Consideration
25 In the related case of Registrar of Aboriginal and Torres Strait Islander Corporations v Taylor [2018] FCA 900, I considered in some detail, the question of relief and the basis for granting it in relation to admitted contraventions of similar provisions of the CATSI Act by the first respondent, Mr Taylor.
26 I refer to and adopt what I said there about such relief and the principles guiding the exercise of judgement in imposing pecuniary penalties and granting the other forms of relief sought here.
27 Specifically, I accept that the following declarations and orders are appropriate:
(1) declarations of contravention under s 386-1(1) of the CATSI Act;
(2) disqualification orders under s 279-15(1) of the CATSI Act;
(3) pecuniary penalty orders under s 386-10(1) of the CATSI Act; and
(4) compensation orders under s 386-15(1) of the CATSI Act.
28 I accept that relief in these terms responds to the contraventions in the following appropriate ways:
(1) The declarations send a clear message as to exactly what the contraventions in this case are.
(2) The disqualification orders operate as protective measures to protect Aboriginal corporations from future harm.
(3) The pecuniary penalties provide a measure of both general and specific deterrence so that others who might be in a similar position of employment to that of Mr Shahid are deterred from engaging in such conduct in the future.
(4) The compensation order suggests to some extent the significant harm suffered by the Aboriginal corporation in this instance.
29 It is important that all persons subject to the obligation imposed by the CATSI Act in the management and operation of Aboriginal corporations are fully aware of their responsibilities and are not under any misapprehension that the revenue, assets and property of the corporations are, in effect, at their private control.
30 As I say, I have no doubt that the declarations proposed are appropriate.
31 I also consider the period of disqualification for a period of seven years is appropriate, for the following reasons advanced by the Registrar:
(1) The conduct was deliberate, self-interested, and not as a result of negligence or oversight, and occurred over an extended period of a number of years.
(2) Mr Shahid was in a position of trust and responsibility and was responsible for keeping written financial records of the Aboriginal corporation. His actions were an abuse of the trust placed in him by the board of directors of the Aboriginal corporation. He held a senior executive position in the Aboriginal corporation with a commensurate salary, and received rent-free accommodation.
(3) The payments were not approved by the directors of the Aboriginal corporation at a directors' meeting or by members of the Aboriginal corporation at a general meeting.
(4) Mr Shahid made the payments in circumstances where he knew, or ought to have known, that:
(a) the amounts borrowed were large sums and interest free;
(b) the Aboriginal corporation lost opportunities to invest those funds, such as via a term deposit;
(c) the Aboriginal corporation could not acquire further housing assets and there was a waiting list for its houses; and
(d) from at least 22 June 2013, Mr Shahid was aware that the Department of Housing proposed to and did in fact discontinue funding to the Aboriginal corporation on and from 1 July 2014.
32 A lengthy period of disqualification will serve to provide specific and general deterrence to protect Aboriginal and Torres Strait Islander corporations (as well as corporations generally).
33 In relation to the question of what pecuniary penalty should be imposed, the parties understand that a statutory maximum penalty of $200,000 applies to each contravention. They also understand that when considering the maximum penalty for the course of conduct it is important to bear in mind that the statutory maximum for one contravention is not converted into a maximum for an entire course of conduct.
34 Rather, the maximum continues to apply to each so that the final total of the penalties imposed may exceed the statutory maximum.
35 Nonetheless, the statutory penalty imposition regimes are designed to ensure that justice is done so far as the total gravity of offending conduct is concerned.
36 As the Registrar points out, these proceedings relate to many separate acts undertaken over a period of almost four years. Accordingly, the proper assessment of appropriate penalties requires consideration of three well-recognised principles regarding the treatment of multiple contraventions:
(1) If multiple provisions are simultaneously breached by the same wrongful act it is appropriate to penalise that act by reference to the most serious provision breached (but it should not attract separate and additional penalties for the other provisions which were also breached).
(2) Separate contraventions arising from separate acts should ordinarily attract separate penalties. However, in some cases it may be appropriate to treat the contraventions as forming part of a "course of conduct" when they are closely interrelated.
(3) A "final check" of the cumulative effect of the proposed penalties must be conducted to ensure the total is just and appropriate. If necessary to do so, the final amount can be moderated by the totality principle.
37 It is also correct to observe that the law recognises that such an offender should be given a sentence which fairly reflects the substance of the offending conduct, rather than a purely mathematical accumulation of sentences for each separate offence which may be able to be technically "attached" to the same act, see Pearce v The Queen (1998) 194 CLR 610 at [40]-[42]; [1998] HCA 57. The same principle is well-recognised as applying to the imposition of civil penalties.
38 In this case, Mr Shahid's conduct simultaneously breached multiple provisions (as is reflected in the declarations of contravention). In those instances, the Registrar seeks the imposition of a penalty in respect of only the most serious contravention arising from each wrongful action, namely the improper use of position to gain an advantage contrary to s 265-10. The wrongdoing encapsulated by ss 265-1 and 265-5 is, in each case, subsumed into the breach of s 265-10. As a result, for the contraventions where penalties are being imposed under s 265-10, the Court is not asked to impose penalties for the breaches of ss 265-1 and 265-5 as to do so would involve Mr Shahid being penalised twice for the same conduct. I accept that the Court should impose pecuniary penalties in this case on that understanding.
39 The question also arises as to whether and, if so, there is any course of conduct in relation to which only one penalty should be imposed.
40 The question which arises in each case is whether the contraventions should be treated as being truly a single course of conduct. This is a factual enquiry to be made having regard to all of the circumstances of the case.
41 The agreed facts show that each staff loan was separately procured by Mr Shahid; that is, each staff loan required a separate positive act on each occasion a payment was made or obtained. The unauthorised payments are not a sequence, as the time lapses between them are not uniform and the purported purposes are various. They were obtained over a period of almost four years. See Mill v The Queen (1988) 166 CLR 59 at 62-63; [1988] HCA 70; reaffirmed by the High Court in Johnson v The Queen (2004) 205 ALR 346; [2004] HCA 15.
42 However, this is not to say that the Court should ignore the similarities and possible points of overlap in the contravening conduct. It is merely to say that any allowance for those matters should be made in a different way, namely:
by imposing penalties which have regard to the circumstances of each contravention, including its place in the context of a series of contraventions; and
if necessary, moderating the cumulative total of such penalties through the totality principle so as to ensure an appropriate final amount.
43 When one has regard to the contravening conduct it is undoubtedly serious. The contravening benefits, being the staff loans:
(1) were obtained on many separate occasions extending over almost four years;
(2) were for a total amount of $1,371,413.55 (exposing the Aboriginal corporation to a significant level of risk even though Mr Shahid repaid an amount of $1,159,902.25); and
(3) were obtained directly from the Aboriginal corporation itself, such that losses of a corresponding amount were inevitable if the staff loans were not repaid.
44 The financial consequences for the Aboriginal corporation were serious in that:
(1) the Aboriginal corporation lost opportunities to invest those funds, such as via a term deposit;
(2) the Aboriginal corporation could not acquire further housing assets and there was a waiting list for its houses; and
(3) for the period ended 31 October 2014 the Aboriginal corporation suffered a net loss of approximately $195,483.
45 Mr Shahid was a senior employee of the Aboriginal corporation, reporting directly to Mr Taylor. As finance officer, and because of his education and experience as an accountant, Mr Shahid was well placed to assess and understand the impact of staff loans on the Aboriginal corporation's financial position.
46 In his favour, Mr Shahid has consented to the declarations of contravention being made against him. In addition, he has provided instructions to his legal advisors to agree to most of the facts put forward by the Registrar (in the statement of agreed facts) avoiding the need for a contested hearing.
47 I also note Mr Shahid has repaid amounts towards his staff loans, being an amount of $1,159,902.25 (against a total amount borrowed of $1,371,413.55). However, taking into account staff entitlements owed to Mr Shahid, an amount of $207,956.75 remains outstanding.
48 I accept the submission made by the Registrar that whilst it could be said the action of obtaining staff loans could form a course of conduct, the staff loans were obtained on many separate occasions extending over a period of four years. Given the staff loans were treated as repayable to the Aboriginal corporation by 30 June of each financial year that the amounts were paid, it would be appropriate to treat the staff loans made each financial year as a separate contravention or "bundles of separate courses of conduct" capable of incurring a pecuniary penalty, namely:
(1) during the 2011/2012 financial year, Mr Shahid caused the Aboriginal corporation to pay him money on at least 24 occasions, which totalled $268,639.31;
(2) during the 2012/2013 financial year, Mr Shahid caused the Aboriginal corporation to pay him money on at least 40 occasions, which totalled $399,012.39;
(3) during the 2013/2014 financial year, Mr Shahid caused the Aboriginal corporation to pay him money on at least 36 occasions, which totalled $445,575.64; and
(4) during the 2014/2015 financial year, Mr Shahid caused the Aboriginal corporation to pay him money on at least 17 occasions, which totalled $258,186.21.
49 I also accept that the staff loans are, in effect, a series of conduct that could be considered a series of separate contraventions such that the course of conduct contraventions should be treated more seriously than a single contravention.
50 In all of the above circumstances and taking into account the totality principle, I accept that the single pecuniary penalty which the parties subscribe namely, a pecuniary penalty of $100,000, is appropriate.
51 I note that in this regard, the pecuniary penalty sought and which I agree should be imposed, is lower than that which I imposed in respect of the first respondent, Mr Taylor. That pecuniary penalty was in the sum of $250,000.
52 I accept the Registrar's view of the relative seriousness of the contravening conduct of each of the respondents, which takes into account Mr Taylor's position as chief executive officer of the Aboriginal corporation. He was the most senior employee of the Aboriginal corporation to whom Mr Shahid reported. On the other hand, Mr Shahid borrowed substantially higher amounts than Mr Taylor and left an amount of $207,956.75 outstanding. Overall, I accept that in the scheme of the management and operation of the Aboriginal corporation, Mr Taylor as the chief executive, should be visited with a greater pecuniary penalty than Mr Shahid. That imposed on Mr Shahid nonetheless remains significant and is appropriate, in a proportionate sense, having regard to the relative responsibilities of the two men in the management of the Aboriginal corporation.
53 I should finally state that the compensation order sought is appropriate and necessary to compensate the Aboriginal corporation for the damage it has suffered as a result of the contravening conduct of Mr Shahid.
54 It also follows that Mr Shahid should pay the costs of the proceedings incurred by the Registrar.
55 In coming to these view that the declarations and orders proposed by the Registrar and Mr Shahid are appropriate and should be made, I have also had regard to the particular circumstances of Mr Shahid as set out by him in submissions filed 18 July 2018.
56 His personal circumstances are that he is now 55 years of age. He was born in Bangladesh and obtained tertiary qualifications in India and in Australia. He has been married for 21 years and has maintained accounting or financial/administrative positions in a number of businesses. He has no prior criminal record or prior history of contravening legislation.
57 When he commenced with the Aboriginal corporation as a finance officer in December 2002, his annual salary was approximately $40,000. When he resigned in November 2014, it was approximately $80,000.
58 I also note that Mr Shahid says that upon his commencement of employment with the Aboriginal corporation he did not receive an induction or any formal handover in relation to his position. He says he was not aware of important information such as the Aboriginal corporation's rule book which established the internal governance, rules and objectives of the corporation, and had no previous experience in working for a corporation registered under the CATSI Act.
59 He further indicates that he did not attend the board meetings from start to finish and did not participate in any decision-making. His duties did not include applying for funding grants, making payments without authorisation from Mr Taylor, purchasing capital items, pursuing tenants for rental arrears, managing or supervising other staff members, or making decisions with respect to the Aboriginal corporation's investment of funds and capital expenditure of more than $500.
60 I take all of those factors into account. If anything they highlight the significant need for Aboriginal corporations affected by the CATSI Act to ensure appropriate training and education of all employees, especially those having key responsibilities under the CATSI Act.