Worrells partner seeks to strike out phoenixing case

phoenixing
Worrells partner
Jason Bettles.

Worrells Queensland partner Jason Bettles has gone on the front foot in his defence of allegations brought by the corporate regulator of complicity in illegal phoenixing, launching an application to have ASIC’s case struck out.

Submissions lodged with the Federal Court reveal that Bettles, who could face a judicial inquiry into his conduct as liquidator of Member Alliance Group if his application fails, wants ASIC’s case struck out on the basis that it is “vague and embarrassing” and not sufficiently clear to enable him a fair opportunity to defend it.

“Such a case should be pleaded with proper precision and particularity. Breaches of legislation and professional duties should not be put as vague assertions based on an ASIC officer’s subjective and idiosyncratic views.” From submissions in support of Jason Bettles.

The strike out application was lodged in June and heard on Monday. Judgment is reserved.

In his submissions Bettles, who is being represented by Norton Rose Fullbright’s Peter Schmidt, argues that ASIC’s case “relies on breaches of a non-existent contravention under the Corporations Act 2001 (Cth) (the Act) by third parties, and Mr Bettles’ alleged involvement in the elements of that non-existent offence.”

The non-existent contravention is alleged illegal phoenixing. Also copping a serve was what Bettles through his legal advisors described as “a narrative style” adopted by ASIC in the concise statements it has filed in its defence of the strike out application.

“ASIC’s case is a serious case where it is alleged that Mr Bettles committed contraventions of the Act and breached his professional duty as a liquidator,” Bettles said.

“Such a case should be pleaded with proper precision and particularity. Breaches of legislation and professional duties should not be put as vague assertions based on an ASIC officer’s subjective and idiosyncratic views.”

ASIC’s case revolves around Bettles pre-appointment involvement with the controllers of Members Alliance Group (MA Group), Colin MacVicar and Richard Marlborough.

“The redirection of income streams and assets prevented Mr Bettles, as liquidator of companies in those groups, from using the funds to meet the ATO’s and other creditors’ debts.” ASIC

In March 2015, more than a year before his appointment as liquidator of MA Group holding company Iridium Holdings and many of the MA Group subsidiaries, Bettles provided written advice to MacVicar and his wife Jenny about the personal implications for them if the group suddenly ceased trading because it couldn’t pay its tax debts, which were well past $10 million and ballooning rapidly.

Much is made by ASIC of a meeting Bettles attended on July 8, 2016.

According to ASIC’s submissions also present were MA Group’s solicitors John Ramsden and Oliver Jones and the accountant for the MA Group, Aaron Lavell from WMS Accountants.

ASIC alleges that as well as discussing the existing corporate structure and the formation of a new company to be helmed by MA Group general counsel Liam Young, “arrangements were discussed for the MA Group’s lawyers (Ramsdens), its accountants (WMS) and others to take security over assets of certain MA Group companies for the payment of their fees. Also discussed was the source of payment for Jason Bettles as liquidator” ASIC said.

Bettles’ file notes purportedly support ASIC’s claims in respect of the meeting.

“Mr Bettles was involved in the redirection of income streams and assets from the failing MA Group to the new Benchmark Group,” ASIC continued.

“As explained herein, this was a redirection from Marlborough interests to Marlborough interests through the guise of “management deeds” and other arrangements designed to withstand superficial scrutiny.

“Relevant MA Group Companies were members of Tax Consolidated Groups for GST and Income Tax. At the relevant times, the MA Group owed the ATO over $18 million.

“The redirection of income streams and assets prevented Mr Bettles, as liquidator of companies in those groups, from using the funds to meet the ATO’s and other creditors’ debts,.” ASIC said.

While it might sound damning it is important to state that no findings of wrongdoing have been made and Bettles strongly rejects the allegations.

In his submissions he sates that the ASIC’s case against him is based on opinion, not law.

“Underlying the drafting of ASIC’s Concise Statement and Supplementary Concise Statement (and the supporting affidavits) is a passionate conviction that the practice of ‘phoenixing’ is abhorrent,” he said.

“One consequence of that passionate conviction is that ASIC have formed an adverse view that any feature that ASIC considers resembles ‘phoenixing’.

“That is not the law. It is the subjective view of officers within ASIC,” Bettles said.

“That misconception infects much of ASIC’s case. That misconception is also aggravated by ASIC’s ‘pleading’ documents, which adopt a narrative style that obscures the precise legal claims being made and the material facts said to support those claims.”

It’ll be interesting to see if ASIC’s case phoenixing survives the strike out application.

Bettles will be hoping for nothing less than annihilation. Support INO’s continued chronicling of the insolvency sector.

Further reading:

Worrells Partner Allegedly Facilitated Phoenix

12 Comments on "Worrells partner seeks to strike out phoenixing case"

  1. Jim McDougal | 31 July 2020 at 11:36 am | Reply

    ASIC case doesn’t sound that vague …

  2. Why is the liquidator being blamed for decisions which only the company’s directors could have made? Is the liquidator guilty simply because he attended a meeting at which the directors could have made remarks in their self-interests? ASIC has well and truly lost the plot and ought to recruit people with brains, qualifications, commercial experience, and empathy. The current lot are largely ex-insolvency practice rejects and career public servants.

    • Jim McDougal | 1 August 2020 at 10:31 pm | Reply

      I think ASIC is concerned that the Liquidator advised them to enter into the offending transaction.

      • I don’t think anyone at ASIC is CA or CPA or ARITA qualified. Let’s not lose sleep about a public service department that can’t be trusted by the government to maintain digital databases in the 21st century (AFSA = PPSR, ATO = Director Identification Numbers, ASIC = umm…).

        • As an Ex ASIC staffer, I can confirm that all of my former colleagues are CA, CPA and or ARITA qualified. Several are former liquidators and or trustees in bankruptcy. Many former staff have gone on to become partners of firms, small and large. As for allegations of director misconduct or fraud that ASIC does not pursue; every complainant reckons their matter is so simple and a certainty, but it never is, as has been explained on numerous occasions in the Senate and as published in ASIC’s Info sheet 151. Personal slurs are never a good look for the profession, especially against people who can’t respond.

          • Garry Riche | 10 August 2020 at 7:11 pm |

            ASIC staff are post-grad qualified and go onto become partners in private practice? Pray tell me, sir, this in the land of unicorns and leprechauns?

          • Yes Garry Riche, all grads, all with post grad professional qualifications and memberships in accounting and law, including ARITA members, with some being current partners/principals/directors of firms large and small. No fantasy land, just Australia in the 21st century

    • An interested bystander | 5 August 2020 at 1:18 pm | Reply

      Mr Who, have you read the documents ASIC filed with the Court – documents no doubt settled by counsel. Seems not. Can you cite the qualifications and experience of the relevant ASIC staff? I suspect not. Your comments, and those of Mr Steins below, reflect an unnecessary aggression and abusiveness toward Australia\’s corporate regulator. That is a real shame as is the fact that ARITA and this website\’s editor seem disinterested in pushing back against this sort of ill-informed commentary. It seems that more could be done to promote a positive relationship with Australia\’s regulators. The better course, as is often the case, is to ask well-informed questions, reflect, and then (respectfully) add something constructive. Try it. It works.

  3. Funny how ASIC go after this case.In an obvious case of Fraud I gave ASIC investigators emails, in the emails, a person working in a Liquidators office was offering advice for nearly a year to directors of a company, even using the company lawyer .8 months later Directors of same company go into VA using same Liquidators, and guess what no books and records.Evidence of Phoenix and Fraud was finally proven with new liquidator. ASIC have numerous emails and bank details of redirected money ( Phoenix).ASIC just looked the other way for years, who advised these directors.Finally ASIC after much prodding, supposedly sent the details to the CDPP, but I have my doubts, and as to what they sent, all very weird.

  4. ASIC is a joke. I report evidence of director misconduct and ASIC does nothing. No one at ASIC knows how to interpret basic balance sheet and profit & loss statements. I feel sorry for this IP dragged through the mud by Australia’s most incompetent bureaucracy.

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