Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 908 of 2012

BETWEEN: REGISTRAR OF ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATIONS

JUDGE: JACOBSON J DATE: 11 SEPTEMBER 2013 PLACE: SYDNEY

INTRODUCTION 1 The respondent (Mr Matcham) was at all relevant times the Chief Executive Officer of a corporation (the Corporation) registered under the provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (the Act). 2 The applicant (the Registrar) seeks declarations and ancillary orders arising from contraventions by Mr Matcham of his statutory duties of care and diligence, good faith and not to act improperly to gain an advantage for himself. Those duties are expressed in provisions of the Act which are analogues of the provisions of ss 180(1), 181(1) and 182(1) of the Corporations Act 2001 (Cth) (the Corporations Act). 3 When the matter was called on for hearing senior counsel for Mr Matcham indicated that his client would consent to the making of declarations in terms of those set out in the originating application. He asked me to stand the hearing down for a short time to enable the parties to hand up a Statement of Agreed Facts upon which the declarations would be based. 4 A Statement of Agreed Facts signed by Mr Matcham was handed up later in the day but a debate then took place as to the terms of the declarations. It was agreed between the parties that the remaining issues in the proceeding, namely, the pecuniary penalties and compensation to be ordered, as well as the period for which Mr Matcham should be disqualified, would stand over until November. 5 The essential issue which separated the parties on the terms of the declarations was an issue of construction of the statutory power of the Court to make declarations of contravention of the civil penalty provisions of the Act. 6 The power to make a declaration is contained in s 386-1 of the Act which has its analogue in s 1317E of the Corporations Act. Subsection (2) of each of those sections states the requirements which must be specified in a declaration. One of the requirements, which is stated in paragraph (b) of each subsection is that the declaration must specify: the civil penalty provision that was contravened. 7 The issue of construction which arises is whether the declaration making power is proscribed by this subsection so as to limit the terms of the declaration to the contravention of a single civil penalty provision. 8 This issue arises because the claims made by the Registrar, and the admissions made by Mr Matcham deal with a number of items of conduct, each item of which is said by the Registrar to give rise to a contravention of more than one of the civil penalty provisions.

Discussion 9 In my opinion, the construction of s 386-1(2) and s 1317E(2) put forward by senior counsel for Mr Matcham is not correct. It is wrong as a matter of statutory construction and is contrary to the well established approach taken by the authorities to the exercise of the power to make declarations of contravention of the civil penalty provisions. 10 The short answer to Mr Campbell's proposition is that s 23(b) of the Acts Interpretation Act 1901 (Cth) provides that words in the singular number include the plural. Thus, there is nothing in the language of s 386-1(2)(b) or s 1317E(2)(b) which limits the power to the specification of a single civil penalty provision. 11 That is consistent with the approach that has been taken in the authorities to the manner in which a declaration should be framed. There are numerous cases in which a declaration has been made that a person has contravened multiple civil penalty provisions by reason of a single act or omission or by engaging in a particular species of conduct. I will refer to some of them below but the approach which those authorities have taken is not usually explained in the reasons for judgment. Only two authorities seem to have discussed the proper approach in the reasons. 12 The first is Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373, a decision of Brereton J. In Maxwell his Honour said at [146] that generally speaking it is not appropriate to make declarations of contravention that treat an entire course of conduct as a single contravention of s 180 of the Act and then as another contravention of s 181. 13 One reason for this given by Brereton J at [147] was that a charge of criminal conduct should not be duplicitous: see Vrisakis v Australian Securities and Investments Commission (1993) 11 ACSR 162. 14 The second reason given by Brereton J at [148] requires further elaboration. His Honour commenced that paragraph by stating that the same conduct should be treated as constituting one contravention only, and not separate contraventions of ss 180 and 181. Whilst at first sight this may be thought to support Mr Campbell's submission, when read in full context it does not do so. This is because the observation in the first sentence of the paragraph was directed at the particular agreement reached by the parties in that case which dealt with a course of conduct and which apparently provided for separate declarations for each contravention of each section. 15 What is important is that his Honour acknowledged in [148] that the same conduct may constitute a breach of the duty to act in good faith as well as the duty of care and diligence. He went on to give expression to this, taking into account the principle that the same conduct should be penalised only once, by consolidating the proposed declarations of contravention of different sections into one declaration of contravention. 16 This can be seen in the declaration set out in Schedule F on page 437 of the Report. The declaration was made, pursuant to s 1317E(1) of the Corporations Act, that the defendant, in contravention of s 180(1) and s 181(1), failed to exercise his powers with the requisite degree of care and diligence, or in good faith in the best interests of the corporations in question, and for a proper purpose, by the particular acts and omissions specified in the enumerated paragraphs of the declaration. 17 This approach was endorsed and adopted by Ward JA in Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs (2013) 93 ACSR 421 at [38]-[40], [146]-[147] and paragraph [61] of the declaration set out at pages 562-563 of the Report. 18 Of course, a declaration that particular acts or omissions constitute contraventions of multiple civil penalty provisions can only be made where the conduct satisfies the test for contravention of the particular provision. The Court must be satisfied that the conduct contravenes the separate duties expressed in the relevant provision and takes into account the different mental element involved in each of the provisions. 19 It is necessary to bear in mind that what judges do in giving effect to civil penalty provisions is analogous to punishment for offences against the criminal law: Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [41] (McHugh J), but in my opinion the approach which I have taken is consistent with this. 20 The separate nature of the duties stated in ss 181 and 182 was conveniently summarised by Ward J in In the matter of Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2012] NSWSC 1276 at [1486] ff, citing well established authorities. 21 I am satisfied in the present case that the form in which Ms Gleeson SC, who appears for the Registrar, has expressed the declarations, meets the necessary test. This can be seen by taking as an example the first declaration which declares that in contravention of ss 265-1, 265-5 and 265-10 of the Act, Mr Matcham failed to exercise his powers with the requisite degree of care and diligence, failed to act in good faith and improperly used his position by causing the corporation to pay him an amount of $31,985 without the authority or approval of the Board, on or about 17 October 2007. 22 This declaration is precisely in accordance with the admissions made by Mr Matcham in the Statement of Agreed Facts. The payment is admitted at paragraph [27] of that document, and the fact that Mr Matcham procured it with knowledge that the payment had not been authorised is also admitted in the following paragraphs. 23 In particular paragraph [37] of the Statement of Agreed Facts is as follows: 37. By procuring the "Bonus" payments without the authority of the Board, the Respondent: 37.1 acted in a manner that was inconsistent with how an ordinary person of ordinary prudence with the knowledge and experience of the Respondent might be expected to have acted in all the circumstances at the relevant time if he was acting on his own behalf; 37.2 failed to exercise his powers and discharge his duties in good faith in the best interests of the Corporation; 37.3 failed to exercise his powers for a proper purpose; 37.4 improperly used his position to gain an advantage for himself; 37.5 caused detriment to the Corporation; and 37.6 acted contrary to the Rule Books. 24 The effect of Mr Campbell's submission, if accepted, would be that the Registrar would be forced to elect which one of the separate admissions of contravention to accept and to forego the others. That would be to emasculate the plain terms of the admissions and to strip the declarations of their full effect in the enforcement of civil penalty proceedings: see Re McDougall (2006) 229 ALR 158 at [55]. 25 The declarations sought by the Registrar do not contain the vice identified by Spigelman CJ in Vines v Australian Securities and Investments Commission (2007) 63 ACSR 505 at [14] or by Ipp JA in the same case at [209]. Nor do they have the effect that they may result in Mr Matcham being penalised more than once for the same conduct: see Vines at [214]. 26 The declarations have been drafted with the appropriate level of particularity and observe the principles discussed by Santow J in Australian Securities and Investments Commission v Adler (2002) 189 ALR 365 at [7] ff. 27 Notably, in Appendix A to his judgment in ASIC v Adler, Santow J set out, with apparent approval, the terms of declarations made in other cases on earlier versions of s 1317E(2). One of the cases was Australian Securities and Investments Commission v Forem-Freeway Enterprises Pty Ltd (1999) 39 ACSR 339. In that case the Court declared that the officer of the company had contravened three separate civil penalty provisions by certain acts and omissions. 28 The earlier form of the section was referred to by Santow J in ASIC v Adler at [6]. The substitution of the word "conduct" in the current form of the Corporations Act for the words "specific act or omission" has, if anything, widened the scope of the requirements stated in s 1317E(2). But, as his Honour said at [7], it is still necessary to specify the conduct. That has been done in the present case. 29 Nothing turns upon the fact that in the present case the originating application claimed three declarations, each expressed as a separate declaration of contravention of a single provision of the Act. Those declarations were properly expressed in the originating application, as predicated upon the opening words which state "on the grounds stated in the statement of claim …". 30 The statement of claim states in clear terms each of the facts and matters relied upon to seek the relief. It does so in a way which makes it plain that single items of conduct, such as the procuring of the bonus referred to above, are alleged to give rise to breaches of the multiple civil penalty provisions that are expressed in the declarations. 31 Thus, the declarations merely express with the necessary degree of specification and particularity the contraventions which are the subject matter of the proceeding and which are admitted by Mr Matcham.

CONCLUSION AND ORDERS 32 Accordingly, I will make declarations in accordance with the draft short minutes submitted by Ms Gleeson. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.