the extent of the monetary order to be made
62 It is appropriate that a monetary penalty order be sufficiently large to constitute a specific deterrent for the respondent against engaging in any like conduct in the future, as well as a form of punishment for his contravention in this case. Importantly, the order needs to send a message to persons in a like position to that of the respondent that generally deters contravening conduct of this sort.
63 In this regard, I agree with comments made in Fitzgeralds at [25] by Logan J, to which Mansfield J subscribed in Eddy at [16], that the Act provides for taxation benefits to trustees of superannuation funds and its members to encourage prudent provision by Australians for their retirement. It is appropriate that the Court should give effect to that policy purpose. The respondent's conduct here, as in those cases, has totally thwarted that purpose. The order made by the Court should ensure that the privilege of maintaining a selfmanaged superannuation fund is not abused.
64 As to the setting of a monetary penalty, there are a number of general principles that should be regarded, including:
(a) A civil penalty needs to be sufficiently high to deter contravention by others, but not so high as to be oppressive: APRA v Holloway [2000] FCA 1245 (Holloway), Mansfield J at [12]; Fitzgeralds at [29]; Eddy at [18].
(b) General deterrence is a very significant factor: Holloway at [11]; Fitzgeralds at [29]; other objectives include denunciation and punishment: APRA v Derstepanian [2005] FCA 1121 (Derstepanian), Weinberg J at [26]; Fitzgeralds at [29]; Eddy at [18]. Contravening conduct under the SIS Act may be difficult to detect and its investigation can be complex and expensive: Holloway at [21]; Fitzgeralds at [29]; Eddy at [18].
(c) Those that take advantage of the utilisation of a self-managed fund have a responsibility to manage that fund in accordance with the terms of the Deed and the legislation: Fitzgeralds at [30] and Eddy at [18]. Any trustee is obliged to discharge his or her duty according to the terms of a governing Trust Deed.
(d) The maximum penalty for any contravention is $220,000: s 196(3), read with s 4AA of the Crimes Act 1914.
(e) The total penalty must not exceed what is proper for the conduct of the person in respect of all the contraventions: Holloway at [19]; Fitzgeralds at [31]-[33], Eddy at [18].
(f) Relevant factors in determining an appropriate penalty include:
(i) the nature and extent of the contravening conduct;
(ii) the amount of any loss or damage caused;
(iii) the size of the organisation;
(iv) the deliberateness or otherwise of the contravention(s);
(v) the period over which the contravention(s) extended;
(vi) the degree of cooperation of the person concerned, either in the investigation or the subsequent hearing;
(vii) the past record of the person;
(viii) the person's financial position;
(ix) any amounts already paid by way of compensation or legal costs;
(x) contrition;
(xi) any public policy position applicable
: see generally, Derstepanian at [30]-[37]; Holloway at [11]-[12], [32]; Fitzgeralds at [35] and [43] and Eddy at [18].
65 In the case of Fitzgeralds, penalties of $20,000 and $10,000 were imposed on the first and second respondents, who were a husband and wife, in respect of their misapplication of the sum of $148,000 from a self-managed fund to settle a claim by a liquidator against them in respect of a company formerly controlled by them.
66 In Eddy, the parties, at the invitation of the Court, submitted an agreed penalty proposal of $15,000 payable by instalments, which received the Court's endorsement having regard to the financial impecuniosity of the respondent in that case.
67 In Holloway, by contrast, a penalty of $40,000 was imposed on the company respondent and $12,000 on the individual as a result of the wrongful application of $130,000 from a self-managed fund. The total penalty for multiple breaches including a large number of funds advised by the respondents in that case was $222,000 for the company and $35,000 for the individual.
68 In Derstepanian an agreed penalty of $100,000 was endorsed by the Court, in circumstances where the trustees of a superannuation fund with 17 members (including trustees) effectively misapplied in the order of $160,000 for the use of themselves and a company they controlled, but had subsequently paid compensation in the sum of approximately $226,000.
69 It is well understood that there is no "tariff" when it comes to the imposition of penalties in civil penalty cases, whether under this Act or like legislation, and that the Court must necessarily have regard to the facts and circumstances of each case. Ultimately, the Court should apply the process of "instinctive synthesis" in arriving at the appropriate penalty, having regard to all relevant factors: see, for example, in relation to the application of pecuniary penalties under the Building and Construction Industry Improvement Act 2005 (Cth), McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29 at [12], [50].
70 The situation here is that the numerous contraventions constitute a single contravening course of conduct, as the applicant submits. This ensures that in applying what is often called the "totality principle", the final penalty is proportionate to the overall contravening conduct.
71 The total amount of funds misapplied by the respondent in this case is in the order of about $64,000. I am prepared in the circumstances to deduct the 11 particular transactions identified by the respondent as errors in relation to which he soon after refunded to the Fund. They total a little over $3,400. Accordingly, the amount on any view misapplied by the respondent is in the order of $60,000.
72 It is pertinent to note that this virtually exhausted the total amount of the funds in the Fund.
73 At the same time, and without in any way excusing the behaviour of the respondent, the total amount involved is not as large as the sums involved in the cases of Holloway, Derstepanian, Fitzgeralds or Eddy.
74 Also important to note is that the respondent was very much the controlling trustee. The other trustee, who has since passed away, was his father.
75 I have already noted above that the contravention extended over a period of times, notwithstanding that the respondent was aware of the fact that he should not have been so conducting himself.
76 In other respects the respondent is not a person who has previously contravened this Act, or for that matter, any other Act or laws so far as the Court is aware.
77 The respondent's general financial position is such that, while he found himself in straightened circumstances at the time he hatched his plan to gain access to his superannuation funds, it has since improved. He continues to be employed as a stockbroker. His son is no longer at school and he is no longer incurring educational expenses on his behalf. Following the death of his father, the respondent has received some funds which have generally improved his financial position. He has disclosed his financial position to the applicant.
78 I also note that the respondent has been obliged to pay, and has agreed to the payment of, assessed taxes and penalties and is repaying that debt to the ATO.
79 This last comment is more an acknowledgement that at all material times since he was approached by the applicant in respect of the contraventions, the respondent has acknowledged them, has cooperated with the applicant and has done nothing to hide his contravening conduct. When the matter first came on for direction in this Court, the respondent immediately indicated his intention to admit the contraventions alleged. All of that is to his considerable credit.
80 Indeed, in general terms, I accept that the respondent is contrite, even though he did deliberately develop this scheme in order to gain access to his superannuation. He accepts now that his scheme was foolhardy.
81 Taking all these factors into account, I consider that, absent the respondent's acknowledgement and admission of his contraventions from the outset of the inquiry and proceedings against him on behalf of the applicant, a monetary penalty in the order of $15,000 to $17,000 would have been appropriate. Taking into account the admissions and cooperative conduct of the respondent, for which he should receive credit, I consider the monetary penalty should be fixed at $12,500. This penalty constitutes both a suitable specific and general deterrent to such conduct, taking into account the circumstances of the respondent in this particular case.