Baskerville v Skene [2023] QSC 31 [2023] 10 QLR

SUPREME COURT OF QUEENSLAND CITATION: Baskerville v Skene [2023] QSC 31 PARTIES: CHRISTOPHER JOHN BASKERVILLE IN HIS CAPACITY AS LIQUIDATOR OF GOLDSKY ASSET MANAGEMENT PTY LTD ACN 611 171 870 (IN LIQUIDATION) (first plaintiff) & others v MATTHEW PETER SKENE (first defendant) & others FILE NO/S: BS 6402 of 2021 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 24 February 2023 DELIVERED AT: Brisbane HEARING DATE: 2 February 2023 JUDGE: Freeburn J ORDER: Application dismissed CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER THE UNIFORM CIVIL PROCEDURE RULES – PLEADINGS – SUMMARY JUDGEMENT – STRIKING OUT – STATEMENT OF CLAIM – where an application is brought for summary judgement or, in the alternative, to strike out the claim and statement of claim – whether the pleading is so flawed and embarrassing that the respondent cannot respond to the claim against them COUNSEL: D Savage KC and L Copley (plaintiffs/respondents) JW Peden, KC and SC Russell (defendants/applicants) SOLICITORS: Thynne + Macartney for the plaintiffs/respondents -- 1 of 15 -- 2 Mills Oakley for the First to Fifth Defendants/Applicants [1] By an amended application filed on 9 November 2022 the First to Fourth Defendants apply for summary judgment pursuant to rule 293 of the Uniform Civil Procedure Rules 1999 (UCPR). Alternatively, those defendants apply to strike out the statement of claim pursuant to rule 171 of the UCPR. The Fifth Defendant makes a similar application. For convenience I will refer to those five defendants as the applicants. [2] A timetable leading to the hearing of the applications was ordered by the Chief Justice on 3 November 2022. The timetable provided for the amendment of the applications, the filing and service of affidavits and the exchange of outlines of submissions. Both parties filed material that complied with that order. Factual Background [3] The applicants’ submissions set out the factual background. None of that background appears to be contentious. Below is a summary of what has happened – largely paraphrased from the applicant’s submissions. [4] Throughout approximately 2017 and 2018, Mr Ken Grace solicited investments from members of the public through various investment vehicles associated with the brand name, “Goldsky”. Those vehicles included three companies – Goldsky Asset Management Pty Ltd, Goldsky Investments Pty Ltd and Goldsky Global Access Fund Pty Ltd (the Goldsky Corporate Entities) – and at least one managed fund, the Goldsky Global Access Fund (the Fund).1 Some of the factual background to the actual operation of the Goldsky Corporate Entities can be found in ASIC v Goldsky Global Access Fund Pty Ltd [2019] QSC 114 (Flanagan J). [5] The background to the appointment of Mr Baskerville as the liquidator of the Goldsky Corporate Entities and the Fund is as follows. [6] On 29 October 2018, the Australian Securities and Investments Commission (ASIC) filed an originating application commencing Supreme Court proceeding number 11736/18. By that application, ASIC sought the appointment of receivers as well as 1 The parties used the expressions ‘the scheme’ and ‘the Fund’ interchangeably. -- 2 of 15 -- 3 declarations to the effect that the Goldsky Corporate Entities had contravened the Corporations Act 2001 (the Act) by carrying on a financial services business without an Australian Financial Services Licence. That same day Flanagan J made orders appointing Mr Anthony Castle of William Buck as interim receiver of the Goldsky Corporate Entities. The receiver was directed to produce a report to the court. [7] On 7 December 2018, Mr Baskerville was appointed liquidator of the Goldsky Corporate Entities pursuant to resolutions of those companies. [8] On 10 December 2018, the receiver filed his affidavit, which contained his report as to the affairs of the three companies and some issues as to the use of investors’ funds. On 10 January 2019, ASIC filed an interlocutory application, which sought orders for leave to file and serve a further amended originating application, seeking: (a) an order pursuant to s 601EE(2) of the Corporations Act 2001 (C’th) for the winding up of the Fund; (b) an order by which Mr Baskerville “… be made responsible for the winding up of …” the Fund. [9] On 16 January 2019, the matter came on for hearing before Martin J. At the hearing: (a) the parties to the proceeding consented to ASIC being given leave to amend its originating application; (b) Mr Baskerville made an oral application, in substance, for that amended originating application to be returnable instanter and for orders to be made winding up “… all Funds, however named …” (c) Mr Steele, counsel appearing for ASIC, described the Fund as “… a managed investment scheme or potential managed investment scheme …” (d) ASIC did not consent to the orders sought by the liquidator, and expressed concerns in relation to the breadth of the order sought in relation to all unnamed funds; (e) the liquidator’s written outline made a submission that all the elements of the s 9 definition of ‘managed investment scheme’ were satisfied; -- 3 of 15 -- 4 [10] The applicants say that no party referred the court to the Full Federal Court authority of National Australia Bank Ltd v Norman,2 or to the receiver’s evidence that: (i) $23,440,264.24 appeared to have been collected from investors; (ii) $14,876,797.03 appeared to have been returned to investors as either capital returns or profit; (iii) Of the difference, the sum of $1,639,142.69 had been paid for purposes apparently personal in nature, including for payments to family members of Mr Grace, and expenditure on jewellery, groceries, cosmetic procedures, beauty treatments, restaurants, clothing, furniture and home expenses, and entertainment tickets. [11] On 16 January 2019, Martin J made orders winding up the Fund pursuant to s 601EE of the Act and appointing Mr Baskerville as liquidator of the Fund. Martin J further ordered that, in respect of the winding up of the Fund, Mr Baskerville was entitled to exercise such functions and powers as set out in Chapter 5 of the Act as he would ordinarily be entitled to exercise if the Fund were a company, with such modifications be made as reasonably necessary in the circumstances. [12] The applicants submit that the orders made by Martin J are controversial. That issue is discussed below.3 [13] On 3 June 2021, Mr Baskerville swore an affidavit in which he deposed to his belief that the Fund operated as a Ponzi scheme. That belief was based on his investigations. Mr Baskerville deposed that he also believed that the Fund was an unregistered managed investment scheme. [14] Mr Baskerville’s belief as to the Fund being a Ponzi scheme was repeated in correspondence from his solicitors on 10 June 2021, being the letter before action to the respondents in the current proceedings, which stated that “…the Goldsky Scheme was what is commonly known as a Ponzi Scheme.” Principles [15] UCPR 293 of the provides: 2 (2009) 180 FCR 243. 3 See the Second Point discussed below. -- 4 of 15 -- 5 “If the court is satisfied that – (a) the plaintiff has no real prospect of succeeding on all or a part of the plaintiff’s claim; and (b) there is no need for a trial of the claim or the part of the claim; the court may give judgment for the defendant against the plaintiff for all or part of the plaintiff’s claim and may make any other order the court considers appropriate.” [16] The relevant consideration is whether there is “no real prospect” of the plaintiff succeeding and that there is no need for a trial of the action. [17] UCPR 171 confers a discretionary power on the court to strike out all or part of a pleading which discloses no reasonable cause of action. [18] Bowskill J summarised the principles in Equititrust Ltd v Tucker (No 1):4 Considerations relevant in deciding if a pleading is deficient include whether it fails to fulfil the function of pleadings, which is to state with sufficient clarity the case that must be met and so define the issues for decision, ensuring procedural fairness; whether it is ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against them; and whether the pleader’s case is not advanced in a comprehensible, concise form appropriate for consideration by both the court, and for the purpose of the preparation of a response. The Claims [19] Here, the applicants contend that the statement of claim5 is embarrassing because it suffers from two fundamental flaws. To understand the complaints, it is necessary to explain the claims made in the statement of claim and the way the pleading has been structured. The respondent has usefully explained the claims made in the statement of claim in this way: (a) the (three) Goldsky Corporate Entities took part in the management of a scheme – the Fund – which was not itself a legal entity; (b) the Fund (or scheme) was an unregistered managed investment scheme as that term is used in Chapter 5C of the Corporations Act 2001; 4 [2019] QSC 51 at [14]. 5 For convenience I will refer to the second amended statement of claim as the statement of claim. -- 5 of 15 -- 6 (c) each of the Goldsky Corporate Entities promoted the Fund and thereby obtained money from members of the public which was paid into the bank accounts of one or other of the Goldsky Corporate Entities; (d) the Goldsky Corporate Entities, and in particular Mr Grace, represented and agreed that the investment money would be used by one or other of the Goldsky Corporate Entities as investments so that investors would receive a return on their investment; (e) the money was received and applied for those investment purposes but was also transferred or expended for private gain; (f) the investments were said to be repayable on demand but were not repaid, except preferentially. [20] As explained, the three Goldsky Corporate Entities, and the Fund, were all ordered to be wound up and Mr Baskerville was appointed liquidator of all four entities.6 [21] Mr Baskerville, as the liquidator, claims that: (a) each of the three Goldsky Corporate Entities was and remained insolvent from 31 January 2018; (b) the relation-back period in relation to the three Goldsky Corporate Entities was 7 December 2018 and the relation-back period for the Fund was 16 January 2019 if the Fund were treated as a corporation; (c) to the extent that one Goldsky Corporate Entity advanced investors moneys to another the former became a creditor of the recipient but had no prospect of being paid because of the recipient’s insolvency; (d) the receipt of funds by each of the defendants from any of the Goldsky Corporate Entities constituted preferences recoverable by the liquidator of the relevant Goldsky Corporate Entity from the creditor who was paid preferentially. [22] Paragraphs 93 and following of the statement of claim make a further claim. There the liquidator puts his claim on this basis. If it is the Fund rather than one or other of 6 Here I use the expression ‘entities’ in a loose sense, recognising that the Fund is not a legal entity. -- 6 of 15 -- 7 the Goldsky Corporate Entities that is the relevant entity to administer for the purposes of determining the entitlements of the creditors, then the court should have regard to the fact that the investments were really pooled into a mixed fund for a common purpose and so the liquidator should be permitted to pay proportionate sums to each investor. [23] That further claim relies on s 601EE of the Act which enables the court to wind up an unregistered scheme and to make any orders it considers appropriate for the winding up of the scheme. [24] The applicants raise two points which, it is contended, comprise fundamental flaws in the pleading. First Point: Recovery of Preference Claims by the Fund [25] The applicants first point is that s 588FA of the Act applies to unfair preferences given by a company.7 Thus, the applicants contend that, in so far as Mr Baskerville brings claims for recovery of unfair preferences given by the Fund, s 588FA does not, and cannot, apply. And so, central to the applicants’ complaints is the applicant’s perception that the claims being made by Mr Baskerville include not only claims for recovery of unfair preferences given by the three Goldsky Corporate Entities, but also claims for recovery of unfair preferences given by the Fund. [26] Mr Baskerville’s counsel did not contest the proposition that s 588FA applies to unfair preferences given by a company.8 Instead, Mr Baskerville’s counsel portrayed Mr Baskerville’s claims in an entirely different way. According to Mr Baskerville he claims recovery of unfair preferences given by the three Goldsky Corporate Entities, and only those entities, in paragraphs 28 to 92 of the statement of claim. Those claims do not, it is contended, include claims for the recovery of unfair preferences given by the Fund.9 According to Mr Baskerville, the claims made by Mr Baskerville are not unfair preference claims but rather are claims made pursuant to s 601EE for appropriate orders in the winding up of the Fund. 7 That is plainly correct. By its terms s 588FA applies to unfair preferences given by a company to a creditor of the company. 8 There was, however, a contest about whether the voidable transaction regime in Part 5.7B of the Act applies to managed investment schemes: see the respondent/plaintiff’s submissions at [17]. 9 See, for example, Mr Savage’s submissions at Transcript T1-27 lines 28-38. -- 7 of 15 -- 8 [27] In that way, the real controversy between the parties involves entirely different perceptions of what is claimed in the statement of claim. [28] There is, it must be accepted, some intermingling of the allegations against the three Goldsky Corporate Entities and the allegations against the Fund. According to Mr Baskerville that is unavoidable because the three Goldsky Corporate Entities operated the Fund and, when explaining the facts, the affairs of each are intertwined. [29] The pleading is not without its challenges. An example can be given. Paragraphs 36 to 38 plead the giving of unfair preferences to Mr Skene and Inside Enterprises (the first and third defendants) in these terms: 36. During the Relation Back Period Skene and Inside Enterprises paid and received the following payments to and from the Goldsky Scheme or in the alternative Goldsky Asset: Date Withdrawal Deposit Account Name Account Nam (a) 14/06/2018 $22,299.89 Goldsky Asset Skene (b) 17/09/2018 $2,000,000.00 Goldsky Asset Inside Enterprises (c) 22/10/2018 $900,000.00 Goldsky Asset Inside Enterprises (d) 22/10/2018 $1,100,000.00 Goldsky Asset Inside Enterprises (e) 23/10/2018 $279,621.27 Goldsky Asset M&A Skene Total $2,301.921.16 $2,000,000.00 The account being otherwise as pleaded in Annexure A. 37. During the Relation Back Period the Skene Entities received payments of $2,301,921.16 from Goldsky Asset, which each constitute unfair preferences within the meaning of s 588FA of the Act, comprising: (a) $22,299.89 to Skene; (b) $2,000,000 to Inside Enterprises from; and (c) $279,621.27 to M&A Skene 38. In the alternative to the matters pleaded at paragraph 37, during the Relation Back Period the Skene Entities received net profit from the Goldsky Bank Accounts of $301,921.16 for which each transaction constitutes an unfair preference within the meaning of s 588FA of the Act, namely: (a) Skene received a net profit of $22,299.89; and (b) M&A Skene received a net profit of $279,621.27 -- 8 of 15 -- 9 [30] It can be seen that paragraph 36 is a little equivocal in that the payments back and forth are said to involve the Goldsky Scheme (i.e. the Fund) or in the alternative Goldsky Asset (i.e. one of the three Goldsky Corporate Entities). The applicants say that betrays an intention on the part of Mr Baskerville to pursue recovery of unfair preferences given by the Fund. On the other hand, Mr Baskerville contends that the mention of the Fund (the Goldsky Scheme) merely reflects the fact that the affairs of the three Goldsky Corporate Entities are intertwined with the Fund that they operated. [31] Paragraph 37 does not mention the Fund and so is consistent with Mr Baskerville’s contention that he does not pursue recovery of unfair preferences given by the Fund. [32] The alternative claim made in paragraph 38 refers to a profit of $301,921.16 derived from the ‘Goldsky Bank Accounts’. Those bank accounts are described in paragraph 6 of the statement of claim as the means by which Mr Grace operated the Fund. However, the table in paragraph 36 shows payments from Goldsky Asset, one of the three Goldsky Corporate Entities. The payments are not said to have been made by the Fund. [33] Later in the pleading, but still addressing to the same claims, paragraph 42 pleads that from 16 October 2018 Mr Skene was aware that: (a) the Fund and/or Goldsky Asset and/or the Goldsky Corporate Entities were insolvent; and (b) the Fund and/or Goldsky Asset was operating as a Ponzi scheme or otherwise not a genuine or bona fide investment vehicle. [34] Ultimately, the claim made in paragraph 92 is as follows: Pursuant to section 588FF of the Act, the Liquidator claims payment from each defendant of an amount equal to the payments received by each of the defendants in the sums pleaded against each of them. [35] Thus, the competing perceptions of the claims made in the statement of claim are both arguable. However, in open court Mr Baskerville’s counsel has expressly disavowed any intention to pursue recovery of unfair preferences given by the Fund.10 In those circumstances, in my view, it is inappropriate to exercise the discretion to strike out 10 Transcript T1-27 lines 28-38; Transcript T1-31 lines 24-37. -- 9 of 15 -- 10 the pleading. It seems to me that, on the basis of that assurance the case can proceed on the present pleading. Certainly, there is no evidence of particular prejudice in doing so. [36] It is necessary to record that Mr Baskerville’s counsel referred me to the reasons of Keane JA in Mier v FN Management Pty Ltd:11 “In Joye v Beach Petroleum N.L. the Full Court of the Federal Court approved the statement of McPherson S.P.J. in Re Crust ‘N’ Crumb Bakers (Wholesale) Pty Ltd that: ‘Winding up is a process that consists of collecting the assets, realising and reducing them to money, dealing with proofs of credits by admitting or rejecting them, and distributing the net proceeds, after providing for costs and expenses, to the persons entitled.’ It follows, in my view, that where a statute makes reference, without more, to the “winding up” of an entity, it is referring to the application of a procedure containing these essential characteristics. It follows that s 601EE(2) must be read as empowering a court to make such orders as it considers appropriate in order to apply such a procedure to an unregistered managed investment scheme. It may also be accepted that the terms of the section allow for further orders to be made as needed as long as they are required for the “due conduct and completion of the winding up”. The necessary corollary is that an order that could not reasonably be seen as advancing this procedure would not be authorised by s 601EE(2).” [37] I mention that discussion of the power under s 601EE(2) for two reasons. First, if Mr Baskerville seeks to have orders made by the court pursuant to the relatively broad power under s 601EE(2), to make orders it considers necessary for the winding up of the Fund, then it will be necessary for Mr Baskerville to precisely identify the orders sought, the factual basis for those orders, and that they are reasonably necessary for the due conduct and completion of the winding up of the Fund. At present, of course, the focus of the proceeding is the recovery of unfair preferences given by the three Goldsky Corporate Entities. The distribution of those recovered funds is likely to require a detailed articulation of what the liquidator proposes and why. [38] Second, an undercurrent present in the submissions of counsel for the applicants was that the Fund is not a legal entity and that was an impediment to the order of a liquidation. Certainly, liquidation is usually a procedure commonly ordered in cases 11 [2006] 1 Qd R 339 at [15]-[16]. -- 10 of 15 -- 11 involving insolvent companies. However, it is inaccurate to assume that the court’s judicial power to order a liquidation is limited to that situation.12 The procedure of a liquidations can be ordered in the case of unincorporated associations, or partnerships, or (as the quote above illustrates) managed funds. Second Point: Limitations on the Appointment Order [39] The applicants’ second point is that there is a fundamental defect with the constitution of the proceedings in relation to Mr Baskerville’s claims as liquidator of the Fund. The applicants contend that the orders of Martin J on 16 January 2019 “ought not to have been made” and therefore do not empower Mr Baskerville to bring this or any proceeding.13 [40] As explained above, on 16 January 2019, Martin J made orders winding up the Fund pursuant to s 601EE of the Act and appointing Mr Baskerville as liquidator of the Fund. Martin J further ordered that, in respect of the winding up of the Fund, Mr Baskerville was entitled to exercise such functions and powers as set out in Chapter 5 of the Act as he would ordinarily be entitled to exercise if the Fund were a company, with such modifications be made as reasonably necessary in the circumstances. [41] For the following reasons, I reject the applicants second point. [42] The order of Martin J has not been appealed or set aside. The order was made more than four years ago. Mr Baskerville and others have, no doubt, acted on the basis that Mr Baskerville was validly appointed by the court and has been entitled to act as the liquidator, an officer of the court, pursuant to that order. There is no basis on which it is said that this court should treat the order as ineffective or as an order that “ought not have been made”.14 No application has been made to set aside the order. Indeed, the applicants did not seek to establish what facts were put before His Honour, or that those facts were somehow insufficient. [43] The applicants’ argument is as follows: The reason why the Appointment Order ought not to have been made should be uncontroversial – a Ponzi scheme, which is what the liquidator alleges the ‘Goldsky Scheme’ to be, is not a managed investment scheme within the 12 Gould v Brown (1998) 193 CLR 346 at [31]. 13 Applicant’s submissions at [32]. 14 Applicant’s submissions at [33]. -- 11 of 15 -- 12 meaning s 9 of the Act and no order pursuant to s 601EE of the Act can be made in respect of such a scheme.15 [44] The winding up of registered schemes is dealt with in ss 601NA to 601NG of the Act. However, where the scheme is not registered s 601EE empowers the court to wind up the scheme. Section 601EE(1) of the Act provides: If a person operates a managed investment scheme in contravention of subsection 601ED(5), the following may apply to the Court to have the scheme wound up: (a) ASIC; (b) the person operating the scheme; (c) a member of the scheme. [45] Section 9 defines a ‘managed investment scheme’ by setting out a list of types of schemes that qualify as managed investment schemes. For present purposes the relevant item in the list16 is a scheme17 that has these features: (a) People contribute money or money’s worth as consideration to acquire rights to benefits produced by the scheme; (b) Any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits for those who hold interests in the scheme; (c) The members do not have day-to-day control over the operation of the scheme. [46] Such a scheme falls within s 601EE if the scheme is operated in contravention of subsection 601ED(5). That subsection specifies that a person must not operate a managed investment scheme that is required to be registered18 unless the scheme is registered. And so, s 601EE applies to managed investment schemes that are required to be registered but are not in fact registered. The court may order those unregistered managed investment schemes to be wound up.19 15 Applicant’s submissions at [33]. 16 This is item (a) in the list of schemes that qualify as managed investment schemes. 17 As Mason J explained in Australian Softwood Forests Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121 at 129 “all that the word ‘scheme’ requires is that there should be some program, or plan of action.” 18 All schemes are required to be registered unless that scheme fits within one of the exceptions in s 601ED (for example, it has less than 20 members). 19 A curiosity is that there is no specific provision that enables the court to appoint a liquidator to a managed investment scheme that is not required to be registered. However, as explained above, it should not be thought that the court is unable to appoint a liquidator or a receiver in such a situation. -- 12 of 15 -- 13 [47] The order made by Martin J was plainly made because the material before His Honour demonstrated that the Fund was required to be registered but was not registered. There is no reason or justification for going behind that finding. No evidence is sought to be tendered which suggests that the finding was incorrect. [48] The only basis for the applicants’ argument is the following passage from the reasons of Gilmour J (with whom Spender J agreed) in National Australia Bank Ltd v Norman:20 “Section 601EE allows managed investment schemes to be wound up where a person operates a scheme in contravention of s 601D(5). Section 601ED(5) prohibits a person from operating a managed investment scheme that is required to be registered, unless the scheme is so registered. Section 601ED(5), accordingly, envisages that the unregistered managed investment scheme is of a kind which ought to have been, and could in fact have been, registered. In my opinion, a scheme involving, even in part, misappropriation as one of its features, is not a scheme of a kind which is capable of registration by the Australian Securities and Investments Commission under s 601EB of the Act. Whilst in the colloquial sense it may be regarded as a scheme, it is not a statutory scheme within the meaning of s 9 of the Act and, it follows, cannot be subject to a winding up order of the court under s 601EE or otherwise. Any scheme involving a programme or plan for the misappropriation of investors’ funds could not involve contributions being pooled or used in a common enterprise to produce financial benefits ‘for the people … who hold interests in the scheme’, as required by the second limb of the definition of ‘managed investment scheme’. As senior counsel for NAB put it, investors in a supposed scheme could not be taken to have intended to contribute money as consideration to acquire rights to benefits produced by a scheme in which they would be defrauded.” [emphasis added] [49] In that case, however, the contest was whether there was a scheme at all. It is necessary to mention some of the facts: (a) A number of investors deposited funds with an accountant, Mr McFarlane, for investment by him. (b) He deposited those funds into a trust account; 20 (2009) 180 FCR 243. -- 13 of 15 -- 14 (c) However, instead of complying with each individual’s instructions as to how their funds were invested, he misappropriated the funds for his own use.21 [50] And so, the threshold question for the Full Court of the Federal Court was whether those facts were sufficient to meet the definition of ‘managed investment scheme’ in s 9 of the Act. The court found that there was insufficient evidence of the pooling of contributions to meet the definition. As Gilmour J said, the mere fact that the contributions were placed into one bank account by one person, with the intention that they be used according to individual arrangements reached with each contributor, did not constitute pooling or a common enterprise as required in the definition.22 [51] That demonstrates that the Full Court was concerned with a question of fact as to whether this particular conduct of the depositors and Mr McFarlane met the definition of ‘managed investment scheme’. Thus, when Gilmour J said that a scheme involving misappropriation was not of a kind that was capable of registration, His Honour was saying that the misappropriation feature was another factor that took those particular facts outside the s 9 definition of ‘managed investment scheme’. His Honour was not saying that a pooled investment of funds that otherwise fell within the definition was, by an act of misappropriation, disqualified from qualifying as a ‘managed investment scheme’. In each case there is a question of fact as to whether the circumstances fall within the definition. It is inappropriate, in my view, to pull one factual consideration from a collection of facts in another case and to treat that fact as a disqualifying criteria for all future cases. [52] It would, of course, lead to absurd results if one act of misappropriation by one employee within a multi-million-dollar managed investment scheme was to be regarded as immediately disqualifying the scheme from registration. [53] Here, Mr Baskerville pleads that Mr Grace raised funds from the public on the promise that those funds would be invested on their behalf with funds subscribed by other investors and that the investors would receive a return on their investment. 21 These facts are taken from the headnote, but see also paragraphs [23], [44], (Graham J) and [105]-109] (Gilmour J). 22 (2009) 180 FCR 243 at [153]. -- 14 of 15 -- 15 Amongst other documents, information memoranda were produced identifying the Fund and the investment techniques and strategies to be deployed.23 [54] In short, the fact that Mr Baskerville also pleads that there was misappropriation of some of the funds so received into the Fund does not disqualify the Fund as a ‘managed investment scheme’. I do not read the Full Court’s decision in National Australia Bank Ltd v Norman as compelling that result. That decision turned on its own rather special facts and, in particular, the absence of a common enterprise. On the peculiar facts of that case the only ‘enterprise’ was Mr McFarlane’s intention to defraud the depositors. [55] And, although it was not argued, for reasons which I have explained, I would think that the court would still have power to appoint a liquidator to a fund that does not qualify as a ‘managed investment scheme’. Conclusion [56] For those reasons, the present pleading is not flawed in the respects identified, and no embarrassment is caused by the form of the pleading. I refuse the application. I will hear the parties on costs. 23 See paragraphs 7 to 10 of the statement of claim. -- 15 of 15 --