ASIC v Bettles – case dismissed, with costs

ASIC has lost a major Federal Court proceeding brought against a senior and experienced liquidator, Jason Bettles, alleging that his conduct “constituted so gross a departure from, and abrogation of, the duties of a registered liquidator, as to warrant” not only the cancellation of his registration as a liquidator but also a lifetime prohibition from reapplying for registration.   It was potentially a “career ending” [1] claim.  

The case arose from investigations by the Serious Financial Crime Taskforce in 2015 which has led to criminal prosecutions of the people with whose companies Bettles was involved as liquidator. Charges against them include trading while insolvent and dishonestly using a position as a director.[2]

The ATO claimed that their various company dealings amounted to ‘illegal phoenix activity’ – but a pleading to that effect in ASIC’s first concise statement of claim against Mr Bettles was struck out, the Judge saying

“there is no such thing, per se, as “illegal phoenix activity”….”.[3]

A 160 page statement of claim was then filed, and further amended.  I commented at the time that “the matter looks exceedingly complex and no doubt ASIC has in mind the proportionality of its claim in terms of costs and time and outcome for all parties involved, including itself”: ASIC’s initial claim of illegal phoenix activity by a liquidator now the subject of a 160 page statement of claim – Murrays Legal.

The Federal Court granted ASIC various time extensions to file its Statement of Claim. This 2023 judgment claim was based on ASIC’s further amended statement of claim of June 2022. The matter was heard before Justice Markovic over several days in June and August 2022. 

The judgment is 888 paragraphs long and more comment on it may be made shortly.  For the moment, it deals with the general law and statutory duties of liquidators. It sets out in what seems to be an agreed list of 8 generic duties of liquidators, being attachment A to the judgment [see below], various ones of which ASIC unsuccessfully alleged Mr Bettles was in breach.

 The proceedings

ASIC brought the proceeding under s 45-1 of the Insolvency Practice Schedule (Corporations) (IPS) being Sch 2 to the Corporations Act, the broad replacement of former s 536 of the Act, under which ASIC had earlier and also unsuccessfully brought a claim against two liquidators: ASIC v Wily & Hurst [2019] NSWSC 521.

The claim arose out of Mr Bettles’ involvement in the liquidation of the Members Alliance Group [MA Group] in 2015 and 2016, a group of more than 50 companies which operated principally from the Gold Coast. The conduct upon which ASIC relied arose out of Mr Bettles’ appointment as administrator and/or liquidator to companies in the MA Group, as well as his conduct as a liquidator of an unrelated company, Bradford Marine.

He was appointed the liquidator of 18 companies in the MA Group, which together owed over $17 million to the ATO. ASIC alleged that Mr Bettles attended meetings where plans were made to transfer the companies’ assets and redirect income streams to new entities, removing these from the reach of creditors including the ATO.  The ASIC claimed that Bettles was involved in what amounted to illegal phoenix activity. 

The question of liability was agreed to be determined first; given the outcome, it was not necessary for the Court to consider questions of remedies and sanctions.

There is too much detail to summarise here but the following are some selected legal issues from the judgment. 

Bettles’ evidence

As to Mr Bettles, in addition to his detailed affidavits

“he provided frank answers in cross-examination and was prepared to make concessions where appropriate. Overall Mr Bettles struck me as someone who endeavoured to do his best both professionally and in assisting the Court”.

While the evidence suggested some naivety on Mr Bettles’ part and a lack of scepticism – he was “too trusting”, he did not appear to be someone who would act in disregard of his duties or statutory obligations.

“On the contrary, he struck me as someone who is earnest and attempted to “do the right thing” when it came to understanding his role as liquidator”.

Various legal issues

Much of ASIC’s case was that Bettles “knew or ought to have known” certain things and that he was “involved” (s 79 Corporations Act) in breaches of duties as a director [ss 181, 182], and that Bettles’ involvement arose from his knowledge of each of the director’s relevant acts; and that Bettles aided a certain payment [s 79(a)] or, alternatively, was knowingly concerned in that payment within the meaning of s 79(c). The law concerning s 79 is discussed in detail, to the effect that actual knowledge of the essential matters is required but that knowledge can be inferred from the person’s knowledge of matters raising suspicion, together with a deliberate failure to make the enquiries which may have confirmed those suspicions.

ASIC also unsuccessfully challenged:

  • a proposed assignment by Bettles of a chose in action of the company to a putative defendant for the alleged uncommercial sale of the company’s business;
  • the accuracy of Bettles’ s 533 misconduct reports in which he had declared that he had obtained or inspected the company’s books, which comprised about 761 boxes and 16 terabytes of computer records, the Court noting that there is no duty on a liquidator to first obtain relevant books of a company in relation to which s 533 report is lodged, citing Murdaca v ASIC;
  • nor is a liquidator required to incur significant expense in getting in the books for the purpose of preparing a report: see ASIC v Wily at [83]; and
  • the extent to which any investigations are constrained by the company’s available resources: s 545.

ASIC’s one ‘success’

ASIC only established one of its many of its claims against Mr Bettles – his failure to provide adequate disclosure of certain pre-insolvency advice in the DIRRIs, contrary to cl 6.10.3 of the ARITA Code. That failure was limited to two aspects of the DIRRIs: the frequency of contact with the person to whom advice was given, and the period over which the work was performed. The infractions were, in the circumstances, minor, even taking into account that they were repeated in more than one DIRRI.  But even though that breach of the ARITA Code was made out, “any question relating to the appearance of impartiality must be determined according to law. It is not the Court’s function in a case such as this to either apply or interpret the code”: Korda and Ten Network [2017] FCA 914 at [96].

Dismissed with costs

In the end, the Judge was not satisfied that there were any matters to be taken into account for the purposes of s 45-1 of the IPS. Therefore, there was no requirement for the matter to proceed to a hearing for remedies and sanctions.  ASIC is to pay Mr Bettles’ costs.


The judgment usefully raises a number of matters of principle about the duties of insolvency practitioners, that were raised in the 2023 PJC Corporate Insolvency inquiry – including as to s 533 reports, limited funds, and delay. 

Also, there are matters in the judgment that ASIC might take into account in its proposed changes to Regulatory Guide 16 External administrators – Reporting and lodging (RG 16). 

While this matter was complex, ASIC took undue time to formulate its complex claim, and the Court to deliver its judgment, leaving Mr Bettles in the position of having a “career ending” claim, with attendant publicity, hanging over him for several years.[4] 

And while ASIC did not succeed in showing breaches of its list of 8 duties of liquidators, some of those duties appear rather rote and text-book and could be more practically framed if ASIC is to continue to rely upon them.   Justice Markovic cited authorities to the effect that a “court should not be quick to condemn a person in the difficult position of a liquidator”, and, in particular, should not judge their conduct with wisdom of hindsight; and that it is not every error of judgment of a liquidator that will be regarded as negligent. 

More soon.

Attachment A to the judgment Australian Securities and Investments Commission v Bettles [2023] FCA 975 (18 August 2023) (

  1. Liquidators are required to identify, take possession of and realise the company’s assets, to investigate and determine the claims against the company and to apply the assets to the satisfaction of those claims in accordance with the statutory scheme of priority: ASIC v Edge [2007] VSC 170(2007) 211 FLR 137 at [40].
  2. Liquidators are required to become thoroughly acquainted with the affairs of the company and must not suppress and conceal anything that arises in the course of the investigation into the company: Re Contract Corporation (Gooch’s Case) [1872] UKLawRpCh 19(1871) LR 7 Ch App 207at 211.
  3. Liquidators are subject to the same statutory duties as directors: ASIC v Dunner (2013) 303 ALR 98[2013] FCA 872at [28].
  4. Liquidators are appointed and paid to exercise a particular professional skill and a high standard of care and diligence is required in the performance of their duties: Pace v Antlers Pty Ltd (in liq) (1998) 80 FCR 485at 497, 499.
  5. Liquidators are obligated to perform their duties in accordance with high standards of honesty, impartiality and probity: ASIC v Edge [2007] VSC 170(2007) 211 FLR 137 at [44]Re Owston Nominees No 2 Pty Ltd (in liq) (rec and mgrs apptd) (2013) 94 ACSR 500[2013] NSWSC 538at [24].
  6. Liquidators must not only be independent of the company but must also be seen to be independent of the company: Re National Safety Council of Australia, Victorian Div [1990] VicRp 2[1990] VR 29; (1989) 15 ACLR 602; [Bovis] Lend Lease Pty Ltd v Wily (2003) 45 ACSR 61221 ACLC 1737[2003] NSWSC 467at [123].
  7. Liquidators are under a duty to complete the administration of the assets within a reasonable time and not to protract the liquidation unduly: Re House Property & Investment Co [1954] Ch 576at 612.
  8. Liquidators are required to pay close attention to their obligations under the Code of Practice for Insolvency Practitioners: Re Monarch Gold Mining Co Ltd; Ex parte Hughes (2008) WASC 201at [37]– [40].


[1] Australian Securities and Investments Commission v Bettles (No 2) [2021] FCA 516 (14 May 2021) (

[2] 21-242MR Lawyer and former company officers associated with Members Alliance and Benchmark groups facing 72 criminal charges | ASIC

[3] Australian Securities and Investments Commission v Bettles [2020] FCA 1568 (28 October 2020) (

[4] ARITA advises it has been monitoring the matter since December 2019 Court inquiry into liquidator’s conduct (

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