not within that part could apply thereto (but did so in the context of the particular question before him which was whether there was standing for a person aggrieved by such a contravention to seek injunctive relief under s 1324). His Honour said: Were it not for one thing, I would have thought it tolerably clear that Pt 9.4B is the exclusive provision dealing with contravention of s 232(2). The schema is that the Commission or its delegate or a person authorised by the minister may commence civil penalty proceedings, this then excludes criminal proceedings and if a civil penalty is imposed, the court may also order compensation to the corporation pursuant to s 1317HA of the Law. Remembering that there is no other civil remedy available to a person aggrieved, and remembering that s 1317EB limits the applicants for a civil penalty order to government officials, one would not think there is any room for a civil action for injunction under s 1324(l). The one thing that makes me pause is that s 1324 is the only provision in the Law which entitles the Australian Securities Commission to apply for an injunction to prevent a breach of s 232. It may feel it needs to do this to stop the impugned conduct continuing pending the civil penalty order. Although the Corporations Law is riddled with provisions that certain enactments are not to prevent other parts of the Law or the general principles of law and equity operating, Pt 9.4B is singularly silent on the matter as to whether s 1324 continues to operate. (my emphasis) 77His Honour considered that (except insofar as s 1324 could be used by the Commission in aid of its rights under Part 9.4B, or a delegate of the Minister was a person affected), there was no longer any right for a person affected (not being the Commission or person referred to in s 1317EB) to seek an injunction in respect of an alleged contravention of s 232 but that, even if that construction were incorrect, it would only be in an extraordinary case that the court would exercise any authority it had to make an injunction under s 1324 at the suit of a person other than the Commission (having regard to the policies shown in s 232 and Part 9.4B). 78Pausing there, his Honour expressly contemplated that there might be recourse by the Commission to s 1324 in relation to conduct that might fall within s 232(2), albeit to do so in aid of rights under that section (seemingly to address the potential need for an interlocutory application to restrain an apprehended breach at a time when the prerequisite for an application under Part 9.4B could not have been satisfied). Moreover, what his Honour was addressing was whether the relief available under Part 9.4B was the only relief available for a contravention of s 232(2), not whether relief of that kind could only be granted if there were to be a contravention of s 232 (as opposed to relief of a similar kind being able to be granted where contravention of another provision of the Act were to be established). 79More recently, in Oates v Hawkins [2010] NSWSC 491, Bergin CJ in Eq considered a submission that there was no standing on the part of an individual plaintiff to pursue causes of action for alleged breach by the defendants of fiduciary duties owed to a company (Matrix) that had gone into liquidation (where the liquidator had chosen not to pursue such claims against the defendants). The defendants relied for their "no standing" submission on the judgment in Mesenberg. 80Her Honour noted at [65]-[68] the basis on which the plaintiff contended that there was standing (the plaintiff relying in particular upon the endorsement by Sundberg and Dowsett JJ in Brookfield Multiplex Ltd v International Litigation Funding Partners Pty Ltd (2009) 180 FCR 11 at [110] of what had been said by Hampel J in Broken Hill Pty Co Ltd v Bell Resources Ltd (1984) 2 ACLC 157 at 162 as to the meaning of the reference to the "interests" of a person in the relevant sub-section; and to the refusal by Hayne J in Allen v Atalay (1993) 11 ACSR 753 at 757 to strike out a claim by a creditor whose interests were said to have been affected by a contravention of the legislation). The question for consideration was thus again directed at one of standing (in Allen there being a reference to whether the general rule in Foss v Harbottle was subject to an exception created by s 1324 of the Corporations Law). 81In Oates, her Honour was not satisfied that the plaintiff was seeking to bring an action on behalf of Matrix (but, rather, considered that the plaintiff was pursuing his personal claims for the purposes of which he sought to establish that breaches of fiduciary duty owed to the company had led to a denial of a share of the profits of the joint venture) and was not satisfied that the claim for relief under s 1324 of the Act should be struck out. 82The issue presently raised (as to whether s 1101B operates as a code so as to preclude ASIC claiming relief under s 1324 by way of injunctions having the effect of financial services disqualification orders without a contravention of the kind on which s 1101B is predicated having been established) did not arise in Oates and was not considered by her Honour. 83In Mercedes Holdings Pty Ltd v Waters (No 2) (2010) 186 FCR 450; [2010] FCA 472, Perram J considered a more closely analogous question, namely whether s 1325(2) of the Act (being a more general provision empowering the court to make compensation orders where there was a contravention of provisions contained in certain chapters of the legislation) yielded to the more specific provision of s 601MA (which provided for the civil liability of the responsible entity to members of a registered scheme for loss or damage suffered because of a contravention of Chapter 5C of the Act). Section 601MA(3) in terms provided that the section did not affect any liability that a person had under other provisions of that Act or under other laws. 84His Honour said at [30], referring to Mesenberg, that: There is authority for the proposition that s 1325 cannot be utilised where some other, more specific, compensation regime is available under the Act. going on to note that in Airpeak Pty Ltd v Jetstream Aircraft Ltd (1997) 73 FCR 161; (1997) 144 ALR 448, Einfeld J had declined to follow that aspect of the decision in Mesenberg. Ultimately, Perram J found it unnecessary to determine whether or not Mesenberg should be followed since that case did not concern an attempt to use s 1325 to seek a remedy for contravention of a civil penalty provision and by reference to the textual indication (provided by s 601MA(3)) that the section did not seek to affect the existence of other remedies. 85The restrictive view of s 1324 that was expressed in Mesenberg has been the subject of academic criticism (Lang Thai, "Statutory injunction - call for amendment to s 1324 of the Corporations Act", (2006) 24 C&SLJ 41) and was expressly not followed in Airpeak v Jetstream (at 454). It is inconsistent with the authorities that have held that the section should be interpreted in the broadest sense (as noted at [1324.40] of Thomson Reuters Annotated Corporations Act, 2012 edn). Section 1324 is based largely on s 574 of the Companies Act 1986 (Cth), which in turn was substantially based on s 149 of the Securities Industry Act 1980 (Cth). In the explanatory memorandum to the 1980 Act it was said to be Parliament's intention that "the Court will have a wide discretion in exercising its powers to grant injunctions". 86In any event, leaving aside the issue of standing, his Honour seems to have left open the possibility that s 1324 would permit at least some injunctive relief to be granted in respect of conduct to which s 1101B would apply (assuming a declaration of contravention were to have been available). Hence, even on his Honour's reasoning s 1101B is not an exclusive code for the grant of injunctive relief in relation to contraventions of the kind there covered. 87Insofar as support for the conclusion in Mesenberg was drawn by reference to the note contained in the Explanatory Memorandum, that note focuses on what sanctions were to be available for contraventions of s232(2) not whether similar sanctions might be available for contraventions of other provisions of the legislation. Insofar as support was drawn from the lack of a statement in the equivalent of s 1101B that it did not affect the existence of other remedies (i.e. a factual indication of the kind from which Perram J sought comfort for his conclusion that s 601MA was not an exclusive code), again this is directed to what remedies may be available for a contravention of the kind on which relief under s 1101B may be granted (not for other contraventions in respect of which similar relief might be appropriate). Apart from the difficulty in using headings in the construction of the text of statutory provisions, even if it might be thought that the header "Power of Court to make certain orders" indicated that such orders were able to be made only if the criteria in that section were established, the words immediately preceding the operative part of sub-section (1) clearly address the Court's power to make orders "in relation to certain contraventions" but do not in terms suggest that similar orders could not be made, where warranted, for other contraventions. 88In a number of cases since Mesenberg financial services disqualification orders have been made expressly pursuant to s 1324 (though often those orders are also expressed to be made pursuant to s 1101B) (see, for example, McDougall [2006] FCA 427; 229 ALR 158; Australian Securities and Investments Commission v Fuelbanc Australia Limited [2007] FCA 960; 162 FCR 174 and, as amended, in [2006] FCA 940; Australian Securities and Investments Commission v Gramax Investment Club Ltd [2005] FCA 1708; Australian Securities and Investments Commission V West & Anor [2008] SASC 111; (2008) 100 SASR 496; 100 SASR 496; and Australian Securities and Investments Commission v Preston [2005] FCA 1805). (In Preston, the Court considered that it was necessary in the circumstances of that case to exercise the discretion under s 1324(1) to grant a permanent injunction to restrain the provision of financial product advice or dealing in financial products, as well as any holding out by either defendant of being able to do so, without an Australian financial services licence.) 89In Maxwell, Brereton J referred to the breadth of the injunction able to be granted under s 1324. (His Honour's view that in that case the injunction sought was much too wide and inappropriate was put on the basis that it would "effectively attach quasi-criminal consequences to what may be inadvertent and unspecific conduct".) 90I do not read Mesenberg as authority for the proposition that there is no power for the court, on the application of ASIC, to grant injunctive relief having similar effect to a financial services disqualification order unless (relevantly) there has been a contravention falling within s 1101B(1)(a)(i). Nor do I consider that s 1101B operates as an exclusive code for the circumstances in which such an order may be made. (If Mesenberg, properly read, suggests otherwise then, with respect, I would consider it to be wrong and would decline to follow it.) 91For those reasons, I proceed on the basis that there is power under s 1324 to grant the financial disqualification orders sought against Mrs Hobbs. * Are the Adler factors applicable? 92As to the second issue, ASIC submits that, when considering an application for financial services disqualification orders, the factors identified by Santow J in Adler provide guidance though it was not able to point to an express judicial statement to that effect. 93No assistance can be found in the revised memorandum or supplementary explanatory memorandum at the time of the second reading speech as to the rationale for the court's power to order financial services disqualification orders, nor was there any mention in the relevant second reading speech or digest of the power to disqualify in the context of the provision of financial services. (ASIC's powers to disqualify persons from managing corporations were explained in the Explanatory Memorandum to the 2001 amendment (No 50 of 2001) to the Corporations Act as being in the public interest.) 94I was referred to two decisions in the Administrative Appeals Tribunal in which reference was made to Santow J's decision in Adler, in both of which the Tribunal was considering applications relating to administrative orders that had been made banning the applicant from holding a financial services licence, where those orders had been made under s 920A of the Corporations Act (Caines v Australian Securities and Investments Commission [2012] AATA 289 at [425] and Seagrim v Australian Securities and Investments Commission [2012] AATA 583 at [95]). 95In Caines, an application was made for the review of a decision by ASIC's delegate, refusing to vary or cancel a banning order permanently prohibiting the applicant from providing financial services. (The making of the original banning order was not in issue.) The Tribunal determined that there had not been a change in the matters upon which ASIC had relied for the making of the banning order of such degree or significance so as to lead to an exercise of discretion to alter the decision. 96The Tribunal (at [4]) noted, without discussion of the issue, that the banning orders were for the protection of the public, having aspects of both general and specific deterrence "with the length of the period being influenced by Santow J's propositions" in Adler and the approval thereof in Rich (referring to the fact that they had been followed in Hayes v ASIC [2006] AATA 506 and other cases). 97In Seagrim, the Deputy President of the Tribunal considered a similar application for variation of orders made by ASIC banning the provision of financial services. The hearing before the Tribunal was a hearing de novo. Deputy President Jarvis set out (from [87]) the matters considered relevant to the discretion to make banning orders. In so doing the Deputy President referred to the propositions formulated in Adler ([95]) again without suggesting that the application of those to the making of a financial services disqualification order would not be appropriate (and without suggesting that there was any relevant distinction in that regard between a case where financial services disqualification was sought and one which the disqualification sought was from managing a corporation). 98In neither Seagrim nor Caines was the basis on which the factors identified in Adler were considered to be of relevance in the context of disqualification from the provision of financial services discussed. 99More recently, Black J, in In the matter of Melinda Scott and Roach Graham Scott Pty Ltd [2012] NSWSC 1643, considered an application by ASIC made under ss 206E and 1101B of the Corporations Act for disqualification orders against the defendants both from managing corporations and from carrying on a financial services business and providing a financial services product (ASIC there having also sought declarations of improper conduct and contravention of s 1041G of the Corporations Act). There was consent to the making of the orders sought. 100In satisfying himself as to the appropriateness of the relief sought, his Honour at [19] expressly drew on the factors articulated in cases dealing with disqualification from managing a corporation for guidance as to the circumstances in which a permanent restraining order should be made under s 1101B, referring both to the factors identified by Franklyn J in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 and the principles summarised by Santow J in Adler. No question as to the applicability of the latter in a financial services disqualification context appears to have been raised with his Honour, nor did his Honour express any doubt as to the application of those principles in such a context. 101The object of Chapter 7 is set out in s 760 of the Act as follows: 760A Object of Chapter The main object of this Chapter is to promote: (a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and (b) fairness, honesty and professionalism by those who provide financial services; and (c) fair, orderly and transparent markets for financial products; and (d) the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facility. 102In Seagrim, Deputy President Jarvis referred to those objectives and said (at [88]): I consider that the discretion to impose banning orders should be exercised in such a way as to achieve the objectives set out in this section. It is accordingly appropriate to take into account that a principal consideration is that the power to make a banning order should be to protect the public from persons who do not comply with the requirements of the Act when providing financial products and services, and also to deter the persons whose conduct is in question and other persons in the industry from contravening the Act. The imposition of banning orders will have a punitive effect on the persons banned, but the discretion should not be exercised by reference to that consequence, but rather by reference to the need to protect the public, and the deterrent effect of banning orders, which are the overriding considerations. Nevertheless, personal hardship if a banning order is made is a mitigating factor which may be taken into account. (my emphasis) reference also being made (in the context of the recognition that the Tribunal was there standing in the shoes of ASIC) to s 1(2)(b) of the ASIC Act providing, in effect, that in performing its functions and exercising its powers, ASIC must strive to "promote the confident and informed participation of investors and consumers in the financial system". 103Mr Halley submits, and I accept, that the factors identified in Adler in the context of considering disqualification from managing corporations are equally relevant when consideration is given to the imposition of financial disqualification orders, having regard to the purpose of s 1101B (namely, the protection of the public interest in the prevention of the conduct to which it relates) and to the importance of upholding public confidence in the persons who might provide financial advice or financial services to consumers. 104Particularly having regard to the fact that one of the factors to be taken into account in Adler is the context in which the corporation operates (reference there being made to financial consulting as an area in which there is potential to do great financial damage), it is not difficult to conclude that similar factors would apply to the making of financial services disqualification orders as Santow J had in mind in relation to the managing of corporations. 105In my view there is no persuasive reason why factors of the kind that have been widely recognised as relevant when determining whether (and if so for how long) to disqualify a person from managing corporations should not also be taken into account (modified if necessary having regard to the particular context in which they are to be applied - so, for example, with a focus on matters relevant to the provision of financial services per se) when determining whether (and, if so, for how long) a person should be disqualified from providing financial services. Both kinds of orders are imposed in the public interest; both have a protective as well as a punitive function; both are to be imposed having regard to the objects of personal and general deterrence and both are to be exercised having regard to the enforcement and efficacy of the Corporations Act. 106Therefore, in considering whether, and if so for what period, financial services disqualification orders are to be made, I consider that it is appropriate and permissible to have regard to the factors summarised in Adler as going to the period of any such disqualification (noting, of course that they operate as guidelines and not strict rules). (iv) Pecuniary penalties sought under s 1317G 107Consequent upon the making of declarations of breach of one or more civil penalty provisions by particular defendants, ASIC seeks pecuniary penalty orders pursuant to section 1317G of the Corporations Act against those defendants. 108I have referred earlier to the observation by McHugh J in Rich v ASIC as to the expectation that the court will consider imposing a pecuniary penalty only if a civil penalty disqualification is considered to be an inadequate or inappropriate remedy. However, as Mr Halley notes, in ASIC v Healey (No 2) Middleton J at [188] saw no reason why the court should not, in respect of a single contravention, impose a period of disqualification as well as a pecuniary penalty (referring to Donovan at 602; Vines (2006) at [51]; ASIC v Citrofresh International Ltd (ACN 064 551 426) (No 3) (2010) 268 ALR 303 at [21]). Such a possibility is expressly contemplated in Adler (and in later cases, such as Forge and Gillfillan where pecuniary penalties were imposed as well as disqualification orders for civil penalty contraventions). 109Section 1317G(1) provides that the court may order a person to pay the Commonwealth a pecuniary penalty of up to $200,000 if a declaration of contravention of a corporation/scheme civil penalty provision has been made under s 1317E and the contravention materially prejudices the interests of a corporation or its members; or materially prejudices a corporation's ability to pay its creditors; or is "serious" (s 1317G(1)(b) of the Corporations Act). A contravention is "serious" for the purpose of s 1317G(1)(b) if the relevant default or neglect is grave or significant (Tasmanian Spastic Association; ASIC v Nandan (1997) 23 ACSR 743). I have noted earlier that the matters by reference to which seriousness of a contravention is to be determined in the context of determining whether disqualification is justified for the purposes of ss 206C and 206E (Vines at [220]) are the degree by which there has been a departure from the requisite standard of behaviour and the potential or actual consequences of the contravention. The same matters are relevant in determining whether the contravention is serious for the proper granting of relief under s 1101B. 110In Adler, Santow J considered the relevant factors applicable in relation to the imposition of a pecuniary penalty, noting at [125] that the principal purpose of such a penalty was well established as being to act as both a personal deterrent and a deterrent to the general public against a repetition of like conduct (again referring to Donovan). At [126], his Honour summarised those propositions as follows, observing that there is no simple mechanical process for quantification of such penalties: (i) the pecuniary penalty has a punitive character, but it is principally a personal and general deterrent to prevent the corporate structure from being used in a manner contrary to commercial standards and the penalty should be no greater than is necessary to achieve this object: Australian Securities Commission v Donovan at 608; (ii) to determine whether compensation is to be paid and in what amount it is necessary to consider the prospect of the respondent paying such compensation and the hardship to the defendant from such payment. Compensation has been ordered for an amount less than that lost even thought there was little prospect of any of it being recovered: Australian Securities Commission v Forem-Freeway at 351; (iii) the capacity of the defendant to pay is a relevant consideration in determining a pecuniary: Australian Securities Commission v Forem-Freeway at 351-2; (iv) in assessing a pecuniary penalty it is important to consider the consequences of an associated disqualification order for the defendant. If the making of such an order has significant consequences, they may operate as a factor in favour of a lesser penalty. Where the disqualification order does not have significant consequences for the defendant, the prohibition order is likely to be only marginally relevant: Re Tasmanian Spastics Association at 751-2; (my emphasis) (v) it is important to assess whether the order will prejudice the rehabilitation of the defendant: Australian Securities Commission v Forem-Freeway at 352; (vi) the size of the penalty is a question of discretion. The circumstances of one case should not dictate the size of the penalty on another case: Australian Securities Commission v Donovan at 608; (vii) in Australian Securities Commission v Forem-Freeway civil compensation of $200,000 was ordered. This amount was lower than the losses to the company concerned. This amount was ordered, even though it was highly unlikely that this amount would ever be paid as the respondent was bankrupt. In this case it was held that precision in the amount was therefore unnecessary: Australian Securities Commission v Forem-Freeway at 351; (viii) a fine was not ordered in Australian Securities Commission v Forem-Freeway. However the AC was given liberty to apply at a later stage in relation to this matter. The court held that the personal hardship to the respondent, the unintended punitive consequences of the other orders and the lack of capacity to pay, justified such an order: Australian Securities Commission v Forem-Freeway at 351-2; (ix) Factors leading to the order of a penalty in the range of $20,000-$40,000 included: · defendant was aware of impropriety of actions; · no intention to deprive company permanently of funds; · amounts in question not large; · no deliberate falsification of accounts; · cases classed as being serious misconduct, but not worst cases Re Tasmanian Spastics Association at 752; Australian Securities Commission v Donovan at 609. (x) relevant factors leading the court to order the lower range penalties in the range of $4,000-$5,000 included: · remorse and contrition shown; · efforts to repay misappropriated funds; · acted upon the advice of professionals; · did not contest the proceedings, or sought to save costs in proceedings; · tended to not involve dishonesty, but negligence or carelessness; · previous unblemished character; · further contravention unlikely Australian Securities Commission v Donovan at 609; Australian Securities Commission v Spencer (1997) 25 ACSR 143 at 144-5. 111(In passing, I note that his Honour also observed (at [127]) that in the trade practices context Finkelstein J in Australian Competition and Consumer and Trade Practices Commission and Distribution Ltd (No 2) [2002] FCA 559 had concluded that it was appropriate to impose a single penalty against each respondent for all contraventions, though having regard to the totality and parity principles to which I refer below). Multiple Contraventions 112Relevant to the determination of disqualification orders (insofar as they have a punitive operation) and pecuniary penalties in the present case, is the question as to how to deal with multiple contraventions (and the question how to deal with the position where, for one or more contraventions, there is more than one contravenor). 113In the context of criminal proceedings it is clear that consideration should first be given to the penalty to be imposed for each contravention and then to the cumulative or concurrent effect of such penalties and to the application of the "totality" principle (Pearce v R (1998) 194 CLR 610; 156 ALR 684; [1998] HCA 57 at [45]). Spigelman CJ in Vines, at [19], confirmed that the principles in Pearce apply by analogy in the context of the imposition of civil penalties in a case where there have been multiple contraventions. 114Following those authorities, in Macdonald, Gzell J referred (at [302]) to Pearce and to the High Court's approval (in Mill v R (1988) 166 CLR 59 at [63]; 83 ALR 1 at [3]) of the description of the "totality principle" in Thomas, Principles of Sentencing 2nd edn 1979 pp 56-57 as being one that requires a sentencer who had passed a series of sentences (each properly calculated in relation to the offence for which it was imposed and each properly made consecutive in accordance with the principles governing consecutive sentences) to review the aggregate sentence and consider whether the aggregate was just and appropriate. 115Where there are a number of persons who have engaged in the same contravening conduct, the parity principle is also to be taken into account. In Jimmy v R [2010] NSWCCA 60), the Court of Appeal noted that, within limits, the principle of parity (or proportionality or relativity) is relevant to the imposition of sentences between participants in a common criminal enterprise even though they have committed different crimes. The Court of Appeal there gave consideration to a number of authorities, including Postiglione v R (1997) 189 CLR 295, where Dawson and Gaudron JJ, noted that the parity principle is an aspect of equal justice (requiring that, as between co-offenders, there should not be a marked disparity which gives rise to "a justifiable sense of grievance") and said (at 301-302): Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them. ... Discrepancy or disparity is not simply a question of the imposition of different sentences for the same offence. Rather, it is a question of due proportion between those sentences, that being a matter to be determined having regard to the different circumstances of the co-offenders in question and their different degrees of criminality. (my emphasis) 116Therefore, in determining an appropriate penalty for the civil penalty contraventions in the present case, the application (by analogy) of the principles in Pearce requires that a penalty first be determined for each of the relevant contraventions (before applying the totality and parity principles to arrive at a total penalty). An illustration of how that process is to be carried out can be seen in both Forge and in Gillfillan. (v) Appointment of a receiver pursuant to ss 1101B and 1323(1) 117I have already referred to the broad discretion under s 1101B of the Act on which reliance is placed by ASIC, together with s 1323(1)(h), for the appointment of a receiver to the assets of Ms Wu and to any assets in the jurisdiction of Mr and Mrs Hobbs. There is clearly power to make such orders on the application of ASIC. For the purposes of s 1323(1)(h), the relevant question in the present case is whether such an appointment is considered necessary or desirable to protect the interests of investors in the schemes (or creditors of the corporate administrators) with which those defendants were involved. ASIC submits that such an appointment is appropriate in order to ascertain whether those defendants have any assets that may be shown to have been derived from the relevant schemes. I agree. Reasons 118I turn now to the particular relief sought in the present case. (i) Declaratory Relief 119The declarations mandated by s 1317E as against the respective defendants are those contained in the draft declarations submitted by ASIC: declarations 30-44 inclusive in relation to the contraventions of civil penalty provisions by Mr Hobbs; declarations 60-65 in relation to Mr Collard; declarations 70-73 in relation to Ms Wu and declaration 74 in relation to Mrs Hobbs. I am satisfied that those draft declarations specify the requisite information in compliance with the requirements of the legislation and that they are in accordance with the findings I have made against those defendants. Those declarations should be made. 120As to the balance of the declaratory relief sought, in respect of which there is a discretion, I am satisfied that ASIC has a real interest, as regulator, in the making of those declarations, for the reasons put forward by Mr Halley (and noted earlier), and that there is utility in the making of those declarations as a matter both of general and personal deterrence and as the foundation for some of the consequential orders sought by ASIC. Again, I am satisfied that the declarations accurately reflect the findings I have made and that they should be made. 121The final form of the declarations that I will now make is contained in the schedule attached to these reasons (with cross-references to the paragraph numbers in the judgment in which the relevant findings were made). (ii)-(iii) Disqualification/penalty orders sought against the respective defendants Contraventions 122The task of determining penalties in this case has been made more difficult having regard to the sheer number of contraventions (particularly, by Mr Hobbs and Mr Collard). On a strict reading of s 1317G, pecuniary penalties must be determined on a contravention by contravention basis (not by reference to groups of contraventions, however broadly or narrowly those groups may be classified). If each separate monetary payment (the making of which has been found to be in breach of the duties prescribed by s 182) gives rise to a separate contravention of a civil penalty contravention for the purposes of which a separate penalty should be determined, then there have been literally hundreds of contraventions. In the case of Mr Hobbs, for example, the individual payments comprising the s 182 Payment contraventions amount, on my calculations, to 715 separate payments (this does not include the 49 instances of s 182 Commission payments or the payments referable to monthly research reports and payments to the various companies of fees to Diligence Discovery.) I consider the import of this in due course. 123ASIC has categorised the overall contraventions in respect of which it seeks penalty orders against the relevant defendants (cross-referenced to the findings I have made in my principal reasons) as follows: Mr Hobbs 124As against Mr Hobbs: * Personal contraventions (i) contraventions of s 601ED(5), by reason of his involvement in the operation of an unregistered managed investment scheme (the Hobbs Scheme) in breach of s 601ED(5) of the Corporations Act (from at least 1 July 2004 to December 2007), by providing information about the individual managed investment schemes in which investors could invest; making offers to invest in the Hobbs Scheme; issuing unit certificates and confirmation letters to investors; and paying returns to investors ([2321]); (ii) contraventions of s 911A of the Corporations Act in providing financial services within Australia, without an Australian Financial Services Licence in the period between 2002 and 2008, by the promotion of the Hobbs financial product and the operation of the Hobbs Scheme ([2323]); (iii) contraventions of each of ss 1041E, 1041G and 1041H of the Corporations Act and ss 12DA, 12DB and 12DF of the ASIC Act (which provisions I will refer to collectively as the Representation Provisions and the corresponding contraventions by the various defendants as Representation Contraventions) over the period from 2003 to 2008 (that period varying as between the particular representations) by making the various different representations pleaded in the Third Further Amended Statement of Claim to potential investors in one or more of the individual investment schemes; (The representations the subject of these contraventions are: the Scheme Representations: [2130]-[2249], [2315], [2324]-[2346]; the Integrity Plus Representations: [2130]-[2138], [2176]-[2249], [2250]-[2265], [2315], [2324]-[2346]; the Super Save Representations: [2130]-[2138], [2176]-[2249], [2266]-[2279], [2315], [2324]-[2346]; the Master Fund Representations: [2130]-[2138], [2176]-[2249], [2280]-[2290], [2315], [2324]-[2346]; the First Secured Bond Unit Trust Representations: [2130]-[2138], [2218]-[2249], [2291]-2296], [2315], [2324]-[2346]; the Profit Representations: [2297]-[2303], [2315], [2324]-2346]; and the Shareholder Representations: [2304]-[2315], [2324]-[2346]. I set out the substance of each of those representations in the Schedule of Representations attached.) * Civil penalty contraventions (in his capacity as a de facto or shadow director of the respective companies) (iv) contraventions of ss 180 and 181 of the Corporations Act in respect of each of FTC and three of the corporate administrators (PJCB, ISL and Secured Bond), by causing or permitting those entities to contravene one or more of ss 601ED(5), 911A, 1041E, 1041G and 1041H of the Corporations Act and ss 12DA, 12DB and 12DF of the ASIC Act; (Findings as to Mr Hobbs' position of director of those companies are: FTC at [1668]; PJCB at [1732]; ISL at [1742]; Secured Bond at [1772]; the findings as to these contraventions at [2384], [2385] and [2389]) (v) contraventions of s 182 of the Corporations Act by improperly using his position to gain an advantage for himself and others in respect of each of, and causing a detriment to each of, PJCB, ISL, ISPL, Secured Bond, Barclaywest, 888 Vanuatu, Geneva Financial, Preserved Investments, Ultimate Investments and GP Global by: receiving commissions, fees or other amounts of money (in connection with the operation of the Cadent Accounts, the purchase, sale, marketing and/or management of US Treasuries for the corporate administrators of the individual investment schemes, including bond trading, and investments by the individual schemes with NCCN through Mr Donald Caffray; and payments in relation to "research reports") (I will refer to commissions of this kind, whether received by Mr Hobbs or others, collectively as the s 182 Commissions) and causing or permitting various of the corporate administrators to make particular payments (again, I will refer to payments the subject of this allegation, whether received by Mr Hobbs or others, collectively as the s 182 Payments). (The s 182 Payments in Mr Hobbs' case are: in the case of PJCB, the Integrity Plus Payments and the Additional Integrity Plus Payments; in the case of ISL, the Super Save Payments and payments made to Diligence Discovery; in the case of ISPL, the Super Save Payments and payments to Diligence Discovery; in the case of Secured Bond, the Master Fund Payments and the First Secured Bond Payments; in the case of 888 Vanuatu, the Pinnacle Payments, the 888 Fund Payment and payments to Diligence Discovery; in the case of Geneva Financial, the Prestige Payments; in the case of Preserved Investments, the Elite Premier Payments, and the Elite Premier Option 2 Payments; in the case of Ultimate Investments, the Covered Strategies Payments; in the case of Barclaywest, the Enhanced Fund Payments; and in the case of GP Global, the Best Fund Payments.) 125Of those five groups of contraventions, the civil penalty contraventions (those in (iv) and (vi) above) have in turn been classified by ASIC into five sub-categories based on the similarity of the particular contraventions (although it is acknowledged by Mr Halley that this is a minimum and that it would be open to the Court to consider further defined groupings of the civil penalty provision contraventions): (a) contraventions of ss 180 and 181 relating to the operation (by FTC, PJCB, ISL and Secured Bond) of an unregistered managed investment scheme in contravention of s 601ED(5) of the Corporations Act (i.e., the Hobbs Scheme); (b) contraventions of ss 180 and 181 relating to the provision by FTC of financial services without a licence in contravention of s 911A; (c) contraventions of ss 180 and 181 relating to misrepresentations based on the lawfulness of the investments, the lack of risk and capital protection, and the likely returns from investments, in contravention of each of the Representation Provisions; (d) contraventions of ss 180 and 181 relating to the misrepresentations based on the payment to investors of returns from capital and not profit, in contravention of each of the Representation Provisions; and (e) contraventions of s 182 relating to the benefits improperly obtained by or at Mr Hobbs' direction and detriment caused to each of PJCB, ISL, ISPL, Secured Bond, Barclaywest, 888 Vanuatu, Geneva Financial, Preserved Investments, Ultimate Investments and GP Global (the s 182 Commissions and s 182 Payments, the detail of which is set out in the attached schedule of s 182 Payments). Mr Collard 126As against Mr Collard: * Personal contraventions (i) contravention of s 601ED(5) of the Corporations Act in being directly involved in the operation of the Hobbs Scheme (in providing information about the individual managed investment schemes in which investors could invest, making offers to invest in the Hobbs Scheme, issuing unit certificates and confirmation letters to investors, and paying returns to investors) ([2321]); (Mr Collard's involvement in the Hobbs Scheme is related to his involvement in most of the Li/Collard Schemes: Master Fund, First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Good Value Fund and Enhanced Fund - Mr Collard was not involved in the remaining Li/Collard Scheme, the Best Fund.) (ii) contravention of s 911A of the Corporations Act in providing financial services within Australia (by promoting the Hobbs financial product and operating the Hobbs Scheme) without an Australian financial services licence ([2323]); (iii) contraventions of ss 1041E and 1041H (and, but only in the case of particular representations, s 1041G) of the Corporations Act and ss 12DA, 12DB and 12DF of the ASIC Act by making various representations (including to potential investors in the Master Fund and/or First Secured Bond Unit Trust and in relation to Barclaywest) ([2324], [2342]-[2346]); (The contraventions of s 1041G and therefore the actual findings of dishonesty relate only to the making of the Principal Protected Representation and Investment Returns Representation; and to the making of the Capital Protected Representation to potential investors in Master Fund: [2342]) * Civil penalty contraventions (as a de facto director or officer of the respective companies) (iv) contraventions of ss 180 and 181 of the Corporations Act by causing or permitting FTC, Secured Bond and Barclaywest to contravene one or more or ss 911A, 1041E, 1041G and 1041H of the Corporations Act and ss 12DA, 12DB and 12DF of the ASIC Act; (Findings as to Mr Collard's position as de facto director are: Secured Bond at [1756], [1772]; 888 Vanuatu at [1784] and Barclaywest at [1845]-[1846] and an officer of FTC at [1695] and [2387]; findings as to the relevant contraventions at [2385]-[2388] and [2391]-[2394].) The Lawful Investment Representation, the Principal Protected Representation and the Investment Returns Representation (each as pleaded at [279] of the Third Further Amended Statement of Claim) as the same corresponding representations by Mr Hobbs; (findings as to the making of those by Mr Collard are at, respectively, [2166] and [2173], [2192], [2214] and [2235].) (I interpose to note that ASIC has drawn attention, in its submissions, to the fact that there is no express finding in my principal reasons that Mr Collard made the Investment Returns Representation though it is considered to be implicit in the findings at [2324], [2343]-[2346]. That was clearly an oversight on my part. I confirm that my view at the time was that the evidence established the making of that representation and that there should have been an express finding to that effect in my principal reasons.) The balance of the representations made by Mr Collard were: the Investment Representation, the Capital Protected Representation and the Returns Representation made to potential investors in Master Fund ([2280]; [2283]; [2290]); the A+ Representation and the Returns Representation made to potential investors in First Secured Bond Unit Trust ([2291], [2293], and [2296]); the Master Fund Profits Representation ([2299], [2303]); the representation that Barclaywest's involvement in projects, including a project in China, would generate profits for shareholders, the Barclaywest representation ([2304], [2310]); and the 888 Shareholder Representation ([2311], [2314]). Again, the content of those representations (referred to in the pleading by use of the defined terms) mirrors that of the corresponding representations by Mr Hobbs (not surprisingly, since Mr Collard was found to be an agent of Mr Hobbs). (v) contraventions of s 182 of the Corporations Act by improperly using his position to gain an advantage for himself and others in respect of, and causing a detriment to each of Secured Bond, 888 Vanuatu and Barclaywest (by causing or permitting the respective companies to make the Master Fund Payments, and the First Secured Bond Payments; the Pinnacle Payments and the 888 Fund Payment; and the Enhanced Fund Payments) (the relevant contraventions being found at [2404]). 127The civil penalty contraventions committed by Mr Collard are those in the last two categories and these have similarly been classified by ASIC into the following sub-categories: (a) contraventions of ss 180 and 181 relating to the provision (by FTC, Secured Bond, Barclaywest and 888 Vanuatu) of financial services without a licence in contravention of s 911A; (b) contraventions of ss 180 and 181 relating to misrepresentations by FTC and Secured Bond in relation to the lawfulness of the investments, the lack of risk and capital protection, and the likely returns from investments, in contravention of one or more of the Representation Provisions; (c) contraventions of ss 180 and 181 related to the misrepresentations by those companies based on the payment of returns from capital and not profit, in contravention of the Representation Provisions; and (d) contraventions of s 182 in relation to payments by Secured Bond out of the Master Fund and First Secured Bond Unit Trust, by Barclaywest out of the Enhanced Fund and by 888 Vanuatu out of the Pinnacle Fund and 888 (Super Save) Fund. Ms Wu 128As against Ms Wu: * Personal contraventions (i) contravention of s 911A of the Corporations Act in the period between 2006 and 2008 in providing financial services within Australia without a licence, by promoting the Hobbs financial product; and operating the Hobbs Scheme (which she did in relation to schemes falling within the Li/Collard Schemes, but not more generally) ([2323]); (ii) contraventions of s 1041H of the Corporations Act and s 12DA of the ASIC Act by making the Lawful Investment Representation, the Principal Protected Representation and the Investment Returns Representation (see [2131], [2166] and [2173], [2192], [2214], [2231], [2235] and the findings at [2343]-[2344]); and * Civil penalty contraventions (iii) contraventions of ss 180 ([2385] and [2395]) and 182 ([2405]) of the Corporations Act, in her capacity as an officer of Barclaywest ([1845]-[1846]) and 888 Vanuatu ([1784]), respectively, by causing or permitting those companies to contravene s 911A of the Corporations Act, and improperly using her position to gain an advantage for herself and others, and causing a detriment to those companies (Barclaywest, in respect of the Enhanced Fund Payments and 888 Vanuatu, in respect of the Pinnacle Fund Payments). Mrs Hobbs 129The civil penalty contraventions in respect of which declaratory relief is to be made and disqualification/penalty orders are sought against Mrs Hobbs are solely of s 182 of the Corporations Act, arising out of her position as a de facto director and officer of Geneva Financial ([1890]), it having been found ([2406]) that she improperly used her position to gain an advantage for herself and others, and caused a detriment to Geneva Financial, in receiving s 182 Commissions and s 182 Payments (of the same kind as those as and/or jointly with those received by Mr Hobbs), and causing Geneva Financial to pay commissions to Mr Hobbs and to make the Prestige Payments (as defined in the Third Further Amended Statement of Claim). The findings to which ASIC points of Mrs Hobbs' involvement in the Prestige Fund and the Smart Money Fund are set out at [1867]-[1890].) 130(In the context of the relief that has been sought against Mrs Hobbs, ASIC notes that in my principal reasons I observed that, had it been necessary to determine the issue, I would not have found that Mrs Hobbs had aided and abetted the contraventions of the J&B Financial officers ([2416]) but would have found that Mrs Hobbs was involved in at least some of the contraventions by Mr Hobbs of ss 181 and 182, the detail of which it was not then necessary to explore as this claim was put in the alternative ([2417]). I there had in mind, in particular, Mrs Hobbs' conduct in relation to the payment of commissions to Mr Hobbs not simply in relation to the funds administered by Geneva Financial but more generally in relation to other funds forming part of the Hobbs Scheme and assistance by her to Mr Hobbs in the operation of the scheme.) Identification of contraventions for the purpose of imposition of civil penalties 131The above categorisation by ASIC of the respective defendants' civil penalty contraventions has been of assistance particularly in highlighting the similarities in the nature or purport of the respective Representation Contraventions. Nevertheless, White J, when considering the imposition of civil penalties in Forge, emphasised at [77] that s 1317EA(3), there under consideration required orders to be made "in relation to the contravention" and that this required a specification of the particular contravention in relation to which the civil penalty order is to be made. 132White J expressly doubted (at [86]) whether it was consistent with Pearce v R to impose civil penalties by reference to categories of conduct, rather than by determining a penalty for each and every declaration of contravention (though noting that the latter approach had generally been taken in such cases), and then applying the totality principle. Referring to the totality principle, his Honour observed that: ...the Court must consider the totality of the penalties imposed, whether they are just and appropriate having regard to the culpability of the defendant's conduct as a whole, and whether the defendant's conduct was a single piece or course of conduct which contravened different provisions of the Corporations Law, or whether it involved separate acts or courses of conduct which involved what in substance, as well as technically, were multiple breaches of the Law. The same outcome should be reached whether pecuniary penalties are assessed by reference to individual contraventions, or by reference to separate transactions, each of which involved multiple contraventions, or by considering the culpability of the defendant's conduct as a whole. (my emphasis) 133Following the approach in Forge, it seems to me that it is necessary to go beyond the classification made by ASIC of the groups of civil penalty contraventions and to identify each of the particular contraventions of civil penalty provisions in respect of which civil penalty orders are sought (even though the overlapping nature of at least some of these contraventions means that on an application of the principles of cumulation and concurrence and the totality principle, the ultimate penalty would (and should) be the same if determined on a category of contravention basis. (The classification by ASIC is nevertheless helpful, insofar as it indicates the regulator's assessment of the two broad areas of misrepresentation in relation to the individual schemes - those made prior to the initial investment by investors (as to the lawfulness of the investments, lack of risk, capital protection and likely return) and those made during the life of the investments (as to the nature of the returns), the latter in effect obscuring the Ponzi aspect of those of the schemes in which returns were in fact paid out of capital and not profits.) 134I have approached the task of identifying each of the civil penalty contraventions as follows. 135The first two categories of civil penalty contraventions identified by ASIC (in the case of Mr Hobbs) relate to his role in the contravention by each of FTC, PJCB, ISL and Secured Bond of s 601ED(5) and his similar role in the contravention by FTC of s 911A of the Act. (The contravention of s 911A by one or more of the corporate defendants is the basis on which the first of the civil penalty contraventions by Mr Collard and Ms Wu are also founded). 136The conduct giving rise to the contraventions of ss 601ED(5) and 911 by those corporations relates to the particular course conduct in respect of the overall Hobbs Scheme and the individual investment schemes comprised therein. Although there were countless individual acts that comprised the operation of the Hobbs Scheme and numerous instances on which financial services were provided, for the purposes of imposition of civil penalties the relevant contravention by Mr Hobbs (and, similarly, Mr Collard and Ms Wu) of ss 180 and/or 181 of the Act (in causing or permitting a contravention of s 601ED(5) and/or s 911A by the particular companies of which they were acting in the role of director or officer) is in my opinion properly to be viewed as a single contravention (of one or both of s 180 or 181 as the case may be) in respect of each individual company's breach of s 601ED(5) (in the case of FTC, PJCB, ISL and Secured Bond) and a single contravention of one or both of those civil penalty provisions in respect of each individual company's breach of s 911A of the Act. 137This is because it is the collective conduct comprising the operation of that scheme (or the provision by a particular company of financial services without being licensed) that constitutes the respective contraventions by each of those companies of ss 601ED(5) and/or 911A, on which the contraventions by Mr Hobbs of ss 180 and 181 are based. 138By way of imperfect analogy, I note that in Forge, where separate declarations of contravention had been made in relation to a particular loan transaction that had comprised two instalment payments, White J treated those payments for the purpose of penalty as part of the same transaction. Similarly, in that case where the decision to pay retrospective management fees to two separate entities was part of the same course of conduct (albeit that it had led to two payments which had been characterised as two transactions and findings of eight separate contraventions), his Honour treated those two payments as forming part of the same course of conduct. 139Therefore, as set out in the Schedule of Declarations that I propose now to make, there are four contraventions of s 180 (and another four of s 181) by Mr Hobbs in his capacity as a director or officer of each of FTC, PJCB, ISL and in relation to the respective contraventions of FTC, PJCB and ISL of s 601ED (thus eight contraventions in all) and one contravention of each of s 180 and s 181 in respect of FTC's contravention of s 911A (thus ten civil penalty contraventions in all, in the first two categories). 140As to the contraventions of ss 180 and 181 (by reference to contraventions by FTC, PJCB, ISL and Secured Bond of one or more of the Representation Provisions, broadly (in the case of Mr Hobbs) the same conduct has given rise to each of the Representation Contraventions (s 1041E of the Corporations Act, (making statements or disseminating false or misleading information); s 1041G of the Corporations Act (engaging in dishonest conduct in relation to a financial product or service); s 1041H of the Corporations Act (engaging in misleading or deceptive conduct in relation to a financial product or a financial service); s 12DA of the ASIC Act (engaging in misleading or deceptive conduct in relation to financial services); s 12DB of the ASIC Act (falsely representing that financial services were of a particular standard) and s 12DF of the ASIC Act (misleading the public as to the characteristics or suitability for purpose of financial services)). 141The declarations of civil penalty contravention in respect of each of the six Representation Provisions are in accordance with the conclusions I reached last year in relation to numerous different (though in some instances similar) misrepresentations made by Mr Hobbs (whether personally or through his agents). Similar declarations of contravention are to be made in relation to the breach of between five and six of the said Representation Provisions (in the case of companies of which Mr Collard was director) and two of those provisions (in the case of the two companies of which Ms Wu was an officer) though in respect of fewer types of misrepresentation in their case) to investors and potential investors in the various investment schemes and over various periods. 142In each instance, the same category of representation amounts to a breach of each of the relevant Representation Provisions (in the case of Mr Collard, there are findings of dishonesty in relation to only some of the contraventions and in Mrs Wu's case there is no finding of dishonesty). 143In some instances the same representations (and hence the same contravening conduct) were made to potential investors in the overall Hobbs Scheme (thus giving rise on my count to at least 600 potential separate contraventions, since there were over a hundred investors in the collective individual schemes though this might depend on whether the representation was made jointly or singly by the investors in question). Others were made in relation to a number of specific schemes (such as the Integrity Plus, Super Save and Master Fund schemes) to a lesser number of investors but nevertheless to a substantial proportion of the overall 100 investors. In yet other cases, the representations were specific to particular schemes (such as the Shareholder Representations made to investors in the Barclaywest and 888 Vanuatu schemes, a smaller subset of Hobbs Scheme investors). 144As already noted, there were fourteen individual schemes. The combination of representations across various schemes gives rise to numerous separate Representation Contraventions. If one were to treat the making of a particular representation to an individual investor on an instance by instance basis there would be an exponential increase in the number of separate contraventions comprised within the broad category of Representation Contraventions by Mr Hobbs. 145The overlapping content of the representations can be seen from the Schedule of Representations attached. The same broad representations were made to potential investors in relation to the operation of the Hobbs Scheme and in relation to individual component schemes: * the Capital Protected Representation (very similar in content to the Principal Protected Representation) was made to investors in each of the Integrity Plus, Super Save and Master Fund schemes; * the Redemption Representation was made to investors in each of the Integrity Plus and Super Save schemes; * the Investment Representation was made to investors in the Super Save and Master Fund schemes; and * the Returns Representation was made to investors in each of the Integrity Plus, Master Fund and First Secured Bond Unit Trust schemes. 146In my view, the making of particular types of representation (whether generally or to a class of investor) for the purpose of inducing investment (or continued investment) in the Hobbs Scheme (or one or more of its component individual schemes) can properly be seen as part of a single course of conduct and hence it would not be inappropriate to see as a separate contravention the making of each of the 18 separate types of representation (though noting that a combination of one or more of those representations was made to investors in relation to different funds). 147When it comes to the civil penalty contraventions by Mr Hobbs, Mr Collard and Ms Wu) in respect of the Representation Contraventions by particular companies, consistently with the above, these would be as follows: (i) ss 180 and 181 contraventions by Mr Hobbs, as a director of FTC, in relation to the making by FTC in relation to the making by FTC of the three specified types of representations in breach of six Representation Provisions (2 x 3 x 6 = 36 separate contraventions); (ii) ss 180 and 181 contraventions by Mr Hobbs as a director of each of PJCB (five different representations = 2 x 5 x 6 = 60 contraventions), ISL (seven different representations = 2 x 7 x 6 = 84 contraventions) and Secured Bond (six different representations = 2 x 6 x 6 = 72 contraventions); (iii) ss 180 and/or 181 contraventions of Mr Collard as an officer of FTC (three different representations, of which contraventions of s 1041G were found only in relation to two of the representations = 2 x 2 x 6 plus 2 x 1 x 5 = 36 contraventions); and as an officer of Secured Bond (six different representations, of which, again, only two also amounted to a breach of s 1041G - therefore 2 x 4 x 6 plus 2 x 2 x 5 contraventions = 68 contraventions); (iv) s 180 (only) contraventions by Ms Wu as an officer each of Barclaywest and 888 Vanuatu (general scheme representations being contraventions of two statutory provisions = 1 x 3 x 3 = 6 contraventions). 148As to the respective contraventions of s 182 by reference to the conduct by each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs (in the capacity of himself or herself as a director or officer, as the case may be, of each of the relevant companies) in using his or her position to gain an advantage for himself or herself and/or others and causing a detriment to the particular companies in question, again there is room for debate as to the level of specificity to which one descends in identifying each separate contravention. 149The s 182 Commissions, the subject of the s 182 contraventions by Mr Hobbs and Mrs Hobbs, were particularised at [121] of the Third Further Amended Statement of Claim and are set out in the attached Schedule of s 182 Commissions and Payments. 150In all, there were 49 separate payments of commission falling within the categories comprised in paragraphs (a)(i)-(ii) in the relevant declaration of contravention, together with the research report payments commencing on a monthly basis from September 2007 (at US $600 per month). 151On one view the receipt of each particular payment for commission or the like within each of the categories comprised within the collective s 182 Commissions would amount to a separate contravention of s 182 of the Act by the particular defendant. Alternatively, the receipt of particular types of commission might be said to fall within a separate course of conduct referable to that particular kind of commission (say, for example, all Cadent commissions or all additional $1 round turn commissions as each being a single contravention) or, more narrowly, all such commissions referable to each separate Cadent account for which Cadent commissions or additional $1 round turn commissions were authorised (so, in the case of the round turn commissions there would be four separate contraventions of s 182 if there were four Cadent accounts for which additional $1 round turn commissions were authorised). 152Another possible characterisation of the contraventions in relation to receipt of commission and like payments would be, for example, all ROF commissions referable to acquisitions of US Treasuries or, more narrowly, all ROF commissions for each separate Cadent account in respect of which US Treasuries were acquired and ROF commissions paid. 153I have proceeded, for the purpose of considering the imposition of penalties, on the basis that the receipt of each category of commission or payment in relation to each of the companies in question amounts to a separate contravention (such that, in Mr Hobbs' case, for each of the ten named companies there would be four separate contraventions with a total of 40 contraventions in all), irrespective of how many individual payments were received within each of the categories of commission in respect of each company. I have done so on the basis that this seems to me to be appropriate as each separate category of commission payment was the subject of a separate agreement and hence payments under that agreement fell within a single course of conduct. 154I have thus treated as separate contraventions by each of the defendants in respect of each company that engaged in the relevant conduct: the receipt of each of the four categories of s 182 Commissions (treating each commission category as part of a single course of conduct); the receipt of each of the particular s 182 Payments identified in the pleading as a separate contravention; and the receipt of the Diligence Discovery payments (treating this as part of a single course of conduct) as one contravention per relevant corporation. 155While the Diligence Discovery payments have not been separately itemised, there was evidence as to the agreements entered into by that company with entities such as 888 Management Australia and ISPL which provided for a payment to be made to Diligence Discovery of AU $200 per investment per superannuation company. Ms Burnard (nee Watson)'s oral evidence in chief, when subpoenaed by ASIC, was that from her memory the fee was a hundred but then that she did not know it if was one hundred or two hundred dollars (T 406.15). Ms Burnard also confirmed that she would send invoices in "kind of a batch lot" (the first copy invoice that she was shown being for a unit price of AU $87.50 which with GST was a figure of around AU $100 per investor and a subsequent invoice showing a unit price of AU $175 excluding GST). The arrangement with 888 Vanuatu seems to have been for an amount of US $100 per account (see T 420). 156As to the specific payments the subject of the s 182 contraventions, these can more readily be seen as a series of separate contraventions and are set out in the attached schedule. (Pausing there, I note that ASIC did not press its claim for declaratory relief as to contraventions of s 182 in respect of the Smart Money Payments identified at [232] of the pleading, no doubt having regard to its acceptance of submissions made by Mrs Hobbs in relation thereto.) 157In all, on my calculations, there were some 715 separate payments (other than of the s 182 Commissions) made by reason of the improper use of Mr Hobbs' position as de facto director or officer of the various companies to the benefit of Mr Hobbs or others and to the detriment of those companies (in breach by him of s 182 of the Corporations Act). There were a lesser number of such s 182 contraventions by Mr Collard (136 contraventions), Ms Wu (16 contraventions) and Mrs Hobbs (4 contraventions). The monetary amount of each such payment varied across a very broad range, from very small sums to very large sums. In essence, however, the conduct comprising the contravention was the same - it involved the payment of sums to the said defendants or those associated with them or for their benefit, in circumstances where the payments cannot possibly have been thought to be investments of the kind for which investors had paid money to the corporate administrators of the respective funds. Such payments were clearly an improper use of the respective defendants' position in the companies and evidenced a clear failure by them to appreciate their obligations, and the obligations of the respective entities holding investment funds of this kind, and the position of conflict in which those running the funds were in when diverting moneys for their own benefit or the benefit of others associated with them. Disqualification orders 158The first issue to be determined is whether it is appropriate that disqualification orders should be made at all with respect to the contraventions of each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs. Those orders are sought variously under ss 206C and 206E, from managing any corporations and, under s 1101B and/or s 1324, from conduct relating to the operation of managed investment schemes (including the Hobbs Scheme) and from the provision of financial advice (the conduct being sought to be restrained under ss 1101B/1324 being referred to collectively by me as the financial services disqualifications). (The s 1101B disqualifications relate to contraventions of Chapter 7 provisions, not contraventions of civil penalty provisions.) 159The next issue to be determined is the period for which such orders should be made (whether those periods should be cumulative or concurrent), applying the totality and parity principles. Disqualification orders under ss 206C and 206E 160As noted earlier, for the purposes of the application for disqualification orders under ss 206C and 206E, it is necessary that I be satisfied that disqualification is "justified". That decision is to be made having regard to the seriousness of the contraventions and the potential and actual consequences of those contraventions. Seriousness of contraventions * Departure from standards expected of directors and officers/managing corporations 161The extent of the departure by the respective defendants of the standards that would reasonably be expected of them in their role as directors (or, in Ms Wu's case, as officer) of the corporations is a matter of serous concern. This is particularly so in the case of Mr Hobbs and Mr Collard, each of whom committed one or more contraventions involving findings of dishonesty on his part. While it was not suggested that either Mrs Hobbs or Ms Wu was dishonest in her respective contraventions of the Act, each nevertheless showed a lack of appreciation and understanding of the duties owed as directors, or in the case of Ms Wu, officers of corporations. 162Both Mrs Hobbs and Ms Wu acted to a certain extent in a bookkeeping or administrative role (each following the instructions and guidance of others). Nevertheless, each signed relevant documents as "administrator" of the relevant funds and each issued directions as to payments out of those funds. Mrs Hobbs, for example, liaised directly with Ms Reisinger and others in relation to commission payments to be made and the appointment of Cadent traders, but the correspondence also reveals that instruction was sought from Mr Hobbs in relation thereto. 163While Mrs Hobbs, in her unsworn statement, avers that she operated at all times under a belief as to the lawfulness of the scheme, any such belief can only have been derived from her husband, since there is no suggestion that Mrs Hobbs herself took any steps independently, to ascertain whether the company of which she was acting in the role of director was complying with relevant regulatory requirements. 164Mrs Hobbs manifested a lack of understanding of, or disregard for, the corporate structure through which substantial investment funds were being channelled. (She signed documents for Geneva Financial variously as principal, beneficial owner, director and administrator, for example without having been formally appointed as director and without seemingly appreciating a difference in the roles.) 165As to Ms Wu, I formed the view from her submissions that she had no understanding whatsoever of the role she was undertaking as the so-called "administrator of funds" (including one that solicited superannuation funds). 166What must also be taken into account in my view is the time over which the contravening conduct occurred and the extent of that conduct. These were not single occurrences; there was for all four defendants a course of conduct or pattern of behaviour over a number of years (though a lesser time for Ms Wu's conduct). 167In Gillfillan, even where the non-executive directors had not been shown to have been dishonest nor to have consciously appreciated the falsity of the relevant statements and had been found to have contravened the Corporations Act on only a single occasion (their contraventions not forming "part of a pattern of conduct demonstrating a failure over a significant period to appreciate their responsibilities as directors of a public corporation" at [232]), their departure from expected standards was regarded as very serious (and Sackville AJA considered that this was the more so because unexplained by evidence from the non-executive directors themselves - at [232])). 168Here, the conduct of each of the four defendants against whom disqualification orders from managing corporations under ss 206C and 206E are sought involves a pattern of conduct, in a high risk financial area, that is serious enough to warrant the making of orders of that kind. * Potential/actual consequences of the contraventions 169As noted, the contravening conduct in which each of the four defendants against whom disqualification orders pursuant to ss 206C and 206E are sought, engaged was conduct in the financial services field. It had the potential to cause (and did in fact cause) significant losses for investors (and significant exposure for the companies in respect of which the defendants were acting in the position of directors and/or officers). 170There were at least one hundred investors across the various individual schemes and, in total, more than AU $50 million was invested in the various investment schemes comprising the Hobbs Scheme. The largest of the schemes were the Integrity Plus, Super Save and Master Fund schemes; Super Save being targeted at superannuation funds. Mr Hobbs played a pivotal role in the establishment and operation of each of the individual schemes. Mr Collard and Ms Wu were involved with only some of those schemes (one or more of the Li/Collard schemes that included the Master Fund). Mrs Hobbs did not have a direct role in any of the individual schemes other than those operated by Geneva Financial but did play a part in relation to the receipt of commissions our of schemes other than those of which she was an administrator.) 171On any view of the matter, there is a significant shortfall of funds available for distribution to investors. The precise quantum of the shortfall depends on whether returns paid to investors during the life of their investments are considered to be capital redemptions (such that the investors are treated as having received no returns by way of profit during the life of the investment but would have had less of a capital loss) or returns by way of profit (which would have the consequence that there was a loss of part of the capital investment by reason of the shortfall). There will still be a shortfall (albeit a lesser one) in the particular funds to which this issue applies (i.e. those in which returns were paid during the life of the fund) whether or not the returns are characterised as redemptions of capital. The issue is only as to the extent of the shortfall. 172The shortfall is either the aggregate of US $3.62 million and AU $8.09 million (if the 'returns' paid to investors during the life of the schemes are considered to be capital redemptions) or the aggregate of US $4.82 million and AU $32.74 million (if the returns should be treated as distributions of "profit", notwithstanding that in many cases there was no (or insufficient) profit out of which the distribution could in fact have been made at the time the returns were paid). 173ASIC made clear at the hearing that it considered, based on the scheme records and what took place when returns were paid (such as the representations made to investors as to the moneys being paid out of profits and the absence of applications for withdrawal of capital), that the returns historically made to investors should be treated as returns in the nature of profit. However, ASIC noted that, in relation to the distribution of the remaining funds in the Super Save and Integrity Plus schemes, the liquidator (Mr Taylor) had taken the view (whether as a matter of fairness as between earlier and later investors or otherwise ASIC could not say, though I was informed that this was not as the result of the application of any accounting principle or the like) that all the returns should be treated as redemptions of capital, rather than payments by way of a return of profits. 174ASIC's position is that, notwithstanding the position adopted by the liquidator, it is inappropriate (for the purposes of the penalty hearing) to treat the returns paid to investors as returns of capital particularly when, at the principal hearing (and implicit in the findings made in relation to the profit representations), the payments were not treated as redemptions of capital. Mr Halley submits that to do so would be inconsistent with the basis on which the returns were identified to investors as representing profits. It would also be inconsistent with the requirements specified in the respective scheme memoranda for the withdrawal or redemption of capital from the schemes. 175I am of the view that, for the purposes of considering what, if any, penalties should be imposed for the various contraventions, the returns should not be treated as redemptions of capital for a number of reasons. 176First, there is no evidence to suggest that applications were made by investors in the various schemes, at or about the time the returns were paid, for returns of their capital investment in the funds (where there was a transfer of investments between schemes, such as occurred in the case of Ms Xu, that is a different matter, since in that case there was at least an implied request for withdrawal of the capital from one fund and its re-investment in the other fund). Rather, the payments were made at the instance of the corporate administrators without any specific request from particular investors (though there were in some funds complaints as to the lack of profit returns, this cannot be seen as a request for withdrawal of capital). 177Second, there is some evidence that the payments made to investors were calculated and treated in the records of schemes (such as Geneva Financial) as profits on the investments (so, for example, where not all of the "profits" thought to have been made by trading in the Cadent accounts were to be distributed to investors there was a notation in the records of Geneva Financial of the balance of the profit as being added to the capital of the investment). 178Third, the determination of how much to withdraw from the respective Cadent accounts for the payment of moneys to investors was seemingly based on a calculation of the profits available from the Cadent trading and the concern to ensure a profit return to investors (at least having regard to the email communications between Mrs Hobbs and Ms Reisinger). 179While the analysis carried out by ASIC, as explained in Mr Clarke's comprehensive submissions at the main hearing, demonstrates that for much of the time that scheme moneys were invested through Cadent there were no, or insufficient, profits to enable a conclusion that the payments to investors in those schemes in fact came out of profits, I am satisfied that the returns paid to investors were represented to have been made out of profits and that (in the absence of evidence as to the making of applications for capital redemption by investors on those occasions) they should not be treated as capital redemptions. 180Thus, the relevant shortfall in investor funds in my view is the higher of the figures in the ranges identified by ASIC. (For present purposes, nothing ultimately turns on this conclusion since, even if I be wrong in the manner in which the returns should be treated, there would still remain a very significant shortfall in investor funds of some AU $8.09m and US $3.62m, such that the contraventions would still in my view be sufficiently serious to warrant the making of disqualification orders. 181Viewed as ASIC contends (and as I consider to be the correct approach) the return payments should be treated as having been made (i.e., not as capital), the shortfall of investor funds is in excess of half of the amounts invested in the funds. Disqualification orders under ss 1101B and/or 1324 (the Financial Services disqualification orders) 182When the conduct of each of the four defendants in relation to the provision of financial services is considered, the seriousness of that conduct becomes even more apparent. 183Of the four, only Mr Hobbs appears to have had any understanding of the kind of requirements that would ordinarily apply for the operation of investment schemes such as these or for the provision of financial services in relation to such investments. (His appreciation of those matters can be seen from the references in the DVD Seminar to the prospectus requirements that he maintained did not apply to the investments to which he was referring.) Requirements as to the need for licences if financial advice was being provided and as to the need for caution in FTC holding out persons as directors, were expressly drawn to Mr Hobbs' attention by ASIC in 2002/2003; and queries were raised in very blunt terms later in 2006 by an accountant as to the legality of the superannuation schemes. The other three defendants seem to have been content to operate in blissful ignorance, indifference or unquestioning reliance on what Mr Hobbs (or others relaying information that Mr Hobbs had provided) told them as to the legality of the investments. 184I have concluded that contraventions are serious enough to warrant the making of both types of disqualification orders. Conduct relied upon as warranting disqualification/penalty orders; submissions by defendants 185The particular findings and conduct relied upon by ASIC as warranting the imposition of the disqualification orders and pecuniary penalties it has sought in relation to each of the particular defendants are summarised below, together with the submissions made by or on behalf of the respective defendants. Mr Hobbs Mr Hobbs' conduct 186ASIC points to the following findings of Mr Hobbs' involvement in relation to the individual investment schemes: Integrity Plus at [1723]-[1731]; Super Save at [1733]-[1740] and [1741]; Master Fund and First Secured Bond Unit Trust at [1757]-[1769] and [1771]; 888 Fund and Pinnacle Fund at [1785], [1790]-[1797] and [1801]-[1803]; Good Value Fund at [1808], [1816]-[1824]; Enhanced Fund at [1847], [1849]-[1855]; Best Fund at [1864]-[1865]; Prestige and Smart Money at [1880]-[1889]; Elite Premier and Elite Premier Option Two at [1891], [1893]-[1896]; and Covered Strategies at [1898]-[1905]. 187Findings as to Mr Hobbs' position as director of the respective companies (other than as already noted) are: ISPL, 888 Turks and Caicos and 888 Management Australia at [1742]; 888 Vanuatu at [1804]; GP Global at [1866]; Geneva Financial at [1890]; Preserved Investments at [1897] and Ultimate Investments at [1906]. Findings as to the contraventions in relation to the s 182 Commissions and s 182 Payments are at [2402]). 188In the written submissions on penalty served for ASIC prior to the penalty hearing, detailed reference is made to the findings I made as to Mr Hobbs' conduct which ASIC considers of relevance when taking into account what penalties should now be imposed. In summary, ASIC highlights the following matters (as going both to its application for financial services disqualification orders and pecuniary penalties): * acceptance of the characterisation of Mr Hobbs as the 'mastermind' behind the operation of the schemes run out of the offices of J&B Financial in Burwood by Messrs Koutsoukos, Wood and Truong ([2410]), ASIC noting that the majority of the funds invested in the Hobbs Scheme were invested through those individual schemes; * the recruitment or approval by Mr Hobbs of other persons to operate the individual investment schemes on his behalf (which ASIC contends had the effect of hiding the involvement of Mr Hobbs from regulators and disguising the extent of his influence in the operation of the schemes); * the fact that the people chosen or approved by Mr Hobbs to operate the individual schemes and to implement the OEM/KLM process lacked financial sophistication and expertise (and were wholly dependent on Mr Hobbs for direction and instruction in operating the relevant investment schemes and/or the investment process) ([2121]); * the giving by Mr Hobbs of directions and instructions to scheme administrators, including as to what to say to investors in relation to the investment scheme, and his presence at seminars and meetings in which misrepresentations (in which he acquiesced) were made to potential investors (see for example [2389]) (characterised by ASIC as encouragement of others to breach their own duties as directors and officers) and the fact that Mr Hobbs authorised FTC executives to solicit investments in the Hobbs Scheme by discussing the various investment opportunities available when a potential investor joined FTC ([1965]-[1966]); * use of a corporate structure that had the effect of hiding from regulators his involvement in the Hobbs Scheme (i.e. the incorporation of IBCs in offshore privacy havens to act as the corporate administrators of the investment schemes) and the requirement that investors establish an offshore IBC in order to invest in the Hobbs Scheme (submitted to be for the purpose of avoiding the operation of the laws and regulations within this jurisdiction) (both matters that ASIC submits had the effect of creating the illusion of legitimacy and lawfulness in relation to the investment schemes); * Mr Hobbs' dishonest conduct by knowingly making false representations to investors as to the legality of the investments and the likelihood of significant returns for no risk ([2340]) in order to encourage investment in the Hobbs Scheme; (this is particularly significant in my view since it is clear, having regard to his comments on the DVD Seminar to that effect that Mr Hobbs appreciated that, faced with the prospect of significant returns, investors would focus on little or nothing else); * Mr Hobbs' conduct of, and attendance and presentations at, meetings and seminars with potential investors and FTC executives (ASIC emphasising Mr Hobbs knew that the potential investors attending meetings and seminars were not sophisticated investors [1470], and thus would be reliant on him in evaluating the schemes and determining whether to invest in them; and * the conduct of Mr Hobbs in directing what ASIC refers to as the "cross-pollination" between the individual schemes that made up the Hobbs Scheme (such as giving advice or instructions for funds invested in one particular fund to be invested in another fund; giving directions or encouragement given to administrators of one scheme to invest in or to assist in soliciting investment of moneys into another fund; encouragement to others to invest in particular funds) ([2120]); * the fact that 888 Fund and Super Save were designed specifically for, and received, superannuation funds ([8], [126], [1733]) (in this regard, it is relevant in my opinion that not only is there evidence that it was Mr Hobbs who developed the idea of extending the operations of the Hobbs Scheme to superannuation funds and adapting the white label or generic funds for that purpose in order to target investment by self managed superannuation trustees of superannuation funds, and directed the J&B Financial officers (initially and then Ms Li/Mr Collard) as to the establishment of specific investment funds for that purpose, but also that the rationale he proffered for so doing showed a disregard for the interests of investors (namely, that the administrators should target young persons who would not care where the money was invested because they would not be retiring in the near future). Tellingly, when ASIC commenced its investigation into Super Save, Mr Hobbs' reaction (according to the J & B financial officers) was to seek to quarantine that fund so as to preserve his "good name" and continue the balance of the investment funds (in circumstances where Mr Hobbs seems readily to have concluded that what had led to scrutiny of the funds was the foray into superannuation). * the incorporation of 888 Vanuatu and Barclaywest (of both of which Mr Hobbs was a founding shareholder) (which ASIC characterises as the next iteration of the Hobbs financial product, in that (rather than in investing in scheme funds) investors acquired shares in the corporate administrator entitling them to a percentage of any profits earned by the funds administered by the said corporate administrator); ASIC submits that this had the effect of adding an 'extra layer' between Mr Hobbs and the investors, while still providing Mr Hobbs with an income from the fund from both the sale of shares and a percentage of "profits" on investments made in the schemes. * the extended period of time over which Mr Hobbs' conduct occurred (from at least 2002 to 2008). 189ASIC submits that Mr Hobbs evinced a complete disregard for the law and engaged in a deliberate course of conduct designed to avoid Australian law and regulation. I consider that there is great force to that submission. Mr Hobbs made it very clear in his presentation at the DVD Seminar (to FTC executives, including the J&B Financial officers and Mr Collard, who in turn parroted Mr Hobbs' advice to others) he regarded it as an advantage that that the scheme was (as he maintained it was) one that was outside regulatory supervision (though at the same time proffering administration for the work of the regulator). Mr Hobbs not only provided incomplete (and incorrect) instructions when he did seek legal advice (from Mr Hartnell and, later, from Ms Maroun) as to the lawfulness of the crux of the Hobbs Scheme as it then operated (i.e. through FTC subscription and the making of investment through an offshore IBC) but he responded to ASIC's concerns (in April 2002 and December 2003) in a way that was designed not to address the substance of ASIC's concerns but, rather, to persuade the regulator not to pursue further enquiries in relation to the matter. Similarly, when concerns were raised as to the legality of the Super Save scheme in mid 2006 by an accountant (Mr Papaioannou), Mr Hobbs' response was not to address the substance of the concern but simply to direct the incorporation of an offshore entity (ISL) to take over the administration of the relevant scheme (apparently in the belief that this was sufficient to remove the operation of the scheme from regulatory overview). 190As to the amounts received by Mr Hobbs (personally and by reference to payments made for his benefit) (see for example the findings at [2400], [2402], [739]-[741], [1921]) the evidence adduced by ASIC demonstrates that Mr Hobbs received sums totalling approximately US $867,000, AU $50,000 and NZ $1,569,000 directly from funds invested in the respective individual investment schemes (in addition to the amounts he received from the sale of his shares in 888 Vanuatu and Barclaywest) and that he (jointly with his wife) received approximately NZ $452,700 by way of the s 182 Commissions ([2085]). (I have addressed in my principal reasons Mr Hobbs' denial that he received commissions otherwise than in relation to the Global Funerals account. The evidence in my view squarely demonstrates the receipt by Mr Hobbs of substantial commissions and other payments beyond those received from the Global Funerals investment.) On any view, the receipt of benefits of that quantum (when Mr Hobbs' own funds were never at risk in these offshore investments) were significant. 191The s 182 Payments that Mr Hobbs personally received or were paid to others for his benefit (as opposed to other payments that he directed to be paid for the benefit of third parties, such as the late Peter Brock), to which ASIC points in its submissions on penalty, are as follows: * out of Master Fund: the payment to Magny-Cours of NZ $246,000; to Tasman Business Consultants, NZ $99,999; to Fletcher Vautier Moore (for use in connection with the purchase of property by Legends of Bathurst, a company owned by Mr Hobbs), the sums of NZ $655,000 and NZ $131,000; and to Nelson Bays Holden NZ $15,000, those payments totalling NZ $1.46m; * out of First Secured Bond Unit Trust: the payment to Magny-Cours of US $39,000; * out of Best Fund: payment to Watercraft World of NZ $19,000; to Lambretta South of NZ $12,000; and to DC Filer of NZ $1,000, totalling NZ $32,000; * out of Elite Premier Unit Trust: payment to Magny-Cours of US $50,000; * out of Elite Premier Option 2 Unit Trust: payment to Tasman Business Consultants of US $55,179.43; * out of Covered Strategies: payment to Tasman Business Consultants of US $93,000; to Magny-Cours of US $60,000; to Bamford Law of US $9,000, totalling US $162,000; and * out of Destiny Holdings (not one of the schemes the subject of the proceedings but an entity through which scheme funds were transferred to or for Mr Hobbs' benefit): payment to Fletcher Vautier Moore of NZ $20,000 and NZ $444,000, totalling NZ $464,000. 192Mr Hobbs disputed at the hearing that some or all of those payments had wrongly been paid out of the scheme funds. I have dealt with those arguments in my principal reasons. For present purposes, I note that these payments amount to substantial sums and (in many instances, such as the payments to Nelson Bays Holden or Watercraft World or Lambretta South, they could not on any sensible view of things be regarded as appropriate payments out of investors' funds - they being payment for personal accounts referrable to motor vehicles or boats). Mr Hobbs, as is evident in relation to his treatment of the Magny-Cours Hong Kong account, was seemingly content to treat corporate or fund bank accounts as his personal bank account (exhibiting a lack of understanding or wilful disregard of the distinction between personal accounts and corporate accounts) (and, if necessary, to create documentation to support those payments if concern were raised in relation thereto, such as the instruction given to Ms Li in Sovereign Trust International to create a consultancy agreement in order to provide a basis for personal drawings out of the Magny-Cours account or the preparation of a loan agreement to explain the Destiny payment to Fletcher Vautier Moore). That conduct is evident in the payment of sums out of investment funds for personal expenses. (The explanation sought to be given at the hearing for some of those payments - to the effect that these were payments from capital redeemed from the funds - is not supported by any evidence; the explanation as to the payments to Fletcher Vautier Moore I have dealt with in my principal reasons.) Submissions made for or on behalf of Mr Hobbs in relation to penalty 193Mr Hobbs has relied, for the purposes of the penalty hearing, on an affidavit sworn by him on 22 November 2012 (which I have read only as a submission, since ASIC did not have the opportunity to cross-examine Mr Hobbs on that affidavit); a variety of written submissions (not all of which may have been read, let alone approved, by Mr Hobbs, having regard to some of the statements made in them as to his health and inability to give instructions); documents that I have treated as character references (although some of these seem to focus more heavily on a criticism of the character of other witnesses in the proceedings than on Mr Hobbs' character); communications by some of those who gave evidence in the proceedings seemingly seeking to contradict or explain some of the evidence they gave under oath at the hearing before me (Mrs Watson and Mr Clements) or from those who did not give evidence at the hearing at all, making assertions as to what evidence they could have given as to various matters (Mrs Andrews and Mr Robert Hobbs); and the further written submissions received on 25 January 2013 (after Mr Hobbs had been provided with transcript of the oral submissions made at the penalty hearing). 194As a result, I understand that in relation to the question of penalty reliance is placed by Mr Hobbs on the following: his affidavit sworn on 22 November 2012 (read as a submission and subject to weight); letters described as references in support of Mr Hobbs from Mrs Suzanne Watson (who gave evidence in the proceedings); Rev Dr Liufau Vaileau Saulala, who states that he is the leader and president of the Tokaikolo Christian Church International, based in Tonga but with congregations in various other countries including Australia and New Zealand, since 1980; Mr Lewis Brock, among other things a board member of the Peter Brock Foundation from 2005-2009; Mr Limoni Oto Naulu (who I infer is the "Otto" described in the evidence at the hearing who attended at least one meeting in Chicago with representatives of Cadent and therefore must have had some knowledge of the offshore investment of funds through Cadent); Mrs Doreen Andrews (who is Mr Hobbs' secretary or personal assistant); Mr Robert Hobbs (who is Mr Hobbs' brother); Mr Warren Watts, Mr Hobbs' next door neighbour and close friend; Mr and Mrs Russ, personal friends of Mr Hobbs; and an unsigned letter from Mr and Mrs Maxwell, also apparently acquaintances or friends of Mr Hobbs and his family. a letter from Mr Grant Clements (who gave evidence in the liability hearing) stating that he was confused during his cross-examination by ASIC and purporting to confirm (inconsistently with the evidence he gave at the hearing) that Mr Hobbs "did not have any involvement in the running of Preserved Invest [sic] Group Ltd "or any of its related funds" and nor did he (Mr Hobbs) give any advice regarding the same. correspondence from Mr Hobbs' doctor (Dr Tim Ewer), who had earlier been cross-examined in the course of an application made on behalf of Mr Hobbs to vacate the liability hearing shortly before it was due to commence (confirming his diagnosis of multiple sclerosis) and, as at 10 December 2012, stating that: Mr Hobbs has had a further exacerbation of his multiple sclerosis over the last week with severe spinal and abdominal pain. This has required the use of regular morphine to control and he has become bed-bound. Both the pain and the medication have affected his ability to function mentally and physically. This is likely to have interfered with his ability to comply with court requirements regarding the preparation of material, etc. a letter signed on Mr Hobbs' behalf by Mrs Andrews on 10 December 2012 forwarding a document that she said had "already been done on his behalf" as at that date (though it is not clear who prepared that document) and attaching redacted correspondence from an insurance broker of brokers apparently cancelling certain insurance policies for particular entities (in support it seems of the assertions as to Mr Hobbs' present financial position or his ability to continue to carry on business in New Zealand); further correspondence from Mrs Andrews on 13 December 2012, attaching some notes that she says she made when in discussion with Mr Hobbs some time ago "before his health failed him" and that she says Mr Hobbs wished to put into letter form for the purpose of the penalty hearing (those notes being along similar lines to the letter signed by Mrs Andrews and referred to above); a letter dated 13 December 2012 purportedly signed by Mr Hobbs (though that seems inconsistent with the information conveyed by Mrs Andrews in her correspondence) attaching two versions of a letter dated 12 December 2012 from Dr Ewer (only one of which bears a signature) stating that it is unlikely that Mr Hobbs will be able to return to employment in the foreseeable future; a further email communication from Mrs Andrews on 14 December 2012 referring to an unidentified newspaper article relating to other proceedings brought by ASIC in what seems to be an unrelated matter (and which made criticism of ASIC in relation to that case) and an unidentified case in which Mrs Andrews says that the defendants did not have to pay any financial penalties "as they had suffered enough in the public arena" (which I take to be a reference to the decision of Middleton J in Healey to which Mr Hobbs' later submissions have referred); and expressing an opinion as to the possibility of suicide if there were to be a "negative outcome" for Mr Hobbs; and a two page submission by Mr Hobbs (received on 25 January this year) (forwarded by email together with submissions from Mrs Hobbs; a document headed "previous cases with matters relating to this case"; a document headed Media Dates and Titles listing the title of newspaper articles said to have been published in the Nelson Mail; and handwritten financial details, including a list of bank accounts for Mr and Mrs Hobbs, and lists of current accounts to be paid, business accounts to be paid; monthly payments; loans to be repaid. * Affidavit/January statement 195The submissions made in Mr Hobbs' affidavit and in his January statement address the following matters: (i) Mr Hobbs' expressions of contrition or remorse; (ii) Mr Hobbs' further explanation (or reiteration of his explanation) for evidence in the proceedings, including assertions as to factual material not in evidence at the hearing; (iii) assertions as to Mr Hobbs' financial position; (iv) assertions as to Mr Hobbs' health; (v) assertions as to the impact of the proceedings on Mr Hobbs and his family; and (vi) statements as to Mr Hobbs' future intentions (and the penalties he seems prepared to accept on the basis that they will have no impact on him or are in accordance with his stated future intentions). 196I consider each (and ASIC's response to them) in turn. (i) Contrition 197Mr Hobbs' affidavit commences (at [1] with the following apology: I apologise to Her Honour, the Court and ASIC for the length of the hearing. I sincerely apologise to everybody involved in any of these funds. 198ASIC's principal submission in relation to Mr Hobbs' affidavit was that, notwithstanding that apology, it showed an absence of any contrition on the part of Mr Hobbs and revealed that Mr Hobbs had either not understood or not appreciated the findings made as to the extent of his involvement in the various investment schemes. ASIC submitted that there had been no real recognition of, or contrition as to, the impact or effect of the contraventions found to have occurred. 199In response to that submission, in his January statement Mr Hobbs candidly acknowledged that: All I can say is that it is difficult for someone like me who has at all times not considered himself to have done anything unlawful to admit that he has done wrong. However since the court case I do acknowledge that many things could have been done differently or not at all. (my emphasis) 200That is hardly an acceptance of the findings of wrongdoing. While I appreciate that he may not agree with those findings, it is hard to see any genuine contrition in someone who, in effect, is simply sorry that he has been found to have committed contraventions of the law. 201Mr Hobbs did go on to say that he was "very sympathetic and remorseful for any person who as a result of my actions has lost money" but in the same breath he again disclaimed responsibility for those losses: I myself have not been responsible for the loss people have suffered because of the thefts that have occurred in Australia and the United States without my knowledge, which was the main reason people lost money. 202After referring to the Hartnell advice, and again emphasising his belief that "for so long as I followed his advice I was not doing anything wrong", Mr Hobbs states: I am sorry that, as I now understand it, the advice did not cover the actual financial services that eventuated. I understand that because of this many people have been disadvantaged and for my part in that I am very regretful and stressed. My intention has always been to help people, not to cause problems, so in view of the fact that many people are suffering it is very hard to bear. I have terrible stress and worry about these people and their distress. I regret very much embarking on the enterprise that I did and I am very sorry for any investor who lost money, principally as a result of thefts by people over whom I had limited or no control. 203Where the extent (and genuineness) of expressions of contrition arises for consideration, the court takes into account whether there has been a sufficient understanding or appreciation of the contravention(s) in question (a matter relevant when considering the propensity for further contravention in light of the need for protection of the public interest). In Forge, for example, while White J accepted that one of the defendants (Mr Forge) suffered some remorse and was contrite, his Honour noted that "the grounds for those feelings do not demonstrate that he has a proper appreciation, even now, of the duties of a director of a public company". Similarly, where another of one of the defendants in that case (Mr Josef Endresz) had given evidence that at the time he engaged in the conduct which was found to have contravened the Corporations Law, he believed he was acting in good faith but had accepted that that belief was contrary to the view of the trial judge; gave evidence as to his belief in the entitlement of Kamanga to be paid the management fee of approximately $2,200,000; and said "that he had to accept the Court's decision because he was not a lawyer, but he did not consider he had done anything wrong", White J at [140] said: Whilst Joszef Endresz understands that directors have a duty to be honest, to exercise the care and diligence expected of someone in their position, and to act in the interests of the company and not in the interests of third parties, including directors, I do not accept that he properly appreciates how those duties should be carried out. Had he a proper understanding of a director's duties, he could not fail to see that he had acted improperly. 204A statement by another defendant in that case (Mr Allan Endresz) that he accepted the decision of the trial judge, and that he did believe that he had done something wrong (a realisation to which he said he had come when the defendants did not have success in the High Court) was not accepted as a statement of contrition (but rather simply as an acceptance that the defendants had exhausted their rights of appeal from the declarations of contravention). Again, his Honour did not accept that this defendant understood (or if he did understand that he was prepared to carry out) the duties of officers of corporations (as imposed by ss 180-182). 205Evidence given in Forge to the effect that a defendant "would do things differently" (by seeking shareholder approval for the transactions in advance) was not sufficient because it demonstrated that he had not grasped the seriousness of the Court of Appeal's findings (which included the finding that the shareholders could not ratify the payments because to do so was a fraud on the minority). Similarly, Mr Hobbs' acknowledgement that "many things could have been done differently or not at all" does not bespeak real contrition. 206Also of relevance, when the issue of contrition was considered in Forge, was that there was no evidence as to what had become of certain of the payments and no explanation as to why, following the findings of breach of duty made by the trial judge, the moneys were not repaid. At [146], White J noted that none of the Endresz defendants had tried to make amends and said: Their very qualified expressions of contrition carry no weight when set against their failure to attempt to make amends, and their failure to provide any explanation as to what happened to the moneys ... received. I do not accept their evidence in relation to the assets of the trusts as being in any way reliable. No financial statements were produced. The position is that the Court does not know what is the financial position of the trusts because [the Endresz defendants] chose not to put any verifiable material before the Court about that. 207In the present case, the position is not dissimilar. Mr Hobbs' expression of contrition is heavily qualified by his continued disclaimer of almost all responsibility for the losses sustained (and his continued attempt to cast the responsibility for the losses on others). I do not suggest that Mr Hobbs is not sorry that losses that have been suffered by investors; simply that he does not accept that he was responsible for those losses and has taken no steps to make amends for his conduct. Mr Hobbs continues to assert that his desire was to help people (similar to the assertions of altruism made in the DVD Seminar and related by others at presentations and seminars to potential investors). Mr Hobbs, who entered into successive arrangements under which he obtained an undisclosed commission at almost every step of the investment process (at least for investments through Cadent), still seems to maintain the stance conveyed at the DVD Seminar, namely that he was assisting 'mums and dads' investors to access lucrative offshore investments to which the banks or the government had unreasonably sought to deny them access (without acknowledging the significant financial gain he stood to make, at no risk to his own assets, thereby). 208Mr Hobbs has given no explanation as to what has become of the payments shown to have been received by him (rather, he continues either to deny receipt of such payments or to maintain that they were referable to other investments). He does not appear to have cooperated in any meaningful way or at all with ASIC's investigation into the funds (ASIC's attempts at conducting the equivalent of a s 19 examination having been frustrated by Mr Hobbs' successive bouts of ill health, about which ASIC expressed some scepticism but which Mr Hobbs' doctor seems to have attributed to the stress of the ASIC investigation). Mr Hobbs has certainly not made any offer to make amends by repayment of any moneys (though if his financial position is as he has asserted, it may be unlikely that he would now be in a position to do so). 209ASIC submits that it is of relevance that Mr Hobbs did not seek to adduce any evidence of contrition in the liability or penalty phase of these proceedings and has expressed contrition or remorse only in response to ASIC's submissions (referring to what was said in ASIC v Loiterton in this regard). I accept that this is the case, although it may well be that in part this was due to the fact that Mr Hobbs is not legally represented and may not have understood the significance of contrition as a factor to be taken into account on the question of penalty. Hence I place little weight on this. 210As noted, I am conscious of the fact that Mr Hobbs is self-represented. I do not suggest that his submissions should be parsed and construed as if they were a legal document. Mr Hobbs has shown a tendency to express his communications infelicitously in the past. However, the difficulty I have in placing weight on Mr Hobbs' statements of contrition and remorse (unsworn and untested as they are) is that they are heavily qualified and they seem more to be an expression of regret at how the schemes have ended up rather than any recognition of and contrition for the contraventions found to have been engaged in by him in relation to those schemes. It is clear that Mr Hobbs still does not accept the full extent of his responsibility for the losses that have been sustained or the findings that have been made against him (as to which the matters set out below make clear). Therefore, as a factor warranting mitigation of any penalties, Mr Hobbs' apology (though it may well be heart felt, consistent with the references as to his general character would suggest) is of little value. (ii) Mr Hobbs' further arguments as to the findings I have made 211Mr Hobbs followed the opening apology in his November affidavit by some one hundred paragraphs in which he largely sought to address again the matters the subject of my October reasons, commencing at [2]: My reply is listed out below is not a reflection on Her Honour's determination but I am seeking to show where I believe the evidence from ASIC that I need to reply to. I apologise I will not be able to cover it all because of my health and the little time I can spend on it and also I cannot quote the sections of affidavits or transcript as we couldn't afford to bring all the folders of evidence home from Australia. (my emphasis) 212Even accepting that paragraph [2] may have been infelicitously expressed, it seems clear that what Mr Hobbs is attempting to do is to "reply" or respond to findings as to the evidence at the hearing (in effect to indicate where he accepts certain matters - such as in [6] where he agrees that his name "was signed as an introducer or broker" on a particular investor's application; and where he does not - such as in [19] and [20] where he asserts that there was no evidence to support findings that he made payments to gain an advantage for himself or to cause detriment to each corporation or that his wife caused detriment to any corporation.) In substance, the affidavit argues that different findings or conclusions should have been made, rather than evidencing an acceptance of responsibility for the contraventions that were found to have been made. 213In Forge, White J heard questions of penalty on remittal of the case from the Court of Appeal where questions of penalty fell to be made on the basis of those contraventions (found by another judge at first instance) that had been upheld in the Court of Appeal and the findings of fact made at first instance or appeal as the basis upon which the declarations were made. His Honour said at [35]: ...As the defendants are entitled to make submissions and to adduce evidence on the question of penalty (including whether any banning order should be made and, if so, for what period), they are entitled to be heard as to whether the evidence led before Foster AJ, or the further evidence adduced in the Court of Appeal, warranted the adverse findings made by Foster AJ and the Court of Appeal, (whether as to credit or facts other than credit), provided that they do not thereby seek to impugn the findings of fact which were the basis for the declared contraventions. The defendants are also entitled to adduce further evidence on the question of penalty, but such further evidence could not be relied upon to seek to impugn the findings of fact which are the basis of the declared contraventions. (my emphasis) 214I accept that for a self-represented litigant, appreciating the distinction there drawn by his Honour may not be easy to grasp. However, in circumstances where it is difficult to distil from Mr Hobbs' affidavit any material that might be treated as a submission as to whether the facts, as I found them to be, warranted the findings made as to contravention (as opposed to material seeking to impugn the factual findings that were made) and where Mr Hobbs has (consciously or otherwise) sought impermissibly to introduce a large amount of further evidence by way of assertions in the affidavit, I am in the position where I can place no weight on the bulk of the November affidavit. 215For example, in that affidavit not only does Mr Hobbs make broad assertions or denials contrary to findings I have made (such as in [4], where he asserts that "I did not have anything to do with Diligence Discovery Ltd"; [16] where he asserts that he had "never heard of a number of these accounts until [he] read the ASIC papers"; and [15] where he asserts that "there is no evidence apart from insinuations from the J & B group that Mr Hobbs gave any instructions or directions to corporate administrators"), he also makes bald factual assertions as to various matters for the first time (such as the statement at [6] that "The J2 service was paid for by Mr Becker and later Mr Chen" (inconsistent with the evidence at the hearing as to the payment of fees for the J2 service from the Tasman Business account and the statement in [7] that "Technocash Ply Ltd [sic] held a number of seminars which recruited people to use their facilities. These people by word of mouth directed administrators to open the accounts with Technocash" (the latter being even more remarkable in circumstances where there was evidence from an officer of Technocash in the proceedings (Mr Monsted), unchallenged by any cross-examination, such that had Mr Hobbs sought to adduce evidence of the so-called word of mouth directions he was in a position to have raised this with Mr Monsted). (In this regard I note also, by way of example, the factual assertions made for the first time in this affidavit in [35], [41], [47], [58] (as to the trading of money relating to the Global Funerals Cadent account opened in December 2005 by Traderview/Tradervest from up to some time in 2006), [72] (as to money that "was to come to Europe for Upton"), [75]-[80], [81] (as to who it was that prepared certain documents signed by the J&B Financial officers when ASIC commenced its investigations), and [78] as to certain advice having been procured at the request of Ms Reisinger.) 216Other parts of Mr Hobbs' affidavit amount to reiteration or expansion of arguments of the kind made at trial (such as his argument in [8] that he could not purchase US Treasuries and that it was Ms Reisinger who gave the instructions to the administrators; in [21] that "...in respect of Geneva Financial and Mrs Hobbs, Mr Koutsouikos, Mr Truong and Mr Wood represented the money to Geneva was their own personal money as stated in evidence by Mr Hobbs. It is particularly important to clarify Mrs Hobbs only know the money Mr Koutsoukos, Mr Truong and Mr Wood invested in Geneva Financial was the personal money of Mr Koutsoukos and Mr Wood"; in [38], the reiteration of earlier submissions in relation to the Geneva Financial Cadent account; and the reiteration of the matters referred to in [61] and [62]); denials made at the hearing (such as at [45], [59]); or evidence given by Mr Hobbs at the hearing ([48]). 217Similarly, there are assertions as to the involvement of others on particular tasks (such as the setting up of the commercial bond for Global Funerals requiring the use of "several professionals" ([46]) or the "getting rid of Ms Dabelic" ([47]) as to which there was no evidence at the hearing (the relevance of which to the issues on the penalty hearing is not apparent). 218Throughout the affidavit there are assertions as to the character of various of ASIC's witnesses (in particular, Mr Koutsoukos, Mr Wood and Mr Parsons (whose handwritten scheme diagram proved so damaging to Mr Hobbs)). For example, at [10], Mr Hobbs states: I find it very disturbing that Mr Koutsoukos, Mr Wood and Mr Truong would change their evidence as to Geneva Financial, from their original evidence was in their Section 19's an assertion which in the circumstances is meaningless since the transcripts of the s 19 compulsory examinations held in late 2007 were not in evidence (and somewhat ironic given the evidence by the J&B officers at the hearing as to statements made by Mr Hobbs from which it can be inferred that Mr Hobbs was directing or asking the J&B Financial officers to give false evidence at the compulsory examinations conducted by ASIC in late 2007). 219At [12], Mr Hobbs points again to the matters that were the subject of submission at the principal hearing as to answers given by ASIC witnesses during his cross-examination (Messrs Koutsoukos, Wood and Truong). In effect, Mr Hobbs reiterates his position that these witness should not have been believed: Mr Koutsoukos statement that Super Save or Integrity Plus was putting at risk $50,000 a month income, there is no evidence from what Mr Koutsoukos deposed. Mr Koutsoukos under cross-examination agreed he stole money from the funds he ran and showed no remorse at that whatsoever, and made a number of other incorrect references such as, Mr Hobbs and Ms Reisinger having morning sessions by telephone on religious subjects and also stating in an agreement that he signed a letter of the conduct of Integrity Plus of which both his business partners signed. Mr Truong and Mrs Reisinger and myself had nothing to do with their religious meetings and Mr Truong agreed that he had signed a statement on this date as a witness on the stand I found that most unbelievable and Mr Koutsoukos was adamant that Ms Reisinger and I phoned into these religious sessions and also his lie in regard to not asking about traders returns. I believed Mr Truong was attempting to tell the truth on all matters including the matters I have just quoted on. I met Mr Truong's support person outside the court who told me Mr Truong just wanted to tell truth on the witness stand. Mr Truong agreed Ms Reisinger and I did not attend the religious meetings by phone and he signed a statement on the 17th October 2007, Mr Koutsouksos, Mr Wood and Mr Truong had years of deceiving people while they ran their Ponzi, I certainly had no idea and I believe Mr Koutsoukos and Mr Wood showed on the witness stand that they were very good at not telling the truth and showed no remorse whatsoever when admitting to stealing money and in Wood's case saying the money was for costs and fees. (my emphasis) 220(The statement as to what was said to have been said outside the Court to Mr Hobbs by the unidentified person described only as "Mr Truong's support person", apart from being inadmissible and an impermissible attempt to introduce new evidence by way of submission, takes the matter nowhere.) Similarly, at [23], Mr Hobbs refers to other aspects of the cross-examination of various of the witnesses, concluding that: Mr Koutsoukos, Mr Wood and Mr Truong do not have the credibility based on the singed [sic] documents being affidavits how they ran their business, the running of Integrity Plus and their first initial Section 19 transcripts 221At [33], Mr Hobbs makes the sweeping assertion that "Mr Parsons is well known in Nelson for his deceit" (a particularly egregious assertion when there was much contention during the trial as to the scope of matters that could properly be put to Mr Parsons in cross-examination by Mr Hobbs and Mr Hobbs abandoned attempts to raise particular matters in cross-examination with Mr Parsons). 222Insofar as Mr Hobbs suggests that it was his own lack of skill as an advocate that precluded the "true nature" of Mr Parsons being shown (and, elsewhere, refers to his inability to prepare evidence or to conduct cross-examination or mistakes in cross-examination - such as at [60], [64], [68], [77]), while I accept that Mr Hobbs had (as would any not legally qualified self-represented litigant be likely to have) a forensic disadvantage in not being experienced in cross-examination, I am not persuaded (with all due respect to those skilled advocates in the legal profession who might have stood in Mr Hobbs' place) that the findings I made would relevantly have been different had there been a more skilled cross-examiner. In coming to the conclusions I did at the liability hearing, I exercised particular caution in accepting evidence that was simply word against word or that could not be tested (or had not been effectively tested) in cross-examination and instead placed weight on the volume of contemporaneous documentary evidence (such as the communications from Mr Hobbs himself and others on his behalf) and the DVD Seminar in making findings as to Mr Hobbs' conduct. 223For example, there is simply nothing from which I could possibly conclude that, had Mr Parsons been cross-examined by a skilled cross-examiner, his evidence as to the making of the scheme diagram would not have withstood such cross-examination. What was damning about that document was that it was difficult to see how Mr Parsons would have been in a position to draw the links between the various aspects of the scheme operations (as he did on the diagram) without information of the kind he said was provided to him by Mr Hobbs and others in the Hobbs' office. That is not evidence that would be affected by whether the account of how Mr Hobbs "shredded" the original diagram while on his crutches was or was not feasible. 224Similarly, insofar as Mr Hobbs reiterates the submission made more than once at the hearing that he had been unable to cross-examine Ms Reisinger ([29]-[32]) (asserting that it was Ms Reisinger "who introduced the Geneva Financial Ltd account" and that this was via Traderview/Tradervest ([34]), as I sought to make clear in my October reasons, I approached the transcript of Ms Reisinger's examination with caution, conscious of the fact that she had not been available for cross-examination. What I placed weight on in relation to that transcript was the corroboration it provided for other evidence as to the events in which Ms Reisinger was involved and where it was consistent with documentary evidence. Ironically, Mr Hobbs draws attention in various paragraphs of his affidavit to statements contained in Ms Reisinger's transcript (see [13], [15], [18]) as supporting his position. I dealt with those matters in my principal reasons. Suffice to say that Ms Reisinger's belief as to Mr Hobbs' role is irrelevant and in any event would not outweigh the volume of evidence that led me to conclude what his role had been. 225At [77], [87], [94] and [95], Mr Hobbs emphasises again his view as to the lack of credibility of the J&B Financial officers: [77] As I attempted to show in my cross-examination of Mr Koutsoukos, Mr Truong, their evidence is not reliable. The same to renting an office or destroying documents and that is not consistent with my own wife's fund or any other persons, nor is it anything that I would ever imagine to be involved in. I actually wrote them a letter in evidence suggesting they get everything from their accountants to give to ASIC. Mr Koutsoukos in cross-examination proved that he was completely unreliable and this alleged involvement of my suggesting to shred documents and shifting offices is completely untrue, I do not know what more Your Honour I can say or do that would cause you to accept what I am saying. Mr Koutsoukos is very street smart and of all the evidence they have put forward to link me to the Ponzi they ran and with their business operations is completely untrue. I feel I have let Jacky and myself down through not being able to cross-examine Mr Koutsoukos, Mr Wood and Mr Truong correctly as I view it now a lawyer skilled in cross-examination would unravel their lies directly. [92] I cannot stress to Your Honour how street-smart Mr Koutsoukos is, Titl was the name of the company he told me on the 17th October 2007 he was making his money out of. The fact that he had an account opening with Cadent two months later is again something I did not know about, and his demeanour under cross-examination Mr Koutsoukos is very accomplished at not telling the truth. [94] When I heard Brian Wood had collapsed at a bus stop and that he had cancer I felt very sorry for him. When he was cross-examined he showed no illness to me and the lies that he was perpetrating proved to me that he was very accomplished at not telling the truth and I submit that all three of these gentlemen when they ran their business at J & B were all very street-smart as they very effectively covered the Ponzi they operated and the stealing of money they conducted. If I had been in control or had been aware I would not have condoned what they were doing. I submit that during their cross-examination, particularly for Mr Koutsoukos and Mr Wood it is their arrogance and their street-smart way that made them look like their evidence was believable, consistent and corroborated. As Mr Halley suggested they would be credible, these three gentlemen had hidden their offending for a long time before ASIC became involved and while Mr Truong was honest under cross-examination all three affidavits of Mr Wood, Mr Truong and Mr Koutsoukos, somebody had suggested what they need to say in an attempt to limit their offending and to attempt to pass blame to myself [an implicit and serious accusation of improper conduct in relation to the evidence to be given by witnesses, as to which there was no evidence whatsoever] I do believe Mr Koutsoukos would be the driving part of this. Mr Wood on the stand simply lied in relation to spark plug money, Stromberg Carburettors and other things. In my cross-examination I attempted to show that they weren't honest. [95] These gentlemen were very accomplished and deceptive as they hid their action in regard to a Ponzi for a number of years and would never allow a Future Trading executive to meet me by themselves. [This is another remarkable assertion for which there is no evidence, and not plausible in circumstances where it was Mr Hobbs who appointed a number of FTZ executives, including Mr Collard, Mr Clement and Mr Fitzgerald, quite apart from those involved in the Burwood schemes.] Even after attending the due diligence seminar in the United States they were actively presenting themselves to a number of high profile attendees. I can say without any hesitation I do not condone nor would ever consider to steal from a client or run a Ponzi. 226In other paragraphs Mr Hobbs simply records that he put certain matters to witnesses ([27], [28]), (presumably to confirm that this evidence had been the subject of challenge), responds to the Jones v Dunkel inference as to Mrs Andrews' evidence by asserting at [83] that had he known that it would be important for her to give evidence in the proceedings "I would have gladly done that" (a matter that Mrs Andrews herself apparently sought to redress during the hearing by sending her own affidavit in relation to a matter that had arisen namely as to the authorship by Mr Hobbs of a book on Art of Arbitrage - something that went only to Mr Hobbs' credibility and on which I ultimately placed little weight); and concludes at [97]: My inability to cross-examine people on issues that thought were obviously incorrect, I attempted to cross examine showing the witness to be unreliable. I recognise my fault now of not challenging all the issues in the affidavits. 227As to the criticisms of their credibility, I made clear in my principal reasons my views as to the credibility of the relevant witnesses (and dealt with the submissions made by Mr Hobbs as to the effect of or inconsistencies in their evidence). I took into account, for example, the admission, on which Mr Hobbs then placed and continues to place considerable weight, by Mr Koutsoukos as to his conduct in relation to the stealing of moneys from the funds. I did not draw from that the conclusion that Mr Hobbs invited me to draw as to Mr Koutsoukos' evidence as a whole. I accept that Mr Hobbs has strong views as to the conduct of those with whom he was in business (at the very least) through FTC. However, I remain of the view already expressed as to those witnesses. 228Mr Halley points, as evidence of Mr Hobbs' failure to appreciate the seriousness of the findings and lack of contrition, to the assertion in [14] of Mr Hobbs' affidavit in relation to the Barclaywest representation (namely the representation that I found to have been made as to an alleged commercial bond investment of $207 million). Mr Hobbs says: ...there was no evidence of a commercial investment bond of $207 million. The $207 million was a bank statement that Ms Min Hua Li had trying to get authenticated. To have a bank statement of this size authenticated, it is a very slow process of checking the bank, the size of the bank it was issued from, that the details of the bank match before actually presenting the statement to the bank in case it was a fraudulent statement. 229The assertion that there was no commercial investment bond of $207 million accords with my finding and is the core of the misleading and deceptive conduct contravention in relation to that representation. Mr Hobbs' attempt to explain this by reference to a bank statement that Ms Li had (in the absence of any evidence at the hearing as to this) is extraordinary. Presumably what Mr Hobbs is seeking to argue is that the investors to whom this representation was made had in some way misunderstood what was being said to them (an argument that was not put at the hearing). 230At [26], Mr Hobbs appears (impermissibly) to be seeking to give evidence as to the reasoning of the late Mr Becker in relation to the establishment or operation of the scheme: Mr Becker's reasoning behind individuals and companies having their own investment business was that he was working on setting up his own trading platform, which he hoped to have completed by 2008 and he was working on that right up to 2004 before he passed away. It was going to be his intention to market his own trading platform. I understand Mr Chen has continued to build the trading platform. 231Even if this is treated as no more than submission or assertion by Mr Hobbs (which is what it clearly is) and a statement of his understanding in relation to Mr Chen (though the basis of that understanding is not stated), it indicates again that Mr Hobbs does not appreciate or accept the findings made against him. 232At [96] (a submission that Mr Halley submits underlines the extent to which Mr Hobbs cannot take responsibility for what has occurred even after the findings that were made) Mr Hobbs criticises another of ASIC's witnesses (Ms Dong) in his submission that she "never wanted to be seen as being in control of anything". There is no basis that has been established for such an assertion and it is, in any event, largely irrelevant to a large number of the findings I made, in relation to the operation of the Burwood schemes for example, (Ms Dong's evidence being principally of relevance to the Li/Collard schemes with which Ms Wu was involved). 233Mr Hobbs asserts throughout his affidavit that, had he known of the conduct of others (in running a Ponzi scheme or stealing from investors), he would not have condoned this (see [70], [89], [91], [94], [95], [103]). The difficulty with this submission is that I have found that the operation of a scheme that involved the purported payment of profits out of the capital funds invested by investors was something with which Mr Hobbs was integrally involved. Mr Hobbs' submissions make it clear that he does not accept that finding or his responsibility for the events that occurred. His contrition therefore seems at its highest to be seen as a statement of sympathy for those who have suffered losses (primarily due, he continues to contend, to the fault of others). 234At [103], Mr Hobbs refers to the Hartnell advice and makes the rather extraordinary and very broad assertion (as to which there was no evidence) that: ... lawyers, Mr Becker, Mr Bellamy, Ms Maroun, Mr Stanton and Mr Southwick all understood the advice to mean exactly what I believed it to be and how I explained it to any other person. 235Mr Becker is deceased. Mr Hobbs did not seek to cross-examine Mr Bellamy (who gave evidence by way of affidavit filed by ASIC in the proceedings) as to the matter asserted in his submissions nor did he call evidence from any of Ms Maroun (a lawyer from whom advice had been sought in 2006), Mr Stanton (a barrister who was involved in the operation of another investment scheme with which Mr Hobbs was associated, but not the subject of these proceedings) or Mr Southwick (the barrister who appeared on behalf of Mr and Mrs Hobbs on various occasions throughout these proceedings) to enlighten me as to what they had understood the advice to mean or what Mr Hobbs had conveyed to them as to his belief in the meaning of the advice (even assuming any such evidence would have been relevant or admissible). There was no evidence from Mr Hartnell as to the instructions he was given that led to the giving of the advice or discussions he may have had with Mr Hobbs as to what was meant by the advice. I do not suggest that there is a Jones v Dunkel inference arising from the above. I simply point to the absence of any evidence from these individuals as highlighting the impossibility of placing any weight on the assertions made by Mr Hobbs as to what they understood Mr Hartnell's advice to have meant (even had that been of any relevance). 236Similarly, Mr Hobbs' assertion at [103] rises no higher than that - an assertion - as does his statement of 'total belief' in the advice of Mr Hartnell and that the way he understood and believed it meant that there was no contravention of any laws in Australia. The significance of this advice was addressed in some detail in my principal reasons. Relevantly, Mr Halley submits, and I accept, Mr Hobbs' affidavit evidences in this regard a continuing inability on the part of Mr Hobbs to accept or understand that the advice given by Mr Hartnell proceeded on the basis of assumptions which did not reflect the reality of what was taking place. 237The fact that Mr Hobbs has shown no real acceptance or understanding of the contraventions detracts significantly from his expressions of contrition or remorse. (iii) Mr Hobbs' financial position 238In his January statement, when addressing the question of the imposition of a monetary penalty, Mr Hobbs asserts that: I have no assets in Australia and I have very few in New Zealand. I do not own the property I live in. I have an interest in a small company in Nelson from which I eek [sic] a modest living trading motor cars. I have no investments in New Zealand. My funds were exhausted by the case. I spent several hundred thousand dollars on lawyers which proved to be insufficient to provide a proper defence at the hearing which I believe contributed to the outcome. [my emphasis - this last sentence seemingly attributing responsibility for Mr Hobbs' current position not on his own conduct but on shortcomings on the part of his legal representatives in the preparation of a "proper defence"] 239In Rahme v R (1989) 43 A Crim R 81 it was said that: ... once a determination has been made that a fine should be imposed the correct procedure in assessing the appropriate amount of the fine is to determine it by reference to the gravity of the offence for which it is imposed. If the court is satisfied that the offender would be unable to pay the amount determined it may reduce it to take account of the offender's means and impecuniosity. 240ASIC submits that there is no proper evidence as to the complete financial position of Mr Hobbs (or that of his wife) and points in particular to the findings made as to the ownership and control of Legends of Bathurst by Mr Hobbs (that company owning two properties in Nelson: the residence of Mr and Mrs Hobbs and the registered office of Tasman Business Consultants) (referring to [1657]-[1658]). While it is conceded by ASIC that there were submissions made at the hearing (in the context of Mr Hobbs' application for access to the transcript), and some earlier affidavit evidence in connection with the application to vacate the hearing, as to Mr Hobbs' financial position, Mr Halley submits that insofar as those were not then tested by ASIC this does not mean that they were accepted by ASIC and that, as ASIC did not have the opportunity to test those matters at the penalty hearing, I should not now speculate (based on material provided in the past) as to Mr Hobbs' present financial position (which I accept may have changed, although in the absence of a vast change of circumstances it seems unlikely that there would have been a significant change since April 2012). 241Furthermore, when considering Mr Hobbs' submission as to his financial position, ASIC emphasises that in other cases a significant pecuniary penalty has been seen to be the appropriate order even where a defendant is bankrupt or where the defendant's only source of income is a Government pension or where the circumstances otherwise warranted such an order (as in ASIC v Loiterton (2004) 50 ACSR 693). 242I can do little, given the lack of evidence as to Mr Hobbs' financial position, other than to note that if his assertions are correct then (absent recourse to his interest in Legends of Bathurst) it may be unlikely that a significant penalty would be able to be met. However, that is not sufficient to warrant the imposition of no (or only a nominal) penalty, having regard to the importance of the objective of general deterrence. Moreover, given the apparent alacrity with which IBCs were incorporated throughout numerous jurisdictions, it is impossible for me to be confident that Mr Hobbs' assertions as to his asset position are correct. (iv) Mr Hobbs' medical condition 243At [82] of Mr Hobbs' affidavit he states: I apologise for my inability to recall matters. Medically I can prove from an MRI scan that my brain suffers large amounts of sclerosis. (though no such medical evidence was in fact produced). At [84], he goes on to explain that: Multiple Sclerosis affects short-term and long-term memory and the impact of the condition at any time neurologists state any inflammation can cause a number of related conditions to the brain. and at [106]-[107]: For myself the stress of this matter has progressed my Multiple Sclerosis to a point now where I have no feeling from the neck down and memory lapses are now very regular as I am unable at times to tell where I am. Financially we do not have an income and are now left without any insurance. It has left me now where I am under the daily supervision from the mental health team and I must be observed by someone continually as I have attempted to take my own life because of the stress of these matters. [I note that similar assertions as to Mr Hobbs' suicidal ideation were made prior to the commencement of the principal hearing.] In particular the actions of Mr Koutsoukos, Mr Wood and Mr Truong cause so much sadness that I have no value for life. Your Honour our life for the past number if years has been without enjoyment as we have lived with this twenty-four/seven. I believe someone accused of murder probably wouldn't have been under the court orders and stress awaiting a trial for as long as we have. And at the time of trial we had no money to employ a lawyer to defend us. Because of my health I am unable to obtain a job as I cannot do any manual work and now I am unable to do any office work. The judgment and my health combined do not allow me to obtain any employment and Your Honour for the number of years we have been under this black cloud of ASIC's action it has destroyed any happiness as a family that we had. I have no desire t continue with life's challenges. 244In his January statement, Mr Hobbs again refers to his medical condition, stating that he suffers from advanced and severe multiple sclerosis; now has "another serious complaint" (presumably referring to aggravation of that condition not a new medical condition altogether); can presently hardly walk; has lost the use of his limbs; has spent long periods in hospital and is unable to pursue any business activity. Mr Hobbs says that his prognosis is poor. He says that "there is little or no chance that [he] will be able to return to work" and "little or no prospect that [he] can retrain for any kind of employment". This submission (to the effect that Mr Hobbs is unlikely due to his medical condition and physical state to be able to return to work) might be thought to be inconsistent with the earlier submission made in the January statement that contemplates Mr Hobbs remaining as a director of a company that "runs my present business in New Zealand". 245In any event, Mr Halley submits (and I accept) that the above submissions concerning Mr Hobbs' health do not rise above assertions. I agree. 246No expert medical evidence was sought to be adduced on the penalty hearing from which I would now be in a position to assess Mr Hobbs' present state and the prognosis for a recovery sufficient to enable his return to work in some capacity in the financial services industry. There were, as noted earlier, some letters written by Dr Ewer. Those are expressed in very general terms and would not be sufficient to establish the position for which Mr Hobbs contends. There was evidence from Dr Ewer prior to the hearing. That, too, was expressed in general terms (and suffered from the fact that Dr Ewer seemed to be expressing opinions as to Mr Hobbs' ability to carry out tasks related to the preparation of the hearing without any understanding of what those tasks involved). Nevertheless, I accepted at the time Dr Ewer's evidence that it was unlikely that Mr Hobbs would recover fully from his medical affliction and that stressful events (such as the then imminent hearing) would be likely to cause an aggravation of Mr Hobbs' condition. I accept that this is likely to remain the case. 247It should be noted that Mr Hobbs was diagnosed with multiple sclerosis (according to Dr Ewer's evidence in April last year) quite some time ago. Mr Hobbs himself referred to his condition at the presentation that was recorded on the 2003 DVD Seminar (as being the reason that he had "sold" his interest in FTC). It was also given, as I recall, as the reason for the steps he took in 2000 for his brother, Robert to be recognised as having a share in the beneficial ownership of Magny-Cours. The reality is that, despite Mr Hobbs' undoubtedly unfortunate (and in his words "wretched") medical condition, he was nevertheless able for the period from 2002 through to 2008 to engage in the provision of the financial services (and to act in the role of de facto director and officer of FTC and the corporate administrators) the subject of these proceedings. I am therefore in no position to speculate as to whether, once the spectre of this litigation (and the prospect of severe penalties as a result) is behind him, Mr Hobbs might be in a position to resume activities in the financial services area (which, as his submissions implicitly concede, is the area of his expertise and training). There is certainly no evidence on which I could comfortably form the view that this would be an impossibility. Even if it would now be an impossibility, the objects of general deterrence in my view make it important that a very strong message be sent to those who might consider developing or operating similar such schemes as to the penalties likely to flow therefrom. 248While I accept that Mr Hobbs suffers from a debilitating and progressive illness (that is or is likely to be worsened by stress) I cannot speculate on the likelihood or otherwise that Mr Hobbs might recover sufficiently to meet a financial penalty imposed on him. Nor is there evidence from which I could conclude that there are no assets available in some other jurisdiction to which he might be in a position to have access in order to meet a pecuniary penalty. As was the case in Forge, there has been no explanation as to what has happened to moneys received by Mr Hobbs from the schemes. The evidence that was given by Mr Hobbs in the witness box as to the Magny-Cours funds was vague and largely unhelpful in clarifying what had happened (whether or not that was due to the effect of Mr Hobbs' medical condition, as Mr Hobbs' apology for his inability to recall things might suggest, I do not know and in any event it does not alter the fact that I am left with little evidence as to what became of the substantial amount received by Mr Hobbs during the course of the Hobbs Scheme). (v) Impact of the proceedings 249Mr Hobbs further submits that the impact of the publicity surrounding the case has destroyed his reputation and that "[e]ven if [he] could return to work, there is little prospect that [he] could find employment in the financial services or Insurance Industries". The last statement is based on the publicity that he says the case has received (described as "phenomenal" in Australia and "substantial" in New Zealand) as a result of which he believes that his reputation has been completely destroyed and he is now "completely unemployable". Mr Hobbs says: For that reason alone [ie the publicity the case attracted] there is no prospect that I could ever find enough money to pay any more than a notional penalty. 250A list of headlines of newspaper articles said to have been published in the Nelson Mail newspaper in New Zealand (and to have appeared elsewhere in the press in New Zealand) was included with Mr Hobbs submission (and seems to have been part of that submission (given that in part it is phrased in the first person and refers to his wife). Other than the titles, there is nothing to indicate the content of the articles. Mr Hobbs states that the articles that have been published in the Nelson Mail have also been in all the associated newspapers throughout New Zealand "as the majority of newspaper publishers in New Zealand are owned and operated by Halifax of Australia"; that some of the newspapers have had up three articles in the one issue; and that variations of these articles have been widespread in other publications throughout New Zealand and that there has also been widespread coverage in the Sydney Morning Herald and throughout Australia. Mr Hobbs also refers to a television item with his photograph that he says featured in November 2012 in New Zealand and Australia. 251I am told in the submissions that all these newspaper articles and more are easily accessed on the "Stuff" website that is New Zealand based and when the name "David Hobbs" is searched on the internet. Mr Hobbs says that: These articles cause so much pain and humiliation, not just to my wife, and myself but also our daughter is greatly effected at school through the actions of her peers. My 90-year-old mother who is almost blind is caused great stress by the media also and also my extended family, friends and the Church. Even when you mention the name David Hobbs to people who live in Auckland, New Zealand, they say is that the same one who has been in the newspapers and television. New Zealand only has a population of approximately four to four-and-a-half million people and it would be difficult to find someone who is not aware of what is in the media. 252Mr Hobbs asks that I take into consideration the "destruction" that the media releases have caused over the last five years (and expresses the opinion that no doubt there will be further media coverage to come). 253Reliance is placed in this regard on what was said by Middleton J in Healey: Whilst the Court has taken many factors into account, very much at the forefront of my consideration has been the issue of general deterrence. In my view, the orders go far enough to indicate the Court's disapproval of the actions of each of the defendants, and to satisfy the requirements of the principle of general deterrence. Any additional penalties are not necessary to facilitate the future adherence to the standard of corporate behaviour found to be required by the Court in this proceeding. What the Court has attempted to do is to recognise the seriousness of the contraventions, but at the same time take into account the circumstances in which the contraventions occurred, the overall conduct of the defendants, and the impact of the penalties imposed on these particular defendants. These factors militate very strongly against more excessive penalties. To achieve this balance is in the public interest; to impose greater penalties in the circumstances of this proceeding would not bring about a greater benefit for society or the corporate world, and would otherwise be unfair and inappropriate. 254In Healey, Middleton J declined to make disqualification orders in respect of penalties on the directors of a corporation which had failed to disclose substantial short term liabilities in its accounts. At [177], his Honour expressed the view that the publicity given to the directors' breaches of duty made the need to impose disqualification orders or pecuniary penalties for reasons of general deterrence much less than it would otherwise have been. His Honour concluded (at [190]) that the declarations of contravention, his refusal to relieve the directors from liability and the reputational damage inflicted on the directors were sufficient to serve the objective of general deterrence. 255Sackville AJA commented on this decision in Gillfillan at [242]: Several points should be made about ASIC v Healey (No 2). First, as Middleton J recognised (at [103]), the guidance to be obtained from other decisions is limited, as each is clearly related to its own facts. Secondly, Middleton J did not say that widespread publicity accorded to contraventions necessarily eliminates the need to impose penalties in the interests of general deterrence. He said that, in the circumstances of the case before him, the need for general deterrence was lessened by the publicity and reputational damage. Thirdly, the decision not to disqualify the directors involved many factors other than publicity and reputational damage. Fourthly, the facts of the case were very different to those of the present case [referring to the fact that in Healey the directors had received assurances from the auditors and management as to compliance of the accounts with the relevant standards]. (my emphasis) 256In Macdonald at [311] Gzell J said: Against the need to protect the public it is necessary to balance personal hardship and in this case I accept that the personal hurt that the attendant publicity has caused is significant. but went on at [312] to emphasise that the breaches were serious and that general deterrence must also be taken into account and concluded that a period of disqualification was in order. 257Similarly, in Forge, White J said at [142] said: Joszef Endresz also gave evidence that the widespread adverse publicity attaching to the proceedings had been stressful and upsetting and had caused him deep distress. As with Mr Forge, I do not regard that as being a mitigating factor to be taken into account in the making of a banning order or the imposition of pecuniary penalties. 258His Honour noted at [94] that Mr Forge had proffered an undertaking to the Court not to act as a director of the company at any time in the future and had given evidence as to the wide publicity in regional and national newspapers as to the events which led to the proceedings and as to the findings made against him and the shame and embarrassment Mr Forge had experienced as a result (and that he was greatly saddened by the effect that had had on his family). His Honour accepted that evidence but said: While I take into account the shame and embarrassment which Mr Forge has felt as a result of the declarations which have been made and the attendant publicity of the proceedings, that is a natural and proper consequence of the exposure of Mr Forge's improper conduct. It does not carry significant weight in the determination of a proper penalty. 259In Gillfillan, Sackville AJA accepted that the publicity accorded to that case (which, I interpose to note, seems to have been far greater at least in this jurisdiction than that accorded here to the present case, though Mr Hobbs suggests otherwise) and the severe reputational damage suffered by the Australian directors (again, there seems to be far greater than in the present case having regard to the prominence of the non-executive directors in that case) are factors to be taken into account in determining whether a disqualification order or other penalty is justified but went on at [243] to say: I do not accept, however, that these matters eliminate the need for penalties to reflect the objective of general deterrence. To accept that submission would be to give too much weight to the vagaries of media reporting or public commentary on particular cases. Moreover, in the absence of major financial reverses or reports of corporate wrongdoing, very few directors of large public corporations do not enjoy high standing and a reputation for integrity and competence. The potential for a diminution of reputation is no doubt a powerful deterrent to carelessness and an incentive to discharge responsibilities diligently. But it should not be assumed that the prospect of disqualification, with the attendant financial consequences and public obloquy attributable to the fact of disqualification, cannot have a powerful additional deterrent effect. In addition, the publicity accorded to particular contraventions does not necessarily diminish the importance of the law maintaining appropriate standards of corporate conduct by imposing disqualification orders on contravenors. 260As to the impact of reputational damage on Mr Hobbs' ability to resume the provision of financial services, again that would be mere speculation on my part. I have not sought (nor would it be appropriate for me) to review the media articles to which Mr Hobbs referred in order to form any view as to the level of publicity the case has received in New Zealand. I am prepared to accept for the sake of argument that there has been a significant amount of adverse publicity in respect of Mr Hobbs' case in New Zealand. I am unaware of any "phenomenal" level of media interest in the case in Australia (and certainly not of the kind that I recall attended the series of proceedings involving the James Hardie directors the subject of a number of judgments including Macdonald and Gillfillan). Mr Hobbs has been involved in schemes such as the present across a number of jurisdictions. His method of operation was to conduct presentations to investors in the guise of financial education seminars that were not publicly advertised and in respect of which participants were subjected to confidentiality obligations (hence largely shielded from regulatory view). I could not possibly form the view that there was no risk to the Australian public that Mr Hobbs might resume such activity if not restrained. 261As to the impact of the hearing on Mr Hobbs in terms of stress, in the January statement Mr Hobbs goes on to express the opinion (though there is no indication as to the basis on which he makes this comparison) that "these proceedings have taken a far greater toll on me than would have been the case with a person in better health". He states: I have found he [sic] case overwhelming, stressful, and totally distracting. The case has exacerbated my health problems, particularly my Multiple Sclerosis to a major degree. I have suffered from severe depression which has made me suicidal on numerous occasions. It has caused me to lose not only my reputation, but my life savings It has been a complete nightmare emotionally, physically and psychologically. It has in effect destroyed my life. No amount of financial penalty can impact on me so severely. 262As to the impact of the proceedings on Mr Hobbs' in terms of stress, Mr Halley readily accepts that a decision by a defendant to contest a matter brought by a regulator will almost certainly impose on a defendant a significant degree of stress but submits that this is not something that the Court should give any weight to in discounting any pecuniary penalty. In that regard, I note the recognition by Beazley JA in a different context that litigation is "a costly and time-consuming process and usually productive of stress, all of which, of their nature, have adverse effects upon those involved in the process" (Old v McInnes and Hodgkinson [2011] NSWCA 410 per Beazley JA). 263Mr Hobbs has also referred to the effect of the stress of the proceedings on his daughter: Our 14 year-old daughter is suffering psychologically and is under counselling as the doctor stated she is to be watched carefully as she is predisposed towards suicide. The continual newspaper articles have interrupted her schooling, including one article that said she was an administrator of a company. 264Although again this rises no higher than assertion, I fully accept that the existence of proceedings of this kind must be stressful for someone in the position of Mr Hobbs' daughter (and, for that matter, his elderly mother) and I have every sympathy for what I have no reason to doubt would be a very upsetting position for her. However, (and regrettably if that will cause additional grief within the family) I consider that the inevitable impact of the proceedings of this kind on defendants and their families does not outweigh the public policy in contraventions of this kind being brought to light and suitably punished. (No doubt the families of those who lost substantial sums in the Hobbs Scheme will also have experienced stress and hardship.) (vi) Mr Hobbs' position as to what penalty should be imposed 265In his affidavit, Mr Hobbs says at [104]: I would accept your Honour to be disqualified from holding a financial services licence or being a director of a company in Australia. We have lived under this action and the ASIC orders for approximately five years, and have suffered immensely through newspaper articles throughout Australia, continual newspaper articles locally and nationally in New Zealand, being placed on a TVNZ news programme and television in Australia. We have had all our insurances cancelled because of the articles in the newspaper. We had a business with SS Inductions before we came to Australia for the hearing but we lost that business while we were at the hearing. (my emphasis) and at [109] that: This is the first time I have ever faced such court action and I have no intention of ever working in the financial services industry. I have read the last sentence as referring to the lack of an intention in the future to work in the financial services industry (not an assertion that Mr Hobbs had not worked in the industry in the past.) There is no evidence as to the nature of the SS Inductions business (though there was some reference, in connection with the application to vacate the hearing that was made only days before the commencement of the hearing, to a business which Mrs Hobbs hoped would produce enough income over 12 months to enable the payment of legal fees for the hearing. It may be that this is the business to which Mr Hobbs is there referring. 266In his January statement, Mr Hobbs makes further submissions as to the particular penalties that ASIC has sought. 267As to disqualification from managing corporations, Mr Hobbs states: I have never been a director of an Australian Company and see little prospect that I will ever be one. I am presently a director of a company that runs my present business in New Zealand and I would wish to remain so as I rely on my company for the livelihood of my wife and myself. [It is not clear how this is consistent with the statement in his November affidavit as to the loss of the SS Inductions business. However, this may be referring to a new business.] 268As to disqualification from offering financial advice in Australia, Mr Hobbs states: As I believe I have never done this, or if I did I did it unknowingly, I do not see that disqualification in Australia will make any difference to me or indeed has any point. [This statement amply reinforces Mr Halley's submissions as to the need for disqualification orders as a matter of personal deterrence, given Mr Hobbs' inability to understand the findings of contravention and the need for pecuniary penalties since Mr Hobbs has acknowledged that the making of disqualification orders will have no punitive effect.] I do not propose to offer financial advice or services in Australia in the future even if my health were to improve enough to enable me to do so. which it will not. 269Insofar as Mr Hobbs has stated (though this statement has not been able to be tested by ASIC) that he has no intention of ever working in the financial services industry again, that statement must be read with a degree of scepticism having regard to Mr Hobbs' continuing protestations of belief that he has never knowingly offered financial advice in Australia. Furthermore, I note that in Forge, White J (at [103]) rejected a submission that a perpetual undertaking of the kind there proffered (not to act as a director of any company at any time in the future) gave greater protection to the public than a disqualification order, stating that: ... A disqualification order is protective of the public for the period of disqualification against misconduct by the person disqualified. However, that is not its only purpose. The object of general deterrence is also of great importance. That object is served by the public disapproval of the impugned conduct being marked not only by a declaration that the conduct has contravened the Act, but by an order for disqualification of the contravener from managing a corporation either for a fixed period or for life. The shame or embarrassment which accompanies such an order is not designed as punishment, although it might have that effect, but serves as a general deterrent to others who might be tempted to breach their duties as directors or officers of a company. In my view, the objective of general deterrence would not be sufficiently served by the acceptance of the proffered undertaking. 270A perpetual undertaking not to manage corporations was not considered to be a sufficient deterrent in Forge. Here, the statement of intention by Mr Hobbs goes nowhere near such an undertaking and would be even less likely to achieve the objects of general deterrence than the undertaking rejected in Forge. Moreover, the conduct of Mr Hobbs in operating the Hobbs Scheme involved far more extensive contraventions than those in Forge. 271Similarly, the fact that Mr Hobbs has expressed the opinion that he is unlikely (due to both his medical condition and the damage to his reputation) to be able to work again (especially in the financial services industry) does not mean that a disqualification order preventing him from managing a corporation or providing financial services is not warranted (for the reasons I have expressed above). 272As to the concern Mr Hobbs has raised as to the effect of the disqualification orders on his ability to remain a director of the company which he says is running his present business in New Zealand and on which he depends for his livelihood, there is no evidence as to the nature or extent of its operations but in any event the disqualification orders that I make will necessarily have a geographical operation confined to Australia. Mr Halley notes that there are provisions under s 383 of the Companies Act 1993 (NZ) and s 137C(e) of the Financial Advisors Act 2008 for the New Zealand High Court, on the application of ASIC's equivalent in New Zealand (the Financial Management Authority of New Zealand) to make orders respectively for the disqualification of a person from the management of corporations or from the provision of financial services (for a period of up to 10 years) if, relevantly, that person has been prohibited in this jurisdiction from such activities. It will be a matter for the regulatory authority in New Zealand to determine what steps, if any, it wishes to take in relation to Mr Hobbs' ability to remain as a director of companies registered or carrying on business in New Zealand (and presumably Mr Hobbs will be able to make submissions if any such action were to be taken). 273ASIC's position is that Mr Hobbs' submissions as to the effect of any disqualification from acting as a director of a New Zealand company are therefore not relevant and provide no basis on which to refrain from making disqualification orders. I agree. 274In summary, ASIC submits that the January submissions forwarded on behalf of each of Mr and Mrs Hobbs confirm the need for there to be both disqualification orders and the imposition of pecuniary penalties: disqualification orders for the protection of the public (and for the purpose of general deterrence) and pecuniary penalties (since the concession by Mr and Mrs Hobbs that the disqualification orders will not have an impact on them means that those orders will not have a sufficient personal deterrent). Character evidence 275I do not propose to set out in detail the character evidence that has been provided. ASIC has, not unfairly, pointed to the unsworn and untested nature of those references. In that regard, I have taken into account that Mr Hobbs and his wife have represented themselves and I have taken what is said in the character references (as to the referees' opinion of the character of Mr and Mrs Hobbs) at face value. 276I have already indicated broadly the content of the character references. It is not necessary to summarise that in any detail. Suffice it to note that criticism of other witnesses, statements as to what other evidence could have been given and attempted retractions or explanations of evidence at the hearing are of no relevance or assistance in determining penalties. Nor are statements as to the impact of the proceedings (or the ASIC investigation that led up to the proceedings) on third parties of relevance. Statements as to Mr Hobbs' good character, integrity and Christian faith (the holding of which, as with the holding of any form of religious belief, I certainly would not wish to denigrate), while no doubt well meant, suffer from the fact that it is not clear that the referees have a full understanding of the nature and seriousness of the contraventions found against him. 277In Macdonald, Gzell J referred to the testimonial evidence for the non-executive directors noting that the evidence was that they were highly qualified and had had an impressive career, demonstrating care, skill and competence; that (at [344]) the need for personal deterrence of the appellants was low and that the testimonial evidence was strongly in favour of their honesty and probity and established the fitness of each of the appellants to manage a company. On appeal, on remittal from the High Court, Sackville AJA in Gillfillan accepted that the need for personal deterrence was very low in relation to those directors. His Honour addressed the testimonial evidence at [238]: The testimonial evidence is important and its substance is accurately summarised by the primary Judge. However, I would add two comments. The testimonial witnesses all indicated in general terms that they were aware of the findings made by the primary Judge and (in their additional affidavits) those made by the High Court. It is not clear from the affidavits that they fully appreciated the nature of the contraventions and the extent of the departures from the standards of care and diligence to be expected of directors of large public companies. Just as the submissions made on behalf of Mr Brown and Ms Hellicar understate the seriousness of the contraventions, my impression is that the testimonial witnesses may well have done the same. Some of the affidavits also note that Ms Hellicar was regarded by the primary Judge as an unsatisfactory witness but assert that this does not alter the deponents' high opinion of her. They do not explain why not. (my emphasis) 278Therein lies the real difficulty with the character evidence relied upon by both Mr and Mrs Hobbs. Apart from the fact that it is not able to be tested, it does not make clear that the referees were aware of the findings that had been made and fully appreciated the nature of the contraventions (particularly in the case of Mr Hobbs against whom serious findings of dishonesty were made) or the extent to which Mr Hobbs (and, for that matter, Mrs Hobbs) had departed from the standards expected of persons in the position of directors and officers of corporations providing financial services of this kind. There is simply no indication of any appreciation, for example, that Mr Hobbs has been found to have been dishonest (a finding that on its face is inconsistent with the glowing references as to his personal integrity, the discrepancy therein not having been addressed by the referees). 279Therefore, the character evidence goes nowhere to establishing a lack of propensity to commit such contraventions in the future (or to demonstrate contrition/remorse on Mr Hobbs' part). Should disqualification orders be made against Mr Hobbs? 280I have already concluded that the contraventions by Mr Hobbs were serious in nature and extent. In my view, disqualification orders would be justified having regard to the separate conduct of Mr Hobbs in each of the five categories of contravention identified earlier (as a matter of personal and general deterrence but especially for the protection of the public). Even more so are they justified having regard to the aggregate of the various contraventions. (If the relevant contraventions had been less serious in nature or extent or could be seen as an isolated instance then a different conclusion might follow. However, the pattern of behaviour and the intentional nature of the acts comprising the relevant contraventions (and the scope of the contraventions looked at overall) unarguably makes the imposition of disqualification orders necessary for the protection of the public and to deter others from such behaviour.) 281The making by Mr Hobbs (himself and through his agents) of each of the different types of representations, well knowing that this was likely to induce investment in the schemes, and causing or permitting others to do so (by providing scheme memoranda to that effect, training FTC executives to make such representations, and giving instructions as to how to answer investor queries, as, for example, in providing the responses for Mr Gahan to pass on to Mr Fink) was very serious and had the potential to (and did) cause substantial losses. Some of the Representation Contraventions (namely, the s 1041G contraventions) necessarily involved findings of dishonesty; the others (though not requiring a finding of dishonesty) I found to have been committed by Mr Hobbs dishonestly and/or with reckless disregard for the law and for the interests of the investors. 282Mr Hobbs' conduct in directing the payment of moneys out of investment schemes for his own personal benefit and that of others; the giving by him of directions as to the payment of returns at a fixed percentage irrespective of the existence of profits (characterised by Mr Hobbs in his cross-examination of Mr Koutsoukos as amounting to theft); and the non-disclosure of commissions to investors (in circumstances where there was a clear conflict of interest on his part) was again serious, reflecting a disregard for the interests of those to whom the investments were promoted. (The seriousness of that conduct was well recognised by Mr Hobbs, whose own presentation (at the DVD Seminar) warned of the risk of persons placing moneys for overseas investment and never seeing the moneys again. Similarly, the repeated warnings of Ponzi schemes, Algerian emails and the like has an act of unreality when regard is had to the nature of the investment schemes Mr Hobbs was, himself, operating.) 283Significant losses have been sustained by investors who were, on the whole, financially unsophisticated. Evidence was given (and not challenged by Mr Hobbs) by investors who had borrowed moneys or mortgaged their homes in order to fund their investment or who had utilised inheritances or superannuation funds to do so. They were surely not in a position to sustain losses (or to bear the investment risks) of the kind they did (and glib warnings in the scheme memoranda, which not all investors were able or given an opportunity to read or understand, about the need to use only "discretionary capital" in the investments were insufficient to draw to their attention the risks involved). 284Mr Hobbs, not only through his conduct in relation to the investment schemes but in his evidence at the hearing, demonstrated a consistent failure to distinguish between his personal interests and those of the entities in which he fulfilled the role of director and a willingness to disregard his responsibilities. He was cavalier in the use of corporate titles (as evidenced by the correspondence signed by him as "director" of companies in respect of which he had not been formally appointed as director, examples of which are noted in my principal reasons) and in the manner in which he treated the registration/deregistration of IBCs and the beneficial ownership of those IBCs (see, for example, his evidence in cross-examination as to the basis on which he had only recently signed a proxy form for a meeting convened by the liquidator of one of the scheme companies). 285At best, Mr Hobbs might be said wilfully to have shut his eyes to the concerns raised from time to time as to the legality of what was being done. However, in my view the evidence warrants the conclusion that he deliberately sought to put in place a corporate structure which would place the individual investment schemes outside scrutiny from the regulator (including the requirement for investors, other than in the superannuation schemes, to apply for investments through an offshore registered IBC). Whether or not Mr Hobbs did so as a result of earlier direction or advice from others (such as Mr Becker or, later, Ms Reisinger) (as Mr Hobbs was insistent was the case but as to which there was no evidence), does not detract from the fact that he deliberately sought to put in place and have implemented a structure that was intended to avoid regulatory supervision (and hence would deprive investors of that safeguard) and that he continued to implement that scheme notwithstanding concerns raised as to its legality. Mr Hobbs' overall involvement in the Hobbs Scheme, and the OEM/KLM processes by which an impression of independence was sought to be conveyed, is clear (having regard to the various matters to which I referred in my principal reasons). 286In Australian Securities Commission v Donovan (1998) 28 ACSR 583, it was noted that s 206C (as, by analogy, so is s 206E) is a provision designed to protect the public and to prevent the use of corporate structures by persons in a way contrary to proper commercial standards (or by analogy with the position in relation to the provision of financial services, in a way contrary to the licensed regime for which provision is made in the legislation). Those objects will be served in this case by the making of disqualification orders (even if orders of that kind are not likely to serve the objective of personal deterrence, as Mr Hobbs' submissions suggest). 287I am firmly of the view that it is necessary for the protection of the public and as a matter of general and personal deterrence that disqualification orders of the kind sought should be made against Mr Hobbs with respect to each of the principal contraventions that has been established (and that, for the purposes of ss 206C and 206E, the relief contemplated by those sections is justified, and for the purposes of s 1101B the contraventions were "serious"). The disqualifications should in each case extend to the operation of the Hobbs Scheme itself and any unregistered managed investment scheme as well as to the provision of financial services without the requisite licence. Period of disqualification orders 288The next question is as to the appropriate period over which such disqualification orders should operate. 289In broad terms, ASIC contends that the appropriate period for which Mr Hobbs should be disqualified from managing corporations is in the range of 25 years to a permanent disqualification; and that the financial services disqualification should be a permanent qualification. To the extent that there is to be any differentiation between the two types of disqualification order, ASIC has submitted that it is appropriate that there be an order disqualifying Mr Hobbs from providing financial services for a greater period than that for disqualification from managing a corporation. Mr Halley made very clear that ASIC's concern, as a matter of protection of the public, is that Mr Hobbs should not ever again become involved in the provision of financial services in this jurisdiction. It seems to me that this concern is well-founded and that, as Mr Hobbs has disclaimed any intention of providing financial services in the future, there is no pecuniary impact likely to flow from such an order that might otherwise weigh against the making of a lengthy disqualification order. 290Other than with respect to his desire to remain as a director of a small business company in New Zealand (to which I have referred above), Mr Hobbs does not cavil with the making of such orders; what he opposes is the making of an order for the payment of a pecuniary penalty. 291As to the disqualification from managing corporations, ASIC notes that the contraventions found against Mr Hobbs are referable to his position as a director or officer of a number of eleven companies (FTC, PJCB, ISL, ISPL, Secured Bond, Barclaywest, 888 Vanuatu, Geneva Financial, Preserved Investments, Ultimate Investments and GP Global). ASIC submits, and I accept, that the evidence establishes that Mr Hobbs either does not have a sufficient understanding of the proper role of company directors and officers and the requirements of the statutory duties imposed under the legislation or has deliberately ignored the duties and requirements of company directors and officers. 292ASIC emphasises (and I accept) that the contraventions found against Mr Hobbs are extremely serious and that they involve not only dishonesty but also Mr Hobbs' personal enrichment at the expense of investors in the schemes (and at the expense of the corporate administrators insofar as they have exposed those entities to significant liability). Again, there can be no question that this is the case. 293Relevantly, Mr Hobbs' conduct of the schemes was carried out through the assistance of others who adopted the role of administrator (thus Mr Hobbs' role in the operation of the individual schemes was not disclosed to investors). This indicates a propensity to direct others in the performance of conduct in breach of the legislation. 294As to the financial services disqualification orders that are sought against Mr Hobbs, it is similarly submitted by ASIC (and I accept) that the evidence establishes that Mr Hobbs does not have a proper understanding of the relevant financial and corporate legal framework for the provision of financial services. ASIC contends, and I accept, that Mr Hobbs deliberately set out to avoid being subject to the applicable requirement of that financial and corporate legal framework. 295In relation to the financial services disqualification orders sought, ASIC points to the additional fact that the contraventions found against Mr Hobbs relate to the very area in which the disqualification is sought - the operation of an unregistered managed investment scheme, provision of financial services, and dishonest misrepresentations in respect of financial products. 296It is abundantly clear that those who were involved in the day to day marketing and operation of the scheme (such as the J&B Financial officers in relation to the Burwood schemes; Mr Collard and Ms Wu in relation to the Li/Collard schemes; and scheme administrators in New Zealand such as Mr Clements and Mr Fitzgerald) had not themselves developed the idea for the schemes or the documentation used in relation to the particular investment schemes (nor, with respect, did people like Mr Clements appear to have any understanding of the financial concepts underlying the schemes) but were acting on advice or instructions or with the assistance of Mr Hobbs (who was the common feature of the various different groups of schemes). Mr Hobbs' own contemporaneous documents (such as the communications he had with Sovereign Trust in 2005 in relation to the Magny-Cours Hong Kong bank account operated by Sovereign on his behalf) make that clear; as does the contemporaneous diagram prepared by Mr Parsons of the explanation given to him by Mr Hobbs in relation to the structure of the overall scheme. 297In essence, ASIC relies on the same factors to support both kinds of disqualification orders (and the various permutations of those orders that have been sought). 298Turning to the factors taken into account in Ekamper, the breaches committed by Mr Hobbs in relation to the management of the various corporate entities involved in the operation and implementation of the Hobbs Scheme (of which Mr Hobbs stood in the position of director) and in the provision of financial services clearly warrant a lengthy period of disqualification. They were very serious, exposing the corporate administrators and FTC (by engaging in the business they did without appropriate financial services licences and without registration of the managed investment schemes they operated) to significant penalties and liabilities and exposing investors in the schemes to significant losses. 299The companies were structured (even on Mr Hobbs' evidence they were structured this way deliberately - albeit that he says he understood this was necessary to ensure the lawfulness of the investments and that this was a requirement imposed by those in the US) in a way that in practice made regulatory supervision difficult. The nature of the business conducted by the corporate administrators was that of soliciting financial investment in the offshore wholesale investment market that Mr Hobbs well understood involved the potential for significant financial loss. 300The conduct of Mr Hobbs showed a complete disregard for the interests of the investors (his suggestion to Mr Koutsoukos that investors should not get more than the stated return because it would make them "too greedy"s is a prime example of his cavalier attitude). Mr Hobbs ignored the corporate structure of IBC's when it suited him to do so (such as with his treatment of Magny-Cours' account in Hong Kong as a personal bank account). He seemed willing to document arrangements without regard to the reality of the situation (such as when he contemplated the drafting of consultancy agreements for the purpose of satisfying Sovereign Trust International that it was in order to permit withdrawals for obviously personal expenses out of the Magny-Cours account). Similarly, the evidence as to Mr Hobbs' directions for the making of loans to persons or entities with whom he was associated and his disinterest in ensuring the recovery of those moneys (such as the "Tractor" investment and the Peter Brock loan) showed a clear disregard for the interests of the corporations (and their creditors or investors) making the so-called loans. Importantly, the Representation Contraventions all involved dishonesty on Mr Hobbs' part. 301Save for what Mr Hobbs now asserts as to his inability (and lack of intention) to continue to carry on a business of this kind (and that rises no higher than assertion), there is an obvious risk of continued contraventions if such conduct were not to be restrained. In particular, I have in mind the fact that Mr Hobbs still is unable to accept that he has responsibility for what has occurred and that there were references in the evidence before me to various other schemes not the subject of the proceedings and as to Mr Hobbs' contacts in the industry such as to make it not unlikely that, if not restrained, Mr Hobbs would seek in future to engage in some kind of activity as he did from at least 2002 to 2008. (The impact of any publicity generated in Australia to date might not necessarily impact on his ability to procure others to operate schemes for his benefit or on his behalf (as he has done in the past) or to continue to operate schemes out of the public eye. In this regard, I have already noted that Mr Hobbs was not, in a formal sense involved in any of the funds (a telling fact when one considers that Mr Hobbs showed no apparent reticence in recruiting family members, friends and acquaintances to act as the scheme administrators and appointed a large number of people as FTC executives and doing so, when regard is had to the DVD Seminar, by reference to the promise of the riches that executives might achieve in that role; see also the evidence in relation to the appointment of persons such as Mr Clements who was invited to become a scheme administrator in order to make some money when he was at a loose end in relation to employment). 302As to any hardship that might be caused to Mr Hobbs, by the making of disqualification orders, Mr Hobbs has himself confirmed that there will be none (other than perhaps in relation to the unidentified small business company in New Zealand - and that will depend on the attitude of the regulatory authorities in that jurisdiction to his position in light of the findings that have been made). 303As to whether there is an appreciation by Mr Hobbs that further conduct of the kind he had engaged in might lead to future proceedings, that is a moot point since there is nothing to suggest that he appreciates sufficiently what the contraventions involved. His submissions certainly do not suggest that he does, though his financial and commercial experience would suggest that he should have done. 304Turning to the factors outlined in Adler (which I consider are equally applicable for both of the types of disqualification orders sought) as to the period of disqualification for the relevant contraventions (and accepting that the contraventions to a large extent overlap) it is readily apparent that Mr Hobbs' conduct falls comfortably within that for which the largest periods of disqualification (25 years or more) are recognised as warranting: the contraventions are ones involving dishonesty; large financial losses were sustained; the activities were in the financial services area where there was obvious potential to do great financial damage (and Mr Hobbs was clearly aware of such a risk given his financial background and the matters raised in the DVD Seminar); and there was in a clear disregard for the regulatory requirements applicable to the conduct of the business (though lip service was paid to this at the time that the Hartnell advice was sought). 305ASIC submits (and I accept) that it can be inferred that, had ASIC not taken the steps that it did, Mr Hobbs would have continued to operate the schemes since (even after ASIC commenced proceedings in relation to the Integrity Plus and Super Save schemes in December 2007), the Master Fund continued to receive investments (and did so until May 2008). (Such an inference is also supported by the evidence that Mr Hobbs procured various statements or affidavits to be signed by those involved in the schemes, which, according to at least one of whom gave evidence in the principal hearing, was said to be necessary to preserve Mr Hobbs' 'good name', without which the schemes could not continue.) 306ASIC further submits that there is no real prospect of rehabilitation for Mr Hobbs on the basis (which I accept is sustained on the material before me) that Mr Hobbs has not demonstrated any, or a sufficient, understanding of the seriousness of his conduct; has accepted no responsibility for his actions or the findings that have now been made as to his conduct; and has expressed no real contrition or remorse). 307The propensity of Mr Hobbs to engage in similar activities or conduct in the future (but for his current state of health and inclination), based on his prior conduct would be high (particularly given that this is the area in which he has professed expertise over many years). The evidence as to his health is untested. 308In Forge, when considering Mr Forge's propensity to engage in similar conduct in the future, White J took into account that his conviction for offences against the Corporations Law in relation to his conduct as a director of another company in about October 1998 (as showing that his contraventions of duty as a director of the company the subject of the present contraventions were not isolated occurrences). 309Here, while there is no evidence of any previous convictions, it is of perhaps some relevance to note that ASIC had drawn Mr Hobbs' attention to issues relating to the need for registration as a director and for licences when providing financial advice. The manner in which Mr Hobbs treated those enquiries suggests a propensity on his part to seek to avoid the operation of regulatory oversight of activities in the future. Of course, in light of the events since 2002/2003 (and the undoubted impact these proceedings will have had in financial and emotional terms on Mr Hobbs) it might be expected that Mr Hobbs would act differently in the future, but the fact is that it is a matter of speculation. 310Insofar as the Mr Hobbs' submissions emphasise the unlikelihood of a repetition of the offences, it has been recognised that where there is an appreciable (not fanciful) risk of particular future contraventions of the Corporations Act by a defendant, it may serve a purpose within the contemplation of the Corporations Act for the court to grant an injunction restraining such conduct (Mauer-Swisse (2002) 42 ACSR 605 at 613 [36]). Indeed in Australian Securities and Investments Commission v Cyclone Magnetic Engines Inc (2009) 224 FLR 50, (2009) 71 ACSR 1, Martin J considered that an order that certain of the defendants in that case be permanently restrained from carrying on a financial services business or holding a financial services licence, pursuant to s1101B, was appropriate even where there was no risk of repetition of the contraventions established if it would act as a deterrent for others. 311As noted already, the expressions by Mr Hobbs of contrition or remorse are heavily qualified. They are not sufficient to persuade me that disqualification orders would not be appropriate. I also note that Mr Hobbs has neither offered nor attempted to repay the amounts he wrongly received out of the funds; has not co-operated with ASIC in its investigations; and has not provided any meaningful evidence as to what happened with funds that he received for his personal benefit. 312In summary, having regard to the nature of the contraventions; that the contraventions involved 11 different companies, hundreds of investors and more than AU $50 million of investor funds; the long period of time over which the conduct occurred (at least from 2002 to 2008); the proliferation of schemes over that period and the foray from 2006 into superannuation investment schemes; the fact that Mr Hobbs gained significant personal benefits from the contraventions; Mr Hobbs' central role in the establishment and operation of the Hobbs Scheme and the Hobbs financial product; his recruitment of other, usually less financially sophisticated or knowledgeable, individuals to market the investments on his behalf; his role in giving directions and assistance in the operation of the funds; the manner in which Mr Hobbs used and advocated the use of a corporate structure (offshore IBCs) so as to evade regulatory supervision of the schemes; the conflict of interest Mr Hobbs had in relation to the many and varied commissions arrangements put in place in relation to the scheme investments; and the other matters referred to above, I consider that Mr Hobbs should be disqualified from each of the types of conduct the subject of the proposed disqualification orders, and that the appropriate period of disqualification in each case should be a permanent one. 313I have considered whether permanent disqualification is required in the public interest in relation to the management of corporations per se (i.e. not in the financial services or investment area) as opposed to a long period but one that is less than a permanent disqualification. From a practical point of view it may make little difference (not simply because of Mr Hobbs' medical condition but also because a disqualification of, say, 25 years might well take Mr Hobbs to near the end of his working life). However, Mr Hobbs has shown a clear disregard for the duties and obligations of a director or officer of a corporation and I have concluded that a permanent period of disqualification is warranted in order to meet the object of general deterrence and protection of the public (particularly having regard to Mr Hobbs' history of using others to perform roles as his agent or on his behalf in relation to the schemes - which might leave open the possibility that in managing a corporation in future he would consider it open to use others to engage in conduct of the kind from which he was otherwise restrained). 314Sackville AJA in Gillfillan, having noted at [174] that, under s 206C, a disqualification order may be made even against a person who, by reason of experience, qualifications, contrition or other factors, may be regarded as fit and proper to manage a corporation notwithstanding the particular contravention found against him or her in the proceedings, referred to the fact that in earlier appeal proceedings in relation to penalty involving another office of the corporation, the Court of Appeal had said at [125]: ... general deterrence is in our view an important consideration given the nature and significance of the cash flow analysis contravention. As well, it is necessary that relief be granted appropriate to mark significant failure in performance of the duties of a senior executive of a large public corporation and to maintain public confidence in the law's upholding of corporate standards. (my emphasis) Still more so, must such an order be made where (as here) Mr Hobbs has shown himself not to be fit and proper to manage corporations. 315ASIC submits that there has been no evidence pointing to any mitigating factors. The kind of factors considered at [253] by Sackville AJA in Gillfillan included the public opprobrium suffered by the non-executive directors, their exemplary records prior to the contraventions, their contributions to the community, the absence of a need for personal deterrence, their fitness to hold office as directors of a corporation, despite the contravention, and their (qualified) contrition. Those factors are not readily attributable to Mr Hobbs' position, even accepting at face value the character references he has forwarded to the Court. 316For the above reasons, I am of the view that the disqualification orders should be permanent. 317As the disqualifications are permanent, no issues of cumulation/concurrence arise. Having regard to the totality principle, there is no reason in my view to discount the periods of disqualification. They reflect the seriousness of Mr Hobbs' conduct viewed in its totality. Mr Collard 318ASIC points to the findings of involvement by Mr Collard in relation to the following schemes: Master Fund and First Secured Bond Unit Trust at [1745]-[1755], [1768]-[1769] and [1771]; 888 Fund and Pinnacle Fund at [1773]-[1774], [1777]-[1781], [1783], [1790], [1795]-[1796] and [1801]-[1803]; Good Value Fund at [1808], [1810]-[1815], [1817], [821]-[1822], [1824]; Enhanced Fund at [1829]-[1833], [1835], [1839]-[1840], [1851]-[1852] and [1853]-[1854]; and Best Fund at [1861]. 319Mr Collard was a de facto director or officer of each of the corporate administrators of the Master Fund, First Secured Bond Unit Trust, 888 (Super Save) Fund, Pinnacle Fund and Enhanced Fund and a de facto director or officer (and founding shareholder) of each of 888 Vanuatu, Barclaywest and North Wave ([1784], [1815], [1845]-[1846]). 320ASIC relies, in summary, on the following matters in relation to Mr Collard: * his promotion of each of the Master Fund, First Secured Bond Unit Trust, 888 (Super Save) Fund, and Pinnacle Fund ([1749] and [1778]); * the finding that he engaged in dishonest conduct by making the Principal Protected Representation, Investment Returns Representation and Capital Protected Representation ([2342]) and caused or permitted FTC and Secured Bond to make those representations ([2386]); (ASIC submits that the scheme memoranda and agreements that Mr Collard provided or caused to be provided to scheme members had the effect of creating an impression of legitimacy about the funds.) * his failure to cause any of the companies of which he was a director or officer to make independent enquiries or take steps in relation to their corporate obligations in relation to the operation of managed investment schemes or the requirements for running a managed investment scheme in Australia, including licensing, registration, and the preparation and issue of a Product Disclosure Statement; * the finding that Mr Collard acted at the direction and instruction of Mr Hobbs in operating the individual investment schemes with which he was involved ([1768], [1790] and [1851]); (ASIC points to Mr Collard's failure to make, or more precisely perhaps lack of evidence as to, any independent enquiries as to the conduct in which Mr Collard was engaged in relation to the scheme (despite his knowledge as to the incorrectness of at least some of the claims made to investors as to the nature of the fund investments, the protection of capital invested in the schemes and the expected rates of return) was conduct that was seriously or grossly incompetent and/or negligent); * Mr Collard's failure to ensure that the companies of which he was a director or officer held an Australian financial services licence; * the use of company structures, including IBCs, to operate each scheme ([119], [207]) and the representation to potential investors that in order to access the schemes there was a "requirement" for investors to set up an IBC ([1977], [1992]); * Mr Collard engaged in dishonest conduct in the various representations about the schemes and breached his duties as director and officer by causing or permitting the corporations with which he was associated also to make those representations. 321ASIC notes that investors invested more than AU $2.18 million and US $2.82 million in the Li/Collard schemes and that there is a shortfall of investor funds of between US $294,000 and US $424,000 and between AU $1.29 million and AU $1.41 million (depending on whether 'returns' to investors are considered to be capital redemptions or returns of profit). As noted, I consider that the higher end of the range is the appropriate one to take into account. As between the different Li/Collard schemes, the shortfall is as follows: Master Fund - AU $1, 549,942.73; First Secured Bond Unit Trust - US $129,453.75; 888 Super Save/Pinnacle Fund - US $196,135.83; Enhanced Fund - US $98,825.27. 322 Mr Collard received, to his personal benefit, sums in excess of AU $180,000 and US $90,000 in funds paid out of the scheme capital in respect of the schemes operated by companies of which he was a director or officer: * out of Master Fund: AU $54,089.02; AU $130,592.05 and US $ 27,483; * out of 888 Super Save Fund and Pinnacle Fund: AU $2,043 and US $53,314.26; * out of Enhanced Fund: US $12,760.88 and to his company (Mr Mac) US $12,7760.88. 323Mr Collard permitted (or failed to act to prevent) companies of which he was a director or officer from diverting scheme capital and/or investors' money in excess of AU $365,000, US $945,000 and NZ $960,000 to third parties (including to Mr Hobbs, Mrs Hobbs, and Ms Li). 324ASIC submits (and I accept that the evidence warrants such a conclusion) that Mr Collard failed to understand the distinction between company property and a personal entitlement by way of shareholder dividends or investor returns and failed to understand the nature of his obligations as a director or officer of the corporate administrator swhen holding investors' funds on trust (the only other available conclusion being that he had deliberately so acted). 325ASIC also emphasises that Mr Collard's conduct related to multiple companies and took place over almost five years (the earliest being the First Secured Bond Unit Trust which received investments from 10 December 2003 to 31 December 2004 and the last receipt of funds being in relation to the Master Fund on 7 May 2008). ASIC submits (and I accept that this is likely - or at least that there is no reason not to infer) that were it not for ASIC's intervention, the conduct would likely have continued. Mr Collard's submissions 326Mr Collard signed a statement on 7 November 2012 in which he stated that he did not wish to tender any evidence or make any submission "by way of mitigation" in respect of his actions or behaviour. In that unsworn statement, Mr Collard stated that he had taken in the full judgment "a significant part of which [he] had not known" and unreservedly apologised: to the Court, to the people who had been hurt or damaged in any way by any of his actions, statements, representations and behaviour in relation to the business activities of the Funds and/or associated entities with which he was associated and which were the subject of the proceedings; and to the officers of ASIC. 327Mr Collard stated that he was "truly sorry in every sense of the word for all of [his] actions, statements, representation and behaviour which caused any hurt or damage". He stated further that: I admit that I was in complete denial for many years that I had done anything wrong in relation to my association with the relevant Funds and/or associated entities which came under scrutiny during the course of the investigation by ASIC. 328As noted above, Mr Collard did not attend the penalty hearing in December (though he had been in attendance through much of the hearing on liability). During the course of the hearing he had on more than one occasion indicated a wish to make a statement as to the impact of the Court proceedings on him over the past few years and he had referred to support he said he had received from persons who had invested in various of the Schemes. There was no evidence before me at the penalty hearing (or at the hearing on liability) as to any of those matters. 329Mr Halley notes that the statement on which Mr Collard relies is not verified. He submits that it bears the hallmarks of a carefully formulated statement prepared by a lawyer, an observation that is not unwarranted having regard to the manner in which other documents have in the past been prepared by Mr Collard compared to the formatting of the present one (though ultimately I place no weight on this). 330In circumstances where Mr Collard's written statement is not consistent with the approach that Mr Collard throughout the course of the hearing (when he indicated that he did not accept that anything he had done or that Mr Hobbs had done in any way constituted any form of contravention), it is submitted by Mr Halley that any change of mind as a result of the judgment is one that ASIC would wish to test (so as to explore whether this was a true reflection of contrition and a true reflection of an acknowledgment that what he had done was wrong). (Mr Halley also points to the evidence that Mr Collard was given the opportunity to come to the Court and to express his contrition to the Court directly (whether or not his statement was sworn) but chose not to do so.) 331ASIC submits that as Mr Collard was not formally appointed as a director or officer of any of the relevant corporations (other than when he was the subject of a resolution appointing him as a director of Secured Bond in connection with that company's application for a Cadent account) and acted for the most part as an administrator, and where he has not accepted that he was ever a director or officer of the relevant corporate administrators, the effect of an order disqualifying Mr Collard from acting as a director or officer of a corporation would on one view have a very limited effect on Mr Collard, in terms of personal deterrence. 332Mr Collard is presently around 65 years of age (according to the bankruptcy record tendered on the penalty hearing) and is an undischarged bankrupt (having been made bankrupt in October 2011). He is not due to be discharged from bankruptcy for nearly two years. He is currently disqualified (by reason of his bankruptcy) from managing any corporations. However, ASIC submits that this is of very little relevance to the question of period of time for which the disqualification orders it seek should now be made (though accepting that it is one of the matters that should be taken into account by the court when determining a pecuniary penalty), given the nature and extent of his conduct in relation to the Li/Collard schemes. 333In Gillfillan, reference was made to the time that the non-executive directors had already been restrained from acting as directors in accordance with the orders made by the primary judge (i.e. the time from the imposition of the orders and pending the appeal) in order to reduce the time for which the ultimate penalties that were imposed. However, there, it was accepted that there was a monetary impact of the disqualification orders (and it was not a situation where the disqualification from acting as a director arose, as it has in Mr Collard's case, from his bankruptcy. (The Court there accepted that since the non-executive directors performed those roles for substantial remuneration, the imposition of disqualification orders had already had a substantial financial effect, indirectly penalising them.) 334ASIC has emphasised the extent to which Mr Collard was involved in the provision of financial services to, and procuring investments from, unsophisticated investors (and, in particular, investors who in many cases could not read the scheme documentation provided to them), in the course of which Mr Collard made numerous representations (and, for some of those, was found to have acted dishonestly). Emphasis is also placed on the extension of the Hobbs Scheme to a self-managed superannuation fund marketed by Mr Collard (the 888 Super Save scheme). 335Mr Collard played a significant role in relation to the implementation of the Li/Collard schemes (which can be seen from the fact that even though he did not speak Chinese he nevertheless attended a number of presentations by Ms Li to potential investors in the Chinese community). ASIC acknowledges that Mr Collard worked closely with Ms Li (as is apparent from the evidence given by investors in those schemes) but submits that (at least in relation to the Li/Collard schemes) Mr Collard could be described as Mr Hobbs' "right-hand man". I agree. 336Mr Halley submits that it is not credible that Mr Collard did not appreciate that the Hobbs Scheme that he was promoting through the Li/Collard schemes was in a high risk area (involving the investment of money which could not be viewed as "discretionary" financial investment money at least insofar as it involved superannuation funds) and that he did not appreciate that there were regulatory requirements to be complied with when procuring financial investment by investors into the relevant schemes. 337As to Mr Collard's level of financial sophistication, and what it might be expected he would have known in this regard, there was some evidence that Mr Collard had been involved (at least as an investor) in other financial schemes (from which I would infer that it is unlikely that he had the same lack of financial sophistication as, for example, that of Ms Wu, who is presently a TAFE student and of whom there is no evidence of previous involvement in investment schemes). There is nothing to show the level of Mr Collard's understanding of the particular regulatory requirements involved in superannuation and the specific requirements for registration of managed investment schemes. 338Mr Halley noted (by reference to the defence earlier filed by Mr Collard) that it raised the suggestion that Mr Collard had simply acquiesced in, or was prepared to proceed on the basis of, what Mr Hobbs had told him as to the operation of the schemes. (Mr Collard, I note, was an attendee at the DVD Seminar to which I referred in my principal reasons and therefore had heard Mr Hobbs' presentation as to the role of FTC and the OEM/KLM process - as well as the assertions as to the lawfulness of investment, the existence of the Hartnell advice, the operation of the schemes and the likely returns from investment schemes - which may have provided the basis for belief by Mr Collard as to those matters.) However, if so, then this simply highlights Mr Collard's failure to confirm for himself the lawfulness of the scheme he was promoting to unsophisticated investors. 339Suffice to say that, on the evidence before me, at best it could be inferred that Mr Collard participated in the promotion of the schemes without choosing to confirm what Mr Hobbs asserted as to the lawfulness of the investments or the process by which the investments were procured (at worst, for Mr Collard, it might be that he understood that the schemes required steps to be taken to meet regulatory safeguards and deliberately ignored them, but on the evidence I could not make such a finding). 340It is submitted, and I accept, that the evidence and findings demonstrate that Mr Collard does not have a sufficient understanding of the proper role of company directors and officers and the requirements of the statutory duties imposed on them; nor does he have a sufficient understanding of the relevant financial and corporate legal framework to be involved in the provision of financial services. I accept that a competent director in the position of Mr Collard would not simply have relied on Mr Hobbs when engaging in conduct as a company director or officer and would have taken steps to satisfy himself or herself that the conduct in which the company was engaging did not contravene the Corporations Act. 341The contraventions by Mr Collard are serious. He was active in soliciting investment from unsophisticated investors and in making representations to induce them to invest in schemes including superannuation funds. Mr Collard's contraventions involve, in some instances, dishonesty on his part and they involve his personal enrichment at the expense of the company and investors. I am satisfied that disqualification orders should be made. 342As to the appropriate range for a disqualification period precluding Mr Collard from managing corporations, ASIC submits that a period of 15 to 20 years is appropriate having regard to the factors outlined in Adler (namely that Mr Collard is not in the most serious category of those who have shown a deliberate disregard for law and compliance but has shown serious incompetence and irresponsibility as to the applicable laws and regulations). As to the appropriate period for disqualification from providing financial services, ASIC submits that the need to protect the public with respect to the provision of financial services justifies a higher period of disqualification and it seeks a period of permanent disqualification. This is put on the basis of Mr Collard's flagrant (in the sense of glaring) disregard of the need to hold the relevant licence for the provision of financial services and of the need not to make misrepresentations of the kind that were made (and his failure to take into account the interests of the people to whom he was seeking to sell the financial products comprised within the scheme). 343As to the import of a lengthy disqualification period having regard to Mr Collard's age (i.e. that a disqualification period for, say, 20 or 25 years might in practical terms operate as a disqualification for most, if not all, of Mr Collard's remaining working life), ASIC submits that the deterrent aspect of a significant period of disqualification is important in this case (and hence seeks a lengthy period of disqualification notwithstanding Mr Collard's age). It is submitted that the danger that Mr Collard presents to the public is his apparent complete lack of appreciation as to the potential implications for investors of the conduct in which he was engaged over a very lengthy period of time and in that sense that he falls within the category of someone who is "almost irremediable" (or incapable of rehabilitation) in terms of providing financial services. 344It is further submitted that given Mr Collard's relatively advanced age (and there lack of any suggestion by him that he wishes to engage in financial services in the future) then a concern that might otherwise arise (as to the financial impact of the imposition of a permanent period of disqualification) does not here arise or does not have the same force. 345While some of the factors outlined by Santow J in Adler for disqualifications for the mid-range (of 7-12 years) are applicable to Mr Collard's circumstances (serious incompetence and irresponsibility; substantial losses; and a deliberate courses of conduct to enrich himself at others' expense), other factors (such as the findings of dishonesty; the field in which these activities were conducted - being the financial services field; and the lack of, or qualified nature of contrition or remorse) are factors that would warrant a longer period of disqualification (of 25 years or more). 346ASIC submits that Mr Collard's lack of (or qualified) contrition and remorse, and his failure to accept responsibility for his actions leads to the conclusion that there is a high propensity that Mr Collard may engage in similar conduct in the future. Accordingly, it seeks a disqualification in the longest category from the provision of financial services (as being necessary both as a matter of personal deterrence and for the protection of the public); and seeks a lengthy disqualification from managing corporations for the same reasons. 347Having regard to the nature of Mr Collard's contraventions (the operation of an unregistered managed investment scheme, the provision of financial services including the procuring of investment in superannuation funds, the making of, at least in some instances, dishonest misrepresentations in respect of the financial products being offered to investors, and the personal benefits obtained by Mr Collard at the expense of the company and investors) I consider that it is appropriate that Mr Collard be permanently disqualified from the provision of financial services and disqualified for 20 years from managing a corporation. Those disqualification periods must obviously operate concurrently. There is no reduction warranted in my view by reference to the totality principle. 348I consider that this is appropriate having regard to the parity principle, on the basis that Mr Hobbs was the central figure involved in the operation of the schemes (and bears a greater degree of culpability than Mr Collard) but that Mr Collard's Representation Contraventions and apparent lack of appreciation of the regulatory framework in which investment schemes must operate are sufficiently serious to warrant the same permanent disqualification from providing financial services. (By way of comparison with Mr Hobbs, Mr Halley submits, and there is force to this submission, that Mr Hobbs is not simply at the threshold of a permanent disqualification but is "well and truly into permanent disqualification territory", whereas Mr Collard might be thought to be on the fringe of permanent disqualification.) The lesser period of disqualification from managing corporations is because Mr Collard has, unlike Mr Hobbs, not shown a propensity to shield his activities behind those of others. 349I have considered whether the period of disqualification from managing corporations should be reduced to reflect the time in which Mr Collard has already been precluded from managing corporations (while a bankrupt). I do not consider that there should be any such reduction. The fact that Mr Collard has been unable to manage corporations since October 2011 is in a sense fortuitous. It does not reflect any judgment on the nature and extent of his departures from the standards expected of him as a company director and officer. Nor am I satisfied that over that period Mr Collard has come to appreciate the extent of the wrongdoing that leads me now to make disqualification orders (indeed, Mr Collard's oral submissions during the course of the hearing are not consistent with such an appreciation). I do not consider that the policy objectives of such a disqualification order will be met in the present case by reducing the otherwise appropriate period to take into account the consequences of Mr Collard's bankruptcy on his ability to manage corporations over the past 16 months. Ms Wu 350ASIC points to the findings of involvement by Ms Wu in the administration of: the 888 (Super Save) Fund and the Pinnacle Fund (at [1773]-[1804]) and the Enhanced Fund ([1826]-[1855]). In summary, ASIC points to the following matters: * Ms Wu promoted the 888 (Super Save) Fund ([1778]) and the Pinnacle Fund [1778], and assisted investors to invest in those schemes ([1776] and [1782]); * Ms Wu told her friends about the Enhanced Fund ([1843]) and provided documents to shareholders in Barclaywest and investors in the Enhanced Fund to sign ([1837]-[1838]); * Ms Wu was involved in promoting and operating unregistered managed investment schemes to solicit subscriptions to FTC and investments from retail investors, including retail investors in Australia, in the name of an IBC, in funds the subject of these proceedings, including Barclaywest ([1852]); (ASIC submits that the use of the corporate structure of the administrator and the use of IBCs for investors had the effect of shielding from regulatory oversight (in accordance with Mr Hobbs' instructions), the activities of the companies for which she was an officer); * in promoting the three schemes and the Hobbs Scheme at large, Ms Wu made representations emphasising the legality of investment, no risk of loss and significant returns (the Lawful Investment Representation, ([2166] and [2173]) the Principal Protected Representation ([2192] and [2214]) and the Investment Returns Representation( [2231] and [2235]) (a matter on which ASIC places reliance in relation to the grant of relief in that it submits that the making of these representations had the effect of encouraging investors to invest in the various funds that made up the Hobbs Scheme); * Ms Wu was a 2% shareholder of 888 Vanuatu ([1773]) and a 10% shareholder of Barclaywest ([1827]) (though in accordance with ASIC's submissions as to this being the next iteration of the way in which investment was made available through the Hobbs scheme this would be consistent with Ms Wu making an investment of her own through the shareholdings in question); and * on at least one occasion Ms Wu assisted an investor to establish a self managed superannuation fund for the purpose of investment in the fund ([1776])). 351It is submitted, and I accept, that on the evidence it appears that Ms Wu has no appreciation of what the duties of a company officer entail or of the requirements of the financial services provisions of the Corporations Act, and does not appear to have accepted that her conduct involved financial services. While ASIC accepts that Ms Wu has been found generally to have acted on the instructions of others and did not understand everything that had occurred in relation to the schemes ([1844]) and that this is of relevance as a mitigating factor, it submits (and again I accept) that this is not an exculpatory factor. 352In relation to the s 180 contraventions, ASIC notes that the finding that it was likely Ms Wu acted at the direction of others is contrary to the standard one would reasonably expect of an officer in her position ([2385]). Similarly, ASIC points to the fundamental requirement for a company carrying on the operation of an investment scheme such as those the subject of these proceedings to ensure that the company (and any relevant officers) had the appropriate licences and took the appropriate steps in order lawfully to conduct business in the jurisdiction ([2349]). It submits that, to the extent that Ms Wu failed to take any steps in that regard (and simply relied on others' instructions), Ms Wu has failed to act in accordance with her duties as an officer of a company and the way a fit and proper person in the financial services industry should act. I agree. (The fact that Ms Wu's conduct involved investment of superannuation funds is emphasised by ASIC as a matter highlighting the serious nature of Ms Wu's conduct.) 353In Ms Wu's case, the conduct in question was for only a relatively short period of time (investments in the Pinnacle Fund taking place over the period from 18 July 2007 to 4 December 2007; the 888 (Super Save) Fund from 24 November 2006 to 27 September 2007; and the Enhanced Fund from 31 August 2007 to 27 September 2007). 354The losses incurred in that period were, however, significant: the combined shortfall of funds in the 888 (Super Save) Fund and the Pinnacle Fund being between US $143,000 - US $196,000 (between approximately 14-19% of funds invested) and in the Enhanced Fund (between US $21,000 - US $98,000 (between approximately 8-35% of funds invested). 355ASIC also notes that the payments the subject of the s 182 contraventions by Ms Wu represented significant proportions of the amounts invested in the Pinnacle Fund (greater than 30% of funds invested) and the Enhanced Fund (greater than 10% of funds invested). ASIC accepts that none of those payments was made directly to Ms Wu for her personal enrichment; but points out that payments were made by Barclaywest to Ms Wu's sister (Ms Hui Quing Wu) out of Enhanced Fund investor funds ([1840]). * Ms Wu's submissions 356As I understand it, Ms Wu seeks to rely upon an email dated 12 December 2012 (later in effect repeated in her affidavit) by way of a submission as to the penalty to be imposed in relation to her conduct. In that email she referred to an unsuccessful attempt to come to an agreement with ASIC. To the extent that the email contains the substance of communications made in a bona fide attempt to resolve the question of the penalty that ASIC was seeking against Ms Wu, those communications would be privileged. Leaving aside that material, I summarise below Ms Wu's submission. 357In essence, Ms Wu has indicated that she wishes to leave the question of what penalty should be imposed in the discretion of the Court but asks that consideration be taken of her financial situation. There is no evidence as such as to Ms Wu's financial situation. She states by way of submission that she has no assets; that her husband previously held a property that was sold some time ago to pay back some of the money the couple had borrowed "as a result of the investment" (by which I understand her to be referring to her investment through one or more of the funds the subject of the proceedings) and to pay money to a court in China "for a related case with this one which involved Ms Min Hua Li [the second defendant in the present proceedings against whom the proceedings have been stayed]". (Ms Wu also refers to her daughter's sale of property to repay her borrowing for the investments.) 358Ms Wu says that she is currently in receipt of a Newstart allowance with CentreLink and looking for work and that she is repaying an amount overpaid to her by Centrelink. Ms Wu attached to her email a recent statement for each of the two bank accounts she says she has (showing very low balances) and says she has no other property, shares, savings or investments. 359Ms Wu says that she put everything she and her family had into "these investments" and lost approximately US $400,000. She says that her due to her association with Ms Li she also had to pay for two related court cases in China that cost her over AU $170,000. There is no evidence as to these proceedings or the losses she claims to have suffered. (Pausing there, I have sympathy for the investors who lost money in these schemes but the manner in which Ms Wu claims to have lost moneys in court case in China and the like is not explained and in any event it does not alter the fact that Ms Wu played a not insignificant part in the administration of the Enhanced Fund, Pinnacle and 888 (Super Save) Fund Schemes, without a proper appreciation of her duties in that regard or the potential exposure for the companies in question of carrying on business in that fashion). 360Ms Wu states that: ..I understand now that what I did was wrong by law, but I did not have that knowledge at the time. I am also an investor in those investments, and am also a victim. In the last 5-6 years my family and I have struggled financially and I have lost everything. I do not wish to have a receiver appointed as I simply cannot afford it. 361ASIC's position was that, although there was some acknowledgment of wrongdoing, and that in [11] and [12] of what her affidavit that was read as her submission Ms Wu asserted an understanding that what she did was wrong by law, it was difficult to test whether Ms Wu really understood why it was that she had been found to have contravened the relevant provisions. In that regard, Mr Zhang, in his oral submissions on 14 December 2012 made it clear that he had advised his wife not to be available for cross-examination, saying: So I just tell my wife no cross-examination at any times. I already see that the witness-- ... Everybody pay money just to sit and lie. Why we need to do this? 362Unfortunately, that forensic decision meant that there was no opportunity for ASIC to test the genuineness of Ms Wu's contrition or her present understanding of the duties of a company officer (or how it was that her conduct fell short of compliance with the standards of behaviour expected of such officers), so as to permit me to be in a position to form a more considered view as to her propensity for future contraventions. 363After hearing the oral submissions by ASIC on 14 December 2012, Mr Zhang's submissions on behalf of his wife went to the imposition of costs orders, in essence: I think my wife has already said very clear. How much penalty, how many years, she didn't care. Because before, she never got financial licence. She didn't do any finance anywhere with any company. How many years? Maybe forever. She didn't care. It is ASIC's costs, that is what we are against. ASIC do these things, not us. ASIC put the wrong position. We invest. In the beginning, it is the wrong position. [This is non-indicative of an understanding as to the basis on which findings of contravention were read.] If this is the case, if ASIC had put us in the defence, ASIC can put a penalty for us. We take a position that this is not fair. It is not fair. Why not fair? I just invest, not just make the plan, not make anything like that. We didn't have the meeting. We still do not know the burden of the case, to anybody. We don't know. ... She didn't go to any lawyer. Why? We didn't have the money. We invest six years. We lost the money. Who pay? The business already set. Right. Mr Hobbs got the money by the contract. All the investors signed a contract. Why is this contract lost? The contract that he promised. The businessman must be at law of the contract. Not steal money. Because this is commonsense. ASIC did not know this. Mixed together. Squandered this business. 364The fact that Ms Wu (or more precisely, perhaps, members of her family) invested in the funds and has sustained losses as a result is not a mitigating factor when assessing the penalty for contraventions that she made and which contributed to those losses (and the losses of others). There was no suggestion that Ms Wu had 'made the plan' or developed the investment schemes. Her role, however, was more than a mere secretarial role of assisting in paperwork. Ms Wu adopted, at least on paper, the role of an administrator of the scheme, signing directions and authorisation for certain payments out of the fund. She also had a role in promoting the fund to others. 365ASIC submits that, for the protection of the public, where Ms Wu has acted inconsistently with her corporate responsibilities (and has acted informally and inconsistently with the requirements of the relevant legislation) which has led to significant consequences for others, orders providing for both general and personal deterrence should be made. 366It is submitted by ASIC (and it seems to me clear from the little opportunity I have had to assess Ms Wu's understanding of the proceedings and from the written submissions made by her), that Ms Wu does not have a sufficient understanding either of the proper role of company officers or of the statutory duties imposed of them; nor of the relevant financial and corporate legal framework applicable to the provision of financial services. To that extent her departure from the standards reasonably expected of such officers is serious. I consider that a period of disqualification is justified. 367ASIC submits that while Ms Wu has expressed some element of contrition it is "very much in the lower range" and that, insofar as Ms Wu's submissions went largely to the question of her financial position, it says this is not relevant to the question of any disqualification order. (ASIC seeks no pecuniary penalty against Ms Wu.) 368ASIC seeks orders for Ms Wu's disqualification for a period of four to five years from managing of corporations and eight to ten years from providing financial services. The longer period of disqualification from providing financial services is put on the basis of the need to protect the public in the financial services field, having regard to the involvement of Ms Wu in the making of misrepresentations in respect of financial products and in her preparedness to be involved in dealings with investors (referring to [1776], [1778], [1782], [1837]-[1838). Mr Halley confirmed that ASIC's principal concern is as to whether Ms Wu will in the future be involved in providing financial services to investors. 369ASIC submits that Ms Wu's conduct falls within the lower range in Adler in some aspects (such as the fact that there has been no finding of dishonesty or wilful contravention of her duties as an officer) but in the mid-range in other aspects (in particular, the fact that there was serious incompetence and irresponsibility; potentially substantial loss; only a partial or technical acceptance of responsibility and, it is submitted, little contrition - or none that I can properly test). 370ASIC notes that a period (even a substantial period) of disqualification may be appropriate, notwithstanding the absence of dishonesty, in an appropriate case. By way of example, in Gillfillan, Sackville AJA, having considered the nature and seriousness of the contraventions by the non-executive directors (in particular that they were "flagrant" in the sense of "glaring" or "blatant", involving a glaring failure on the part of the defendants to discharge their responsibilities as non-executive directors on a matter of very great significance to the company and to the wider community) considered that penalties should be imposed even though the contraventions had occurred on a single occasion and there had been no findings of dishonesty. His Honour said at [234]: If there were no other factors to take into account, I would conclude that the departures [by the non-executive directors concerned] from the standard of care and diligence reasonably expected of directors of the contraventions justify a substantial period of disqualification, notwithstanding the absence of dishonesty. A penalty of this kind is required to mark disapproval of the conduct, to demonstrate that the law upholds appropriate standards of corporate conduct, and to act as a deterrent to other company directors who might be tempted to forego their responsibilities on critical matters. Moreover, ... these were not victimless contraventions. [His Honour noting that a consequence of the contravention was that the market had operated on a false basis and the price of shares artificially maintained and that the conduct had the potential to mislead asbestos victims and their families and to increase their distress when the true position emerged.] (my emphasis) 371ASIC accepts that there is some relevant mitigating conduct, that being the extent to which Ms Wu has been controlled and led by others (Mr Hobbs, Ms Li and Mr Collard), reference being made to the findings at [1791], [1796], [1802]-[1803], [1838], [1845], [1851]-[1852], [1854]-[1855] (though again it is said that this is not exculpatory). In that regard, as I understand the submissions put on behalf of Ms Wu by her husband (and having regard to her position at the close of the hearing), it is contended that Ms Wu also acted on the direction of others (in particular, Ms Dong), which again would not be exculpatory (and in any event I am not in a position to test that submission). (I did observe that Ms Wu's conduct in respect of the claims made against her at least since her attempt to take an active role in the proceedings, has been at the apparent direction of her husband, but it is not clear that her involvement in the scheme was the subject of similar direction.) 372Having regard to the nature of the investment schemes in which Ms Wu was involved, the representations that were made with respect to those schemes (including the rather extraordinary representations as to the level of profits for Barclaywest), the apparent lack of financial sophistication of Ms Wu (and the fact that it should have been apparent to Ms Wu that she did not have financial expertise in relation to such investments), that Ms Wu was dealing with potential investors who in many cases had difficulty in reading or understanding English, I consider that periods of disqualification are required both as a matter of personal and general deterrence and for the protection of the public. 373It is submitted by Mr Halley that while Ms Wu's lack of sophistication and reliance on others might have been relevant to whether or not a pecuniary penalty might be imposed (noting that none is sought in the present case against Ms Wu), this does not warrant a diminution or reduction in the period of disqualification that would otherwise be imposed having regard to the protective function of such an order. Further, it is submitted that where a disqualification period is not likely to have any immediate (or perhaps even any long term) financial impact on the likely business capacity or earning capacity of Ms Wu (since she has not earnt an income in the past from the performance of services as a director), there is no reason not to impose such an order for the protection of the public. 374I consider that disqualification orders should be made from managing corporations for four years and financial services disqualifications for eight years. Mrs Hobbs 375In summary, ASIC places reliance on the following matters: * Mrs Hobbs was found to be acting with, or on behalf of, Mr Hobbs in relation to the business of Geneva Financial and the setting up and operation of Smart Money ([1888]); played a significant role in the day to day running of Geneva Financial including explaining to her sister-in-law, Mrs Brenda Hobbs, how to operate the funds ([1878]); provided the relevant scheme documentation for Smart Money and Prestige ([1878]); gave Mrs Brenda Hobbs instructions in relation to the payments of profit, commissions or other payments from the accounts held by Geneva Financial ([1878]); and, vis a vis Mrs Brenda Hobbs, determined the way in which funds deposited into Smart Money and Prestige were to be invested ([1878]); * Mrs Hobbs used her position as a director or officer of Geneva Financial improperly to gain an advantage for herself or someone else, or cause a detriment to Geneva Financial, in contravention of s 182 ([2406]), having authorised Mr Hobbs to obtain round turn commissions in relation to the Geneva accounts and authorised payment to both herself and Mr Hobbs of moneys from arrangements with MLN (at the expense of investors and to the detriment of the corporate administrator insofar as it was exposed to claims in relation thereto) ([2406]); ASIC submits that these payments constituted a significant amount of the shortfall to investors in at least Prestige; * Mrs Hobbs also received a benefit from schemes other than Smart Money and Prestige in that there was evidence of payments of commission or fees to Mr and Mrs Hobbs (either to their joint account or to the Business Solutions accounts) ([2081]); 376ASIC submits that Mrs Hobbs' conduct demonstrates that she did not understand her statutory duties and responsibilities as a company director and officer (referring to the closing oral submissions by Mrs Hobbs in which she made reference to the IBC she had incorporated, Wyndom Enterprises, as an extension of herself). It is submitted, and I accept, that the evidence also demonstrates that Mrs Hobbs did not have sufficient understanding of the relevant financial and corporate framework applicable for the provision of financial services. ASIC emphasises that Mrs Hobbs' conduct occurred in circumstances where there was a conflict between her interests and those of investors in relation to the payment of commissions and other payments relating to the investment of funds in respect of the schemes. 377Mr Halley points to the apparent endorsement by Mrs Hobbs of the matters in Mr Hobbs' affidavit as indicating that she has not accepted the findings made against her insofar. It is submitted that it can thus be inferred that Mrs Hobbs does not accept or understand that she acted as a de facto director of Geneval Financial and was engaged in the provision of financial services which led to significant losses. 378The period of time over which the respective funds operated (largely consecutively but with a short period of overlap from February to July 2005) was from October 2002 to December 2006. There is a shortfall of investor funds in Smart Money of at least AU $448,000 (but, on the approach that I consider to be correct, as much as AU $663,000) and US $482,000 (or US $612,000). 379ASIC submits that, having regard to the nature of the contraventions found against Mrs Hobbs referable to her position as a director and officer of Geneva Financial, it is appropriate that there be orders disqualifying her from managing a corporation and from the provision of financial services, both for the protection of the public and to safeguard public interest in the management of companies, as well as for the objects of personal and general deterrence. I agree. 380The appropriate period for which ASIC submits Mrs Hobbs should be disqualified both from managing corporations and from the provision of financial services is for a period in the range of 6 - 10 years. As to the factors outlined in Adler, it is submitted (and I accept) that those applicable to the shortest periods of disqualification (up to 3 years) do not have direct application to Mrs Hobbs' circumstances. Of the relevant factors warranting disqualifications in the mid-range of 7-12 years, some are applicable to Mrs Hobbs' (serious incompetence and irresponsibility, potentially substantial loss and lack of contrition or acceptance of responsibility), but others are not (there having been no finding of dishonesty against Mrs Hobbs and no finding of wilful contravention of the law with respect to the duties owed by a director or officer of a company). 381ASIC accepts that to the extent that Mrs Hobbs appears to have been directed by Mr Hobbs ([1880] - [1883], [1887] - [1888]), this would be a relevant mitigating factor. Mr Halley also points to the fact that during the course of the hearing Mrs Hobbs was in general prepared to acquiesce and follow Mr Hobbs, whether it be in submissions or cross-examination and that Mrs Hobbs deferred to her husband when she was having difficulty explaining matters in relation to Global Funerals (matters that I observed myself during the hearing). Apart from the fact that there was a divergence in their respective defences (insofar as Mr Hobbs in the alternative had accepted that other defendants, including Mrs Hobbs, were running various schemes) it is submitted that Mrs Hobbs was ultimately very much dependent upon Mr Hobbs. 382In Forge the finding that Mrs Endresz was very much reliant on her son and her husband for any knowledge of the company and its relationship with the entity to whom management fees had been wrongly paid and did not have a significant grasp of the business affairs of the company was regarded as a mitigating factor. In Mrs Hobbs' case (unlike that of Mrs Endresz), she did, however, have a reasonable grasp of the financial matters relating to Geneva Financial. By way of comparison with the role others played, ASIC notes that it was Mr Hobbs who had the financial experience and contacts in order to be able to set up and operate investment funds using pooled moneys from investors to invest in foreign exchange or derivatives trading, rather than Mrs Hobbs, who was a book-keeper without tertiary qualifications ([1880]). 383Mr Halley notes ASIC's concern that in circumstances where Mrs Hobbs was apparently prepared to conduct the affairs and operations of a company (involved in the provision of financial services) without accepting that she was a director or officer of that company, and without an adequate understanding of the role and obligations of a director or officer, Mrs Hobbs might in future not perceive involvement in the business of a company (if that not be as a formal director or officer of the company) as being in breach of a disqualification from managing a corporation. Submissions by or on behalf of Mrs Hobbs 384As I understand it, Mrs Hobbs relies on the submissions put by Mr Hobbs in his affidavit (and presumably on the correspondence sent from Mrs Andrews on his behalf). She also relies on an email sent by her in December 2012 and on a separate two page unsworn statement sent in January this year, together with character references from Mr Les Armstrong (who was a tutor for a TAFE equivalent accounting course attended by Mrs Hobbs about 20 years ago); Mr Lewis Brock (his letter being a joint reference); and Mr Limoni Oto Naulu. Those references suffer from the same difficulty as did their counterparts for Mr Hobbs. 385In the email submission sent late last year, Mrs Hobbs states, among other things, that: I fully co-operated with ASIC's instruction to close Geneva Financial Limited' s account with Cadent Financial Limited and direct the money to be paid to the Supreme Court in Sydney. However this was done reluctantly because I fully understood the implications of this in regard to the financial loss that would be incurred by doing this. ASIC were aware of my concern in regard to this right from the beginning. and that Geneva Financial's clients did not incur substantial loss during the period the trading account was open at Cadent. She says (and I accept) that she had no intention of depriving any of Geneva Financial's clients. Mrs Hobbs goes on to state that: Geneva Financial Limited's only loss was caused by ASIC forcing the closure of the account with Cadent and this is of very great concern to me. 386I have noted above that this does not indicate an acceptance of responsibility by Mrs Hobbs of the conduct in which she and her husband were engaged. 387Mrs Hobbs denies that she had any business with Mr Koutsoukos, Mr Truong or Mr Wood or they with her and asserts that "They operated their own business in accordance with their own values", those being values she says are not shared by she or her husband. Those are, in effect, simply matters of assertion. 388Mrs Hobbs maintains that there is no need to apply a pecuniary penalty to discourage her from operating any corporate structure in relation to the finance industry; that she has not operated a structure since 2008, does not presently operate one and has no intention of operating one in the future. She asserts that she has no capacity to pay the 'proposed' penalty for either herself or her husband or David; is not employed and has little likelihood of becoming employed in the near future. Mrs Hobbs says that (and there is no reason to doubt this) that she has full time responsibilities caring for both her husband and daughter. 389Mrs Hobbs denies the falsification of any document or accounts in relation to Geneva Financial. Though I do not recall any suggestion in the principal proceedings that she had done so, it appears that this may be intended to address one of the topics considered in Adler as impacting or having a potential impact on penalty. 390As to the impact of the proceedings on her and on her family, Mrs Hobbs said: In addition to this, my life has been over for the last 5 years. My daughter has endured 5 years, over one third of her young life of nothing but stress, unhappiness, mental health services and doctors, living with a seriously ill father, lived with the threat of losing her father to suicide, media assaults, privacy invasion and bullying at school. The effect of this has seriously compounded with her being under mental health care since the mid-end of 2011 (apart from other long periods of mental health care prior to that), that is still ongoing. Her achievements at school have been affected in that she was a top academic and sporting achiever who now has educational problems with learning, achieving and development. She is a medicated mess who is unable to live her life the way she should be able to, she has no interest, no motivation and is extremely sad and exhausted. Her attendance this year has been 71% largely due to stress and associated problems in relation to the court case. If you want to measure punishment, please consider the destruction of the vitality and freedom of my precious young child that has already occurred. I think this is a good measure that punishment has already been achieved. We despair that she will ever fully recover. She will not regain the lost childhood she has had over the last 5 years. The fulfilment of ASIC's wishes and demands in relation to penalty will most certainly add to the ruination of my daughter's life. My entire concern is the preservation of my husband's and daughters lives. 391Mrs Hobbs' January statement commences: I was aware that David had obtained advice from a prominent Sydney lawyer that the business processes he pursued were proper and lawful Like him I had no reason to believe otherwise. How ever, during the course of the hearing I did understand the limitations of that advice and our misguided application of it. Unfortunately that advice was the foundation and pivotal point on which the pursuing business was based. In hindsight it was a mistake to proceed on that understanding and as can be seen from the trial, significant adverse repercussions resulted. We are devastated to see the severe financial impact on so many. We are sorry for our involvement in a business that turned out the way it did, If I had the opportunity to turn back time, I would never embark on a business in the financial arena. (my emphasis) 392I accept that this is an acknowledgment as to the consequences of the operation of the scheme. There is, of course, no evidence as such from Mrs Hobbs as to when and in what circumstances she became aware of the Hartnell advice. It may well be that Mrs Hobbs falls within the category of the investors themselves in having relied on representations as to the lawfulness of the scheme but in any event no claim was made against her for breach of s 601ED(5) and the correctness or otherwise of the Hartnell advice once applied to the actual circumstances of the operation of the scheme is irrelevant to the question of her liability for breach of s 182 of the Act (which in no way depends on whether the scheme or schemes in question did or did not require registration). 393Mrs Hobbs went on to say that: While I always had a great respect and feeling of responsibility for the property of the investors in Smart Money and Prestige, since the hearing I have become very aware of the massive responsibility involved in the financial services industry. I am sincerely sorry for the adversity suffered by people and friends who invested in Smart Money and Prestige who probably would not have made their investments if I did not have that business. I regret being involved in a high-risk arena because of the stress and loss that people have incurred. Having endured enormous stress and loss myself over the last five years caused me to empathise greatly with those clients. Recognising their stress has in turn caused me much stress and anxiety. I have had many sleepless nights and have been sick with worry for these people and that I have been party to their distress. Therefore I do not propose to be in any way involved in this industry and certainly have no intention to offer financial services in Australia at any time in the future and so a ban will have no impact on me. 394Mrs Hobbs then addressed the consequences of imposition of a penalty, largely in terms of the impact she believes a penalty will have on her husband and the couple's joint ability to meet any such order: I believe that the case has destroyed David's health and his chances in the future of remaining as the family's breadwinner. Any penalty imposed on him will have a profound effect on me, and my daughter. To date, the cumulative pressures have had terrible consequences for both my and my daughter's health. We are both on anti depressant medication. My daughter has been unable to do her schooling properly for the last three-and-a-half-years and it is not well enough to participate in her regular sports activities. Five years is a long time and a big portion of her life (over one third of it). She has experienced and observed many terrible things over the last five years. As a consequence of this business and the case we feel we have failed to provide an environment suitable for a child to grow up in and have failed in protecting her from the mistakes we have made by being involved in this business. We regret thinking this could have been a viable opportunity because of the far-reaching effect it has had on clients, family, friends, co-workers as well as our daughter. I would plead for Your Honour to consider her life when coming to your conclusions. 395As to the financial position, Mrs Hobbs prepared a summary of outstanding accounts for which she says that she and her husband do not have funds to pay and says that accounts totalling $20,000 have already been passed to debt collection agencies: The case has already devastated us financially. We struggle now to pay our bills. ... We have numerous creditors who regularly call requesting payment and as well as these outstanding debts we still have regular ongoing overheads necessary to keep the business operational. In addition to this we have our monthly household/personal expenses, which we have trimmed to a minimum. We are surviving on gifts and loans from family and friends at present. The business is not producing any income from which we can draw on for living expenses. 396Mrs Hobbs states that the cost of attempting to defend the case has completely exhausted the family's resources; that there are still outstanding legal bills and loan repayments incurred for the defence, amounting to thousands of dollars and that there is no reasonable possibility that either she or her husband can pay anything more than a nominal penalty. She goes on to state that: Any asset that David and I own in New Zealand is jointly owned [presumably this does not include his shareholding in Legend of Bathurst which seems to be solely in his name] so any financial penalty imposed on David will have a direct impact on me. I ask myself if there is any point the Court imposing on David and I financial penalties that we have no possibility of ever paying. If we lose our small business it will mean that we are destitute with no prospect of either paying the penalties or feeding our daughter and ourselves. In my submission this is a more severe penalty than being declared bankrupt or going to jail. [a somewhat surprising submission] 397Mrs Hobbs reiterates that (and it was not disputed at the hearing) the Smart Money and Prestige Funds (as individual investment funds) did not require to be registered in accordance with what is referred to colloquially as the "2-12-20 rule". That, however, fails to address (or fully to appreciate) the findings made as to the requirement for registration of the overall managed investment scheme of which those funds were found to be part. 398ASIC accepts that Mrs Hobbs' involvement in the Hobbs Scheme is much less than that of Mr Hobbs but it is submitted that it was nevertheless a significant role (both in the day-to-day running of Geneva Financial, including the determination of the manner in which the funds deposited in Smart Money and Prestige were to be invested and in the absence of any supervision or understanding of what happened when those funds were transmitted, at least initially, to Mr Carr). Mr Halley notes that Mrs Hobbs' conduct occurred in circumstances where there was a conflict of interest between her interests and those of her investors, particularly in relation to the authorisation for Mr Hobbs to obtain round turn commissions in relation to Geneva accounts, and also for Mr Hobbs to receive money from arrangements with MLN at the expense of investors. 399Mrs Hobbs' stated position is perhaps in some respects not unlike that of Mrs Endresz in Forge (who deposed that she accepted that her actions had been found to be in breach of the Corporations Law but said that at the time she did not know that she was acting unlawfully; she maintained under cross-examination that she believed that she had done the right thing for the company and the shareholders, and that she had not done anything wrong). White J was not satisfied, however, that Mrs Endrersz had a proper appreciation as to how directors' duties should be performed when put to the test. Mrs Hobbs, similarly, seems to have had little appreciation of those duties in the context of a corporation soliciting financial investments. 400ASIC refers to the fact that Mrs Hobbs has persisted throughout the hearing and in the penalty submissions in maintaining that she was never a director or officer of any corporation (and hence it is submitted that banning her from acting as a director or officer may in practice have very limited implications). Mr Halley notes that ASIC's concern is as to the risk that Mrs Hobbs might seek to engage in the provision of financial services again. 401It is noted that the s 182 contravention, although outside chapter 7, was one concerned with the operation of an unregistered managed investment scheme (arising from the fact that, in breach of her directors' duties to Geneva Financial, Mrs Hobbs arranged for payments to be made to her husband, and to a joint account, out of money invested in the funds administered by Geneva Financial). 402(The attempt by Mrs Hobbs in her submissions to attribute scheme losses to ASIC's conduct in requiring the early close of open trading positions is redolent of a failure to acknowledge that the schemes were operated in contravention of the legislation. Furthermore, only a proportion of investor funds ever ended up in the offshore investments that were represented in the scheme memoranda as investments into which funds would be placed (a not insignificant proportion of investors' funds being paid out to various of the defendants or for their benefit or by way of unsecured and ultimately irrevocable loans to friends and acquaintances of Mr Hobbs). Had the contraventions not occurred, it is likely that the schemes (at least as they were constituted) would not have been available for investment in the first place. To seek to blame ASIC for the losses arising from the early closing out of trading positions taken with funds invested in schemes operated in contravention of the Act, is the antithesis of contrition and acceptance of responsibility for the losses in question.) 403I consider that disqualification orders of both kinds are justified and that they should be for a period of six years from managing corporations and for eight years from the provision of financial services. This recognises the seriousness of the contraventions committed by Mrs Hobbs but also her lack of dishonesty and her tendency to follow instructions or directions from Mr Hobbs. It also, in my opinion, fits with the comparative culpability of the four defendants against whom such orders are to be made. These periods should be served concurrently, as each contravention relates in essence to the same kind of wrongdoing on Mrs Hobbs' part and occurred during the course of the operation of the one fund. Pecuniary penalties sought against the respective defendants 404ASIC submits that a pecuniary penalty should be imposed (as well as the disqualification orders) on each of Mr Hobbs, Mr Collard and Mrs Hobbs, both for the punitive effect of such an order and as a matter of personal and general deterrence having regard to the nature of the contraventions by each. Broadly speaking, I agree. The making of disqualification orders against individuals who assert no intention to carry on the provision of financial services or the like in the future has no real punitive effect on the individuals nor does it adequately meet the objective of personal or general deterrence. 405At [330] in Gillfillan, Sackville AJA said: I accept that a pecuniary penalty should be imposed on the appellants only if an order for disqualification is an inadequate or inappropriate remedy: CA Penalty Judgment, at [131], per curiam. However, I think that the seriousness of each contravention warrants an additional pecuniary penalty, even if of a relatively modest amount. While the appellants have correctly submitted that a pecuniary penalty is not required in the interests of personal deterrence, it is necessary to take into account the objective of general deterrence and the need for the court to match the disapproval of conduct involving such a marked departure from the standards to be expected of directors of public companies. (my emphasis) 406By way of example, in Adler, Santow J (having outlined in detail the principles gleaned from earlier cases as set out earlier and considered various matters in relation to penalty) ordered that Mr Adler be disqualified from managing corporations for 20 years and pay a civil penalty of $450,000. In so doing, his Honour took into account that Mr Adler had vigorously denied, at all points, any wrongdoing; that it was likely that he would act in exactly the same manner if allowed to manage a corporation again; that Mr Adler did not merely contravene the Act once or in one way, but multiple times in multiple ways (forming a pattern of behaviour); that he was dishonest, had misled the public (as well as the Board) and had preferred his own interests to those of the company in personal shares transactions. (Also taken into account was that Mr Adler was found to have attempted to prevent the company obtaining its own advice and had given less than frank instructions to the company's lawyers.) Santow J noted that Mr Adler had sidestepped the company's safeguards against impropriety. His Honour considered that there was a need for a harsh penalty so as to serve as a general deterrent (but accepted that the penalty should not be so large as to be oppressive). Most of the observations made by his Honour in that case are equally applicable to Mr Hobbs' conduct. Mr Hobbs 407ASIC submits that the appropriate pecuniary penalty to be imposed on Mr Hobbs should be in the range of $500,000 to $750,000. 408While ASIC does not contend for any differentiation in the monetary amount sought by way of penalty for each of those five groups of civil penalty contraventions, Mr Halley identified ASIC's greatest concern as being in respect of the contraventions falling within the last three (the first two relating to the different categories of misrepresentations made in relation to the investment schemes: namely as to the legality, capital protection and likely returns from the investments, which can be seen to go to the inducement for investors to invest in the schemes, and as to the representations arising from the manner in which returns were made purportedly out of profits, going to the Ponzi element of the schemes and the inducement for further investors to invest in the schemes; and the third relating to the payments made out of the schemes to or at Mr Hobbs' direction). Mr Halley notes that conduct within those classes of contravention involved significant dishonesty on Mr Hobbs' part. 409As to the other contravening conduct, it is noted that although such contraventions do not necessarily involve dishonesty, they are of significance because they removed the statutory protection that investors would otherwise have had (i.e. had the individual schemes been registered or had they been operated by persons holding Australian financial service licences). (In this regard, Mr Hobbs clearly sought to structure and implement the scheme to avoid the need for registration of a prospectus or other regulatory overview - it was a prominent feature of his presentation at the DVD Seminar.) 410In summary, ASIC submits that what happened was a lengthy and deliberate attempt by Mr Hobbs to obtain investments from people without the protection that would otherwise be accorded to them through the mandatory registration and operation of the schemes as management investment schemes by qualified persons holding the requisite financial services licences; and that Mr Hobbs not only obtained the benefit of personal payments to or for his benefit out of the funds but extracted a series of (undisclosed) commissions by reference to the investments. Having regard to the material before me at the principal hearing, it is not an unfair description in my view to characterise the Hobbs Scheme as one presented to unsophisticated investors as a "get rich quick" scheme with no risk of loss of capital and a huge upside on the profits by reason of their investment. Like, no doubt, most investments that seem to a discerning investor to be too good to be true, unfortunately investment in the Hobbs Scheme proved to be just that. 411ASIC submits that the pecuniary penalty should be a very significant component of the relief granted because of the extent to which Mr Hobbs maintains the proposition that he has never been a director or officer of any of the Scheme administrators (and I note in this regard that he has also persisted in denying responsibility in relation to the development and implementation of the Hobbs Scheme). It is submitted that in circumstances where there is a real doubt that Mr Hobbs accepts, or has ever accepted, that he did provide financial services, the personal deterrence achieved by significant disqualification orders is not apparent and the more likely personal deterrent will be in the nature of a pecuniary penalty. 412On the basis that there is nothing to suggest that (other than through the schemes themselves) Mr Hobbs derived any formal income from providing services as a director or officer of any corporations or from offering financial services, ASIC submits that this is not a case where there is an overlap between a significant disqualification from such conduct and a pecuniary penalty. (It is noted that no pecuniary consequences will flow from the making of the disqualification orders since Mr Hobbs has in effect accepted the likelihood of disqualifications and, having maintained his denial that he has worked in the industry in the past, has disavowed any intention ever to work in the financial services industry.) 413In terms of the size of the penalty that ASIC seeks, ASIC submits that the conduct is well above the high range of factors identified in Adler: focussing on the extent of the dishonesty, the large financial losses, activities in fields in which there is a potential to do great financial damage, financial services, failure to make any effort to repay misappropriated funds, purporting to act on advice which was in fact contrived, contesting the proceedings in full, the lack of (or qualified nature of) any contrition or remorse and a disregard for law and the need for compliance for corporation regulations (ASIC not unfairly characterising the Hobbs Scheme as an elaborate scheme to circumvent the law and compliance with corporate regulations). 414Again, ASIC relies on the facts that: the conduct occurred over an extended period of time (at least from 2002 to 2008); by reason of the s 182 contraventions Mr Hobbs himself obtained significant personal benefits; and the contraventions involved 11 different companies (and, I might add, fourteen individual managed investment schemes). ASIC points again to the fact that Mr Hobbs has not sought to make any effort to repay misappropriated funds and contested the proceedings in full. 415ASIC submits that a penalty at or near the maximum ($200,000) should be imposed for each of the five categories of contravention. It accepts that account must be given to questions of cumulation, concurrence and totality. Applying a discount of 50-75% to a penalty representing the maximum for each group of contraventions, ASIC submits that the aggregate pecuniary penalty should be in the range of $500,000 to $750,000. 416As to the impact of the pecuniary penalty on Mr Hobbs in light of his financial circumstances, ASIC accepts that I can infer that a penalty in the range of what it is seeking would have a significant impact on him, but says that this should not operate to discount the penalty in the absence of admissible evidence (capable of being tested) as to his current financial position. It is also noted that no civil compensation order has been sought against Mr Hobbs. 417The general thrust of the submissions made by ASIC as to the appropriateness in the present case (having regard to the number and similar nature of the various groups of contraventions) of fixing a penalty referable to the five groups of civil contraventions that have been found against Mr Hobbs (or the four such groups of contraventions on the part of Mr Collard) on a group by group basis (the relevant civil penalty contraventions being grouped according to the similarity of the contravention) is that this would be a sensible and efficient way to impose an appropriate penalty in the circumstances of this case. I do not disagree. 418However, the difficulty I have with that approach is that it does not seem to me that this accords with the principles articulated in Pearce as to the manner in which sentencing for multiple offences should be undertaken (confirmed in Vines to be applicable by analogy in the context of civil penalty contraventions). The rationale for the contravention by contravention approach was explained by McHugh, Hayne and Callinan JJ in Pearce as being that sentencing by way of the fixing of a total effective penalty on a group of contraventions (and, in so doing, ignoring the penalty appropriate for each contravention in that group) may mask error and may provide an imperfect foundation from which to determine questions of cumulation and concurrence and may distort questions of parity. At [46], their Honours said: Sentencing is not a process that leads to a single correct answer arrived at by some process admitting of mathematical precision. It is, then, all the more important that proper principle be applied throughout the process. 419The statutory power to impose pecuniary penalties, as noted in Forge, is predicated on and referable to "the" particular contraventions in respect of which a declaration of contravention has been made, not contraventions in the aggregate. 420Therefore, I consider that it is necessary to determine a pecuniary penalty for each separate civil penalty contravention (not, as ASIC with persuasive force, submitted would be the better method, by reference to categories of contravention) before considering whether those penalties should be cumulative or concurrent and before applying the totality and parity principles. 421That said, in my view some of the contraventions (namely the Representation Contraventions) can be seen to relate to a course of conduct, rather than to the particular instances comprising that course of conduct, that Mr Hobbs (or Mr Collard or Ms Wu as the case may be) caused or permitted the relevant corporations to contravene one or more of the Representation Provisions by the making of a particular representation to one or more of a class of investors, on one or more occasion and in one or more ways (orally, at presentations to, or meetings with, groups of potential investors; and in writing, through the provision of scheme memoranda containing such representations or otherwise in communications with one or more investors). 422I have approached the matter on the basis that a penalty should be fixed for the contravention comprised by the course of conduct in permitting the respective corporations to make each of the particular representations (having regard to the particular defendant's culpability with respect to the making by the relevant corporation of that representation), rather than a penalty for each particular instance on which such a representation was made to each particular investor or group of investors. I have done so because the course of conduct that in substance gives rise to the contravention is in my view properly to be seen as one comprising the aggregate of many instances. 423I consider that this approach is consistent with (and does not offend) the principles set out in Pearce and confirmed in Vines to be applicable to a case such as the present. 424The degree of culpability of Mr Hobbs, for example, in causing or permitting companies of which he was a director to make each of the particular representations that they did (and thereby causing them to breach each of the six Representation Provisions), having regard to the evidence at the hearing as to when and how particular misrepresentations were made, does not differ materially different between the respective occasions on which those representations were made. There is, for example, no discernible difference in his culpability in causing or permitting a misrepresentation to be made through a statement in a scheme memorandum and his culpability in causing or permitting such a statement to be made orally to meetings of investors. It might be thought that there was a greater degree of culpability in the manner in which representations were made to investors who were unable to read the material provided to them but in circumstances where the written material was itself misleading I am not persuaded that the degree of culpability was materially different in this respect. (There is clearly a greater degree of culpability where the representations were dishonestly caused to be made but that applies to all of the Representation Contraventions by Mr Hobbs.) 425Where there has been a contravention of both s 180 and s 181 by reason of the same conduct, I have adopted the approach in Maxwell and will impose only the one penalty for those contraventions (even though each would separately have attracted the same penalty) in order to avoid multiple jeopardy (to adopt the terminology used in Maxwell). Where each representation constitutes a breach of six (or, in the case of Mr Collard, five) separate statutory provisions, I consider that only one penalty per separate representation should be imposed (again to reflect the approach adopted in Maxwell), though in Mr Collard's case I have imposed the penalty referable to the more serious of the contraventions (i.e. those involving dishonesty on his part). 426By a similar process of reasoning, I have treated the contraventions of s 182, comprised by the improper use of the respective defendants' positions as directors or officers of the companies to obtain for themselves or others commissions to the detriment of the respective companies, as separate contraventions by reference to the particular kinds of commission received (on the basis that, for example, payment of Cadent commissions pursuant to the particular arrangements entered into with New World Holdings together formed part of a course of conduct that was part of the same contravention). The s 182 Payments (being separate payments, as defined, are to be treated as separate contraventions for the purpose of the imposition of pecuniary penalties. 427Having regard to the principles and matters referred to above, and balancing the need for a pecuniary penalty to meet the objective (among others) of general deterrence against the likelihood of personal hardship and the operation of associated disqualification orders, I consider that the appropriate penalties (prior to considerations of cumulation, concurrence and the application of the totality and parity principles) to be imposed for the civil penalty contraventions I have found against Mr Hobbs are as follows: * ss 180/181 contraventions in relation to the contravention by each of FTC, PJCB and ISL of s 601ED(5): $200,000 per contravention ($600,000). I consider that the maximum penalty is warranted having regard (among the matters to which I have already referred) in particular to the seriousness of operating an unregistered managed investment scheme of the magnitude of the Hobbs Scheme and to the fact that Mr Hobbs caused FTC to do so knowing that the fact that the scheme was unregistered meant that it was (and was so intended by Mr Hobbs to be) removed from regulatory oversight. I also have regard to the fact that the audience that was targeted was that of financially unsophisticated investors for whom the statutory safeguards were a necessary protection and that the Hobbs Scheme operated over a period of some 6 or 7 years and extended to the solicitation of investment of superannuation funds. Had the Hobbs Scheme been subjected to the regulatory oversight that compliance with the requirement for registration would have provided, it is unlikely that the Hobbs Scheme (and the individual component schemes) could have operated as it (and they) did - assuming such a scheme would have been registered at all (and hence it is likely that the substantial scheme losses would have been avoided). * ss 180/181 contraventions in relation to the contravention by FTC of s 911A: $200,000 (in total). Again, I consider that the maximum penalty is warranted having regard to the matters to which I have already referred. It seems to me highly unlikely, having regard to the general lack of financial qualifications or expertise of most of the FTC executives and scheme administrators in respect of whom evidence was given at the hearing, that they would readily have been able to establish the qualifications to obtain an Australian Financial Services licence (i.e. without undertaking appropriate study or training). Had FTC (and the FTC executives and fund administrators soliciting investment in the individual investment funds comprising the Hobbs Scheme) been able to comply (and had in fact complied) with the requirement to obtain an Australian Financial Services licence, then it seems unlikely that the present situation in relation to the funds would have arisen. * ss 180/181 contraventions in relation to each of the Representation Contraventions by each of: FTC (the making of 3 separate representations); PJCB, (the making of 3 separate representations); ISL (the making of 7 separate representations) and Secured Bond (the making of 6 separate representations) in each case in breach of 6 separate statutory provisions (and, in each case involving findings of dishonesty against Mr Hobbs): $200,000 per contravention (as there are 19 separate Representation Contraventions in all, this would be produce an aggregate penalty of $3.8 million). ASIC has categorised this group of contraventions into what I have broadly referred to as pre-investment representations and those made during the life of the investments (though the latter may not only have induced investors to leave their moneys invested in the funds but may also have induced new investors to invest in the funds or existing investors to invest more in the funds by reference to the prospect of high profit returns). I consider that the degree of culpability as between these two categories of representations is the same and hence I would not differentiate in the penalty to be imposed for contraventions falling in the respective categories. By way of explanation for the imposition of the maximum penalty per Representation Contravention, I have taken into account the findings of dishonesty on Mr Hobbs' part. The reality is that these were high risk investments in which unsophisticated investors were induced to invest funds by the making of misrepresentations as to matters such as the type of investments into which funds would be put, the protection of investors' principal or capital (particularly by being secured through the acquisition of US Treasuries), the high rate of returns they could expect, the manner in which the funds could be redeemed and the lawfulness of the investment. It was also represented to investors that returns received by them were in the nature of profits, thus obscuring the Ponzi nature of various of the schemes. Mr Hobbs well knew that the manner in which funds were being dealt with was inconsistent with those representations and that it was unlikely that returns of the kind that were represented could be received on a regular basis or at all (particularly where funds were diverted for the personal benefit of those associated with him and not invested at all). He showed a blatant disregard for investors in the manner in which the schemes were operated. There have been substantial losses as a result. Each kind of representation, taken in isolation, was a serious contravention and would warrant the maximum penalty in the circumstances of the schemes operated by or on instructions from Mr Hobbs. Hence I have fixed the penalties as above. Of course, there was overlapping of the representations. The scheme memoranda contained many of the separate representations. It would be oppressive and would amount to multiple penalties for the total penalty to reflect the aggregate of the individual penalties to be imposed for the representation contraventions. Having regard to the principles outlined earlier, the total penalty for the representation contraventions would need to be significantly discounted to take into account the overlapping nature of the contraventions. I deal with this after determination of the s 182 contraventions. * s 182 contraventions in relation to the improper use by Mr Hobbs of his position as a director or officer of the 10 different companies identified in the relevant declaration of contravention in the making of the s 182 Commissions (which, as noted, I have treated as part of the one course of conduct and hence one contravention) and the s 182 Payments (each of which I have treated as a separate contravention): $20,000 for the civil penalty contravention by Mr Hobbs in respect of the payment of the s 182 Commissions by each of the companies in which he improperly used his position as a director or officer to procure (this would amount to 10 x 4 contraventions if dealt with by reference to the particular types of commission as a separate course of conduct; even more if there is reference to the 49 separate payments of commission identified in the Schedule attached - therefore at least $200,000 in total); $20,000 for each of the s 182 Payment contraventions (since there are 715 of those, it is obvious that any aggregate penalty in respect of these contraventions would be very large indeed). 428The total penalty for the separate civil penalty contraventions (leaving aside the s 182 contraventions) would thus amount to in excess of $4.5 million. Bearing in mind the extent of the losses sustained in the schemes and the extent of the benefits received by Mr Hobbs in breach of his duties as a director of the various entities, it might be suggested that this is not excessive. However, there are overlaps in each of the categories of contravention (other than the civil penalty contraventions by reference to the s 911A contravention by FTC). Regard must be had to the totality of the penalties and whether they would be excessive and go beyond the purpose for which they are to serve. 429The contravention in relation to breach by FTC of s 601ED(5) in the operation of the Hobbs Scheme overlaps with the contraventions in relation to breach by PJCB and ISL of the same provision in relation to component parts of the scheme. There is overlap in relation to the representation contraventions as already noted. In most cases representations made to a potential investor were not made as to one type of representation alone but together with others (the easiest illustration of this is by reference to the representations in the scheme memoranda which canvassed various issues - including the investment returns; capital or principal protected nature of the investments; redemption of investments; and (varying as between different funds) the types of investments into which the funds were to be invested. If there were to be a separate penalty for each such representation contraventions this would involve a large degree of overlap. ASIC has emphasised particular representations, such as the lawful investment representation. Others (such as the capital or principal protected nature of the investment and the likely returns) are similarly serious in that they go to the kind of matters that Mr Hobbs himself thought would prove attractive or irresistible to unsophisticated investors. There is also overlap in the conduct relating to the receipt of the s 182 Commissions. 430The approach adopted by White J in Forge is instructive in this regard. His Honour determined what penalty should be imposed for each contravention but (in circumstances where all the contraventions that had been found were serious) to make pecuniary penalty orders only in relation to the most serious of the offences in relation to each of the separate transactions. His Honour did so on the basis that this was appropriate where the same conduct had resulted in a number of contraventions (and even though, if the less serious contraventions stood alone, they would also have warranted the making of a pecuniary penalty order). (In a different context, in Hawkins (1993) 67 A Crim R 64, in considering an appeal against sentence where there had been concurrent sentences imposed, the Court of Appeal considered that the longest sentence there imposed was appropriate to represent the totality of the criminal conduct for which the concurrent sentences had been imposed.) 431Insofar as certain of the conduct the subject of various of the contraventions (as previously noted) overlaps or is in substance the same, then any penalty imposed would in my view need to be aggregated, in line with the principle of concurrence, so as not to apply multiple penalties for what is in substance the same conduct. Where the conduct is of a separate kind or otherwise does not in substance overlap (such as is the case as between the civil penalty contraventions in relation to the corporate breaches of s 601ED(5), on the one hand, and s 911A on the other; or those breaches contrasted with the Representation Contraventions and with the s 182 contraventions), then the penalties should be cumulative. The totality principle would then need to be applied to the aggregate of the individual penalties so as to determine whether the total of the penalties determined was appropriate having regard to the whole of the offending conduct. In so doing, it is necessary to consider what would be a harsh but not oppressive penalty to reflect the seriousness of the conduct and to be satisfied that it is not one beyond that which would be necessary to serve as a general deterrent. 432Applying the principles of cumulation and concurrence I consider that the appropriate aggregate penalty for the respective contraventions set out in [430] above should be as follows: $200,000 for the contraventions in relation to s 601ED(5); $200,000 for the contraventions in relation to s 911A; $400,000 for the aggregate of the Representation Contraventions and $200,000 for the s 182 Contraventions. Thus the aggregate of the penalties for the separate contraventions across the categories I have set out is $1 million. 433Having regard to the totality of the contraventions, I consider that such a penalty is not excessive. I accept that such a penalty will in the ordinary course cause personal hardship and stress (though it is impossible to measure the extent of this in the present case in the absence of admissible evidence). Particularly having regard to the question of what penalty I consider is necessary to meet the objective of general deterrence, the total penalty thus derived should be reduced by 50% to the sum of $500,000 in total. 434The above process does not purport to be a scientific one nor is it one that has mathematical precision by reference to a particular formula or formulae (neither of which is called for, or considered to be feasible, by the relevant authorities). Rather, I have sought to apply the relevant principles set out in the authorities to which I have referred to the circumstances of Mr Hobbs' contraventions (having in mind the extent of his role in the development and implementation of the Hobbs Scheme). 435It seems to me that a penalty of $500,000 reflects, among other things, the very serious nature of the contraventions committed by Mr Hobbs; the degree of departure from his duties as a director or officer of the respective companies; the pivotal role he played in the establishment and implementation of the Hobbs Scheme and its component schemes; the substantial losses occasioned by the Scheme; his disregard for the legal requirements and safeguards in respect of investments of this kind; and the fact that Mr Hobbs still does not accept responsibility for the losses and (but for any limitations placed on his future behaviour by his health or by the publicity attending this case, the extent of which I am not in a position to assess) there is every likelihood that he would engage in similar conduct in the future were he not to be restrained from so doing and were there not to be a personal deterrent (in the nature of a pecuniary penalty) to provide a disincentive for him so doing. 436I am firmly of the view that not to impose a penalty of this kind (even accepting the fact that it may be unlikely that Mr Hobbs will ultimately be in a position to meet such a penalty) would be to fail to mark the Court's very serious disapprobation of such conduct and the public interest in the general deterrence of such conduct. 437I appreciate that this is the lower end of the range submitted by ASIC to be appropriate. However, I consider that the pecuniary penalty that I have concluded should be imposed meets the need to avoid a penalty that is so large as to be oppressive while at the same time serving as a significant general deterrent. Mr Collard 438ASIC submits that, again, it is appropriate that there be a pecuniary penalty imposed as well as the disqualification orders in order to meet the objects of personal and general deterrence (and that the appropriate amount of pecuniary penalty to be imposed on Mr Collard should be in the range of $150,000 to $200,000). ASIC places particular weight on Mr Collard's involvement in the misuse of superannuation funds and the extent and scope of the contraventions. ASIC accepts that it may be difficult, once Mr Collard is discharged from bankruptcy, for him to meet any penalty of that nature (though it contends that there may be scope for some form of negotiation in that regard) but submits that as investors have lost significant sums of money and that, in those circumstances, it is not unfair to Mr Collard for a penalty of that kind to be imposed. 439The impact of a person's bankruptcy on the exercise of the discretion to impose a pecuniary penalty has been considered in a number of cases. In ASC v Form-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 351-352, Madgwick J decided not to impose a pecuniary penalty where, but for the defendant's bankruptcy, his Honour considered a "substantial" pecuniary penalty should be imposed. The Commission had sought a penalty of $50,000. His Honour did, however, give liberty to the Commission to apply in the future for a pecuniary penalty if the defendant's circumstances changed. 440Middleton J noted that a pecuniary penalty is not a debt which is provable in bankruptcy and said: At the end of his bankruptcy, the effect of the kind of large penalty order that might otherwise be appropriate would simply be to make him indebted to the Commonwealth. So far as his personal capacity to earn a living is concerned, any prejudice to his potential rehabilitation would need to be carefully considered. If he has no capacity to pay, the infliction of such a debt is a somewhat pointless exercise. If he then has a presently unforeseen capacity to pay, the position may be different. 441In contrast, in Citrofresh, Goldberg J imposed a $20,000 pecuniary penalty on a bankrupt defendant, noting that the conduct that had given rise to the relevant contraventions was serious and that a previous prohibition on managing corporations for three years did not seem to have had any impact on his approach to the manner in which he should discharge his duties as a public officer. His Honour went on to say at [62]: ... What is more, I have had no evidence from Mr Narain or on his behalf as to his character or as to his remorse for the conduct which he had undertaken or for any attitude of contriteness. I do not consider that Mr Narain has yet recognised the seriousness of his misconduct in the present circumstances. 442Mr Halley refers to ASIC v Loiterton (2004) 50 ACSR 693 as support for the proposition that a significant pecuniary penalty may be appropriate, despite the bankruptcy of the defendant, where the offences are ones of dishonesty. There Bergin J, as her Honour then was, considered that the imposition of such a penalty was appropriate where the wife of a bankrupt defendant owned a property valued at over $3 million, from which the defendant earned a living, and her Honour considered it was reasonable to conclude that the defendant would have access to such assets in order to make payment of a pecuniary penalty (particularly where the defendant's wife and family had benefited from the payment of the dividend which resulted from his contravening conduct). 443As to the factors that Goldberg J considered, it is submitted by ASIC that the relevant factors for consideration in the present case are as to contrition (in particular, what weight can be placed on Mr Collard's unsworn statement) and the nature and extent of Mr Collard's conduct. 444It is submitted that if Mr Collard had been earning remuneration as a professional director or had been operating a financial service, then the question of punitive penalty would be far less significant (because the making of disqualification orders would itself have a deterrent effect on him). However, Mr Halley notes that there is no suggestion that Mr Collard has acknowledged that he has done so in the past nor is there any suggestion that he intends in the future to engage in financial services or activities or to act as director or officer of a corporation. Therefore, where, as here (and as was the case with Mr Hobbs), disqualification orders are unlikely to have much impact in a practical sense, ASIC submits that this puts a sharper focus on the imposition of a pecuniary penalty to mark the Court's disapprobation of his conduct and that not to do so because of the fact that Mr Collard is bankrupt would be not send a sufficient message as to the disapproval of such conduct. 445In similar fashion to that on which it puts its submissions in relation to Mr Hobbs, ASIC maintains that the similar contraventions of Mr Collard may be grouped together and that this should lead to a maximum pecuniary penalty in total of $800,000 (i.e. $200,000 per category of contravention) before regard is had to the concepts of totality, cumulation or concurrence, the effect of associated disqualification orders and Mr Collard's bankruptcy. (ASIC notes that it does not seek compensation orders against Mr Collard; and that it is not pressing for an order that a receiver be appointed over Mr Collard's assets.) 446I have applied the same process for calculation of the pecuniary penalty to be imposed on Mr Collard as set out above and have concluded as follows: * ss 180/181 contraventions in relation to the contravention by each of FTC, Secured Bond and Barclaywest of s 911A: $50,000 for the FTC contravention; $150,000 for each of the Secured Bond and Barclaywest contraventions ($400,000) For the reasons set out in relation to Mr Hobbs' similar contravention, I consider that a harsh penalty is warranted for contraventions of this kind. However, the role that Mr Collard played in relation to FTC was not in the development of the Hobbs Scheme but as an FTC executive fulfilling the marketing role in which Mr Collard was directed by Mr Hobbs (at the FTC presentations). In effect, Mr Collard acted (as did other FTC executives) as a glorified salesman. In those circumstances I do not consider that his conduct in failing to make appropriate enquiries as to the financial product being offered or promoted by FTC warrants the maximum penalty. By contrast, I consider that Mr Collard's role as scheme administrator of the funds administered by Secured Bond and Barclaywest was one in which he had a more prominent contribution and that his failure to comply with his statutory duties by causing or permitting those companies to promote the Hobbs financial product and to operate the Hobbs Scheme without making enquiries as to, and obtaining, the requisite Australian Financial Services Licence is a serious contravention and one for which Mr Collard bears a substantial degree of responsibility. That said, I have not imposed the maximum penalty for those contraventions as I consider that Mr Collard's contravention was largely due to serious incompetence and irresponsibility, not dishonesty. * ss 180/181 contraventions in relation to each of the Representation Contraventions by each of: FTC (the making of 3 separate representations) and Secured Bond (the making of 6 separate representations) in each case in breach of either 5 or 6 separate statutory provisions (the difference being that the findings of civil penalty contraventions against Mr Collard predicated on the s 1041G contraventions involving findings of dishonesty applied only to the Principal Protected and Investment Returns Representations by FTC and Secured Bond - therefore only 4 of the overall 9 representation contraventions involved dishonesty on Mr Collards' part): $200,000 per each contravention involving dishonesty ($800,000); $100,000 for each of the remaining 5 contraventions ($500,000). My reason for imposing harsh penalties of this kind for this conduct is as set out above in relation to Mr Hobbs. The distinction I have drawn in assessing Mr Collard's conduct goes to the extent of dishonesty found against him. * s 182 contraventions in relation to the improper use by Mr Collard of his position as a director or officer of each of Secured Bond, Barclaywest and 888 Vanuatu in relation to the particular s 182 Payments relating to Mr Collard (136 contraventions): $20,000 per contravention. 447The total penalty for the separate civil penalty contraventions (leaving aside the s 182 contraventions in relation to the separate s 182 Payments) thus amounts to somewhere in excess of $1.7 million. Bearing in mind the factors considered above, I would impose a maximum of $150,000 for the contraventions relating to breaches of s 911A, s 182 and the Representation Contraventions other than those of s 1041G and would impose a penalty in aggregate of $200,000 for the contraventions in relation to the breaches of s 1041G). This would result in an aggregate penalty of $650,000, which I consider accurately reflects the totality of Mr Collard's contraventions (and takes into account the differences between his conduct and that of Mr Hobbs). In particular, having regard to the parity principle, I consider that this appropriately reflects the difference between the respective roles of the two in the overall Hobbs Scheme, the more limited findings of dishonesty made against Mr Collard and the fact that Mr Collard largely acted on the instruction or direction of Mr Hobbs or as he had been shown by Mr Hobbs. 448I do not consider that Mr Collard's bankruptcy should lead to the conclusion that no penalty be imposed (though I accept that this may have an impact on his rehabilitation once discharged from bankruptcy), particularly in circumstances where no compensation orders have been sought against him. I would, however, discount that penalty (having regard to Mr Collard's personal financial position and his lesser overall role compared to Mr Hobbs) to $150,000 in total. Mrs Hobbs 449ASIC submits that the appropriate pecuniary penalty to be imposed on Mrs Hobbs is in the range of $25,000 to $50,000. (Again, ASIC submits that there is no evidence of any significant consequences for Mrs Hobbs from being disqualified from managing corporations or from providing financial services hence the need for a pecuniary penalty to mark the court's public disapproval of such conduct.) 450ASIC points to the applicability of some of the factors outlined by Santow J in Adler as leading to penalties in the range from $20,000 to $40,000 (including no deliberate falsification of accounts and the conduct being of a serious nature but not the worst case) but also emphasises that Mrs Hobbs has not admitted or acknowledged her wrongdoing (and has shown only qualified contrition or remorse) and has not offered or attempted to repay the amounts she received from investor funds. 451Having regard to the fact that the conduct occurred over an extended period of time (from 2002 to at least 2006) and that Mrs Hobbs gained personal benefits from the contraventions, ASIC contends that there should be a pecuniary penalty in the higher range of the lower end. It accepts, nevertheless, the mitigating factor of Mrs Hobbs being directed or 'led' by Mr Hobbs. 452ASIC submits that as Mrs Hobbs has not provided any evidence of her current financial position, her capacity to pay a pecuniary penalty is not in issue. Mrs Hobbs' submissions do, however, seek to put her ability (and that of her husband) to pay a pecuniary penalty in issue (albeit without admissible evidence). Moreover, Mrs Hobbs has submitted that the Court should take into account, in forming a view as to the penalty that should be imposed on her, any penalty imposed on Mr Hobbs. As to that submission, I was informed that ASIC had been unable to identify any authority in which the consequential impact of a pecuniary penalty on a co-defendant or third party had been considered to be a basis not to make, or to reduce, a pecuniary penalty that it would otherwise be minded to make. A somewhat analogous question was, however, considered in Forge, where there was a submission put to his Honour that the pecuniary penalty orders to be made against Mrs Endresz should be further discounted to reflect the fact that both she and her husband would be liable to pay the penalties as they were individually culpable. 453White J did not consider that a further reduction of that kind should be made (noting that no proper evidence had been adduced as to the financial position of the trusts from which the Endresz family had obtained benefits, and that no explanation had been given as to what happened to the moneys received by the family). His Honour did take into account the evidence that Mrs Endresz' financial position was strained due to the numerous legal proceedings that had been commenced since 1999 and that the penalties which would be payable by Mr Endresz would affect his ability to provide financial assistance to his wife and vice versa (thus to that extent considering the consequential impact on Mrs Endresz of the pecuniary penalty to be imposed on her husband). 454Similarly, in Loiterton, some regard was had to the position of family members (namely that they had received the benefit of payments and jointly owned assets might be available to assist in repayment) in determining to impose a penalty notwithstanding Mr Loiterton's bankruptcy. 455ASIC's position was that, particularly in circumstances where no evidence had been advanced in support of the assertion as to the financial impact on Mrs Hobbs of orders made against Mr Hobbs (including as to whether any assets are jointly held and as to Mr and Mrs Hobbs' employment or means of income) and where ASIC, had there been such evidence, would have sought to test it and make submissions as to its weight and relevance (referring to the potential implications acceptance of such a proposition might have for other proceedings), no discount on that basis should be made. 456I note that ASIC has not been in a position either to test the basis for the submission by Mrs Hobbs and would wish to make submissions were it otherwise to be accepted (given that it might have some precedential value if accepted). I do not propose to add to the length or cost of the hearing by inviting yet further submissions. Nor do I consider it necessary to do so, since I consider that the issue of what pecuniary penalty should be imposed can be determined without reference to that submission. The fact is that obviously the imposition of a pecuniary penalty on both Mr and Mrs Hobbs will have a greater impact on the family than imposition of a penalty on only one (depending on the respective size of the penalties). I consider that it is appropriate to take into account (when considering the appropriateness of the penalty necessary to mark the Court's disapprobation of Mrs Hobbs' conduct and the general deterrence objective of such an order) whether the penalty is unduly harsh for someone in the position of Mrs Hobbs. 457I have no doubt that Mrs Hobbs has, throughout the course of the hearing and in the submissions made at the time of the unsuccessful application to vacate the hearing, been genuinely concerned at the impact of the hearing on Mr Hobbs' health. I have also no doubt that, as a mother, Mrs Hobbs will be concerned at the impact of the proceedings (and any penalties now imposed) on her daughter. That would surely be the case for anyone in the position of Mrs Hobbs. It is, however, necessary to bear in mind the need for there to be a very clear message to those who engage in investment schemes of this kind that they face significant penalties as a result of such conduct. I do not believe it would be consistent with the policy objectives of the legislation for there to be no pecuniary penalty imposed on Mrs Hobbs. 458I am mindful that Mrs Hobbs' role was largely one that was under the guidance and direction of her husband and that the functions she carried out appear to have been (in the main) administrative. That is, in part, the basis on which I formed the view that it was Mr Hobbs who was the controlling mind of the Hobbs Scheme as it encompassed Geneva Financial. I consider that this is a strong mitigating factor (as is the fact that Mrs Hobbs was not shown to have acted dishonestly). 459Balancing those matters (and without purporting to have a scientific formula to address the quantification of penalty) I consider that the penalty that should be imposed for the breach of s 182 in relation to the direction for payment of commission and like payments to the joint account with her husband (noting that Mr Hobbs is also being penalised for the conduct in relation to the same payments and that Mrs Hobbs acted broadly at her husband's direction) should be $5,000 and that the penalty for the contraventions for each of the Prestige Payments should be $20,000, they each involving the same degree of culpability. That amounts to a total of $85,000, which I will discount by reference to the totality principle and having regard to the mitigating factors referred to above to $20,000. I consider that this reflects the lesser culpability of Mrs Hobbs in relation to the contraventions committed by her (as compared with that of Mr Hobbs and Mr Collard for similar contraventions). Appointment of receiver 460As noted earlier, ASIC seeks an order that a receiver be appointed to Mr Hobbs' and Mrs Hobbs' assets in this jurisdiction and to the assets of Ms Wu. ASIC contends that the appointment of a receiver is warranted where each of Mr and Mrs Hobbs and Ms Wu has contravened s 182 of the Corporations Act on multiple occasions, so as to ascertain whether there are any assets (in the case of Mr and Mrs Hobbs in this jurisdiction) that have been derived by the schemes. I consider that application to be appropriate in circumstances where each has obtained benefits (or in the case of Ms Wu directed the payment of moneys to others) out of individual scheme funds. 461As to the receiver to be appointed, ASIC nominates those who it seeks to have separately appointed as liquidator to wind up the Hobbs scheme and its constituent investment funds (Messrs Taylor and Needham). The obvious advantage of the appointment of those is that Mr Taylor (and his staff) will have familiarity with the Hobbs Scheme and the funds in question, Mr Taylor having already carried out considerable work as liquidator of the Super Save, Integrity Plus and Master Fund schemes. Mr Taylor (and his staff)'s review of the books and records of the schemes formed the basis on which the s 50 summaries were admitted as evidence in the proceedings and an affidavit setting out the work that Mr Taylor had carried out was read on the application (before the main hearing) by ASIC for those documents to be admitted into evidence. It seems to me highly likely that there would be economies of time and cost in appointing as receiver someone with such knowledge of the matter (particularly where there may be little by way of assets to be uncovered in this exercise and a close eye will need to be kept on the costs of the exercise). 462Mr Collard made a submission during and at the close of the hearing as to who should be appointed as liquidator to wind up the funds (stating his concern as to the costs of the liquidation). Consents to act as liquidator from Mr Blair Peash of Hall Chadwick were handed up at the close of the principal hearing. (It is not clear whether Mr Collard also sought to have Mr Peash appointed as receiver particularly where no order is sought for the appointment of a receiver to Mr Collard's assets. However, for present purposes I will assume that the application for Mr Peash to be appointed as liquidator extends to the appointment of a receiver to the assets of the specified defendants.) 463Mr Hobbs has also requested that the appointment of a receiver to the funds be at a fixed price (referring, I assume, to the liquidator nominated by Mr Collard) as that would mean investors would be able to retain most of their investment. The reality is that, even if a fixed price sum for the conduct of the liquidation/receivership were to be appropriate (and given the complexity of the schemes I am by no means convinced that this would be - since the risk would be that it would lead to corners being cut), there is nothing to suggest that investors would retain "most" of their investment having regard to the significant shortfall in the funds. 464I deal with the identity of the liquidator and receiver together. There has been no objection raised by the defendants to the winding up of the individual funds with which they were involved and, given the likely shortfall in the funds available for distribution to investors and the time that the funds have been held in Court, it is appropriate that orders now be made to permit the winding up of those funds as expeditiously and cost effectively as possible. 465It is noted in Austin and Ramsey, Ford's Principles of Corporations Law (15th edn) at 28.170 that when the court orders a winding up it appoints a liquidator nominated by the applicant. That seems to be a statement of general principle. There remains a discretion as to who should be appointed to such a role. What must be determined is what is in the best interests of the parties concerned in the winding up (Re Austral Knitting Mills Ltd (1926) 43 WN (NSW) 131). There, Long Innes J stated at 132 that "the guiding principle to be applied in the exercise of that discretion is to ask oneself in every case; "what do the interests of the parties concerned in the winding-up require?" And the Court should in every case endeavour to make such an order as will best serve those interest." 466Commenting on the practice under the previous New South Wales legislation of appointing the liquidator nominated by the applicant for the winding up order, McHugh JA (as his Honour then was) observed that "it is hardly to be supposed, however, that the legislature intended that the court's choice was simply to approve or disapprove that official liquidator, willing to act, who is nominated by the applicant for winding up of a company. Virtually the whole history appointment of liquidators is against such an action. Whatever the form of the legislation, the court has always asserted right to reject one nominee and appoint another" (there citing Brian Cassidy Electrical Industries Pty Ltd (in prov liquidation) and another v Attalex Pty Ltd [1984] 3 NSWLR 52 at 79). 467The basis on which I understand Mr Collard and Mr Hobbs to be putting forward an alternative liquidator is their belief that this would minimise the costs of the liquidation. I do not understand there to be any suggestion that the liquidator of the three main funds has in any way acted improperly or inefficiently so as to make it undesirable for him to be appointed to the role now contemplated. In my view, the likely economies of time and cost attendant upon the appointment of a liquidator who already has considerable knowledge and familiarity with the matter (and whose costs to date have presumably been open to review but not, as I understand it, the subject of criticism by the court) and who is put forward by the regulator as the appropriate person to be appointed weighs strongly in favour of ASIC's nomination. I am satisfied that such an appointment is in the interest of the investors of the funds and any creditors of the funds. 468Accordingly, I will make the appointments sought of Messrs Taylor and Needham, both as liquidators of the Hobbs Scheme (and for the purposes of winding up the Hobbs Scheme as liquidators of the individual constituted schemes) and as receivers in relation to the assets of Ms Wu and to the assets of Mr and Mrs Hobbs in this jurisdiction. 469Orders 31, 32, 33, 34, 35 then deal with matters necessary in connection with the winding-up of the scheme. Order 37 seeks the payment of all amounts held by the Court in relation to these proceedings together with all accrued interest to the liquidator. Other orders 470Although there was at the hearing a suggestion that orders might be sought for the reactivation of various of the deregistered companies (in order to permit distributions to be made of the payments held in Court), that was not ultimately pressed on the basis that the appointment of a liquidator to wind up the schemes was being sought (and the liquidator would then have power to make such a distribution). 471However, an injunction is sought restraining the defendants from taking any steps in relation to the transfer or reregistration, reinstatement or otherwise revival of the deregistered defendants (the tenth to thirteenth and fifteenth defendants). ASIC's concern is that if the companies were to be revived but proceedings had otherwise been discontinued then, potentially, some of those schemes might start to operate again, because the corporate entity would then be reactivated (and, since no orders or declarations will be made against the deregistered companies ASIC would then have to take steps to commence fresh proceedings to ensure that the orders and declarations were made). This concern is raised having regard to the evidence in the proceedings as to the seemingly administrative way in which these companies were able to be registered and in some cases reactivated after deregistration simply by the filing of fees. 472By way of explanation as to the orders now sought to be vacated, I note that: * order 12 made on 20 June 2008 (that being an order prohibiting the release of moneys paid into Court - $430,000 - being the balance of Geneva Financial's account with Cadent, without ASIC or the liquidator giving the named solicitor of Geneva Financial 14 days notice) be vacated. * orders 12 and 13 of the orders made on 14 December 2007 (these are asset preservation orders made in the Idylic proceedings in relation to any money held in any Technocash account maintained or held by the defendants named in order 12 and in relation to the removal from the jurisdiction or the country of, and dealings with, assets of the defendants named in order 13 - PJCB, J&B Financial, Destiny Holdings, ISL and Messrs Wood and Jennings) and expressed to be until further order; * orders 1 to 3 of the orders made on 18 December 2007 (these relate to a restraint on Mr Wood leaving the country and delivery up of his passport). * orders 10 and 11 of a second set of orders made on 18 December 2007 (being asset preservation orders, again expressed to be until further order, against Upton Ltd, the then eighth defendant in the Idylic proceedings); * order 1 of the orders made on 21 December 2007 (requiring the Registry to hold Mr Wood's passport until further order); * orders 11, 18, 20 and 23 of the orders made on 5 February 2008 and each expressed to be until further order (which are further asset preservation orders in the Idylic proceedings - order 11 restraining the then additional defendants - namely Messrs Truong, and Koutsoukos, Mrs Hobbs, Mrs Brenda Hobbs and the entities ISPL, Geneva Financial and Unifund Ltd from dealing with assets in the jurisdiction; order 18 restraining the giving of instructions or directions by Messrs Truong and Koutsoukos to Cadent in relation to the Idylic Cadent account; order 20 similarly restraining Geneva and Mrs Hobbs and her sister-in-law from giving instructions or directions in relation to the Geneva Financial Cadent account; and order 23 restraining dealings by Mr Koutsoukos and Unifund Ltd with funds in a Unifund Cadent account). (In that regard, all the money held in those accounts has since been paid into the Court in accordance with Court orders hence the restraints no longer have any meaningful operation.) * order 4 made on 7 February 2008 (restraining Technocash from dealing with moneys in various accounts otherwise than by payment into Court, by way of an asset preservation order); orders 9-12 of those orders (being orders made in relation to the passports of Messrs Truong and Koutsoukos), again expressed to be until further order * orders 1-3 of the orders made on 15 October 2010 (being asset preservation orders concerning various Technocash and Cadent accounts made against Mr Hobbs, Ms Li, Mr Collard, 888 Management Inc, Barclaywest, North Wave and GP Global; including certain NAB accounts in the name of Mr Collard and an HSBC account in the name of Magny-Cours; as well as orders restraining the removal or dealing with the assets of those defendants and the giving of instructions in relation to those Cadent accounts other than an instruction for the transfer of moneys to the Court or the Attorney-General's Department of NSW), each expressed to be until further order. 473I am satisfied these orders should be made. 474ASIC also seeks an order releasing Mr Collard from an undertaking provided by him to the Court in the Secured Bond proceedings in relation to travel outside Australia on 18 September 2009. 475ASIC seeks the vacation of order 1 of the orders made by consent, on13 December 2007, in the Idylic proceedings in which 888 Management Inc, PJCB and each of Messrs Truong, Wood, Jennings and Koutsoukos were restrained from accepting any further contributions to the Scheme defined in the originating process to those proceedings and from promoting any other investment scheme required to be registered under the Act and from providing financial services advice in Australia without holding an Australian Financial Services Licence to provide that advice (that again being an order until further order). 476I am satisfied that these orders should be made. (In relation to the passport orders, I will also arrange for my staff to notify the Registrar that the passports may be returned or made available for collection.) 477ASIC seeks an order that proceedings be discontinued against the ninth and fourteenth defendants and the deregistered companies (the tenth to thirteenth and fifteenth defendants) on the basis that there be no order as to costs so they are the deregistered companies. In that regard, I see no reason for a discontinuance of the proceedings against the ninth and fourteenth defendants, against whom the proceedings have now been prosecuted to final judgment. I will make the orders sought in relation to the deregistered companies. 478The one defendant that would then remain would be the second defendant (Ms Li). The proceedings are stayed against her while she remains in prison in China. ASIC is concerned that it not lose the benefit of the commencement of these proceedings against Ms Li within any relevant limitation periods in the event that she returns to Australia seeks to revive the proceedings against her. Costs 479ASIC has sought costs orders only against those defendants who have actively participated in the proceedings in opposition to its claim (on the basis that costs in the ordinary event will follow the result) and to the extent of that participation. By way of illustration it has sought costs orders in the case of Ms Wu only to the extent that ASIC incurred costs that it would not otherwise have incurred in the conduct of the proceedings but for her late intervention. 480The history of the proceedings is of relevance in determining the costs orders to be made. There were two sets of proceedings commenced by way of interlocutory process in late 2007 (ASIC v P.J.C.B. International Ltd (5864/07) commenced on 5 December 2007 in relation to the Super Save scheme, and ASIC v Idylic Solutions Limited (6021/07), commenced on 14 December 2007 in relation to the Integrity Plus Unit Trust or the Integrity Plus scheme). ASIC has referred to these two proceedings as the PJCB and ISL proceedings. A third set of proceedings (ASIC v Secured Bond Limited (4532/08)) was subsequently commenced by ASIC on 2 September 2008 in relation to the Master Fund scheme (referred to by ASIC as the Secured Bond proceedings). By order made by Palmer J on 27 August 2010, those three separate sets of proceedings were consolidated into the present proceedings. 481Mr Hobbs was not a defendant to any of the proceedings until July 2008. On 8 July 2008, prior to the consolidation of these proceedings, ASIC filed interlocutory processes in the PJCB and ISL proceedings seeking orders that Mr Hobbs be joined as a defendant to both of those proceedings. Those orders were made on 11 July 2008. As to the Secured Bond proceedings, Mr Hobbs was joined as the second defendant when those proceedings were commenced. Mr Collard was joined as the third defendant to the Secured Bond proceedings (but was not a party to the PJCB or ISL proceedings). Mrs Hobbs was joined as a defendant to the ISL proceedings on 5 February 2008. Ms Wu was joined as a defendant to the ISL proceedings on 26 March 2010 (though she had earlier sought to appear as an interested party in those proceedings (for the limited purpose of seeking payment out of moneys held in relation to a scheme not the subject of the proceedings). 482ASIC seeks the following costs orders: * an order against Mr Hobbs for the payment of its costs of these proceedings from 11 July 2008 onwards, that being the date on which he was first joined as a defendant to the PJCB and ISL proceedings; * an order against Mr Collard for the payment of its costs of the proceedings from 2 September 2008 to 12 April 2012, that being the period commencing on the date he was first joined as a defendant to the Secured Bond proceedings up to the date he filed an unconditional submitting appearance in the consolidated proceedings; * an order against Mrs Hobbs for the payment of its costs from 5 February 2008, being the date on which she was joined to the first of the relevant proceedings; and * an order against Ms Wu for the payment of costs referable to the last minute applications made by her to intervene in the proceedings. 483I have in my principal reasons outlined the respective defendants' involvement in the litigation. In summary, I note the following matters. 484In relation to Mr Hobbs, on 8 September 2008, a Notice of Appearance was filed on behalf of Mr Hobbs in the Secured Bond proceedings by lawyers then acting for him; from 8 September 2008 to date, Mr Hobbs appeared through his lawyers, counsel or in person at directions hearings and hearings of interlocutory processes and Notices of Motion in the respective proceedings; after a period in which his lawyers had ceased to act, a further Notice of Appearance was filed on Mr Hobbs behalf in April 2012 when Mr Hobbs opposed various interlocutory applications by ASIC (on which applications he was initially represented by Counsel), which was then withdrawn by leave of the Court; and Mr Hobbs appeared in person at the main hearing in respect of liability and took an active role in cross-examining ASIC's witnesses, in presenting evidence in his own case and in making submissions on behalf of himself and his wife. 485In relation to Mr Collard, on 23 September 2008, a Notice of Appearance was filed on behalf of Mr Collard in the Secured Bond proceedings by Atanaskovic Hartnell; from 23 September 2008, appeared through his lawyers, counsel or in person at directions hearings, hearings of interlocutory processes and Notices of Motion; after a period in which Mr Collard was not represented by lawyers, a further Notice of Appearance was filed on his behalf (limited to appearance in opposition to the interlocutory applications then being made by ASIC) by the same lawyers in April 2012; and Mr Collard attended throughout most of the hearing in respect of liability (on a number of occasions seeking to make submissions as to liability or on particular issues, such as the appointment of a liquidator). Relevantly, on 12 April 2012, Mr Collard filed an unconditional submitting appearance in these proceedings. Although he later (unsuccessfully) sought to withdraw that submitting appearance, this was put on the basis that Mr Collard wished to rely on the matters already pleaded in the defence that had been filed by him. (ASIC accepts that Mr Collard should not be liable for costs from the date of filing the submitting appearance.) 486In relation to Mrs Hobbs, a notice of appearance was filed on her behalf in the ISL proceedings following her joinder in February 2008 and she was represented by solicitors from that time up until consolidation of the proceedings. Thereafter, her representation (and the stance taken by her in the proceedings) broadly followed the same course as that of Mr Hobbs. 487In relation to Ms Wu, I have referred in my principal reasons to the circumstances in which she sought to become an active defendant late in the course of the principal hearing (having taken no steps as a party to the proceedings since her joinder in March 2010), I do not repeat those here. The only costs orders sought against Ms Wu are in respect of her unsuccessful applications immediately prior to and during the final hearing of the proceedings, being applications made on 27 June 2012, 30 July 2012, 15 August 2012 and 21 August 2012, and costs in respect of the hearing on relief and orders. 488No submissions were made by or on behalf of Mr and Mrs Hobbs or Mr Collard directly in relation to costs. Ms Wu's position, neatly summarised, as conveyed by her husband, was adamant "I just say, if any costs shall be paid even $1, I am still against." 489Had Ms Wu maintained the stance she had adopted through almost all of the hearing (of not taking any step in the proceedings at all), ASIC would still have had to tender evidence to make out its case against her, but would have done so in circumstances where much, if not all, of that evidence was necessary in order to maintain some of the claims made against Mr Hobbs. If that had been the position it could not have been said that ASIC had incurred any costs referable to any particular step that Ms Wu had taken in the course of proceedings. However, ASIC's costs of the proceedings were increased by Ms Wu's late application (made on two occasions) to intervene in the proceedings as well as the service by Ms Wu of an affidavit in relation to the penalty orders ASIC had sought (which I am informed led to some consideration by ASIC as to that evidence). 490ASIC submits that Ms Wu's assertion as to her financial position is not relevant to whether or not a costs order should be made (particularly since ASIC seeks only a costs order limited to the three unsuccessful applications Ms Wu made during the course of the hearing). 491The Court's power to award costs pursuant to s 98(1) of the Civil Procedure Act 2005 (NSW) is, subject to the rules of court and to statute, discretionary. It is well recognised that the discretion is a very wide one (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; (1998) 152 ALR 83; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 322), though it must of course be exercised judicially (having regard to its statutory context, established principle and the circumstances of the relevant case). I have already noted the overriding statutory context in which this discretion falls to be exercised (that being the need for parties to conduct their proceedings with a view to the just, quick and cheap resolution of the real issues in dispute). 492Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) provides that, subject to Part 42, if the court makes any order as to costs, it is to order that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. The general rule is thus that a successful party will be the recipient of an order for costs in its favour (those costs to be on the ordinary or party/party basis). Such an order is compensatory in nature, to reflect the vindication of the successful claim or defence thereof, not punitive (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; (1990) 97 ALR 45; Ohn v Walton (1995) 36 NSWLR 77). 493There is no reason not to make costs orders as sought by ASIC. Those costs follow the event and, in the case of Mr Collard and Ms Wu, are limited to those that represent costs that would not otherwise have been incurred by ASIC in prosecuting the proceedings. Conclusion 494For the reasons set out above, I will make the declarations and orders set out in the Schedule of Declarations and Orders attached, subject only to any amendment that is necessitated by the outcome of the payment out application by Messrs He and Gao. (The only amendment if that application wholly or partially succeeds will be to the appointment of the liquidator to wind up the Pinnacle Fund and the payment out of the sums held in Court in respect of that fund.) ********** Schedule of Representations 1The Scheme Representations (namely, the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim; the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, and the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs (himself or by one or more of Ms Li, Mr Collard, Ms Wu, Mr Koutsoukos, Mr Wood, Mr Truong and FTC) in the period from at least 2004 to 2008 to investors and potential investors in the Hobbs Scheme (through one or other of the individual managed investment schemes). Those representations were, in summary, that: (i) by investing in the Hobbs scheme (and further or alternatively each of the schemes), Mr Hobbs or persons or entities associated with Mr Hobbs could lawfully provide investors with access to offshore investment products and opportunities (the Lawful Investment Representation); (ii) there was no risk of investors losing the principal sum invested in the Hobbs scheme, and further or alternatively each of the schemes (the Principal Protected Representation); and (iii) each investor could generally expect to receive returns in the order of at least 3 to 4% per month on funds invested in the Hobbs Scheme, and further or alternatively each of the schemes (in the case of the Pinnacle Fund, the representation was as to a 30% annual rate of return, which would equate to approximately 2.5% per month (the Investment Returns Representation ). 2The Integrity Plus Representations (namely the Trading Representation, as defined in section 282(a) of the Third Further Amended Statement of Claim; the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim; and the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim) were made in Australia by each of Mr Hobbs and his agents, Mr Wood, Mr Truong, Mr Koutsoukos and PJCB, to potential investors in Integrity Plus in the period from 2004 to 2007. The Integrity Plus Representations were that: (i) the investor's funds would be traded in AA+ rated financial instruments (the Trading Representation); (ii) the capital of funds invested would be protected by US Treasuries (the Capital Protected Representation); (iii) once funds had been invested for at least 12 months, each investor would be able to redeem or withdraw the invested capital upon giving 60 days' notice (the Redemption Representation); and (iv) each investor would receive returns of approximately 4% per month on funds invested on a best efforts basis (the Returns Representation). 3The Super Save Representations (namely, the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim; the representation as to the investments into which investors' funds would be invested, as set out in declaration 13; the representation as to the various funds managers with whom investors' funds would be invested, as set out in declaration 14; the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim; the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim; and the Super Save Returns Representation, as defined in paragraph 285(f) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs, and his agents Mr Wood, Mr Truong, Mr Koutsoukos and ISL, to potential investors in Super Save in the period from 2006 to 2007. The Super Save Representations, apart from the Capital Protected and Redemption representations that were the same as set out above, were that: (i) investor's funds would be invested in AA+ rated financial instruments which were presold (the Investment Representation); (ii) the investor's funds would be invested in equities, currencies, options, factoring, the secondary life insurance market, futures and registered derivatives; (iii) the investor's funds would be invested with various fund managers such as Bond's Viatical Markets, Registered Derivatives, Factoring Funds and Company Debentures, Shares/Options, Initial Public Offerings, Unit Trusts and Currency Trading; (iv) each investor would receive returns of approximately 3.5% per month on funds invested on a best efforts basis (the Super Save Returns Representation). 4The Master Fund Representations (namely, the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim; the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim; and the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs and his agents, Ms Li and Mr Collard and Secured Bond, to potential investors in Master Fund in the period from 2003 to 2008 (and were the same in substance as those representations made to other investors as set out above). 5The First Secured Bond Unit Trust Representations (namely, the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim and the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim) were made in Australia by Mr Hobbs and his agents, Ms Li, Mr Collard and Secured Bond, to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004. The Returns Representation was as made to potential investors of other schemes and the substance of that representation has already been noted. The A+ Representation was to the effect that the investor's funds would be invested in A+ registered securities or the underwriting of those securities (the A+ Representation). 6The Profit Representations (namely the Integrity Plus Profits Representation, as defined in paragraph 292 of the Third Further Amended Statement of Claim; the Super Save Profits Representation, as defined in paragraph 293 of the Third Further Amended Statement of Claim; and the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim, were made by Mr Hobbs and various of his agents (as noted below) in Australia to potential investors of the three funds in question. 7The Integrity Profits Representation was made in the period from 4 April 2005 to 14 December 2007 by Mr Hobbs and his agents, Mr Truong, Mr Koutsoukos and PJCB, to investors in Integrity Plus that Integrity Plus was generating profits or sufficient profits to enable the returns each investor received by way of purported profit to be paid to them. 8Similarly, the Super Save Profits Representation (made on or about the dates on which returns were paid to investors - 12 February 2007, 21 to 25 May 2007, 4 June 2007, 20, 22 and 29 August 2007, 20 September 2007 and 22 November 2007) made by Mr Hobbs and his agents, Mr Wood, Mr Truong, Mr Koutsoukos and ISL, to investors in Super Save was that Super Save was generating profits or sufficient profits to enable the returns each investor received by way of purported profit to be paid to them. 9A similar representation was made in relation to the Master Fund (on or about each of 31 May 2005, 28 June 2005, 29 September 2005, 22 December 2005, 4 July 2006, 3 October 2006, 31 October 2006, 27 July 2007 and 27 August 2007) by each of Mr Hobbs, Ms Li, Mr Collard and Secured Bond to investors in Master Fund (namely that Master Fund was generating profits or sufficient profits to enable the returns each investor received by way of purported profit to be paid to them). 10The Shareholder Representations (namely, the representations pleaded at [297] of the Third Further Amended Statement of Claim as to: Barclaywest's involvement in projects that would generate profits for shareholders (declaration 26); the representation that Barclaywest would do a commercial bond to fund a project (declaration 27); the representation that Mr Hobbs would give $200 million, being proceeds from a sale of rights, to Barclaywest (declaration 28); each of which were made in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008; and the 888 Shareholder Representation pleaded at [298] of the Third Further Amended Statement of Claim (that an amount in the order of $207 million would be invested and would generate returns in the order of 100% every 10 days, 50% of which would be paid to 888 Vanuatu) (declaration 29) were made in Australia in 2007 and 2008 by Mr Hobbs and/or his agents (Ms Li and Mr Collard) to potential and existing shareholders of Barclaywest and 888 Vanuatu respectively. Schedule of s 182 Commissions and Payments 1The s 182 Commissions, as defined in my reasons, apart from the monthly payments for research reports referable to reports to be provided by Cadent traders to corporate administrators (which were for a monthly amount of US $600 commencing from around September 2007) were as follows (paid to accounts held by or operated by Mr and/or Mrs Hobbs): NZ $247,145.38 (paid by New World Holdings in the period from 25 September 2006 to 7 February 2008); this aggregate sum comprises 22 separate payments ranging in amounts from as low as $2,238.27 to as high as $31,831.94; NZ $36,966.88 (paid by Ms Reisinger or her husband as agents for New World Holdings) this being the aggregate of a payment of $11,131.45 on 26 July 2006 and a payment of $25,835.43 on 21 August 2006); NZ $105,336.23 (paid by ROF in the period from 23 December 2005 to 22 February 2007); this aggregate sum comprising 7 payments ranging from $263.70 to $44,010.17; NZ $7,846.14 (paid by NCCN on 14 August 2006); NZ $32,952.20 (paid by MLN on 27 December 2007); NZ $7,653.48 (paid by Cadent in the period from 24 January 2006 to 12 September 2007); this being the aggregate of 12 payments ranging from $78.07 to $1,654.23; NZ $7,983.44 (comprising two payments by ROF - one of $830.85 on 12 July 2005 and one of $7,152.59 on 3 August 2005); comprising 2 payments NZ $6,814.43 (paid by NCCN on 8 March 2006). 2The s 182 Payments (the making of one or more of which by the respective companies was the subject of civil penalty contraventions by each of Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs) were as follows: (i) in relation to PJCB, the Integrity Plus Payments (set out at [154] of the Third Amended Further Statement of Claim) and made variously to Mr Koutsoukos, Mr Wood; Mr Truong; J&B Financial; 888 Vanuatu; Mirage Consulting Services Pty Ltd (a company of which Mr Truong's wife was the sole director and shareholder); Ms Christina Dabbagh (Mr Koutsoukos' wife); Mr Collard; Mr Gregory Stanton; Liu Qiang; Ms Jennifer Trinh (Mr Truong's wife); Mr Clements; Ms Elizabeth Halls and Mr Quintin Johns (relatives of Mr Hobbs); and Geneva Financial, as follows: between 13 September 2005 and 23 November 2007, AU $563,898.46 to Mr Koutsoukos; this being the aggregate of 35 payments in sums ranging from $1,000 to $55,000; between 22 December 2005 and 23 November 2007, US $41,656.25 and AU $842,368 to Mr Wood; this being the aggregate of 57 payments in sums ranging from $3,000 to $50,000; between 14 February 2005 and 23 November 2007, AU $760,050.75 and US $16,747 to Mr Truong; this being the aggregate of 34 payments in sums ranging from $1,200 to $100,000; between 15 February 2005 and 16 November 2007, AU $1,168,248.27 and US $398,000 to J&B Financial; this being the aggregate of 88 transactions in sums ranging from AU $411.29 to US $200,000; on 18 July 2006, US $5,000 to 888 Management Australia; between 29 January 2007 and 26 November 2007, AU $120,459.50 to Mirage; this being the aggregate of 13 payments in sums ranging from $2,887.50 to $14,000; between 22 May 2007 and 23 October 2007, AU $27,283.20 to Ms Dabbagh; this being the aggregate of payments in sums ranging from $2,283.20 to $10,000; on 27 April 2006, AU $20,000 to Mr Collard; between 9 November 2006 and 30 March 2007, AU $110,000 to Mr Stanton; this being the aggregate of 3 payments in sums ranging from $20,000 to $60,000; on 21 September 2007, AU $200,000 to Liu Qiang; on 27 August 2007 AU $50,000 to Ms Trinh; in or about December 2006, NZ $20,000 for the benefit of Mr Clements to Ms Elizabeth Halls and Mr Quintin Johns; on 14 December 2006, NZ $20,000 to Ms Elizabeth Halls and Mr Quintin Johns; on 24 March 2005, US $50,000 to Geneva Financial. (Within the definition of Integrity Plus Payments there are, on my calculations, 244 separate payments.) (ii) also in relation to PJCB, the Additional Integrity Plus Payments (set out at [158], [159] and [162] of the Third Amended Further Statement of Claim); variously to Magny-Cours, Dowker Chiropractic Pty Ltd; David Marchant; SL Lawyers for the purposes of a transaction with Ausmutual Capital Ltd; GH & DJ Clarke Family Trust; Upton Ltd and Fletcher Vautier Moore, as follows: US $200,000 transferred from the Integrity Plus Account to the J&B Financial Technocash Account on 6 November 2006 and then on 8 November 2006 to Magny-Cours; on 24 August 2007, AU $120,000 to Dowker Chiropractic Pty Ltd; on 4 September 2007, US $100,000 to David Marchant; on 17 October 2007, AU $507,500 to SL Lawyers; on 28 November 2007, NZ $100,000 to GH & DJ Clarke Family Trust; on 19 October 2007 AU $1,000,000 to Upton Ltd; on or about 8 March 2006, NZ $20,000 to Fletcher Vautier Moore of which Mr Hobbs directed Fletcher Vautier Moore to pay NZ $10,000 Nelson Bays Holden and NZ $10,000 to be offset against amounts owed by Mr Hobbs and/or Tasman Business to Fletcher Vautier Moore; (I have treated this as one payment although it was ultimately the subject of a direction for on-payment to two accounts); on or about 25 October 2007, NZ $444,000 to Fletcher Vautier Moore (this was paid on behalf of Legend of Bathurst (purportedly by way of loan from Destiny to Legend of Bathurst); to be used for the purchase of a property for his personal use in Nelson, and the remainder was invested in Capital Mortgage Income Trust for the purpose of paying off tax liabilities owed by Mr Hobbs to Inland Revenue (again, I have treated this as one payment though directed to two separate accounts). (the above comprising eight separate payments). (iii) as to both ISL (and ISPL), the Super Save Payments (set out at [176] of the Third Amended Further Statement of Claim made by ISPL as agent of ISL) variously to Mr Wood, Mr Koutsoukos, Mr Truong and J&B Financial as follows: on 12 February 2007 US $50,000 to each of Mr Wood, Mr Koutsoukos; and Mr Truong; (by way of three separate payments ranging from $10,000 to $30,000 to Mr Wood; three separate payments ranging from $8,000 to $27,000 to Mr Koutsoukos; and one payment of $50,000 to Mr Truong); between 21 February 2007 and 14 March 2007 US $91,485 to J&B Financial (in three payments, ranging from $5,000 to $60,485.00). (In all, these comprise ten separate payments. I have counted the ten payments only once, though there is on one view a contravention in respect of each of ISL and ISPL, the reason for this being that payments were made by ISL through its agent ISPL.) (iv) also as to each of ISL and ISPL, the Diligence Discovery payments (the dates and amounts of which have not been separately itemised but which were a small fee per transaction); (v) in relation to Secured Bond, the Master Fund Payments (set out at [190] of the Third Amended Further Statement of Claim) variously to Mr Hobbs; Magny-Cours and Tasman Business; Fletcher Vautier Moore; the R & B Hobbs Family Trust; Ms Li in her personal capacity and by her wholly owned company Shunfu Corporation; Mr Collard in his personal capacity and by his wholly owned company Mr Mac Incorporated; J&B Financial; G P Global; Guo Ping Zhang; Preserved Investments; Hui Qing Wu; Liu Qiang; Excite Holidays; DR & GI Wells; E D Weaver; Nelson Bays Holden; and Vincent Chen, as follows: between 31 May 2005 and 23 February 2007, US $246,141.99 to Magny-Cours; this being the aggregate of 10 payments in sums ranging from $1,775.19 to $140,000; on 14 August 2007, NZ $99,999 to Tasman Business; on 26 May 2005, NZ $62,000 to Fletcher Vautier Moore (for the benefit of Mr Hobbs or Tasman Business); on 1 November 2007, NZ $655,342.45 to Fletcher Vautier Moore for the benefit of Legend of Bathurst; on 15 November 2007, NZ $131,102.44 to Fletcher Vautier Moore for the benefit of Legend of Bathurst; on 7 August 2006, US $99,976 to the R & B Hobbs Family Trust; between 26 November 2004 and 23 May 2008, US $190,492.09 and AU $78,630.41 to Ms Li and Shunfu Corporation; this being the aggregate of 67 payments in sums ranging from $3.50 to $63,953.87; between 29 January 2008 and 19 March 2008, AU $130,886.12 to Ms Li and Shunfu Corporation (by way of purported shareholders' profit in Secured Bond); this being the aggregate of 3 payments in sums ranging from $14,432.32 to $71,038.28; between 22 July 2005 and 14 August 2007, US $27,483 and AU $54,089.02 to Mr Collard and Mr Mac Incorporated; this being the aggregate of 13 payments in sums ranging from AU $49.50 to AU 22,964.32; between 29 January 2008 and 19 March 2008, AU $130,592.05 to Mr Collard and Mr Mac Incorporated (by way of purported shareholders' profit in Secured Bond); this being the aggregate of 3 payments in sums ranging from $14,833.22 to $70,343.32; on 5 March 2007, AU $17,281.18 to J&B Financial; on 5 March 2007, US $45,126.71 to GP Global; on 8 March 2007 US $15,400.15 to GP Global; 2 payments, one of AU $10,000 on 9 May 2006 and one of AU $20,000 on 16 May 2006, totalling AU $30,000 to Guo Ping Zhang; on 14 May 2007, US $15,000 to Preserved Investments; 2 payments, one of US $6,790.92 on 7 March 2008 and one of US $ 6,621.15 on 19 March 2008, totalling US $13,412.07, to Hui Qing Wu (at the direction of Ms Li and Mr Collard); between 29 September 2005 and 8 May 2008, US $12,100.16 to Liu Qiang; this being the aggregate of 5 payments in sums ranging from $636.41 to $6,723.75; on 29 January 2008, AU $44,142.90 to Excite Holidays (to pay for travel expenses of a trip by Mr Hobbs, Mr Collard and Mr Stanton to Chicago); on 21 March 2007, AU $6,214.28 to DR & GI Wells; on 31 January 2007, AU $27,191.50 to E D Weaver; on 19 May 2006, NZ $15,440.40 to Nelson Bays Holden; and on 31 October 2006, AU $1,999.50 to Vincent Chen (Ms Li's former husband). (In all these comprised, on my calculations, 119 separate payments.) (vi) also in relation to Secured Bond, the First Secured Bond Payments (being the payment set out at [200] of the Third Amended Further Statement of Claim - US $39,292 to Magny-Cours on 17 September 2004); (vii) in relation to 888 Vanuatu, the Pinnacle Payments (set out at [208] of the Third Amended Further Statement of Claim) variously to: HLD Corp and/or Suzan Fi Ou; Mr Collard and/or Mr Mac Incorporation; Ms Li and/or Shunfu Corporation; and Mr Hobbs and Tasman Business, as follows: on 21 April 2008, US $47,008.08 to Tasman Business; between 24 August 2007 and 18 April 2008, a total of US $104,719.86 was paid to HLD Corp and/or Suzan Fi Ou (including on 18 April 2008, US $86,253.30, part of which funds were subsequently paid to Ms Ou and Ms Li); this being the aggregate of 3 payments in sums ranging from $3,499.35 to $86,253.30; on 24 August 2007, AU $2,043 to Mr Collard; on 18 April 2008, US $53,314.26 to Mr Collard; between 24 August 2007 and 18 April 2008, US $53,314.26 to Ms Li and US $2,337.45 to Shunfu Corporation; this being the aggregate of 3 payments in sums ranging from US $1,087.15 to US $53,314.26. (the above comprising 9 separate payments). (viii) also in relation to 888 Vanuatu, the 888 Fund Payment (set out at [216] of the Third Amended Further Statement of Claim of US $1,087.15 to Ms Li's wholly owned corporation Shunfu Corporation); (ix) again in relation to 888 Vanuatu, the Diligence Discovery payments (the dates and amounts of which have not been separately itemised); (x) in relation to Geneva Financial, the Prestige Payments (set out at [222] of the Third Amended Further Statement of Claim to ROF, being a net total of US $135,997.78); this comprised of 4 payments ranging from US $10,000 to US $224,966.13 less two credits to the Geneva Financial account of US $189,985 and US $9,000, respectively; (which I have treated as 4 separate payments); (x) in relation to Preserved Investments, the Elite Premier Payments (set out at [239] of the Third Amended Further Statement of Claim - namely, payment of the sum of US $50,000 transferred from the Elite Premier Account to Magny-Cours on 12 February 2003 and the payment of moneys totalling US $ 54,411.50 to Focus Administration Services Ltd between October 2002 and December 2002 - by way of 6 payments in sums ranging from US $2,532.50 to US $ 18,5000); a total of 7 payments in all; (xi) also in relation to Preserved Investments, the Elite Premier Option 2 Payments (set out at [246] of the Third Amended Further Statement of Claim) variously to: Tasman Business; Mrs Hobbs; Mr Robert Hobbs; Ms Li; Mr Collard; Mr Clements; Business Management Services; Tevita Saumakia; Touchpoint Global; Wyart International Ltd; and ROF, as follows: between 4 October 2004 and 10 July 2007, US $55,170.43 to Tasman Business; this being the aggregate of 18 payments in sums ranging from $580.92 to $8,237.49; between 15 August 2006 and 7 December 2006, US $3,129.64 to Mrs Hobbs; this being the aggregate of 5 payments in sums ranging from $322.80 to $1,507.68; between 14 November 2005 and 14 August 2008, US $1,917.56 to Mr Robert Hobbs; this being the aggregate of 4 payments in sums ranging from $174.67 to $938.80; between 26 February 2004 and 23 August 2007, US $29,391.09 to Ms Li; this being the aggregate of 17 payments in sums ranging from $130 to $4,296.27; between 4 October 2004 and 14 June 2005, US $5,008.68 to Mr Collard; this being the aggregate of 3 payments in sums ranging from $762.41 to $1,690.28; between 2 August 2004 and 11 April 2008, US $17,604.57 to Mr Clements; this being the aggregate of 5 payments in sums ranging from $310 to $9,859; between 20 June 2005 and 24 June 2008, US $5,640.24 to Business Management Services; this being the aggregate of 5 payments in sums ranging from $585 to $1,789.50; on 5 November 2008, US $11,330.81 to Tevita Saumakia; on 25 November 2008, USD23,836.98 to Touchpoint Global; on 13 December 2004, US $3,916.91 to Wyart International Ltd; between 21 December 2005 and 25 July 2006, US $8,379.43 to ROF in 2 payments (of $6,515.13 and $1,864.30 respectively). (these comprising, on my calculations, 62 separate payments.) (xii) in relation to Ultimate Investments, the Covered Strategies Payments (set out at [253] of the Third Amended Further Statement of Claim) variously to: Tasman Business and Mr Hobbs by deposit to his company Tasman Business; Magny-Cours; Mr Collard; Ms Li; Mr Wood; Mr Diaz; Mr Parker; Mr Fitzgerald; Dan Aubin; Don Shelby; John Gerrald; Roy Robert Cummings; Rhapsody in Blue Stables; TFH Holdings Ltd; Global Visions Ltd; Golf Oz Tours and Tourism; and Inland Revenue as follows: between 21 October 2003 and 13 March 2006 US $93,020.67 to Tasman Business; this being the aggregate of 15 payments in sums ranging from $1,263.76 to $19,000; between 14 January 2005 and 25 January 2005 US $60,000 to Magny-Cours; in 2 payments of $10,000 to $50,000, respectively; on 15 September 2003 US $17,730.23 to Mr Collard; between 23 October 2003 and 19 March 2004 US $3,643.58 to Ms Li; this being the aggregate of 5 payments in sums ranging from $138.57 to $621.06; on 3 September 2004 AU $20,617.76 to Mr Wood; between 10 November 2003 and 18 February 2004 US $221,510.39 to Mr Diaz ; this being the aggregate of 6 payments in sums ranging from $264.04 to $80,000; between 5 November 2003 and 14 January 2009 an amount of US $141,950 was withdrawn from the Optionz NZ Account and paid out as cash at the direction of Mr Parker; this being the aggregate of 68 payments in sums ranging from $50 to $15,000; between 13 May 2003 and 24 June 2009 an amount of US $158,830 was withdrawn from the Optionz NZ Account and paid to Mr Parker; this being the aggregate of 75 payments in sums ranging from $300 to $20,000; between 14 November 2003 and 27 May 2008 US $2,005 to Mr Fitzgerald; in 2 payments of $500 and $1,505; between 2 July 2004 and 3 November 2008 NZ $7,600 to Mr Fitzgerald; this being the aggregate of 5 payments in sums ranging from $300 to $5,000; on 14 October 2004 NZ $5,000 to ASB-Visa Gold for the benefit of Mr Fitzgerald; on 7 June 2004 US $6,000 to Dan Aubin; on 26 April 2006 US $4,500 to Don Shelby; between 2 September 2003 and 21 June 2005 US $66,789.54 to John Gerrald; this being the aggregate of 9 payments in sums ranging from $300 to $20,000; between 6 January 2004 and 10 August 2006 US $3,000 to Roy Robert Cummings; in 2 payments of $2,000 and $1,000; on 17 May 2006 US $2,500 to Rhapsody in Blue Stables; on 12 December 2006 US $5,000 to TFH Holdings; on 19 March 2004 US $14,271.84 to Global Visions Ltd ; between 29 May 2006 and 12 August 2008 AU $3,927.31 to Golf Oz Tours and Tourism; this being the aggregate of 3 payments in sums ranging from $1,150 to $1,482.31; between 28 June 2004 and 4 April 2005 NZ $42,849.62 to Inland Revenue; this being the aggregate of 5 payments in sums ranging from $4,354 to $12,771.35. (comprising 205 separate payments). (xiii) in relation to Barclaywest, the Enhanced Fund Payments (set out at [263] of the Third Amended Further Statement of Claim) to Mr Hobbs by payments to Tasman Business; Mr Collard by payments to his wholly owned company Mr Mac Incorporated; Ms Li by payments to her wholly owned company Shunfu Corporation or through the Secured Bond Account; Hui Qing Wu; and Iris Wire Trans-Out as follows: on 23 May 2008 US $12,760.88 to Mr Mac Incorporated on behalf of Tasman Business (purportedly by way of shareholders' profit in Barclaywest); on 6 May 2008 US $12,760.88 to Mr Mac Incorporation Mr Collard purportedly by way of shareholders' profit in Barclaywest; on 5 May 2008 US $12,760.88 to Secured Bond for the benefit of Shunfu Corporation purportedly by way of shareholders' profit in Barclaywest; between 11 December 2007 and 9 May 2008 US $24,138.35 was paid to Amazing Glory Hui Qing Wu; in 2 payments of $5,558.85 and $18,579.50; on 21 May 2008 a payment of US $17,517.24 (the payee of which has not been identified beyond the description Iris Wire Trans-Out). (6 separate payments). (xiv) in relation to GP Global, the Best Fund Payments (set out at [273] of the Third Amended Further Statement of Claim) to Mr Hobbs; Ms Li in her personal capacity and by her wholly owned company Shunfu Corporation; Mr Collard in his personal capacity and by his wholly owned company Mr Mac Incorporated; Hong Li; and New Century 2001 Pty Ltd, as follows: on 2 April 2006 AU $10,000 to Ms Li at the direction of Mr Hobbs; on 6 March 2007 NZ $ 19,000 to Water Craft World Ltd at the direction of Mr Hobbs; on 5 June 2007 US $12,600 to Lambretta South at the direction of Mr Hobbs; on 4 February 2008 NZ $1,206.31 to DC Filer Limited t/a Filco Farm at the direction of Mr Hobbs; on 23 June 2005 US $1,959.98 to Ms Li; between 12 August 2005 and 30 January 2008 US $5,097.32 to Shunfu Corporation; this being the aggregate of 24 payments in sums ranging from $1.50 to $570; on 17 January 2008 AU $594.13 to Mr Collard; between 2 April 2006 and 12 June 2008 AU $13,816 to Hong Li; this being the aggregate of 8 payments in sums ranging from $55 to $3,535; on 17 August 2007 US $8,000 to New Century 2001 Pty Ltd. (these comprising 39 separate payments). SCHEDULE of DECLARATIONS and ORDERS Definitions 1In these declarations and orders, references to the Hobbs Scheme and the individual investment funds (Integrity Plus Unit Trust, Super Save Superannuation Fund, Master Fund, First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Prestige Unit Trust, Smart Money, Elite Premier Unit Trust, Elite Premier Option Two Unit Trust, Covered Strategies Unit Trust, Good Value Fund, Enhanced Fund and Best Fund), as well as reference to companies involved in the schemes (including FTC) have the same meaning as in my reasons for judgment published on 24 October 2012. Cross-references have been included in the headers to the declarations to the paragraphs of my principal reasons in which the findings supporting those declarations are set out. Declarations 2I make the following declarations: Declarations in relation to the First Defendant, Mr David Hobbs Unregistered Managed Investment Scheme ([2124];[1917], [1920], [1921]; [2321]) 1. The Court declares that the fourteen individual managed investment schemes, being the schemes defined in paragraph 41 of the Third Further Amended Statement of Claim, which operated in Australia, collectively comprised a single managed investment scheme under the Corporations Act 2001 (Cth) by reason of the matters set out in paragraph 276 of the Third Further Amended Statement of Claim (the Hobbs Scheme). 2. The Court declares that prior to 2002 the first defendant (Mr Hobbs) created or otherwise developed a financial product within the meaning of Division 3 of Part 7.1 of the Corporations Act 2001 (Cth), being the product defined in paragraph 37 of the Third Further Amended Statement of Claim, which he promoted and offered to retail investors in Australia (referred to in these declarations as the Hobbs financial product) 3. The Court declares that the first defendant (Mr Hobbs), contravened s 601ED(5) of the Corporations Act 2001 (Cth) in the period from at least 1 July 2004 to December 2007 by being directly involved in the operation of the Hobbs Scheme, by: (a) providing information about the individual managed investment schemes in which investors could invest; (b) making offers to invest in the Hobbs Scheme; (c) issuing unit certificates and confirmation letters to investors; and (d) paying returns to investors. Unlicensed Financial Services ([2323]) 4. The Court declares that the first defendant (Mr Hobbs) contravened s 911A of the Corporations Act 2001 (Cth) in the period between 2002 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Scheme Representations ([2130]-[2249], [2315],[2324]-[2346]) 5. The Court declares that by making the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 6. The Court declares that by making the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 7. The Court declares that by making the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Integrity Plus Representations ([2130]-[2138], [2176]-[2249], [2250]-[2265], [2315], [2324]-[2346]) 8. The Court declares that by making the Trading Representation, as defined in section 282(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act; (b) s 1041G of the Corporations Act; (c) s 1041H of the Corporations Act; (d) s 12DA of the ASIC Act; (e) s 12DB of the ASIC Act; and (f) s 12DF of the ASIC Act. 9. The Court declares that by making the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, the first defendant (Mr Hobbs) contravened: ((a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 10. The Court declares that by making the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 11. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007, first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Super Save Representations ([2130]-[2138], [2176]-[2249], [2266]-[2279], [2315], [2324]-[2346]) 12. The Court declares that by making the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 13. The Court declares that by making the representation that investors' funds would be invested in equities, currencies, options, factoring, the secondary life insurance market, future and registered securities, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 14. The Court declares that by making the representation that investors' funds would be invested with various fund managers such as Bond's Viatical Markets, Registered Securities, Factoring Funds and Company Debentures, Shares/Options, Initial Public Offerings, Unit Trusts and Currency Trading, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 15. The Court declares that by making the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 16. The Court declares that by making the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 17. The Court declares that by making the Super Save Returns Representation, as defined in paragraph 285(f) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Master Fund Representations ([2130]-[2138], [2176]-[2249], [2280]-[2290], [2315], [2324]-[2346]) 18. The Court declares that by making the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 19. The Court declares that by making the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 20. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act; (b) s 1041G of the Corporations Act; (c) s 1041H of the Corporations Act; (d) s 12DA of the ASIC Act; (e) s 12DB of the ASIC Act; and (f) s 12DF of the ASIC Act. First Secured Bond Unit Trust Representations ([2130]-[2138], [2218]-[2249], [2291]-2296], [2315], [2324]-[2346]) 21. The Court declares that by making the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 22. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Profit Representations ([2297]-[2303], [2315], [2324]-2346]) 23. The Court declares that by making the Integrity Plus Profits Representation, as defined in paragraph 292 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: ((a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 24. The Court declares that by making the Super Save Profits Representation, as defined in paragraph 293 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 25. The Court declares that by making the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Shareholder Representations ([2304]-[2315], [2324]-[2346]) 26. The Court declares that by making the representation that Barclaywest's involvement in projects, including a project in China, would generate profits for shareholders, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 27. The Court declares that by making the representation that Barclaywest would do a commercial bond to fund a project, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the First Defendant, Mr Hobbs, contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 28. The Court declares that by making the representation that Mr Hobbs would give $200 million, being proceeds from a sale of rights, to Barclaywest, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 29. The Court declares that by making the 888 Shareholder Representation, as defined in paragraph 298 of the Third Further Amended Statement of Claim, the first defendant (Mr Hobbs) contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Directors' Duties Contraventions - FTC - Sections 180(1) and 181 ([2382]-[2395]) 30. The Court declares that, pursuant to section 1317E(1) of the Corporations Act, the first defendant (Mr Hobbs) as a director or officer of Future Trading Corporation Ltd (FTC), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by: (a) causing or otherwise permitting FTC to be directly involved in the operation of the Hobbs Scheme, in the period from at least 1 July 2004 to December 2007, in contravention of s 601ED(5) of the Corporations Act 2001 (Cth), by: (i) providing information about the individual managed investment schemes in which investors could invest; (ii) making offers to invest in the Hobbs Scheme; (iii) issuing unit certificates and confirmation letters to investors; and (iv) paying returns to investors; (b) causing or otherwise permitting FTC to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2002 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (i) promoting the Hobbs financial product; and (ii) operating the Hobbs Scheme; and (c) causing or otherwise permitting FTC to: (i) make the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (ii) make the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (iii) make the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041G of the Corporations Act 2001 (Cth); (C) s 1041H of the Corporations Act 2001 (Cth); (D) s 12DA of the ASIC Act 2001 (Cth); (E) s 12DB of the ASIC Act 2001 (Cth); and (F) s 12DF of the ASIC Act 2001 (Cth). Director's Duties Contraventions - PJCB, ISL and Secured Bond - Sections 180(1) and 181 ([2382]-[2395]) 31. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) as a director or officer of P.J.C.B. International Ltd (PJCB), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2004 and 2007, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by: (a) causing or otherwise permitting PJCB to be directly involved in the operation of the Hobbs Scheme, in the period between 1 January 2006 and 31 December 2006, in contravention of s 601ED(5) of the Corporations Act 2001 (Cth), by: (i) providing information about the individual managed investment schemes in which investors could invest; (ii) making offers to invest in the Hobbs Scheme; (iii) issuing unit certificates and confirmation letters to investors; and (iv) paying returns to investors; (b) causing or otherwise permitting PJCB to: (i) make the Trading Representation, as defined in section 282(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; (ii) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; (iii) make the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; (iv) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Integrity Plus in the period from 2004 to 2007; and (v) make the Integrity Plus Profits Representation, as defined in paragraph 292 of the Third Further Amended Statement of Claim; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041G of the Corporations Act 2001 (Cth); (C) s 1041H of the Corporations Act 2001 (Cth); (D) s 12DA of the ASIC Act 2001 (Cth); (E) s 12DB of the ASIC Act 2001 (Cth); and (F) s 12DF of the ASIC Act 2001 (Cth). 32. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) as a director or officer of Idylic Solutions Ltd (ISL), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2006 and 2007, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by: (a) causing or otherwise permitting ISL to be directly involved in the operation of the Hobbs Scheme, in the period between 7 December 2006 and 6 December 2007, in contravention of s 601ED(5) of the Corporations Act 2001 (Cth), by: (i) providing information about the individual managed investment schemes in which investors could invest; (ii) making offers to invest in the Hobbs Scheme; (iii) issuing unit certificates and confirmation letters to investors; and (iv) paying returns to investors; (b) causing or otherwise permitting ISL to: (i) make the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; (ii) make the representation that investors' funds would be invested in equities, currencies, options, factoring, the secondary life insurance market, future and registered securities, in Australia to potential investors in Super Save in the period from 2006 to 2007; (iii) make the representation that investors' funds would be invested with various fund managers such as Bond's Viatical Markets, Registered Securities, Factoring Funds and Company Debentures, Shares/Options, Initial Public Offerings, Unit Trusts and Currency Trading, in Australia to potential investors in Super Save in the period from 2006 to 2007; (iv) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; (v) make the Redemption Representation, as defined in paragraph 282(c) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; (vi) make the Super Save Returns Representation, as defined in paragraph 285(f) of the Third Further Amended Statement of Claim, in Australia to potential investors in Super Save in the period from 2006 to 2007; and (vii) make the Super Save Profits Representation, as defined in paragraph 293 of the Third Further Amended Statement of Claim; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041G of the Corporations Act 2001 (Cth); (C) s 1041H of the Corporations Act 2001 (Cth); (D) s 12DA of the ASIC Act 2001 (Cth); (E) s 12DB of the ASIC Act 2001 (Cth); and (F) s 12DF of the ASIC Act 2001 (Cth). 33. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) as a director or officer of Secured Bond Ltd (Secured Bond), in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2003 and 2008, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by causing or otherwise permitting Secured Bond to: (a) make the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (b) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (c) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (d) make the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; (e) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; and (f) make the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim; in contravention of: (i) s 1041E of the Corporations Act 2001 (Cth); (ii) s 1041G of the Corporations Act 2001 (Cth); (iii) s 1041H of the Corporations Act 2001 (Cth); (iv) s 12DA of the ASIC Act 2001 (Cth); (v) s 12DB of the ASIC Act 2001 (Cth); and (vi) s 12DF of the ASIC Act 2001 (Cth). Directors' Duties Contraventions - Section 182 ([2396[-[2406]) 34. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of each of PJCB, ISL, Idylic Solutions Pty Ltd (ISPL), Secured Bond, 888 Management Inc (888 Vanuatu), Geneva Financial Ltd (Geneva Financial), Preserved Investment Group Ltd (Preserved Investments), Ultimate Investments Ltd (Ultimate Investments), Barclaywest Ltd (Barclaywest) and GP Global Ltd (GP Global), in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2005 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to each of those companies by: (a) receiving commissions, fees or other amounts of money in connection with: (i) the operation of the Cadent Accounts; (ii) the purchase, sale, marketing and/or management of US Treasuries for the Corporate Administrators of the Schemes, including bond trading; and (iii) investments by the Schemes with NCCN through Mr Donald Caffray; and (b) receiving payments purportedly to cover costs incurred in distributing "research reports" containing material prepared by the Cadent Traders to the Corporate Administrators; as set out in paragraph 121 of the Third Further Amended Statement of Claim. 35. The Court declares, pursuant to s 1317E(1) of the Corporations Act, that the first defendant (Mr Hobbs), as a director or officer of PJCB, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2005 and 2007, improperly used his position to gain an advantage for himself and others, and caused a detriment to PJCB, by causing or otherwise permitting PJCB to: (a) make the Integrity Plus Payments, as defined in paragraph 154 of the Third Further Amended Statement of Claim; and (b) make the Additional Integrity Plus Payments, as defined in paragraph 163 of the Third Further Amended Statement of Claim and set out in paragraphs 158,159 and 162 of the Third Further Amended Statement of Claim. 36. The Court declares, pursuant to s 1317E(1) of the Corporations Act, that the first defendant (Mr Hobbs), as a director or officer of ISL, in contravention of s 182 of the Corporations Act, in the period between 2006 and 2007, improperly used his position to gain an advantage for himself and others, and caused a detriment to ISL, by: (a) causing or otherwise permitting ISL to make the Super Save Payments, as defined in paragraph 176 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting ISL to make payments to Diligence Discovery Ltd (Diligence Discovery). 37. The Court declares, pursuant to section 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of ISPL, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2006 and 2007, improperly used his position to gain an advantage for himself and others, and caused a detriment to ISPL, by: (a) causing or otherwise permitting ISPL to make the Super Save Payments, as defined in paragraph 176 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting ISPL to make payments to Diligence Discovery. 38. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Secured Bond, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2004 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Secured Bond, by: (a) causing or otherwise permitting Secured Bond to make the Master Fund Payments, as defined in paragraph 190 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting Secured Bond to make the First Secured Bond Payments, as defined in paragraph 200 of the Third Further Amended Statement of Claim. 39. The Court declares, pursuant to s 1317E(1) of the Corporations Act, the First Defendant, Mr Hobbs, as a director or officer of 888 Vanuatu, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to 888 Vanuatu, by: (a) causing or otherwise permitting 888 Vanuatu to make the Pinnacle Payments, as defined in paragraph 208 of the Third Further Amended Statement of Claim; (b) causing or otherwise permitting 888 Vanuatu to make the 888 Fund Payment, as defined in paragraph 216 of the Third Further Amended Statement of Claim; and (c) causing or otherwise permitting 888 Vanuatu to make payments to Diligence Discovery. 40. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Geneva Financial, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Geneva Financial, by causing or otherwise permitting Geneva Financial to make the Prestige Payments, as defined in paragraph 222 of the Third Further Amended Statement of Claim. 41. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Preserved Investments, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Preserved Investments, by: (a) causing or otherwise permitting Preserved Investments to make the Elite Premier Payments, as defined in paragraph 239 of the Third Further Amended Statement of Claim; (b) causing or otherwise permitting Preserved Investments to make the Elite Premier Option 2 Payments, as defined in paragraph 246 of the Third Further Amended Statement of Claim. 42. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Ultimate Investments, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2003 and 2009, improperly used his position to gain an advantage for himself and others, and caused a detriment to Ultimate Investments, by causing or otherwise permitting Ultimate Investments to make the Covered Strategies Payments, as defined in paragraph 253 of the Third Further Amended Statement of Claim. 43. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of Barclaywest, in contravention of section 182 of the Corporations Act, in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Barclaywest, by causing or otherwise permitting Barclaywest to make the Enhanced Fund Payments, as defined in paragraph 263 of the Third Further Amended Statement of Claim. 44. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs), as a director or officer of GP Global, in contravention of section 182 of the Corporations Act, in the period between 2005 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to GP Global, by causing or otherwise permitting GP Global to make the Best Fund Payments, as defined in paragraph 273 of the Third Further Amended Statement of Claim. Declarations in relation to the Third Defendant, Mr David Collard Unregistered Managed Investment Scheme ([2321]) 45. The Court declares that the third defendant (Mr Collard), contravened s 601ED(5) of the Corporations Act 2001 (Cth) in the period from at least 19 March 2007 to 26 July 2007 and 15 August 2007 to 27 September 2007, by being directly involved in the operation of the Hobbs Scheme, by: (a) providing information about the individual managed investment schemes in which investors could invest; (b) making offers to invest in the Hobbs Scheme; (c) issuing unit certificates and confirmation letters to investors; and (d) paying returns to investors. Unlicensed Financial Services ([2323]) 46. The Court declares that the third defendant (Mr Collard), contravened s 911A of the Corporations Act 2001 (Cth)in the period between 2004 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Scheme Representations ([2130]-[2249], [2315], [2324]-[2346]) 47. The Court declares that by making the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 48. The Court declares that by making the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 49. The Court declares that by making the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). Master Fund Representations ([2130]-[2138], [2176]-[2249], [2280]-[2290], [2315], [2324]-[2346]) 50. The Court declares that by making the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 51. The Court declares that by making the Capital Protected Representation, as defined in paragraph 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041G of the Corporations Act 2001 (Cth); (c) s 1041H of the Corporations Act 2001 (Cth); (d) s 12DA of the ASIC Act 2001 (Cth); (e) s 12DB of the ASIC Act 2001 (Cth); and (f) s 12DF of the ASIC Act 2001 (Cth). 52. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). First Secured Bond Unit Trust Representations ([2130]-[2138], [2218]-[2249], [2291]-[2296], [2315], [2324]-[2346]) 53. The Court declares that by making the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 54. The Court declares that by making the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). Profit Representations ([2297]-[2303], [2315], [2324]-[2346]) 55. The Court declares that by making the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). Shareholder Representations ([2304]-[2315], [2324]-[2346]) 56. The Court declares that by making the representation that Barclaywest's involvement in projects, including a project in China, would generate profits for shareholders, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 57. The Court declares that by making the representation that Barclaywest would do a commercial bond to fund a project, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 58. The Court declares that by making the representation that Mr Hobbs would give $200 million, being proceeds from a sale of rights, to Barclaywest, in Australia to potential and existing shareholders of Barclaywest in 2007 and 2008, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). 59. The Court declares that by making the 888 Shareholder Representation, as defined in paragraph 298 of the Third Further Amended Statement of Claim, the third defendant (Mr Collard), contravened: (a) s 1041E of the Corporations Act 2001 (Cth); (b) s 1041H of the Corporations Act 2001 (Cth); (c) s 12DA of the ASIC Act 2001 (Cth); (d) s 12DB of the ASIC Act 2001 (Cth); and (e) s 12DF of the ASIC Act 2001 (Cth). Directors' Duties Contraventions - FTC - Sections 180(1) and 181 ([2382]-[2395]) 60. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the third defendant (Mr Collard), as an officer of FTC, in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by: (a) causing or otherwise permitting FTC to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2002 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (i) promoting the Hobbs financial product; and (ii) operating the Hobbs Scheme; and (b) causing or otherwise permitting FTC to: (i) make the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (ii) make the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; (iii) make the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2004 to 2008; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041H of the Corporations Act 2001 (Cth); (C) s 12DA of the ASIC Act 2001 (Cth); (D) s 12DB of the ASIC Act 2001 (Cth); and (E) s 12DF of the ASIC Act 2001 (Cth); and (G) in causing or otherwise permitting FTC to make the Principal Protected Representation and the Investment Returns Representation only, s 1041G of the Corporations Act Directors' Duties Contraventions - Secured Bond - Sections 180(1), 181 and 182 ([2382]-[2395], [2396]-[2406]) 61. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the third defendant (Mr Collard), as a director or officer of Secured Bond, in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2003 and 2008, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by: (a) causing or otherwise permitting Secured Bond to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2003 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (i) promoting the Hobbs financial product; and (ii) operating the Hobbs Scheme; and (b) causing or otherwise permitting Secured Bond to: (i) make the Investment Representation, as defined in paragraph 285(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (ii) make the Capital Protected Representation, as defined in 282(b) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (iii) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in Master Fund in the period from 2003 to 2008; (iv) make the A+ Representation, as defined in paragraph 289(a) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; (v) make the Returns Representation, as defined in paragraph 282(d) of the Third Further Amended Statement of Claim, in Australia to potential investors in First Secured Bond Unit Trust in the period from 2003 to 2004; and (vi) make the Master Fund Profits Representation, as defined in paragraph 294 of the Third Further Amended Statement of Claim; in contravention of: (A) s 1041E of the Corporations Act 2001 (Cth); (B) s 1041H of the Corporations Act 2001 (Cth); (C) s 12DA of the ASIC Act 2001 (Cth); (D) s 12DB of the ASIC Act 2001 (Cth); and (E) s 12DF of the ASIC Act 2001 (Cth); and (G) in causing or otherwise permitting FTC to make the Principal Protected Representation and the Investment Returns Representation only, s 1041G of the Corporations Act 62. The Court declares that, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the third defendant (Mr Collard), as a director or officer of Secured Bond, in contravention of section 182 of the Corporations Act 2001 (Cth), in the period between 2004 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Secured Bond, by: (a) causing or otherwise permitting Secured Bond to make the Master Fund Payments, as defined in paragraph 190 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting Secured Bond to make the First Secured Bond Payments, as defined in paragraph 200 of the Third Further Amended Statement of Claim. Directors' Duties - Barclaywest - Sections 180(1), 181 and 182 ([2382]-[2395], [2396]-[2406]1) 63. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard), as a director or officer of Barclaywest, in contravention of ss 180(1) and 181 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, failed to exercise his powers and discharge his duties with the requisite degree of care and diligence, or in good faith in the best interests of the corporation, and for a proper purpose, by causing or otherwise permitting Barclaywest to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2007 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 64. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard), as a director or officer of Barclaywest, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to Barclaywest, by causing or otherwise permitting Barclaywest to make the Enhanced Fund Payments, as defined in paragraph 263 of the Third Further Amended Statement of Claim. Directors' Duties - 888 Vanuatu - Section 182 ([2396]-[2406]) 65. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard), as a director or officer of 888 Vanuatu, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used his position to gain an advantage for himself and others, and caused a detriment to 888 Vanuatu, by: (a) causing or otherwise permitting 888 Vanuatu to make the Pinnacle Payments, as defined in paragraph 208 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting 888 Vanuatu to make the 888 Fund Payment, as defined in paragraph 216 of the Third Further Amended Statement of Claim. Declarations in relation to the Fourth Defendant, Ms HuiMin (Nancy) Wu Unlicensed Financial Services ([2323]) 66. The Court declares that the fourth defendant (Ms Wu), contravened s 911A of the ASIC Act 2001 (Cth) in the period between 2006 and 2008, by the provision of financial services within this jurisdiction without an Australian financial services licence, by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Scheme Representations ([2130]-[2249], [2315], [2324]-[2346]) 67. The Court declares that by making the Lawful Investment Representation, as defined in paragraph 279(a) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2006 to 2008, the fourth defendant (Ms Wu) contravened: (a) s 1041H of the Corporations Act 2001 (Cth); and (b) s 12DA of the ASIC Act 2001 (Cth). 68. The Court declares that by making the Principal Protected Representation, as defined in paragraph 279(b) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2006 to 2008, the fourth defendant (Ms Wu) contravened: (a) s 1041H of the Corporations Act 2001 (Cth); and (b) s 12DA of the ASIC Act 2001 (Cth). 69. The Court declares that by making the Investment Returns Representation, as defined in paragraph 279(c) of the Third Further Amended Statement of Claim, in Australia in the period from at least 2006 to 2008, the fourth defendant (Ms Wu) contravened: (a) s 1041H of the Corporations Act 2001 (Cth); and (b) s 12DA of the ASIC Act 2001 (Cth). Directors' Duties - Barclaywest - Sections 180(1) and 182 ([2382]-[2395], [2396]-[2406]) 70. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of Barclaywest, in contravention of s 180(1) of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, failed to exercise her powers and discharge her duties with the requisite degree of care and diligence, by causing or otherwise permitting Barclaywest to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2007 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 71. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of Barclaywest, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used her position to gain an advantage for herself and others, and caused a detriment to Barclaywest, by causing or otherwise permitting Barclaywest to make the Enhanced Fund Payments, as defined in paragraph 263 of the Third Further Amended Statement of Claim. Directors' Duties - 888 Vanuatu - Sections 180(1) and 182 ([2382]-[2395], [2396]-[2406]) 72. The Court declares that, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of 888 Vanuatu, in contravention of s 180(1) of the Corporations Act 2001 (Cth), in the period between 2006 and 2008, failed to exercise her powers and discharge her duties with the requisite degree of care and diligence, by causing or otherwise permitting 888 Vanuatu to provide financial services within this jurisdiction without an Australian financial services licence, in the period between 2006 and 2008, in contravention of s 911A of the Corporations Act 2001 (Cth), by: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 73. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu), as an officer of 888 Vanuatu, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2007 and 2008, improperly used her position to gain an advantage for herself and others, and caused a detriment to 888 Vanuatu, by: (a) causing or otherwise permitting 888 Vanuatu to make the Pinnacle Payments, as defined, in paragraph 208 of the Third Further Amended Statement of Claim; and (b) causing or otherwise permitting 888 Vanuatu to make the 888 Fund Payment, as defined in paragraph 216 of the Third Further Amended Statement of Claim. Declarations in relation to the Eighth Defendant, Mrs Jacqueline Hobbs Directors' Duties - Geneva Financial - Section 182 ([2396]-[2406]) 74. The Court declares, pursuant to s 1317E(1) of the Corporations Act 2001 (Cth), the eighth defendant (Mrs Hobbs), as a director or officer of Geneva Financial, in contravention of s 182 of the Corporations Act 2001 (Cth), in the period between 2002 and 2008, improperly used her position to gain an advantage for herself and others, and caused a detriment to Geneva Financial, by: (a) as set out in paragraph 121 of the Third Further Amended Statement of Claim: (i) receiving commissions, fees or other amounts of money in connection with: (1) the operation of the Cadent Accounts; (2) the purchase, sale, marketing and/or management of US Treasuries for the Corporate Administrators of the Schemes, including bond trading; and (3) investments by the Schemes with NCCN through Mr Donald Caffray; and (ii) receiving payments purportedly to cover costs incurred in distributing "research reports" containing material prepared by the Cadent Traders to the Corporate Administrators; (b) causing or otherwise permitting Geneva Financial to pay round turn commissions to the First Defendant, Mr Hobbs, in relation to the Geneva Cadent Account, as defined in paragraph 87(c) of the Third Further Amended Statement of Claim and to make the Prestige Payments, as defined in paragraph 222 of the Third Further Amended Statement of Claim. Declarations in relation to the Corporate Defendants Unlicensed Financial Services ([2323]) 75. The Court declares that the ninth defendant (ISPL) contravened s 911A of the Corporations Act 2001 (Cth) in the period between 2006 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. 76. The Court declares that the fourteenth defendant (North Wave Ltd) contravened s 911A of the Corporations Act 2001 (Cth) in the period between 2005 and 2008, by providing the following financial services within this jurisdiction without an Australian financial services licence: (a) promoting the Hobbs financial product; and (b) operating the Hobbs Scheme. Orders 3Consequent upon the findings and declarations made in these proceedings, I make the following orders: Against the first defendant (Mr David Hobbs): 1. Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth) that the first defendant (Mr Hobbs) be permanently disqualified from managing any corporation. 2. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) be permanently restrained, by himself, his servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme). 3. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) be permanently restrained, by himself, his servants or agents or otherwise, from (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered. 5. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant (Mr Hobbs) be permanently restrained, by himself, his servants or agents or otherwise from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth). 6. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth). 7. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the first defendant be permanently restrained, by himself, his servants or agents or otherwise from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth). 8. Pursuant to s 1317G of the Corporations Act 2001 (Cth), by reason of his contraventions of ss 180(1), 181, 182 of that Act, that the first defendant (Mr Hobbs) pay the Commonwealth pecuniary penalties of $500,000. Against the third defendant (Mr David Collard): 9. Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be disqualified from managing any corporation from the date of entry of these orders for a period of 20 years. 10. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme). 11. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered. 12. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth). 13. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth). 14. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the third defendant (Mr Collard) be permanently restrained, by himself, his servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth). 15. Pursuant to s 1317G of the Corporations Act 2001 (Cth), by reason of his contraventions of ss 180(1), 181, 182, that the third defendant (Mr Collard) pay the Commonwealth pecuniary penalties of $150,000. Against the fourth defendant (Ms Huimin (Nancy) Wu): 16. Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth), the fourth defendant (Ms Wu) be disqualified from managing any corporation from the date of entry of these orders for a period of four years. 17. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be permanently restrained, by herself, her servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme). 18. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered. 19. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth). 20. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth). 21. Pursuant to ss 1101B and 1324(1) of the Corporations Act 2001 (Cth), that the fourth defendant (Ms Wu) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth). Against the eighth defendant (Mrs Jacqueline Hobbs): 22. Pursuant to ss 206C and 206E of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be disqualified from managing any corporation from the date of entry of these orders for a period of six years. 23. Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be permanently restrained, by herself, her servants or agents or otherwise, from operating or promoting the Hobbs Scheme (and any of the individual investment schemes comprised in the Hobbs Scheme). 24. Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a managed investment scheme within the meaning of the Corporations Act 2001 (Cth) that requires registration under that Act and has not been so registered. 25. Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business related to, concerning or directed to be; and (b) being in any way involved in the promotion or establishment of, or the carrying on of the business of a registered managed investment scheme within the meaning of the Corporations Act 2001 (Cth). 26. Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be permanently restrained, by herself, her servants or agents or otherwise, from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth), without holding an Australian financial services licence; and (b) from being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth) without an Australian financial services licence in circumstances where that other person is acting in contravention of s 911A of the Corporations Act 2001 (Cth). 27. Pursuant to s 1324(1) of the Corporations Act 2001 (Cth), that the eighth defendant (Mrs Hobbs) be restrained, by herself, her servants or agents or otherwise, from the date of entry of these orders for a period of eight years from: (a) carrying on any business in relation to financial products or financial services by: (i) providing financial product advice; (ii) dealing in financial products; (iii) otherwise carrying on a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth); and (b) being involved in the carrying on by another person of a financial services business within the meaning of Chapter 7 of the Corporations Act 2001 (Cth). 28. Pursuant to s 1317G of the Corporations Act 2001 (Cth), by reason of her contraventions of s 182 that the eighth defendant (Mrs Hobbs) pay the Commonwealth a pecuniary penalty of $20,000. In relation to the Hobbs Scheme 29. Pursuant to s 601EE(1) of the Corporations Act 2001 (Cth), that the Hobbs Scheme and, for that purpose, each of the First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Prestige Unit Trust, Smart Money, Elite Premier Unit Trust, Elite Premier Option Two Unit Trust, Covered Strategies Unit Trust, Good Value Fund, Enhanced Fund and Best Fund (the Hobbs Scheme and the said individual investment schemes together referred to as "the Liquidation Funds") be wound up. Note: Proposed Order 29 above was amended when final orders were made as follows: Pursuant to s 601EE(1) of the Corporations Act 2001 (Cth), that the Hobbs Scheme and, for that purpose, each of the First Secured Bond Unit Trust, Pinnacle Fund, 888 (Super Save) Fund, Prestige Unit Trust, Smart Money, Elite Premier Unit Trust, Elite Premier Option Two Unit Trust, Covered Strategies Unit Trust, Good Value Fund, Enhanced Fund and Best Fund be wound up. 30. That Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd (together referred to as the Liquidator) be appointed liquidator to wind up the Liquidation Funds. Note: Proposed Order 30 above was amended when final orders were made as follows: That Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd (together referred to as the Liquidator) be appointed liquidator to wind up the Hobbs Scheme and each of the individual investment schemes referred to in Order 29, other than the Pinnacle fund, those funds together being referred to in the following orders as "the Liquidation Funds"). 31. That the Liquidator have the power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with the winding up of the Liquidation Funds, or incidental to the attainment of the winding up of the Liquidation Funds, including: (a) the powers identified in s 477 of the Corporations Act 2001 (Cth) as if each reference there to a company were a reference to the Liquidation Funds; and (b) the power to investigate any deficiency in the Liquidation Funds and to exercise the powers conferred by Division 1 of Part 5.9 of the Corporations Act 2001 (Cth), as if the Liquidation Funds were corporations being wound up. 32. That the Liquidator convene a meeting of investors in the Liquidation Funds within 16 weeks of the date on which these orders are made. 33. That the reasonable costs and expenses of the winding up of the respective Liquidation Funds be paid out of the assets of the Liquidation Funds. 34. That the plaintiff (ASIC) be permitted to give to the Liquidator any books and records of the Liquidation Funds obtained by ASIC pursuant to notices issued under the Australian Securities and Investments Commission Act 2001 (Cth) or voluntarily provided to ASIC or otherwise obtained by ASIC during the course of its investigations in relation to the Liquidation Funds, together with such other documents as ASIC has created from information derived from those books and records. 35. Pursuant to s 1324B of the Corporations Act 2001 (Cth), that each of the first, third, fourth, eighth, ninth and fourteenth defendants (Mr Hobbs, Mr Collard, Ms Wu, ISPL and North Wave, respectively) provide such assistance and information to the Liquidator as is reasonably requested in the discharge and performance of his or their functions as Liquidator. 36. That order 12 of the orders made in these proceedings (formerly matter 6021/07) on 20 June 2008 be vacated. 37. That all amounts held by the Court in relation to this matter, being matter number 2007/258119 (formerly matter 6021/07) (which for the avoidance of doubt includes matter numbers 2007/258010, formerly matter 5864/07, and 2008/280495, formerly matter 4532/08, which were consolidated into 2007/258119 by orders made by the Court on 27 August 2010), together with all accrued interest, be paid to the Liquidator in the capacity of Liquidator of the Liquidation Funds. Note: Proposed Order 37 above was amended when final orders were made as follows: That, subject to the order made on 21 February 2013 on the application of Messrs He and Gao in these proceedings for the payment out of moneys held in Court that are referable to the Pinnacle Fund, all amounts held by the Court in relation to this matter, being matter number 2007/258119 (formerly matter 6021/07) (which for the avoidance of doubt includes matter numbers 2007/258010, formerly matter 5864/07, and 2008/280495, formerly matter 4532/08, which were consolidated into 2007/258119 by orders made by the Court on 27 August 2010), together with all accrued interest, be paid to the Liquidator in the capacity of Liquidator of the Liquidation Funds. In relation to the appointment of a receiver to the assets of various of the defendants: 38. Pursuant to ss 1323(1)(h) and 1101B of the Corporations Act 2001 (Cth), that Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd be appointed as receiver to: (a) the assets of the fourth defendant (Ms Wu); (b) the assets located in this jurisdiction of the first defendant (Mr Hobbs); and (c) the assets located in this jurisdiction of the eighth defendant (Mrs Hobbs); (those three defendants being referred to collectively as the Receivership Defendants), for the purposes of: (i) identifying, collecting and securing property or proceeds of the Liquidation Funds, or property or proceeds in which the Liquidation Funds have a right or interest, which are in the possession, custody or control of each of the Receivership Defendants; (ii) ascertaining the amount of funds received by each of the Receivership Defendants (Received Funds) as a consequence of promoting, offering and/or operating any one or more of the Liquidation Funds; (iii) recovering the Received Funds; (iv) ascertaining, to the extent necessary for the receiverships or for the liquidation of the Schemes, the following information: (1) the assets and liabilities of the Receivership Defendants; (2) any property purchased or acquired with the Received Funds by each of the Receivership Defendants; (3) any distributions or uses made of the Received Funds by each of the Receivership Defendants. 39. That Mr Barry Taylor and Mr Andrew Fletcher Needham of HLB Mann Judd, in their capacity as receiver pursuant to order 38, have the powers set out in s 420(1) and (2) of the Corporations Act 2001 (Cth), as if each reference there to a corporation were a reference to each of the Receivership Defendants. 40. That the reasonable costs and expenses of each receivership be paid out of the assets of the person under receivership. In relation to the Tenth to Thirteenth and Fifteenth defendants: 41. That each of the first, third, fourth and eighth defendants (Mr Hobbs, Mr Collard, Ms Wu and Mrs Hobbs) be restrained, by themselves, their servants or agents or otherwise, from taking any steps in relation to the transfer or re-registration, reinstatement or otherwise revival of any of the Tenth to Thirteenth and Fifteenth Defendants (the Deregistered Defendants). As to administrative matters: 42. That the following orders made in matter number 2007/258119 (formerly 6021/07) be vacated: (a) Orders 12 and 13 of the orders made on 14 December 2007; (b) Orders 1 to 3 of the first orders made on 18 December 2007 (concerning Mr Brian Wood) and orders 10 and 11 of the second orders made on 18 December 2007 (concerning Technocash Pty Ltd and Upton Ltd); (c) Order 1 of the orders made on 21 December 2007; (d) Orders 11, 18, 20 and 23 of the orders made on 5 February 2008; (e) Orders 4 and 9 to 12 of the orders made on 7 February 2008; (f) Orders 1 to 3 of the orders made on 15 October 2010. 43. That Mr Collard be released from the undertaking recorded in order 4 of the orders made in matter number 2008/280495 (formerly matter 4532/08) on 18 September 2009. 44. That order 1 of the orders made in matter number 2007/258010 (formerly 5864/07) on 13 December 2007 be vacated. 45. That leave be granted for the discontinuance of the proceedings against the Deregistered Defendants on the basis that there be no order as to costs. As to costs: 46. That the eighth defendant (Mrs Hobbs) pay ASIC's costs of matter 2007/258119 (formerly matter 6021/07) from 5 February 2008 to 10 July 2008. 47. That the first and eighth defendants (Mr and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 (formerly matter 6021/07) from 11 July 2008 to 26 August 2010. 48. That the third defendant (Mr Collard) pay ASIC's costs of matter 2008/280495 (formerly matter 4532/08) from 2 September 2008 to 26 August 2010. 49. That the first, third and eighth defendants (Mr Hobbs, Mr Collard and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 from 27 August 2010 to 12 April 2012. 50. That the first and eighth defendants (Mr and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 from 13 April 2012 to 24 October 2012, save for ASIC's costs of the following applications made by the fourth defendant (Ms Wu): (a) an application dated 27 June 2012 and filed on 3 0 July 2012; (b) an application made on 15 and 16 August 2012; and (c) an application made on 21 August 2012 and that Ms Wu pay ASIC's costs of the applications in (a) to (c) above. 51. That the first and eighth defendants (Mr and Mrs Hobbs) pay ASIC's costs of matter 2007/258119 from 24 October 2012 to date, save for ASIC's costs, including ASIC's costs thrown away, arising out of the service by the fourth defendant on ASIC of Ms Wu's affidavit affirmed on 12 December 2012 and that the fourth defendant (Ms Wu) pay ASIC's costs arising out of the service of that affidavit (including costs thrown away in relation thereto). ********** 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: 21 February 2013