Australian Securities and Investments Commission v Dixon Advisory & Superannuation Services Ltd

INTRODUCTION 1 The plaintiff in this proceeding, the Australian Securities and Investments Commission (ASIC), alleges contraventions by the defendant, Dixon Advisory Superannuation Services Limited (DASS or the Company), of s 961K(2) of the Corporations Act 2001 (Cth) (the Act) on multiple occasions. By an originating application dated 3 September 2020, ASIC alleges that DASS was the responsible licensee of representatives who contravened ss 961B(1), 961G and 961J of the Act. DASS filed a defence to these allegations on 31 March 2021. 2 On 8 July 2021 the parties entered into a conditional heads of agreement to resolve the proceedings. DASS admitted to 53 of the alleged contraventions of s 961K(2) of the Act by being the responsible licensee of representatives who contravened s 961B(1) and s 961G on 29 occasions, however it denied any contraventions of s 961J of the Act. ASIC does not press any of the allegations of breach which DASS denies. 3 The parties prepared and filed a statement of agreed facts for the purposes of s 191 of the Evidence Act 1995 (Cth), together with joint submissions, on 15 October 2021 for the assessment of the pecuniary penalty. These were filed in support of a signed proposed minute of orders, which was annexed to the joint submissions. 4 On 25 July 2022, ASIC provided a revised set of orders. These revised orders were provided in circumstances where DASS's Australian financial services licence (AFSL) had been suspended on 19 April 2022. The revised orders included a requirement that the plaintiff would not seek to enforce the pecuniary penalty orders or any costs order against the defendant without the leave of the Court. Further amended orders were provided by ASIC on 28 July 2022. These orders included the definitions of relevant terms used in the proposed declarations and orders. 5 The substance of the orders sought has not changed since the consent orders were initially proposed by the parties. Broadly, the orders sought by the parties comprise: (a) a declaration of contravention of a civil penalty provision pursuant to s 1317E(1) of the Act in respect of DASS's 53 admitted contraventions; (b) a penalty of $7.2 million in respect of the 53 admitted contraventions of s 961K(2) of the Act; (c) orders pursuant to s 1101B(1) of the Act requiring DASS, if it resumes providing financial services, to have in place certain systems and procedures and to provide a report to ASIC verifying those matters (compliance program orders); and (d) an order that DASS pay ASIC's costs of the proceeding in the amount of $800,000. 6 On 30 November 2021 orders were made by Anastassiou J granting Kosen-rufu Pty Ltd, as trustee for T Stott Superannuation Fund and Trudy Stott (Interested Parties), leave to intervene in the proceedings. The Interested Parties filed an interlocutory application seeking orders pursuant to s 1317QF of the Act. Orders were subsequently made by consent on 25 July 2022 to discontinue this application. A similar application was foreshadowed by the legal representatives for another interested party in July 2022, however the Court was later advised that this application would not be forthcoming. 7 On 19 January 2022 it was announced that DASS had entered into voluntary administration and that joint and several administrators had been appointed. By this time most of the steps to give effect to the heads of agreement entered into by the parties had been completed. 8 On 25 July 2022 the administrators provided ASIC with their signed written consent under s 440D(1)(a) of the Act for the proceeding to continue against the Company. The administrators advised in an email to the Court on 26 July 2022 that they do not oppose the orders sought by ASIC. 9 The administrators have since applied to have DASS's AFSL cancelled, which application is still pending. 10 On 2 August 2022 I heard oral submissions from ASIC, primarily in relation to the proposed pecuniary penalty. Having regard to the agreed position, the administrators were excused from attendance at the hearing. 11 The primary documents relied upon by ASIC at the hearing were as follows: (a) statement of agreed facts dated 15 October 2021; (b) joint submissions dated 15 October 2021; (c) affidavit of Rayma Gupta, ASIC litigation counsel, sworn 25 July 2022; and (d) proposed orders dated 28 July 2022. 12 Having regard to the parties' agreed position, it is necessary to determine: (a) the form of the declaration of contravention; (b) the amount of any pecuniary penalty; and (c) whether and in what form any compliance program orders should be made. 13 For the reasons that follow, there will be a declaration and orders substantially in the terms sought by the parties. Given the agreement of the parties as to the relevant facts, the application of the law to those facts, and the appropriate penalties, in these reasons I have drawn from the statement of agreed facts and, where I agree with them, the written submissions. I will refer to the statutory provisions and the applicable principles, and then address each of the relevant issues in turn.