ASIC v Ingleby [2013] VSCA 49

Amicus Curiae (appearing at the request of the Court to present submissions as to the approach to be taken to agreed penalties in civil penalty proceedings)

1 I have had the advantage of reading in draft the reasons for judgment prepared by Harper JA. I agree, generally for the reasons given, that this appeal should be allowed. I also agree that the orders proposed should be made.

2 I wish to add some brief observations of my own. It has become increasingly common, in recent years, for statutory breaches of various kinds to be dealt with not by criminal sanctions, but rather by what are known as 'civil penalty' provisions. At a federal level, provisions of that kind are mainly to be found in statutes such as the Corporations Act 2001 (Cth), the Competition and Consumer Act 2010 (Cth) and the Customs Act 1901 (Cth).

3 Part 9.4B of the Corporations Act sets out the consequences of contravening 'civil penalty provisions'. Such provisions, including s 180(1), are punishable by what are described as 'pecuniary penalties'.[1]

4 The term 'penalty', in this context, is generally understood to refer to a punishment, usually in the form of the payment of a sum of money. There is no doubt that a 'pecuniary penalty' has a 'punitive character'.[2] Such penalties operate as sanctions. They represent an exercise of state power. They differ from what might be termed 'criminal penalties' in that they are normally imposed by courts applying civil, rather than criminal, court processes. In practical terms, however, they closely resemble fines, and other punishments imposed upon criminal offenders.

5 Pecuniary penalties have been described as 'a hybrid between the criminal and the civil law'.[3] They are founded on the notion of preventing or punishing public harm.[4] Often, the contravention that they are intended to meet is itself similar to a criminal offence, and many of the ordinary principles that govern sentencing for such offences are equally applicable to such civil penalties.[5] In some cases, civil penalties can be more severe than criminal penalties for the same or similar conduct.

6 There is, however, a fundamental distinction between criminal and civil penalties. There are no federal civil penalty provisions that include a term of imprisonment as an aspect of the penalty. It is doubtful that any such penalty would withstand constitutional scrutiny.

7 It has become common, these days, for proceedings brought by various regulators to be resolved, between the parties, by way of negotiated settlement. What next happens is that the regulator and defendant approach the court with an agreed statement of facts, and what is described as an 'agreed penalty'. They do so seeking the court's approval, and the conversion of the 'agreed penalty' into formal orders.

8 This approach was endorsed by the Full Court of the Federal Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission.[6] There, Burchett and Kiefel JJ (with whom Carr J agreed) said:

Since the decision in Trade Practices Commission v Allied Mills Industries Pty Ltd, it has been accepted that both the facts, and also views about their effect, may be presented to the Court in agreed statements, together with joint submissions by both the Commission and a respondent as to the appropriate level of penalty. Because the fixing of the quantum of a penalty cannot be an exact science, the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but rather whether their proposal can be accepted as fixing an appropriate amount.

There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.[7]

9 No doubt the resolution of such cases by negotiated settlement has a number of advantages. It results in predictability, which those who are subject to regulation value highly. It saves both the regulator and the defendant the cost and uncertainty of contested litigation. It also saves valuable court time.

10 Notwithstanding these advantages, a number of judges have expressed concerns as to various aspects of this process. For example, in Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd,[8] Finkelstein J said:

One consequence of this practice is to make it more difficult for a court to determine whether the penalty which has been agreed is within the range that the court would fix. Moreover, decisions which sanction agreed penalties are not a good yardstick against which to measure what is agreed in later cases is within the range of appropriate penalties. This is because the agreed penalty need not be the penalty that would have been imposed by the court, although the penalty was not inappropriate.[9]

11 The Australian Law Reform Commission itself noted in 2002 that the view had been expressed that the lack of transparency of negotiated settlements may reinforce the perception that negotiated penalties are not 'adequately grounded in fact and legal principle'.[10] In addition, it has been suggested that in some cases negotiated penalties are inappropriately low.

12 Moreover, some courts have expressed reservations as to the accuracy, and sufficiency, of the statements of agreed facts which have been presented to them for the purpose of fixing penalty. Such concerns have generally been put to one side, however, because a pragmatic view has been taken of the utility of settling proceedings expeditiously. This is part of a broader problem. There is an understandable tendency, on the part of some courts, to view such proceedings as being essentially civil in nature. That ignores the important role that courts must play in ensuring that serious contraventions of regulatory statutes are adequately denounced, and punished.

13 Some regulators have responded to these concerns by insisting upon transparency with regard to the factors that will be considered when negotiating agreed outcomes.[11] They maintain that careful attention is always given to the nature of the material to be placed before a court charged with imposing any such pecuniary penalty.[12]

14 Regulators generally operate under clear guidelines when negotiating possible settlements in pecuniary penalty cases. Nonetheless, some judges, at least, have voiced concerns about the adequacy, and accuracy, of the material placed before them by way of agreed facts in such cases.

15 Any negotiated settlement that is placed before a court for approval must recognise the fact that sentencing an offender (or, for present purposes, the imposition of a pecuniary penalty) is quintessentially an exercise of judicial power. Courts have stated repeatedly that they do not merely 'rubber stamp' agreements entered into by parties, and no one suggests that they should.

16 For example, in Australian Competition and Consumer Commission v Sundaze Australia Pty Ltd,[13] Spender J warned:

Any agreement between the ACCC and a respondent as to the appropriate penalty, or appropriate range of penalties, is highly relevant to what the Court ought to impose by way of penalty, but in no way is the Court dictated to by any such agreement between the parties; nor is the penalty imposed by anybody other than the Court.[14]

17 To the same effect, French J said in Australian Securities and Investments Commission v Chemeq Ltd[15] that:

When a regulator brings action to enforce the provisions of a public statute and agreed orders and penalties are proposed, it is not the role of the court merely to rubber stamp them.[16]

18 At the same time, there may be a disconnect between the rhetoric of judicial independence, and the practical operation of 'agreed penalties' in this area. There is a danger that courts will (if presented with both agreed statements of fact and 'agreed penalties', which are routinely approved) be seen, perhaps justifiably, as nothing more than 'rubber stamps'. One commentator has gone so far as to suggest that, by reason of negotiated settlements in this area, effective responsibility for deciding the appropriate quantum of penalty has shifted from the courts to the regulator.[17] That may be an overstatement, but it seems to have about it at least a grain of truth.

19 In Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd,[18] I was faced with an agreed penalty that I regarded as quite inadequate, but still within what might be termed 'the range'. In approaching the matter that way, I recognised that, ordinarily, a sentencing judge has a broad discretion, and that in some cases any such 'range' might be extremely wide. I said:

I cannot leave this matter without commenting briefly upon what I consider to be the somewhat undesirable practice on the part of the ACCC in presenting this Court with a specific figure as an 'agreed pecuniary penalty'. I acknowledge that both the ACCC and Colgate have accepted that the figure proposed is in no way binding upon the Court. However, when pressed to point to a single instance when the Court has not, in the past, endorsed such a figure, counsel found it difficult to do so.

It is difficult to imagine that the parties would propose a pecuniary penalty that is so clearly beyond the permissible range that the Court would depart from it. As the authorities presently stand, the Court is bound to impose an agreed pecuniary penalty, save in such circumstances. I acknowledge that a contravention of s 48 is not a criminal offence. The liability is civil only. I also acknowledge the importance of the principles enunciated in NW Frozen Foods v Australian Competition and Consumer Commission, and in particular the need for corporations to have certainty of outcome if they are to be encouraged to engage in negotiated settlements. I am bound by these principles, and a well established line of authority, to accept that the Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure.

However, there are dangers associated with this approach. The Court may be seen, perhaps not altogether incorrectly, to act as a "rubber stamp" in simply approving a decision taken at an executive level by a body charged with investigating and prosecuting contraventions of the Act, but having no role in actually imposing particular sanctions for those contraventions. Negotiated settlements are an important vehicle for resolving complex matters such as those involved in the present case. It must be borne in mind, however, that there is a public interest in ensuring that corporations that engage in behaviour of the kind that occurred in this case are dealt with appropriately, and that proper recognition is given to the need for specific and general deterrence. There are important parallels between the fixing of a pecuniary penalty under s 76, and the ordinary sentencing process which is quintessentially a matter for the courts: Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited at pars 4-6 per Finkelstein J.

I should emphasise that nothing that I have said should be regarded as a criticism of a joint submission being received regarding what might be the appropriate range of pecuniary penalties to be imposed. A submission couched in those terms can assist in achieving a measure of certainty, and consistency of treatment with other like cases. At the same time, unlike what seems to have emerged as the more usual practice, namely putting forward an 'agreed penalty', the suggestions of an appropriate range of pecuniary penalties allows for the proper exercise of judicial discretion in what is fundamentally a matter for the courts to determine.[19]

20 When I spoke of the parties putting forward a 'range', by way of joint submission, I meant nothing more than what sometimes occurs in this State during the course of plea hearings for criminal offences. It is also common, in Victoria, for the Crown to be asked to provide a range of sentences within which it submits the particular offending should fall. [20] In such cases, the Crown should, as a general rule, provide specific reasons for having proffered that range. What normally happens then is that the defence puts forward its own submission as to the appropriate range. The judge, having considered the totality of the material, then determines what in his or her view should be the appropriate sentence. I can see no reason why a judge, faced with a pecuniary penalty application, should not adopt a similar approach.

21 In Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd,[21] the Full Court of the Federal Court held that the reasoning in NW Frozen Foods 'disclose[d] no error of principle'.[22] It rejected the various criticisms which had been levelled against the NW Frozen Foods approach, including my own in Colgate-Palmolive. In a joint judgment, Branson, Sackville and Gyles JJ said:

The position of the Court where prosecution and defence agree on the appropriate sentence, as laid down in R v Gallagher, has similarities to the position where regulator and contravenor jointly submit that a particular penalty should be imposed in a civil penalty case. Just as the criminal court will take into account the prosecution's views on the appropriate sentence, so the court in the civil penalty case, as NW Frozen Foods explained, will take account of the regulator's position. But in neither case is the court relieved from the responsibility of exercising its own judgment as to the appropriate sentence (in criminal cases), or whether the proposed penalty is within the appropriate range for the contravention (in civil penalty cases). In each case, the Court should be satisfied that it is being given accurate, reliable and complete information on critical questions. If not satisfied that it has sufficient information to support the "agreed" approach, the Court can request the parties to provide additional evidence or information. If that information or evidence is not provided, the Court might well decide that it should impose a different sentence or penalty from that proposed by the prosecution or regulator (as the case may be). And, whatever the position in criminal cases, in a civil penalty case where there is no contradictor, the Court may request assistance from an amicus curiae or a potential intervenor pursuant to FCR, O 6 r 17.

Finally, in our view, there would be little advantage to the parties in a civil penalty case limiting themselves to a joint submission on a range of pecuniary penalties, as distinct from a precise figure. The former is likely to be less helpful to the court than the latter. Weinberg J appears to have in mind that a range of penalties would allow for the "proper exercise of judicial discretion" (at [35]). A rather better way of reinforcing the Court's responsibility to determine penalty is for the Court to scrutinise the material presented to it carefully, and satisfy itself that the information is sufficient to determine whether the proposed penalty is appropriate.

For these reasons, we do not think that the criticisms made of NW Frozen Foods warrant departing from the principles stated in that case, even if it were open to this Court to do so. ... The Court has adequate powers to ensure that it discharges its statutory responsibilities appropriately.[23]

22 With great respect, although in Colgate-Palmolive I spoke of the possibility of there being a 'joint submission' on an agreed range as preferable to an 'agreed penalty', I did not mean by that to suggest that any such joint submission should somehow be regarded as binding. It would be nothing more than a submission, to be taken into account, and put to one side if rejected. At least, the proffering of a range, by way of submission, recognises the breadth of the discretion necessarily vested in the court to synthesise the various factors associated with the sentencing process. Of course, I fully recognise that agreement as to what might be the appropriate range may be difficult to achieve. If no agreement can be reached, the normal practice routinely followed in criminal cases would seem to be perfectly acceptable.

23 In Australian Prudential Regulation Authority v Derstepanian,[24] delivered after Mobil Oil, I went further in my criticisms of the reasoning in NW Frozen Foods. I said:

In Australian Competition & Consumer Commission v Colgate-Palmolive Pty Ltd, I followed the reasoning of Burchett and Kiefel JJ in NW Frozen Foods, as I was bound to do. It is fair to say that I did so somewhat reluctantly. Other judges at first instance had expressed similar reservations. In Mobil Oil, the Full Court clarified the position to some degree by emphasising that NW Frozen Foods did not require the court to fix the penalty proposed by the parties. However, it was acknowledged that there was a public interest in promoting settlement of litigation, and thus in encouraging parties to reach agreed penalties. In that context, the views of the particular regulator were a relevant, though not determinative, consideration. Nonetheless, such criticisms as had been made of the reasoning NW Frozen Foods did not warrant the reconsideration of the principles stated in that case.

With great respect to those who think differently, I remain of the view that the approach taken in NW Frozen Foods is misconceived, and contrary to principle. As I have previously said, it endorses the "somewhat undesirable practice" of the particular regulator presenting to a court an agreed pecuniary penalty, which it will normally simply "rubber stamp". Platitudes such as those adopted in Mobil Oil, which allow for some latitude on the part of a court, but only in circumstances where the figure agreed upon is "clearly out of bounds", impose an unwarranted constraint upon the broad discretion that the legislature has vested in judges charged with the task of imposing proper penalties. The prospect that a judge will depart from an agreed penalty, given the criteria that must be satisfied before he or she will do so, is likely to be more apparent than real.

It must be remembered that the imposition of a civil penalty for a statutory contravention is intended to achieve many of the same objectives as the fixing of a fine for a criminal offence. These include deterrence, both specific and general, denunciation, and, importantly, punishment. The only difference of any consequence is that there may be an element of additional stigma associated with a criminal conviction.

It is a truism that sentencing is often a complex and difficult task. It has been described as an art, and not a science. There is no one correct penalty in any given case. In criminal cases, it is regarded as quite wrong, and unacceptable for the prosecution and the defence to present the judge with an agreed sentence, stated in terms of the exact amount of time to be served, or the precise amount of any fine to be levied. There is no reason why the principle should be any different in civil cases. If the parties are agreed upon an exact amount that should be fixed as a civil penalty, that submission should be treated no differently to any other submission. In particular, it should not be regarded as presumptively one that the court must adopt, unless it is outside the "permissible range". No criminal court would ever contemplate the fettering of a sentencing discretion in that way. Nor should a court exercising civil jurisdiction.

Despite my strongly held views on this subject, I am bound to follow both the NW Frozen Foods and Mobil Oil decisions. Accordingly, I must ask myself whether the agreed penalties in this case, of $100,000 for the first respondent, and nothing for the second respondent, are within "the permissible range" for the serious breaches of the SIS Act that have been admitted.[25]

24 In Australian Competition and Consumer Commission v Australian Abalone Pty Ltd,[26] I added to my concerns by saying:

There is a public interest in the settlement of cases brought under the TPA and the Code. Such settlement avoids lengthy and complex litigation, with attendant savings of costs. It also leaves the Court free to deal with other urgent matters, and relieves the ACCC of the burden of conducting the litigation, freeing up investigating officers to deal with other matters.

The Court must ensure that any consent orders sought as part of the settlement of a proceeding which alleges breaches of the TPA are within power, and otherwise appropriate. However, it should not refuse to give effect to a proposed settlement merely because it would have made different orders had the matter not been resolved. There is no doubt in this case that the declarations sought are within the power of this Court, and are otherwise appropriate.

The real question is whether the pecuniary penalties which are now sought, and which have been agreed by the respondents, should be approved. In answering that question it must be emphasised that, in the final analysis, it is for the Court, and not the parties, to determine the amount of any pecuniary penalty. The Court is not to be regarded as a "rubber stamp". See generally NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission; and Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd.

Nonetheless, it is a fact that in the vast majority of cases where pecuniary penalties have been agreed the Court has approved those penalties. That is because the Court is concerned only with whether the agreed penalties are within what is described as the "permissible range". Because the determination of a penalty is not an exact science, that range may be quite broad. If an agreed penalty is "within the range" the Court will generally give it effect.

In determining whether or not an agreed penalty is "within the range" the Court will have regard to various matters. These include pecuniary penalties imposed in other cases, particularly those imposed in like circumstances. Questions of parity will also be important. The Court will accord particular weight to the view of the regulator, as representing the public interest, that the penalty is adequate in all the circumstances.[27]

25 In Australian Abalone, I determined that agreed penalties with regard to two particular respondents were themselves excessive, and entirely outside the range that would have been appropriate. Those agreed penalties also offended quite basic principles of parity which seemed not to have been understood by the parties. In those circumstances, I declined to impose the penalties agreed, but instead imposed lesser penalties. In effect, I did exactly what the judge below did in this very case.

Intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in other jurisdictions on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is plainly wrong. Since there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non-statutory law.[28]

27 This case does not concern the interpretation of any statute, be it Commonwealth or uniform national. Nor does it concern, in any direct sense, or substantively, any question of common law. Rather, it raises the question of how trial judges hearing civil penalty applications should deal with agreed penalties and, in particular, what constraints are imposed upon them by the fact of agreement. Comity is, of course, an important factor to be considered when determining how to deal with such matters. That is all the more so when one is dealing with the application of national legislation.

28 The views expressed by the Full Federal Court in both NW Frozen Foods and Mobil Oil are entitled to be given due weight, and appropriate respect. That said, and as the High Court has made clear, this Court is not bound to follow decisions of other intermediate appellate courts which it regards as 'plainly wrong'. I have previously said that I consider both NW Frozen Foods and Mobil Oil to represent bad law. I am still of that opinion.

29 NW Frozen Foods and Mobil Oil were, in my opinion, wrongly decided because they treat the trial judge, who is to impose the pecuniary penalty, as though he or she is exercising an appellate role. Under the approach adopted in those cases, the judge is not independently arriving at the appropriate penalty, but rather asking an entirely different question - whether the agreed figure falls within the range of penalties reasonably available. That is, in substance, an appellate question, and not a first instance question. If the judge is unable to say that the agreed penalty is 'wholly outside' the range,[29] he or she is bound to impose that penalty irrespective of whether it is considered appropriate. That is, in my view, a fundamental departure from the judicial function in relation to sentencing, and one that simply ought not to be countenanced.

30 That is not to say that a judge faced with a negotiated settlement in a pecuniary penalty matter should not give due weight to any agreed figure, if one happens to be put forward.[30] However, that figure should be regarded as nothing more than a submission. It should have no binding force of any kind, even if it happens to fall 'within the range'.

31 It goes without saying that cases which involve serious contraventions of the law cannot be 'settled' by agreed facts that do not present a fair and accurate picture of the relevant offending to the court. I shall come back to this point shortly. Nor should such cases be 'settled' on the basis of an 'agreed penalty' that, while it may not be 'wholly outside the range', is nonetheless regarded as inadequate or excessive by the judge who faces the task of imposing the relevant penalty.[31]

32 My doubts about this entire process of negotiated settlements being presented to the court for 'ratification' (albeit allowing for the theoretical possibility that in an extreme case the 'rubber stamp' will not be applied) are strengthened by what took place in this case.

33 The judge below was put into an awkward situation, albeit one that he could perhaps have averted had he adopted the course suggested by the Full Federal Court in Mobil Oil regarding inadequate or inaccurate agreed facts.[32] He was provided by the parties with a set of agreed facts that were, in my opinion, impossible to reconcile with what the documentary material plainly showed to be the true role played by Mr Ingleby.

34 No doubt s 180(1) of the Corporations Act covers a broad spectrum of conduct. The 'agreed facts', if it were proper to act upon them, suggested that he played only the most insignificant part in this entire enterprise. One could be forgiven for thinking, on the basis of those facts, that there was virtually no moral obloquy attached to anything that he did. It was on that basis that the judge reduced the agreed penalty from $40,000 to $10,000, a decision that, given the interpretation which the agreed facts placed upon Mr Ingleby's role, would be hard to fault.

35 It is true that Mr Ingleby's contravention was characterised, in the agreed facts, as 'serious'.[33] It had to be so described in order to trigger the operation of the pecuniary penalty provision invoked. However, that description, though attached to the contravention, was not reflected in the specific components of the agreed facts. As Harper JA has concluded, those facts, as provided to the judge, did not present an accurate assessment of Mr Ingleby's role in the enterprise. Nor did they appropriately characterise the degree to which he should be held responsible for what occurred.

36 A simple example will suffice. The effect of Mr Ingleby's misconduct was said in the agreed facts to be as follows:

Had Mr Ingleby acted with the degree of care and diligence consistent with his statutory obligations, AWB may have at an earlier stage ceased making payments of the purported inland transportation fees to Iraq, which payments ultimately ceased following the US incursion into Iraq in March 2003.[34]

37 It is hard to understand why, in that statement, the word 'may' is used. One would have thought that had Mr Ingleby done nothing more than what s 180(1) required, there would have been no chance of these payments continuing for as long as they did. His position within AWB Ltd was hardly that of a minor functionary. He was at the very centre of its operations.

38 The agreed facts did not explain why it was not open to draw an inference that Mr Ingleby, rather than merely falling short of the statutory standard of care and diligence, was wilfully blind as to what was happening. Those facts made clear that, as Chief Financial Officer of AWB Ltd, and as a member of the executive committee of that company, Mr Ingleby received minutes of the meetings of that committee.[35] They did not, however, spell out in any appropriate detail the authority and responsibility that Mr Ingleby's position entailed. They should have done so.

39 As Harper JA points out, the agreed facts revealed that Mr Ingleby received a number of indications which should have put him on notice that inquiry should be made. So much is clear from the terms of the agreed contravention:

[Ingleby] had information available to him to raise questions as to the legitimacy of the inland transportation fees and to suggest that the fees

(a) were ultimately being paid to the government of Iraq; and

(b) were recovered by AWB from the UN Escrow Account.[36]

40 That said, the agreed facts did not adequately explain the circumstances in which Mr Ingleby failed to make inquiries. Indeed, it is clear that he was present at meetings with officers of AWB who, it can safely be assumed, were in a position to provide him with information as to the true circumstances of the inland transportation fees, and, if asked, would have done so.[37]

41 The agreed facts also did not adequately explain Mr Ingleby's reaction, or apparent lack thereof, to the emails identified by Harper JA which - quite clearly, it might be thought - adverted to significant irregularities associated with the relevant transactions. In substance, the agreed facts represented, at the very least, a watered-down version of Mr Ingleby's true level of culpability.

42 The maximum penalty for a contravention of s 180(1) is, and was at all material times, a pecuniary penalty in the sum of $200,000.[38] Left to my own devices, and based upon Harper JA's finding that Mr Ingleby committed a most serious breach of that section, I would have been inclined to fix a pecuniary penalty substantially greater than even the $40,000 agreed between the parties.

43 However, having regard to the position taken by ASIC throughout this case, and the fact that it seeks nothing more, on this appeal, than the imposition of the agreed penalty, I regard myself as bound to go no further than the penalty agreed between the parties by way of negotiated settlement. I do so on the basis that Mr Ingleby chose not to participate in this appeal, having seen that ASIC asked for nothing more than a pecuniary penalty of $40,000, and an increase in the period of disqualification to one of 15 months. He was therefore entitled to assume that this Court would not impose a penalty exceeding that amount, and a period of disqualification no greater than that of 15 months, even if the appeal were allowed, or at least would not do so without giving him the opportunity to be heard regarding that matter.

44 It is nonetheless appropriate, however, to allow the appeal and to impose a pecuniary penalty of $40,000, and a period of disqualification of 15 months. A penalty of that order more clearly reflects Mr Ingleby's culpability in this disgraceful enterprise, and at least goes part of the way towards ensuring that an appropriate level of punishment is meted out. It may also serve to send a message as to the seriousness with which such conduct should be viewed, and to provide some guidance to judges who may be faced with such issues in the future.

45 I should add that if it looks somewhat odd for a strong opponent of 'agreed penalties' in cases of this kind to be acquiescing in the imposition of just such a penalty, my explanation is as follows. The judge below was confronted with a set of agreed facts, and felt constrained to impose a penalty based solely upon those facts. Unfortunately, the 'agreed penalty' did not reflect the 'agreed facts'. That put his Honour in a difficult position. In hindsight, he ought to have insisted upon a fuller, and more realistic set of agreed facts. However, to his very great credit, he at least refused to 'rubber stamp' an 'agreed penalty' that made no real sense, given the material before him.

46 The difficulty from my point of view is that the agreed facts should never have been agreed. If a judge is to be asked to endorse an 'agreed penalty', great care

must be taken to present the facts fully and accurately. Had that been done in this case, I have no doubt that his Honour would, at the very least, have imposed the agreed penalty. Indeed, he might even have gone beyond it.

47 International trade is an essential component of domestic economic health. But its contribution to that health is significantly reduced unless it is conducted in accordance with just laws impartially and consistently enforced. The responsibility for such enforcement falls primarily upon the courts. The courts enlarge the economic interests of the communities they serve by ensuring that economic activity, along with all human behaviour, is governed by the rule of law.

48 Wheat is a very important commodity in international trade. Australia, as a major exporter of that grain and of much else, including vast quantities of minerals, is among the more significant participants in that trade. To the extent that the courts, and in particular the superior courts, can ensure the wellbeing of that trade and the reputation of Australia as a reliable and law-abiding member of the international economic community, they have a high obligation to do so.

49 Between 1939 and 1998, the Australian Wheat Board ('the Wheat Board') held a monopoly over the international trade in Australian wheat. Iraq was one of its biggest customers. But even at its best the relationship was somewhat fraught. According to a statement of agreed facts prepared by the parties for the purposes of this litigation, Iraq was regarded by the Wheat Board as 'a high risk, high return market.'[39]

50 By 1999, 'most of the marketing and financial functions of the Wheat Board had been transferred to a new grower owned company structure (the AWB Group).[40]

AWB [Limited] was the head of that new structure.'[41]

51 In the meantime, a relationship which had always been fraught had by 1999 become distinctly more so. In 1990, Iraq invaded Kuwait. The Security Council of the United Nations was of the opinion that this was a breach of international law. It reacted by adopting resolution 661 on 6 August 1990. This forbade member states from allowing their nationals to sell or supply to Iraq any commodities except (i) medical supplies and (ii) such foodstuffs as were required for humanitarian purposes. The resolution likewise, and importantly, proscribed UN member states from making available 'any funds or any other financial or economic resources' to that country.[42]

52 Sanctions of the kind introduced by resolution 661 necessarily cause hardship to the citizens of the nation at which they are directed. At all events, on 14 April 1995, the Security Council adopted resolution 986, which established what became known as the 'oil for food' program ('OFFP'). An escrow account, maintained by the United Nations, was created to receive the proceeds of the sale of Iraqi oil. From those proceeds came the monies to pay for the foodstuffs and medical supplies which Iraq was permitted to import. According to the statement of agreed facts:

From October 1997 to November 2003, in order to obtain payment from the UN Escrow Account, exporters of foodstuffs to Iraq were required to submit to the UN Office of the Iraq program ('the OIP') the concluded contract for each transaction in respect of which payment was sought. Each concluded contract was required to be submitted through the exporting country's Mission to the UN. The contracts were examined by the OIP for a range of matters including price and value. If the OIP approved the relevant contract, the exporter became eligible for payment from the UN Escrow account.[43]

53 Australia is a signatory to the Charter of the United Nations. It was therefore bound by resolutions 661 and 986.[44] Moreover, in compliance with this country's obligations, the Commonwealth Parliament approved regulation 13CA of the Customs (Prohibited Exports) Regulations 1958. This regulation prohibited the export of foodstuffs to Iraq unless the exporter had first obtained the permission of the Minister for Foreign Affairs and Trade or his or her authorised representative.

54 The Government of Iraq traded in wheat through the Iraqi Grain Board ('the IGB'). The Wheat Board and - after 1999 - the AWB Group, tendered for IGB's custom. They did so in competition with other wheat exporters, including those of Canada and the United States. Although what follows does not appear explicitly in the statement of agreed facts, it is in that document clearly implied that, unknown to Australia's competitors, the AWB interests accepted a lower price for their wheat than was revealed by their contracts with the IGB. The nominated contract price was inflated by a disguised component which purported to be reimbursement to the AWB interests of their assumption of responsibility for the 'cost of discharge at [the port of] Umm Qasr and land transport'[45] or for 'after sales service'.

55 In truth, however, this additional amount represented something far beyond the cost of discharge and transport; and it bore no relationship to the provision of any service. The difference between the contractually nominated gross, and the actual net, return to the Wheat Board and, later, the AWB Group, was in substance equal to the vendors' payment of hard currency to an Iraqi Government desperately in need of all the internationally traded currency it could get.

56 These payments were always made via an intermediary based in Jordan and linked - it seems directly - to the Iraqi authorities. Initially, the process was multi-staged, with other intermediaries also involved. Later, only the Jordan-based organisation was utilised. Always, however, the payments were disguised; and that was because their 'purpose was to allow the Government of Iraq to obtain further amounts of internationally traded currency'.[46]

57 Behind the disguise, therefore, the payments were of the very kind that resolution 661 was designed to prohibit. They were made to a government with which Australia and much of the remainder of the world was at loggerheads, and with which Australia would soon be at war. They were also of significant amounts: they ranged from US$12 per metric tonne of wheat to €55.40 per metric tonne. Over the life of the OFFP 'AWB made payments of purported inland transportation fees and purported after sales service fees totalling more than US$220 million'.[47] Moreover:

Each of those payments was subsequently recovered by AWB from the UN Escrow Account. A part of these payments was allocated by the Government of Iraq to agencies responsible for the discharge and distribution of wheat with Iraq ..., but the remainder (approximately two-thirds of each payment) went to the Iraqi Ministry of Finance.[48]

58 Although the statement of agreed facts does not explicitly confirm that those officers of AWB who negotiated the 'inland transportation fee' and 'service fee' knew of the intended destination of the relevant funds, it is implicit in the statement of agreed facts that that was the case. For example, that statement records that:

AWB has been sued in Australia and the United States for its role in facilitating payments to the Hussein regime. AWB settled a class action in Australia in about March 2010 on terms including that AWB paid the applicant and group members the sum of $39.5 million in damages, interest and costs. Proceedings in the United States are continuing.

59 The statement of agreed facts refers to what it calls the 'Cole Inquiry' - the Royal Commission into 'Certain Australian Companies in relation to the Oil For Food Program'. It is notorious that that Royal Commission found that AWB knowingly made secret payments to the Saddam Hussein regime.[49]

60 Throughout the period between 14 April 1998 and 30 October 2006, the respondent, Paul John Ingleby, was the Chief Financial Officer of AWB and, before that, of the Wheat Board as the predecessor of the AWB Group. He has been accused by the appellant, Australian Securities and Investment Commission ('ASIC'), of failing in relation to his employers' dealings with Iraq to act with due care and diligence (a breach of s 180 of the Corporations Act 2001) and in good faith (a breach of s 181 of that Act). On 19 December 2007, ASIC commenced this proceeding, in which it sought declarations that Mr Ingleby had contravened ss 180 and 181 of the Act, together with orders that he pay a pecuniary penalty in relation to each contravention, and be disqualified from managing a corporation for such period as the Court thought appropriate.

61 On 12 November 2008, the Court ordered that the proceeding be stayed. This order was lifted on 2 August 2010, following which the parties came to an agreement about the means by which, subject to the concurrence of the Court, the proceeding be resolved. Pursuant to the agreement, Mr Ingleby admitted that he is guilty of a contravention of s 180(1) of the Corporations Act. The agreed terms of the admission were as follows:

Between December 2001 and September 2004, Paul John Ingleby as Chief Financial Officer of AWB failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise if they were an officer of a corporation in AWB's circumstances and occupied the office held by, and had the same responsibilities within AWB as, Paul John Ingleby.

62 The particulars of the contravention were also agreed, and are set out in a Statement of Contravention which was an exhibit in the proceedings below. Save for those words of the agreement which are quoted directly, I set out the effect of those particulars as follows. They were, first, that Mr Ingleby co-authorised five payments pursuant to four AWB contracts with the IGB. They were contracts identified as contracts A0785, A0785, A1111 and A1112, and the payments were of what were ostensibly fees for inland transport. In fact, however, the funds were destined in very large part for the coffers of the Government of Iraq, at the head of which was Saddam Hussein.

63 The Statement of Contravention continued that Mr Ingleby 'had information available to him to raise questions as to the legitimacy of the inland transportation fees', and to suggest that the fees were ultimately destined for the Hussein regime, but by reason of a fraud on the United Nations would be recovered from the UN Escrow Account.[50]

64 The final particulars were that Mr Ingleby took no steps to either ascertain the true position or inform the Board of AWB of the information which was both at his disposal and which pointed to the ultimate recipient of the so-called transportation fees; and this despite the fact that he knew that 'AWB's trade with Iraq was conducted under the UN OFFP which prohibited direct payments to the Government of Iraq', and that 'payments from the UN Escrow Account to AWB in respect of contracts for the supply of wheat could only be made for the purpose of the OFFP'.[51]

65 Mr Ingleby and ASIC joined in concluding the statement of agreed facts with a joint submission under the heading 'Appropriate Penalty' which read:

ASIC and Mr Ingleby agree that the appropriate penalty in this matter is a pecuniary penalty of $40,000, and a period of disqualification as a director for 15 months.[52]

66 It was against that background that the matter came to the Court for hearing on 13 June 2012. It was, in effect, a joint application that the Court approve the compromise. The justification for such approval was said to be found in the statement of agreed facts. The judge, however, came to a different conclusion. He held, in reliance (in part) on that statement, that the proposed penalties were too harsh. Under the heading 'Conclusions', his Honour said (among other things):

The agreed contravention by Mr Ingleby does not involve any deliberate wrongful act, dishonesty or moral turpitude. Mr Ingleby admits that as the CFO of AWB he was negligent in that he failed to observe the degree of care and skill a reasonable officer would in his situation.[53]

...

After taking into account the relevant principles of sentencing that are applicable to a civil penalty proceeding, the periods of disqualification and pecuniary penalties imposed in other cases, Mr Ingleby's conduct in relation to the management of AWB including the particular circumstances of the contravention in this case, and Mr Ingleby's circumstances in general, I find that the agreed period of disqualification and pecuniary penalty broadly speaking are too severe and fall outside the permissible range that [is] appropriate in all the circumstances to Mr Ingleby's contravention of the Act.[54]

67 Consistently with his judgment, the judge made the declarations of contravention sought by the parties but, instead of accepting the appropriateness of the agreed penalties, ordered that:

1. Pursuant to s 1316G(1) of the Act [the Corporations Act (2001)] ... within 30 days hereof the defendant pay to the Commonwealth of Australia a pecuniary penalty in the amount of $10,000.
2. Pursuant to [s] 206C [of the Act], the defendant is disqualified from managing corporations until the end of 2012.

68 The statement of agreed facts is of central importance in this case. It is the product of concluded, and perhaps difficult, negotiations between the parties to it. His Honour relied upon it for the evidence of 'Mr Ingleby's conduct in relation to the management of AWB including the particular circumstances of the contravention in this case, and Mr Ingleby's circumstances in general, ... [and] all the circumstances ... [surrounding] Mr Ingleby's contravention of the Act'.[55] The judge likewise relied upon it to come to conclusions about penalty; conclusions which stand in strong contrast to those upon which ASIC (and Mr Ingleby) agreed. And ASIC, again relying on that statement, has now appealed against the penalties imposed by his Honour.

69 There is a significant role in the proper administration of the Corporations Act for agreements of the kind reached by ASIC and Mr Ingleby. Courts resolve disputes. Unless the parties to a dispute are under a relevant disability, the courts are generally content to remove themselves from those disputes which the parties have resolved. Unnecessary litigation, and unnecessary uncertainty about the outcome of litigation, is in the interests of no-one. While the responsibility for the assessment of penalties must remain firmly with the courts, they will be greatly assisted by statements of agreed facts sufficient to form a sound - which must include a fully informed - basis for such assessment. And if a statement of agreed facts meets that criterion, the courts will accord significant but not ultimate respect to any agreement about penalty which is consonant with the facts as thus put forward.

70 At the same time, the imposition of civil and criminal sanctions for breaches of the law is quintessentially a function of the courts. With the exception of such rights as reside in a parliament to deal with those whom the parliament has found to be in contempt of it, and possibly some limited rights in other bodies - rights reviewable by the courts - only the courts have power to punish for breaches of the law.

71 ASIC does not have that power. And if, as is essential, the rule of law is to be maintained, the courts must be astute to ensure that agreements of the kind reached in this case do not subtly incorporate a transfer from the courts to investigative and prosecutorial authorities such as ASIC of the responsibility for the imposition of penalties.

72 This is not to denigrate in any way the importance of bodies such as ASIC. It is, rather, to emphasise the place which the separation of powers occupies in the proper functioning of democratic governance. Just as the courts may neither investigate nor prosecute, so only the judicial authority of the courts may be invoked in the imposition of penalties for breaches of the law.

73 In my opinion, the statement of agreed facts upon which the Court has been asked to act in this case is less than a desirably sound basis upon which to reach important decisions about appropriate penalties. It speaks of the internal harm done to AWB as a result of Mr Ingleby's contraventions of the Corporations Act, although even then it restricts itself to the proposition that, had the contraventions not occurred, AWB may have ceased at an earlier stage to engage in sanction-breaching conduct. Moreover, it does not touch upon any harm which might have been done to Australia's reputation as an ethical partner in international trade. Admittedly, that might be hard to quantify; but it is nevertheless an important aspect of AWB's serious misconduct.

74 Nor does the statement of agreed facts explain how Mr Ingleby could remain ignorant of the serious fraud being committed by others in AWB when three broad considerations point in the opposite direction. First, the Iraqi issue occupied centre stage in international affairs throughout the relevant period; and it was an issue which touched directly upon Australia's international responsibilities and national interests, including - but not restricted to - its trade in wheat, the commodity at the heart of AWB's business. Secondly, Mr Ingleby held a position which the statement of agreed facts suggests (but does not explicitly spell out) placed him with the authority, and perhaps with the responsibility, to inquire into AWB's conduct of its (very significant) trade with Iraq. Thirdly, the statement of agreed facts reveals that Mr Ingleby was furnished with a number of indicators which ought to have put him on notice that inquiry should be made; but it does not clearly reveal whether or not he did inquire, or if he did not why he did not.

75 The upshot is that the statement of agreed facts does not place the Court in a position from which it can properly discharge its constitutional responsibilities.

76 This conclusion requires for its justification a more detailed examination of the statement of agreed facts. First, the statement makes the point that from 1939 until the 'single desk' was abolished in 2008, the Wheat Board or its successor was the sole bulk exporter of Australian wheat. From 1 October 1999 to 30 September 2005 Iraq was consistently one of the largest markets for Australian wheat, and was highly profitable.

77 Secondly, Mr Ingleby occupied a very senior position within the AWB Group. Between 1999 and early 2003 he and all other staff directly responsible for what the statement of agreed facts refers to as 'the wheat pool' (but does not otherwise define) 'were employees of AWB Ltd' (sic).[56] As earlier noted, it seems clear enough, although the statement of agreed facts is not as clear as it should be on the point, that AWB Ltd is the company to which that document refers as 'the head of the new structure.'

78 Between 2000 and 2003 Mr Ingleby's responsibilities included risk management and compliance and, between 2000 and 2002, legal. The head of Trade Finance reported to him, as did the Treasurer. Mr Ingleby was a member of the AWB Group's executive committee and its corporate risk review committee.[57] He attended meetings of the Boards of AWB and AWB International Ltd, as well as meetings of the audit, risk and investment committees of one or other or both of those entities. As the statement of agreed facts reports, he 'understood the importance of the Iraq market to AWB',[58] although he 'was not involved in the operational aspects of AWB's wheat trade or contractual arrangements.' He received copies of documentation 'dealing with the financial aspects of ... contracts [with the IGB] after they were struck.'[59]

79 The statement of agreed facts outlines the history and effect of UN Security Council resolutions 661 and 986. There is no suggestion that Mr Ingleby was not familiar with these resolutions. In the absence of evidence to the contrary, the inference must be that he was aware of them, or at least of their general effect. Indeed, in about August 1999 he submitted a report to the Board of AWB Ltd in which he referred to the visit of an AWB marketing delegation to Iraq the purpose of which was 'to discuss in detail the changed terms and conditions being sought by Iraq for the distribution of food under the United Nations food for oil scheme.'[60]

80 This visit by this delegation had obvious significance. The statement of agreed facts is, nevertheless, as silent about the information it elicited as it is about Mr Ingleby's receipt of that information. Yet the fact that he referred to it in a report which he submitted to the Board places him squarely in the position of one who would be expected by reason of the scope of his duties as Chief Financial Officer of AWB to be (i) directly interested in the delegation's work; (ii) concerned to know what changed terms and conditions Iraq was seeking; and (iii) equally concerned to know whether any and what changes were made as a result.

81 Mr Ingleby attended an AWB meeting in 1999 at which inland transport fees were discussed. Other attendees were Nigel Officer, the general manager of 'global sales and marketing'; Mark Emons, AWB's regional manager for the Middle East-Africa region; Michael Watson, the manager of the Chartering Division at the time the inland transportation fee was introduced; and an employee named David Cowan who was 'allocated mainly to the Chartering Division'.[61]

82 These men, one would assume unless the contrary was stated in the statement of agreed facts, were in a position to provide Mr Ingleby with all the information about which (again, as one would assume unless the contrary was stated in the statement of agreed facts) Mr Ingleby ought to have made it his business to be informed. Yet the statement of agreed facts does not record what information, if any, Mr Ingleby obtained or attempted to obtain. Still less does it reveal why, while he was present at a meeting with others who could give him information which (one could properly assume) it was his duty to have, he did what he did, or why he failed to do what one might have expected him to do, in seeking that information.

83 These observations are particularly pertinent given that, as the statement of agreed facts discloses, David Cowan recorded that Mr Officer had told the meeting that AWB wished 'to distance itself from the [inland transportation fees]'. Mr Cowan also noted that 'It was common in AWB's business to talk about costs being disguised, this being the practice of not disclosing the component parts of the final price per tonne.'[62]

84 On 15 March 2000, Mr Ingleby received a letter sent on behalf of a shipping company with which AWB had dealings. The company was concerned about 'an audit enquiry regarding the payment of "trucking fees" and the amount of trucking fees paid.'[63] Consistently with this, the letter requested confirmation that all wheat contracts and trucking fees were sanctioned by the United Nations and approved by the Australian Government.

85 Mr Ingleby responded the following day. The statement of agreed facts reproduces part of that response. In it, Mr Ingleby simply said that the contracts had been approved by the United Nations and the Australian Government, and that the payment of trucking fees was 'in accordance with AWB Ltd's instructions and form part of [its] contractual obligations.'

86 Mr Ingleby's response is literally true; but it made no mention of the fact that the contracts did not themselves disclose the true position in relation to trucking. More pertinently, there is nothing in the statement of agreed facts to suggest that Mr Ingleby addressed in any way one of the shipping company's principal concerns: namely, what amount had been paid as trucking fees, and whether the United Nations had sanctioned their payment. Nor is there anything in it to explain how Mr Ingleby came to sign a letter which he either knew or ought to have known was deficient in that important respect.

87 In June 2003, the shipping company sought clarification by way of the provision of the 'specific information' which had been lacking in the response of 16 March 2002.[64] Mr Ingleby forwarded the relevant correspondence to AWB's General Manager - Chartering. The statement of agreed facts does not reveal the response from the General Manager; but it does include quotations from subsequent emails, of which Mr Ingleby received copies. In none of these did AWB provide the requested information.[65]

88 In or about September 2000, Mr Ingleby received an email from David Cowan. Among other things, it noted that Messrs Emons and Officer:

... wanted to disguise AWB payments into Iraq for trucking fees. This was achieved by [AWB] Chartering taking a forward contract with [one of the intermediaries used in the Iraqi trade] to combine the freight and trucking payments. The new regime [at AWB] has not supported this agreement and Chartering have incurred the cost to buy out of the deal.

89 A properly prepared statement of agreed facts would have addressed Mr Ingleby's response to his receipt of this email. Instead, it is utterly silent about his reaction to it.

90 On 12 June 2001, Mr Ingleby received a copy of an email from Dominic Hogan, an account manager for AWB based in Cairo, to other officers of AWB.[66] The email 'set out details of contracts A0784 and A0785, which included amounts for inland transportation fees of US$46.70 [per metric tonne] and US$46.90 respectively.'[67] Yet 11 months earlier, on 26 July 2000, Mr Ingleby had been copied into an AWB email which referred to a 'trucking fee' which was quite remarkably lower - a mere US$15 per metric tonne.[68] The statement of agreed facts does not disclose what it ought to have disclosed: namely, either the explanation for the increase, or Mr Ingleby's reaction when he came to appreciate, as surely he must have done, that an increase of that magnitude over that short period had been agreed by AWB.

91 The explanation could not be that Iraq was now a country under invasion or occupation. That did not occur until 2003. Nor could it be that Mr Ingleby was too distant from the changed circumstances to be legitimately unconcerned by them. In the absence of anything to the contrary in the statement of agreed facts, one must conclude that his indifference was incompatible not only with his occupation of the office of Chief Financial Officer, but also with the fact that he personally co-authorised the payment of the inland transport fees for AWB contracts A0784 and A0785.[69]

92 Mr Ingleby likewise co-authorised the payment of the inland transport fees for contracts A1111 and A1112.[70] The amounts involved per metric tonne were, respectively, €55.17 and €55.40.[71] This was disclosed in the payment requests which Mr Ingleby signed.[72] In total, the trucking fees for the four contracts co-authorised by Mr Ingleby amounted to approximately AUD$37.7 million.[73] The payments were authorised in, respectively, March, April, May, June and October 2002 - after Mr Ingleby had to hand all the information to which I have thus far referred, and after he received the emails the subject of the following paragraphs of this judgment.

93 On 10 September 2001, and on the following 13 September, Mr Hogan sent emails addressed to Mr Ingleby and another AWB officer, and copied to others. The first email stated that AWB could 'hold back' from the IGB a second payment for 'inland transport'. The second said that by 22 September the amount 'due to Iraq' would be US$8.864 million. The statement of agreed facts does not reveal Mr Ingleby's reaction to this information.

94 As noted in [61] above, ASIC and Mr Ingleby agreed to describe his admitted contravention of s 180(1) of the Act as a failure by him to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person in his position would exercise. And it may be that Mr Ingleby's contravention can properly be described in those terms, and that the agreed penalties appropriately reflect the true level of his culpability. It may indeed be that the penalties imposed by his Honour, and which are the subject of this appeal, appropriately reflect the true level of his culpability. But, based upon the facts as set out in the statement of agreed facts, neither conclusion immediately commends itself. On the contrary, the statement of agreed facts points in the opposite direction.

95 Senior counsel for Mr Ingleby submitted, in the hearing below, that his client's failure to see what he ought to have seen was a consequence of the demands placed upon him by his job; demands which did not allow for a sufficiently careful reading of correspondence or attention to the detail which would, if known, have led to the truth. I am unimpressed with this argument. It is essential that those who accept the rewards of important offices also accept the responsibilities which go with them. Proper corporate and professional behaviour depends upon that acceptance, and must be supplemented by the knowledge that the courts will play their part in the maintenance of appropriate standards.

96 Senior counsel for Mr Ingleby also submitted that this was 'not a case where it's ... [even] suggested, nor could it be, that Mr Ingleby acted with some degree of wilful blindness.' For the reasons given above, I am of the opinion that a finding of wilful blindness is, on a fair reading of the statement of agreed facts, clearly open. However, for reasons unknown to the Court, ASIC (in the exercise of authority which belongs to it and not to the judicial arm of government) has accepted that Mr Ingleby should be dealt with only for a breach of s 180 of the Corporations Act.

97 This places the Court in a very difficult position. It is the constitutional responsibility of the courts to decide the penalty which justice demands be paid by a contravener. It follows that, while agreements on these matters are to be encouraged, the Court must not simply allow the parties to determine that penalty for themselves. In this case, however, the Court cannot go beyond the penalty upon which the parties agreed; and this is true even given that the Court is justified in doubting that that penalty and period of disqualification sufficiently recognises the extent of Mr Ingleby's failure to adhere to the standards appropriate to his office.

98 In his judgment, a draft of which I have had the benefit of reading and with which I respectfully agree, Weinberg JA gives concise expression to the reason why the Court is bound to go no further than the penalty and period of disqualification agreed between the parties. Mr Ingleby, knowing that ASIC sought nothing more in this appeal than the penalty upon which agreement had been reached, chose not to participate in this appeal. He was therefore entitled to assume that, unless he were first given the right to be heard, this Court would increase neither the penalty nor the disqualification period, even if the appeal were allowed. And the Court has no power to interfere with ASIC's decision to allege a breach of s 180 rather than a provision which, as indicated by the statement of agreed facts, might well more adequately reflect Mr Ingleby's role in the shameful dealings of the organisation in which he occupied a senior office.

99 For the reasons he gives, I agree with Weinberg JA that both NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission[74] and Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd[75] represent bad law. In particular, I agree with his Honour's characterisation of the approach taken by the Full Federal Court as requiring the trial judge, when deciding whether an agreed penalty is within the appropriate 'range', to exercise an appellate role - and therefore to endorse the agreement unless it is outside that 'range'. As demonstrated by this

case, the approach of the Full Court may also result in a court of appeal being placed in an invidious position. Much better that the trial judge give such weight to an agreed penalty as is appropriate to whatever assistance it may provide as no more than a submission.

100 In the circumstances in which it now finds itself, this Court must in my opinion approach its task on this appeal on the basis that Mr Ingleby has committed a most serious breach of his obligations under s 180. It is in these circumstances also necessary to allow the appeal, and make the orders sought by the parties in their statement of agreed facts. Mr Ingleby should be required to pay a pecuniary penalty of $40,000 and should be disqualified from managing corporations for a period of 15 months.

101 I have had the benefit of reading the separate draft reasons of Weinberg JA and Harper JA. I agree with them that the statement of agreed facts in this case was plainly inadequate. In these circumstances, the trial judge ought to have sought more evidence or information from the parties before determining the appropriate penalty.[76] That course not having been adopted, I agree with Weinberg JA, for the reasons he gives, that we should allow the appeal but go no further than imposing the monetary penalty and period of disqualification agreed by the parties.

102 In his reasons, Weinberg JA has disagreed with the approach taken by the Full Federal Court to cases of this kind, repeating and expanding upon his criticisms of that approach while a member of the Federal Court. I specifically record my agreement with the reasons of Weinberg JA on this issue. When a court is faced with a negotiated settlement in a pecuniary penalty case, the joint submission of the parties as to an 'agreed penalty' is an important factor to be considered by the court in performing its judicial role of fixing the appropriate penalty in the circumstances

of the case. The court's discretion in such cases should not, however, be fettered by a principle requiring imposition of the agreed penalty if it is within 'the permissible range in all the circumstances.'[77] Nor should there be a general rule to that effect. Each case must depend on its own facts.

103 The appeal should be allowed. A pecuniary penalty of $40,000 and a period of disqualification of 15 months should be imposed.

[1] Corporations Act 2001 (Cth) s 1317G.

[2] Australian Securities and Investments Commission v Adler [2002] NSWSC 483; (2002) 42 ACSR 80, 114 (Santow J) ('Adler').

[3] Australian Law Reform Commission, Principled Regulation - Federal Civil & Administrative Penalties in Australia, Report No 95 (2002) [2.47] ('ALRC Report').

[5] These would include deterrence, both specific and general, totality and parity. Courts imposing pecuniary penalties would have regard to aggravating and mitigating factors, in the same way as they do when sentencing criminal offenders: see generally Adler [2002] NSWSC 483; (2002) 42 ACSR 80, 114-17 (Santow J).

[6] [1996] FCA 1134; (1996) 71 FCR 285 ('NW Frozen Foods').

[8] [2001] FCA 383 ('ABB Transmission and Distribution').

[11] See, eg, Australian Taxation Office, Code of Settlement Practice (2012); ALRC Report [16.34]; Australian Competition and Consumer Commission, ACCC Cooperation Policy for Enforcement Matters (2002).

[13] [1999] FCA 1642.

[15] [2006] FCA 936; (2006) 234 ALR 511.

[17] J Hilton, 'Principles of Fairness and Accountability' , quoted in ALRC Report [16.24].

[18] [2002] FCA 619 ('Colgate-Palmolive').

[19] Ibid [32]-[35] (citations omitted).

[20] R v MacNeil-Brown [2008] VSCA 190; (2008) 20 VR 677.

[21] [2004] FCAFC 72 ('Mobil Oil').

[24] [2005] FCA 1121; (2005) 60 ATR 518.

[26] [2007] FCA 1834 ('Australian Abalone').

[27] Ibid [119]-[123] (citations omitted).

[28] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, 151-2.

[29] DPP v Karazisis [2010] VSCA 350; (2010) 31 VR 634, 663 (Ashley, Redlich and Weinberg JJA).

[30] The better course, in my view, is to put forward a range, rather than an agreed penalty. I have made that argument before, albeit unsuccessfully.

[31] I should add that another reason for not having 'agreed penalties' in such cases is that appellate guidance can rarely be sought as to whether these are appropriate. Self-evidently, if they are agreed, there cannot be an appeal. Finkelstein J made this very point in ABB Transmission and Distribution.

[32] It will be recalled that in Mobil Oil it was said that if the Court is 'not satisfied that it has sufficient information to support the "agreed" approach, the Court can request the parties to provide additional evidence or information'. Failing that, 'the Court might well decide that it should impose a different sentence or penalty from that proposed by the prosecution or regulator (as the case may be)': Mobil Oil [2004] FCAFC 72, [79] (Branson, Sackville and Gyles JJ).

[33] See the Statement of Agreed Facts, set out as an annexure to Robson J's reasons [2012] VSC 339, part I ('Agreed Facts'); Corporations Act 2001 s 1317G(1)(b)(iii).

[34] Agreed Facts, part I.

[36] Australian Securities & Investment Commission v Ingleby [2012] VSC 339, [4] (Robson J).

[38] Corporations Act 2001 (Cth) s 1317G(1).

[41] The statement of agreed facts does not specifically identify the entity to which it refers as 'AWB'. I take it that the reference is to a corporation called AWB Limited. I shall resort to the acronym 'AWB' where this is consistent with its use in the statement of agreed facts.

[44] See the statement of agreed facts annexed to the judgment of Robson J in ASIC v Lindberg [2012] VSC 332 at [12] of that statement.

[45] Statement of agreed facts, [11].

[48] Statement of agreed facts, [16].

[49] Report of Inquiry in certain Australian companies in relation to the Oil-for-Food Programme, page 135, 31.74.

[50] Statement of Contravention, exhibit P1 in the proceedings before the trial judge.

[52] Statement of agreed facts, [63].

[53] ASIC v Ingelby [2012] VSC 339, [49].

[56] Statement of agreed facts, [20].

[57] The statement of agreed facts refers to these committees as committees of 'AWB', which I take to be AWB Ltd, which is described as the 'head' of the structure which was created in 1999. It may be, however, that the reference is to the AWB Group.

[58] Statement of agreed facts, [26].

[61] Statement of agreed facts, [29]. The descriptions of the positions held by the attendees are taken from the statement of agreed facts as appended to the judgment of Robson J in ASIC v Lindberg [2012] VSC 332, [22].

[64] Statement of agreed facts, [50a].

[66] Statement of agreed facts, [37]. The description of the position held by Mr Hogan is taken from the statement of agreed facts as appended to the judgment of Robson J in ASIC v Lindberg [2012] VSC 332, [22].

[67] Statement of agreed facts, [37].

[74] [1996] FCA 1134; (1996) 71 FCR 285.

[75] [2004] FCAFC 72.

[76] Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72, [79].

[77] See NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285, 291.