IN THE MATTER OF Courtenay House Capital Trading Group Pty Limited (in Liquidation)

Transcription

1 Filed: 5 September :52 PM Form 2 D0000WHI6Y ORIGINATING PROCESS COVERSHEET AND ACKNOWLEDGEMENT IN THE MATTER OF Courtenay House Capital Trading Group Pty Limited (in Liquidation) COURT DETAILS Court Supreme Court of NSW Division Equity List Corporations List Registry Supreme Court Sydney Case number 2017/ TITLE OF PROCEEDINGS First Plaintiff Said Jahani Second Plaintiff John McInerney Number of plaintiffs 4 FILING DETAILS Filed for Said Jahani, Plaintiff 1 John McInerney, Plaintiff 2 Courtenay House Capital Trading Group Pty Limited (in Liquidation), Plaintiff 3 Courtenay House Pty Limited (in Liquidation), Plaintiff 4 Legal representative Legal representative reference Telephone Your reference Scott Hedge SGH.SWM HEARING DETAILS This application will be heard at Supreme Court Sydney on 18 September 2017 at 10:00 AM ATTACHMENT DETAILS In accordance with Part 3 of the UCPR, this coversheet confirms that both the Originating process (Corporations Law) Other, along with any other documents listed below, were filed by the Court. Corporations Law Originating Process (Form 2) (Originating Process dated 5 September 2017.pdf) Affidavit in Support of Originating Process (Affidavit of Said Jahani - Affirmed 4 September 2017.pdf) thoff1 Page 1 of 2

2 [attach.] thoff1 Page 2 of 2

3 Filed: 05/09/ :52 PM Form 2 IN THE SUPREME COURT OF NEW SOUTH WALES No. 2017/ DIVISION: EQUITY REGISTRY: SYDNEY CORPORATIONS LIST (rules 2.2 and 15A.3) IN THE MATTER OF COURTENAY HOUSE CAPITAL TRADING GROUP PTY LIMITED (IN LIQUIDATION) (ACN ) & COURTENAY HOUSE PTY LIMITED (IN LIQUIDATION) (ACN ) SAID JAHANI AND JOHN MCINERNEY IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF COURTENAY HOUSE PTY LIMITED (IN LIQUIDATION) AND COURTENAY HOUSE CAPITAL TRADING GROUP PTY LIMITED (IN LIQUIDATION) First Plaintiffs COURTENAY HOUSE CAPITAL TRADING GROUP PTY LIMITED (IN LIQUIDATION) (ACN ) Second Plaintiff COURTENAY HOUSE PTY LIMITED (IN LIQUIDATION) (ACN ) Third Plaintiff ORIGINATING PROCESS A. DETAILS OF APPLICATION This application is made under part 90-15(1) of Schedule 2 to the Corporations Act 2001 (Cth) entitled "Insolvency Practice Schedule (Corporations)"(IPS); sections 579E, 579G and 601 EE of the Corporations Act 2007 (Cth)(the Act); section 63 of the Trustee Act 1925 (NSW); UCPR rule 28.2 and rule 2.13(5) of the Supreme Court (Corporations) Rules 1999 (NSW). The application is for orders and directions about the manner in which the First Plaintiffs (the Liquidators) should distribute the funds held in certain bank accounts to former clients of one or more of Courtenay House Capital Trading Group Pty Ltd (in Liquidation) (CHCTG) and Courtenay House Pty Limited (in Liquidation) (CHL, and collectively with CHCTG, the Companies). The Liquidators seek orders to join representatives of various classes of creditors of each of the Companies to these proceedings. Filed on behalf of : The Plaintiffs Prepared by: Scott Geoffrey Hedge Colin Biggers 8~ Paisley Pty Ltd DX: 280 SYDNEY Lawyers Tel: (02) Level 42, 2 Park Street Fax: (02) SYDNEY NSW 2000 Ref: SGH: scott.hedge@cbp.com.au - stuart.mckenzie@cbp.com.au Attention: Stuart McKenzie JUZYL768MG

4 The Liquidators also seek orders or directions for payment of the representatives' costs and the Liquidators' costs and expenses from the assets of either or both of the Companies or from trust assets (if a trust is found to exist). On the facts stated in the supporting affidavit of Mr Said Jahani affirmed on 4 September 2017, the plaintiffs apply for the following relief. Investors' claims Orders, declarations or directions pursuant to one or more of part 90-15(1) of the IPS; ss. 579G(1)(e) and 601 EE(2) of the Act and s. 63 of the Trustee Act as to the beneficial ownership and distribution of the funds held in the Companies' Accounts (as defined below). Separate question 2. An order as to whether, pursuant to UCPR 28.2, the following question should be determined separately and before others arising in these proceedings: (a) (b) Whether the funds held in the NAB 1 Account (as defined below) should be available for distribution to the Brexit Investors (as defined below) only and not to other creditors of the Companies. If the answer to 2(a) is "yes", then consequential directions or orders as to the manner in which the funds should be applied and distributed. Winding up of unregistered managed investment scheme 3. An order pursuant to s. 601 EE(1) of the Act that the unregistered managed investment scheme operated by the Companies in contravention of s. 601 ED(5) of the Act be wound up. Pooling 4. Further, or in the alternative, an order that the Companies are determined to be a pooled Set Off group for the purposes of s. 579E of the Act. 5. Directions or orders as to whether the plaintiffs should apply any set off for any funds received from the Companies prior to liquidation by any creditors against dividends or distributions to be made arising from the prayers set out above. Representative Defendants 6. Orders, pursuant to rule 2.13(5) of the Supreme Court (Corporations) Rules 7999 (NSW), for the appointment of creditors to represent various classes of creditors for the purposes of these proceedings. JUZYL768MG 2

5 Notice 7. Orders or directions as to the persons to whom notice of these proceedings should be given Costs and the manner of giving such notice. 8. An order or direction that the Liquidators' costs and expenses in relation to these proceedings, and in relation to the winding up of the Companies, be either: (a) (b) (c) paid or recouped out of the funds held in the NAB 1 Account; or paid or recouped out of any trust funds that may be held to exist; or otherwise paid out of the assets of the Companies. 9. An order or direction that the representative creditors' costs and expenses in relation to these proceedings be either: (a) (b) (c) paid or recouped out of the funds held in the NAB 1 Account; or paid or recouped out of any trust funds that may be held to exist; or otherwise paid out of the assets of the Companies. 10. Such further orders or declarations as the Court thinks fit. Definitions NAB 1 Account Companies' Accounts means the NAB account no held in the name of CHL is a collective reference to the following accounts: 1. The NAB 1 Account 2. The NAB account no held in the name of CHL 3. The NAB account no held in the name of CHL 4. The Westpac account no held in the name of CHCTG 5. The Westpac account no held in the name of CHL JUZYL768MG 3

6 6. The Westpac account no held in the name of CHCTG Brexit Investors Means the investors who deposited funds into the NAB 1 Account to participate in a special investment opportunity identified by the Companies as the Brexit Investment. Date: 5 September 2017 Scott Geoffrey Hedge Solicitor for the First, Second and Third Plaintiffs Practising certificate number: This application will be heard by the Supreme Court of New South Wales at Law Courts Building Queens Square Sydney at [time] [am/pm] on [date] B. NOTICE TO DEFENDANTS) (IF ANY) TO: If you or your legal practitioner do not appear before the Court at the time shown above, the application may be dealt with, and an order made, in your absence. As soon after that time as the business of the Court will allow, any of the following may happen: (a) (b) (c) the application may be heard and final relief given, directions may be given for the future conduct of the proceeding, any interlocutory application may be heard. Before appearing before the Court, you must file a notice of appearance, in the prescribed form, in the Registry and serve a copy of it on the plaintiff. Note. U nless the Court otherwise orders, a defendant that is a corporation must be represented at a hearing by a legal practitioner. It may be represented at a hearing by a director of the corporation only if the Court grants leave. C. APPLICATION FOR WINDING UP ON GROUND OF INSOLVENCY Not applicable. JUZYL768MG 4

7 D. FILING Date of filing: This originating process is filed by Scott Geoffrey Hedge for the First, Second and Third Plaintiffs. E. SERVICE The plaintiff's address for service is c/- Colin Biggers &Paisley Pty Ltd, Lawyers, Level 42, 2 Park Street, Sydney NSW It is intended to serve a copy of this originating process on each defendant and on any person listed below: 1. The Australian Securities and Investments Commission 2. The creditors of the Companies as directed or ordered by the Court. JUZYL768MG

8 Filed: 05/09/ :52 PM IN THE SUPREME COURT OF NEW SOUTH WALES No. 2017/ DIVISION: EQUITY REGISTRY: SYDNEY CORPORATIONS LIST I N THE MATTER OF COURTENAY HOUSE CAPITAL TRADING GROUP PTY LIMITED (IN LIQUIDATION) (ACN ) & COURTENAY HOUSE PTY LIMITED (IN LIQUIDATION) (ACN ) SAID JAHANI AND JOHN MCINERNEY IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF COURTENAY HOUSE PTY LIMITED (IN LIQUIDATION) AND COURTENAY HOUSE CAPITAL TRADING GROUP PTY LIMITED (IN LIQUIDATION) First Plaintiffs COURTENAY HOUSE CAPITAL TRADING GROUP PTY LIMITED (IN LIQUIDATION) (ACN ) ~ Second Plaintiff COURTENAY HOUSE PTY LIMITED (IN LIQUIDATION) (ACN ) Third Plaintiff AFFIDAVIT OF SAID JAHANI On 4 September 2017, I, Said Jahani of Level 17, 383 Kent Street, Sydney NSW 2000, liquidator, affirm: Qualifications r 1. I am a registered liquidator and a Partner at Grant Thornton Australia Limited (Grant ~ Thornton). 2. I am the head of Grant Thornton's Financial Advisory team in Sydney and I have over 20 years' experience in corporate recovery and turnaround. During that time, I have specialised in, among other areas, the financial services market. I hold an Executive Masters of P~'ministration and am a fellow of INSOL International. I am also a ember of the ~-- I i Deponent Witness Filed on behalf of : The Plaintiffs Prepared by: Scott Geoffrey Hedge Colin Biggers &Paisley Pty Ltd DX: 280 SYDNEY Lawyers Tel: (02) Level 42, 2 Park Street Fax: (02) SYDNEY NSW 2000 Ref: SGH: scott.hedae(a~cbp.com.au - stuart.mckenzie(a~cbp.com.au Attention: Stuart McKenzie JUZYJJ3J4K

9 Turnaround Management Association, Australian Restructuring and Turnaround Association and I am a fellow of the Institute of Chartered Accountants of Australia. 3. During the course of my career, I have acted in a substantial number of contentious and difficult liquidations, including a number of liquidations in which investment companies were wound up. I also have previous experience acting as the liquidator of large companies which operated "Ponzi" style schemes. 4. Shown to me at the time of swearing this affidavit are finro tabbed and paginated bundles of documents entitled "Exhibit SJ-1" (Exhibit). When I refer to documents in this affidavit, I do so by reference either to their tab and page number in the Exhibit. _. 5. I intend to provide for the Court's consideration, as soon as possible, a detailed report and analysis which will describe in detail at least the following matters: (a) The movement of cash into and out of the NAB 1 Account (defined below). (b) (c) The movement of cash into and out of the Westpac 1 Account (defined below). The details of payments made to investors (either in the form of interest or returns on investments) over time. Background to Liquidation 6. On 16 May 2017, John McInerney, who is a Director at Grant Thornton, and I were appointed as joint and several liquidators of Courtenay House Capital Trading Group Pty Limited (In Liquidation) (Courtney House Trading) and Courtenay House Pty Limited (In Liquidation) (Courtney House) (collectively, the Companies) by order of the Supreme Court of New South Wales. At Tab 1 Page 1 of the Exhibit is a copy of the orders made by Justice Black ~,' on 16 May In this affidavit when I refer to "the Liquidators" I am referring to myself and Mr McInerney. 8. Since the appointment of the Liquidators I have had the primary conduct of the Liquidation of the Companies and have directly supervised staff of Grant Thornton working on the Liquidations. My staff and I have reviewed the books and records kept by each of the Companies. I have also received correspondence from, and conducted interviews with, Tony lervasi (a director of each of the Companies), various other employees/contractors of the Companies, investors and some of the foreign exchange traders contracted by the Companies. Those persons attended for voluntary interviews. The interviews were not conducted ynder oath. I depose to the matters contained in this affidavit based on these Deponent Witness JUZYJJ3J4K r 2

10 Background to Companies' activities The Companies 9. Courtenay House was incorporated on 14 April At Tab 2 Page 17 of the Exhibit is an historical company search of Courtenay House extracted from the records maintained by the Australian Securities and Investments Commission (ASIC). 10. Courtenay House Trading was incorporated on 21 July At Tab 3 Page 22 of the Exhibit is an historical company search of Courtenay House Trading extracted from the records maintained by ASIC The Companies held out to prospective investors that they operated a foreign exchange and commodities investment business. ~~~ 12. Based on the Liquidators' investigations, and the books and records available to me as at the date of affirming this affidavit, I believe that the Companies operated a single business which offered returns to investors on capital which was, allegedly, invested in foreign exchange and futures commodities. 13. The Liquidators' investigations and review of the Companies' books and records to date have not revealed any evidence that either of the Companies were registered, pursuant to section 601 ED(5) of the Corporations Act 2001 (Cth)(Act), to operate a managed investment scheme. 14. As a result of what I say in paragraph 13 above, it appears to me that the Companies may have been operating an unregistered managed investment scheme in contravention of section 601 ED(5) of the Act. i ~_,~ Winding up of the Companies 15. The winding up orders were made on the application of the Australian Securities & Investments Commission (ASIC). This followed what I understand to be an extensive investigation by ASIC into the affairs of the Companies. 16. On or around 2 May 2016, prior to the Companies being wound up, the Supreme Court of New South Wales made orders (on the application of ASIC), freezing each of the bank accounts controlled by the Companies (Freezing Orders). 17. The basis for ASIC winding up the Companies was, among other things, that the Companies were op~ratir~ an unlicensed foreign exchange investment scheme. At Tab 4 Page 26 of the Witness 3

11 Exhibit is a release from ASIC's website dated 16 May 2017 in relation to the winding up of the Companies. 18. I have reviewed the evidence prepared by ASIC in the Proceedings. I may seek leave of the Court to tender the evidence filed in the winding up proceedings in the event that it appears relevant to any factual issues in dispute. 19. At the time of the orders appointing the Liquidators, the Freezing Orders were extended. 20. I am informed by my solicitor, Scott Hedge, and believe that on 4 September 2017, Justice Black made orders which, among other things, extended the Freezing Orders until 5 March Investment products offered by the Companies 21. The exact nature of the investments offered by the Companies to investors and the terms upon which investors advanced funds to the Companies are not entirely clear. However, based on the books and records currently available to the Liquidators, it appears that the Companies provided investors with the option of investing in four different types of trading strategies: Trading Strategy Potential Returns Risk (% of-total funds invested) 1. Swing Trading 1.5% per month 5% 2. Extreme Trading 4% per month 10% ~~ 3. Forex Live/Elite 7.5% per month 15% Trading 4. Forex Extreme 15% to 25%one-off 20% to 30% 22. The following documents appear in the Exhibit: (a) A Swing Trading agreement (Tab 5 Page 27). (b) An Extreme Trading agreement (Tab 6 Page 32). (c) A Forex Live/Elite Trading agreement (Tab 7 Page 36). (d) F rex Extreme agreement (Tab 8 Page 41). Deponent Witness 4

12 The Liquidators' investigations Trading carried out by the Companies 23. Based on our initial investigations, the Liquidators have reached the following conclusions: (a) (b) (c) the Companies were operating an unregistered investment scheme of a type commonly known as a "Ponzi" scheme. Of all the funds that were paid to the Companies, at least from 2014 to 2017, only around 1 % of those funds (approximately $1.9 million) were transferred into foreign exchange trading accounts to be traded and hence used for the purpose of trying to achieve a return. From at least 2014 to 2017, approximately 90% of the funds paid to the Companies were used to pay investor interest and returns. The cash deposits were effectively recycled and new deposits were applied to meet payments due in respect of earlier investors. There was only minimal income earned on those funds. The Companies' accounts 24. The Liquidators have identified and secured control over approximately $51 million in cash which was held in bank accounts and foreign exchange trading accounts formerly controlled by the Companies at the time of their appointment. These funds are held in the following accounts: Bank Account Name of Account Opening Balance at Name Date appointment ~~; NAB CHL 29/11/2016 $28,999,968 NAB 1 NAB CHL 2/09/2016 $10.00 NAB 2 NAB CHL 2/09/2016 $14, NAB 3 Westpac CHCT ATF Courtenay Under $21,016,572 Westpac 1 House Capital Trading and investigation Investment Group Trust Westpac CHL Under $1, Westpac 2 eponent A/ v Witness JUZYJJ3J4 5

13 investigation Westpac CHCT ATF Courtenay Under USD $ Westpac 3 House Capital Trading and investigation Investment Group Trust 25. There was also a sum of $1,306, contained in various foreign exchange accounts held by Courtenay House Trading. The amounts identified above have been secured by the Liquidators and are now. held by the Liquidators in interest bearing accounts and/or term deposits. 26. Based on their investigations, the Liquidators believe that the Westpac 1 Account was the ~~~ Companies' general account. Various investors paid money into the Westpac 1 Account and, ~ from time to time, funds were paid from the Westpac 1 Account to various recipients. 27. Investors in the Swing, Extreme Trading and Forex Live/Elite Trading strategies deposited their funds into the Westpac 1 Account. 28. It is my understanding that the above strategies were the Companies' generic investment offering. Forex Extreme investment strategy 29. The NAB 1 Account was opened on or around 29 November 2016 and, based on the Liquidators' investigations, appears to have been used for holding the funds which were held out to be invested in the Forex Extreme investment strategy. ~~ ; 30. It is my understanding that the Forex Extreme investment strategy involved providing "existing clients" with "special investment opportunities", which investment opportunities purportedly had a faster and higher rate of return than the generic investment strategies offered by the Companies. 31. It is my understanding that these "special investment opportunities" were linked to significant international events that would, purportedly, affect the foreign exchange markets in such a way as to allow the Companies to generate larger investment returns for preferred clients in a shorter period of time. Witness D

14 The US Election Investment Event 32. One such example of a special investment opportunity is the "US Election" event (Election Investment) which related to the most recent presidential elections in the United States. 33. During the period from 2 September 2016 to 31 October 2016, investors deposited a total of approximately $20.8 million into tfe NAB 2 Account. Based on the records currently available to me, I believe that these funds were deposited for the purposes of the Election Investment (Election Investors). 34. During the period from 7 December 2016 to 13 December 2016, $12.6 million was transferred by way of 88 separate transactions from the NAB 2 account to the NAB 1 account for the purposes of rolling investors capital into the Inauguration Investment special. 35. On 12 December 2016, $4.2 million was paid out of the NAB 2 Account to pay investor returns. $1.5 million was subsequently received into the NAB 2 Account on 15 December 2017 from the NAB 1 Account (which had recently received investor funds for the I nauguration Investment) which was then used, together with the majority of the balance of funds in the NAB 2 Account, to make payments totalling $4.6 million to Election Investors (who had not rolled over into the Inauguration Investment) in relation to their capital return for the Election Investment. 36. On 19 December 2016, $1.1 million was received into the NAB 2 Account from the NAB 1 Account (which had recently received investor funds for the Inauguration Investment). Based on discussions the Liquidators have had with Tony lervasi, I believe that this amount was used to pay a further return to Election Investors in relation to the Election Investment after complaints were received from them that the initial 21 %return was too low. ~_% 37. I note that Tony lervasi has informed the Liquidators that the funds deposited in the NAB 1 Account, purportedly for the purpose of the Election Investment, were never traded. Inauguration Investment event 38. Another example of such a special investment opportunity is the "Inauguration Day" event (Inauguration Investment) which related to the inauguration of Donald Trump as President of the United States. 39. Befinreen 29 November 2016 and 12 January 2017, investors deposited a total of approximately $15.1 million into the NAB 1 Account. Based on the records currently available to me,,~ believe that the sum of $15.1 million, together with the sum of $12.6 million that was Deponent Witness JUZYJJ3J4K T

15 transferred from the NAB 2 Account, was deposited for the purposes of the Inauguration I nvestment (Inauguration Investors). 40. The records of the Companies show that by 13 January 2017, the vast majority of investors' funds were transferred out of the NAB 1 Account, leaving a balance of $4,965. The following table sets out a summary of the transfers: The NAB 1 Account Date Description Amount Transferred to 15/12/2016 Capital Repayment Nov CHCTG $1,495,014 NAB 2 Account 16/12/2016 Internet Transfer Ext 3 Capital rtn $100,000 NAB 2 Account CHCTG 19/12/2016 Internet Transfer shuffle to $10,0000 NAB 2 Account then Westpac CHCTG subsequently to Westpac 1 Account in 2 separate equal payments 19/12/2016 Internet Transfer shuffle to $1,100,000 NAB 2 Account then Westpac CHCTG subsequently to Westpac 1 Account in 2 separate equal payments 30/12/2016 Account Fees $10.00 n/a ~! 13/01/2017 Internet Transfer Internal Trf $25,000,000 NAB 3 Account and then CHCTG subsequently transferred in 2 separate transactions to the NAB 2 Account 16/03/2017 Internet Trf $4,945 Unknown 31/03/2017 Account Fees $10.00 n/a Total $27,799, Witness

16 41. $25 million transferred from the NAB 1 Account on 13 January 2017 was paid to the NAB 3 Account. These funds were subsequently transferred, largely in two separate payments of $3,713,850 on 14 February 2017 and $20,750,000 on 17 February 2017, to the NAB 2 Account to pay on the same or next day what the Liquidators believe to be the investor returns for the Inauguration Investment and/or return of capital. I note that the Companies' records show that a large number of investors chose to `shuffle/transfer' the capital they invested in the Inauguration Investment into the Companies' generic trading strategies at the time of redemption. 42. I note that Tony lervasi has informed the Liquidators that the funds deposited in the NAB 1 Account, purportedly for the purpose of the Inauguration Investment, were never traded. "BREXIT"Investment event 43. A final example of such a special investment opportunity is the "BREXIT" vote in the United Kingdom (Brexit Investment). The Companies' records identify 161 investors who invested in the Brexit Investment, who I will collectively refer to as the Brexit Investors. The Liquidators are currently awaiting bank confirmation advice from a number of individuals to confirm their investment in the Brexit Investment. As at the date of swearing this affidavit the Liquidators have still to confirm 17 investments. 44. Between 15 March 2017 and 26 April 2017, the Brexit Investors deposited sums totalling approximately $28.9 million into the NAB 1 Account. Based on the records currently available to me, I believe that the sum of $28.9 million was deposited for the purposes of the Brexit Investment (Brexit Funds). ~_, 45. The Companies' records indicate that the investors contained in the table below deposited funds in the NAB 1 Account between 15 March 2017 and 26 April 2017, apparently for the purpose of the Brexit Investment. As set out in paragraph 42 above, based on a review of the books and records currently available to them, the Liquidators have been unable to confirm that approximately 17 of the below investors paid funds into the NAB 1 Account. The Liquidators' investigations in this respect are ongoing. 46. The Liquidators are also aware that a number of the investors named below may have executed agreements with the Companies by or on behalf of companies, superannuation funds or trusts. Witness JUZYJJ3J4K E

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25 This page has been redacted. 47. The Liquidators' investigations have revealed that no part of the Brexit Funds had been removed from the NAB 1 Account as at the day of their appointment. I understand that this is due to ASIC obtaining the Freezing Orders. Current status of the liquidation of the Companies 48. Since their appointment on 16 May 2017, the Liquidators have been investigating the affairs of the Companies. 49. Investigating the affairs of the Companies has been a time consuming and complicated exercise for, amongst others, the following reasons: (a) The Liquidators' investigations indicate that approximately investors are due approximately $190 million as at the date of affirming this affidavit. Witness 18

26 (b) (c) (d) Neither of the Companies maintained proper books and records for the entire period since they were incorporated. Courtenay House Trading did not prepare accounts or proper financial records for the entire period since it was incorporated. The lack of proper records has meant that, in order to determine the origin of funds paid both into and out of bank accounts formerly controlled by the Companies, the Liquidators and their staff have had to manually review the bank statements for these accounts line byline. As an indication of the size of this task, payments during the period from 2014 to 2017 (upon which the Liquidators have been focussing) are recorded in over 15,000 lines in bank statements. (e) It took several weeks for WBC and NAB to provide the Companies' bank statements ~ to the Liquidators after they had been requested. (f) (g) The Liquidators are still awaiting the provision of a large number of account opening forms and other primary documents by NAB and WBC. The employees and contractors who worked for the Companies operated largely from their own personal computers and personal addresses. To date the Liquidators have only been able to obtain access to a very small percentage of these documents. The Companies' s were `cloud' hosted by Google Inc. in the United States of America. The Liquidators are still making efforts to access these s. At Tab 9 Page 45 of the Exhibit are copies of letters sent to Google Inc. seeking to access this data. (h) At Tab 10 Page 90 of the Exhibit is a copy of an from Google Inc. which sets ~,; out, among other things, that: (i) (ii) (iii) access to the requested s would generally be granted only if appropriate orders were made by a Court in the United States of America; Google Inc. "may" provide the requested s in response to an order made by a Judge or Magistrate of an Australian Court if such disclosure can be made in accordance with the laws of the United States and the subscriber did not object; and Google Inc. is prohibited from disclosing content and passwords absent ~_~..~.. ~: yin the United States). W itrress JUZYJJ3J4K 19

27 50. The Liquidators' investigations into the affairs of the Companies are ongoing. At Tab 11 Page 93 of the Exhibit is a report dated 24 July 2017 prepared by the Liquidators pursuant to an order of this Court. 51. On 2 June 2017, Grant Thornton sent a letter to all known creditors of the Companies which contained, amongst other things, a schedule of "Frequently Asked Questions" and responses to those questions. At Tab 12 Page 111 of the Exhibit is a copy of that letter. 52. A meeting of the creditors of the companies was convened and took place on 31 July The meeting was attended by approximately 300 creditors. Committees of inspection were appointed to each of the Companies. At Tab 13 Page 118 of the Exhibit is a copy of the Notice of Meeting that was sent to the creditors prior to the meeting of creditors. ~~ 53. The Liquidators intend to conduct public examinations of a number of persons who may be Application able to provide further information in relation to the examinable affairs of the Companies. 54. The Liquidators seek guidance from the Court as to whether the Brexit Funds are the subject of any trust and, if so, whether they should be returned in full to the Brexit Investors, less costs properly incurred by the Liquidators (Application). 55. The Liquidators are able to identify with precision the funds that have been deposited by Brexit Investors. Those funds were held by the Companies upon the appointment of the Liquidators and were identifiable. 56. As I set out above, as at the date of the Liquidators' appointment, ASIC had obtained the Freezing Orders so none of the funds deposited by the Brexit Investors have been removed from the NAB 1 Account. 57. Below I set out some further relevant matters in relation to the Application. Returns from the Election and Inauguration Investments paid to Brexit Investors 58. As I set out above, the Liquidators intend to put a detailed report and analysis before the Court as soon as possible which details the returns paid to the Brexit Investors over time. 59. The Liquidators' investigations to date appear to show that: (a) More than half of the Brexit Investors were paid significant returns on their investments in either the Election and/or Inauguration Investments. Witness 20

28 (b) (c) (d) The funds deposited by investors in the Election and Inauguration Investments were never traded on any market. The returns were paid from either the newest promotional capital and/or funds transferred from the Westpac 1 Account, that is they were paid from funds invested by non-brexit investors who invested in the Companies' other trading strategies. if the Brexit Investors are fully refunded then they will obtain a windfall benefit as compared to other investors in the Companies.. Representative and Contradictor ~, 60. As part of the Application, the Liquidators intend to seek the leave of the Court to appoint a representative and a contradictor on behalf of the creditors of the Companies. The Liquidators will also seek Court approval to provide funding for those representatives. 61. The Liquidators have identified 2 persons among the creditors of the Companies who believe would be, respectively, an appropriate representative and contradictor in the Application. Those persons are: Name Capacity. Investment Investor since. Geneve Grasso Representative of $500,000 in Swing 2015 non-brexit Investors Investment strategy ~ ; Peter Melocco Representative of $500,000 in Brexit 2016 Brexit Investors Investment, $2.2m in other general investments 62. In relation to Mr Melocco's investments of $2.2 million in other generic investment strategies offered by the Companies, the Liquidators' investigations have revealed that being an existing investor in the Companies' generic investment strategies was a prerequisite for investing in either the Election, Inauguration or Brexit Investments. 63. I have contacted Ms Grasso and Mr Melocco, and each of them have agreed to be appointed as representatives of their respective class of creditors if the Court were to make orders for their appointment. Witness 21

29 64. I consider that each of Ms Grasso and Mr Melocco are suitable representatives of their respective class for the following reasons: (a) (b) (c) (d) Ms Grasso has invested the sum of $500,000 in the Companies' Swing Trading strategy and has not invested any sum in the Brexit Investment. Mr Melocco has invested the sum of $500,000 in the Brexit Investment. M r Melocco has already sought and obtained legal advice in relation to his disputes with the Companies and is currently legally represented; Ms Grasso has significant financial experience including a Bachelor of Commerce degree and it is her intention to obtain legal advice to assist her with the process. ~~, AFFIRMED at Signature of deponent Name of witness Address of witness Capacity of witness Sydn S a illiam McKenzie Level 42, 2 Park Street, Sydney NSW 2000 Solicitor And as a witness, I certify the following matters concerning the person who made this affidavit (the deponent): saw the face of the deponent. have confirmed the deponents identity using the following identification document: NSW Driver's L Signature of witness v ~~; Note: The deponent and witness must sign each page of the affidavit. it relied on (may be original or certified copy)t [* The only "special justification" for not removing a face covering is a legitimate medical reason (at April 2012).] [t"identification documents" include current driver licence, proof of age card, Medicare card, credit card, Centrelink pension card, Veterans Affairs entitlement card, student identity card, citizenship certificate, birth certificate, passport or see Oaths Regulation 2011 or JP Ruling 003 -Confirming identity for NSW statutory declarations and affidavits, footnote 3.] Deponent Witness JUZYJJ3J4K ZZ

30 SCHEDwULE~ -: PLAINTIFFS Said Jahani and John McInerney in their capacity as Joint and Several Liquidators of Courtenay House Pty Limited (In Liquidation) And Courtenay House Capital Trading Group Pty Limited (In Liquidation) First Plaintiffs Courtenay House Pty Limited (In Liquidation) (ACN ) Second Plaintiff Courtenay House Pty Limited (In Liquidation) (ACN ) Third Plaintiff DEFENDANT/S ~`~ ~;' JUZYJJ3J4K 23