Wright v Australian Prudential Regulation Authority

Federal Court of Australia|2024-03-05|Before: Derrington J

Pursuant to s 126J(1)(a) of the Superannuation Industry (Supervision) Act 1993 (Cth), the disqualification of Mr James Hebden Wright made on 16 January 2004 pursuant to s 120A(1) of the SIS Act be revoked.
The Australian Prudential Regulation Authority remove Mr James Hebden Wright's disqualification listing from the APRA Disqualification Register. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 By an originating application filed on 30 October 2023, the applicant, Mr James Hebden Wright, seeks orders pursuant to s 126J of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act): that his disqualification as a trustee or responsible officer made on 16 January 2004 be varied or revoked, pursuant to s 120A(1) of the SIS Act, as then enacted; and that the Australian Prudential Regulation Authority (APRA) remove his disqualification listing from the APRA Disqualification Register. 2 APRA is not required to be joined as a party to an application made pursuant to s 126J of the SIS Act. Nevertheless, as Mr Wright did join APRA, and because he is self-represented, APRA has filed submissions to assist the Court. The Court is grateful for APRA's courtesy and assistance. APRA is neutral as to whether the orders sought by the applicant should be made. 3 In support of his application, Mr Wright relied on his affidavits dated 25 October 2023 (First Wright Affidavit), 4 December 2023 (Second Wright Affidavit), and 8 December 2023 (Third Wright Affidavit) and written submissions filed on 31 January 2024. APRA relied on two affidavits of John Edmund Poulsen dated 30 November 2023 (First Poulsen Affidavit) and 22 December 2023 (Second Poulsen Affidavit), and written submissions filed on 2 February 2024. 4 The purpose of Mr Wright's application is to enable him to register a Self-managed Superannuation Fund (SMSF) for the benefit of himself and his wife. 5 On 8 January 2024, I made Orders that the proceeding be determined on the papers. For the reasons that follow, it is appropriate to make the orders sought by Mr Wright.

Background 6 The circumstances of Mr Wright's disqualification are described in the First and Third Wright Affidavits, and the Second Poulsen Affidavit. At the time of his disqualification, Mr Wright was a trustee or responsible officer of "The Wright Directors and Executives Superannuation Fund" (WDES). The accountant who was administering WDES at the time used his business address - a post office box in Kuranda, Queensland 4881 - for correspondence. The evidence discloses that APRA had attempted to contact Mr Wright in 2003 about the non-lodgement of annual returns for WDES. None of APRA's communications appear to have been brought to Mr Wright's attention by his accountant, if they were received. Mr Wright deposed that he left North Queensland in 1996 and subsequently relocated to Brisbane. His accountant similarly left North Queensland and relocated to Tasmania in 1998, whereupon Mr Wright lost contact with him. APRA was apparently not notified of any change of contact details for WDES. 7 Mr Wright did not become aware of his disqualification until on or about 11 July 2023 when he spoke with an officer of the Australian Taxation Office (ATO) about his application for SMSF registration. In order to view copies of the relevant disqualification notices, he was required to lodge a Freedom of Information request with APRA. I accept Mr Wright's evidence that he never received any phone calls or mail from APRA in the period immediately prior to his disqualification, or in the ensuing period of over 20 years. APRA does not contest that evidence. 8 In the period between 2003 and 2022, Mr Wright was a director of a corporate trustee entity Eurostyle Eyewear Pty Ltd ACN 107 117 395 as trustee for The Wright #3 Family Trust. Considering that both are registered entities, it is somewhat surprising that APRA was unable to obtain accurate contact details for Mr Wright through basic corporate searches, but nothing turns on this. To the extent that Mr Wright's First Affidavit contained opinion evidence as to his view of shortcomings in the regulatory regime administered by APRA, that evidence is inadmissible, and I have had no regard to it.

Should the disqualification be revoked? 9 The Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 (Cth) introduced, among other provisions, ss 126G to 126K of the SIS Act. Section 126K(1) of the SIS Act relevantly provides that a person commits an offence if the person is a disqualified person, and, knowing that he or she is a disqualified person, "is or acts as a trustee, investment manager or custodian of a superannuation entity". 10 Mr Wright's disqualification was in effect at the time of the commencement of the relevant provisions of the Review of Prudential Decisions Act, which were assented to on 26 May 2008. The disqualification was taken to continue in force by virtue of s 70(2) of that Act. That section provides: (2) For the purposes of the Superannuation Industry (Supervision) Act 1993, a disqualification by APRA that is in force under section 120A of that Act immediately before this item commences continues in force after this item commences. 11 Section 126J of the current SIS Act is in these terms: 126J Court power to revoke or vary a disqualification etc. (1) A disqualified person, or the Regulator, may apply to the Federal Court of Australia for: (a) if an individual is a disqualified person only because he or she was disqualified under section 126H - a variation or a revocation of the order made under that section; or (b) otherwise--an order that the person is not a disqualified person. (2) If the Court revokes an order under paragraph (1)(a) or makes an order under paragraph (1)(b), then, despite section 120, the person is not a disqualified person. (3) At least 21 days before commencing the proceedings, written notice of the application must be lodged: (a) if the disqualified person makes the application--by the person with the Regulator; or (b) if the Regulator makes the application--by the Regulator with the disqualified person. (4) An order under paragraph (1)(b) may be expressed to be subject to exceptions and conditions determined by the Court. (Emphasis in original.) 12 "Regulator" is defined in s 10 of the SIS Act as follows: (a) if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by APRA (other than a provision that is administered by both APRA and ASIC) - APRA; or (b) if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by ASIC (other than a provision that is administered by both APRA and ASIC) - ASIC; or (c) if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by both APRA and ASIC - either APRA or ASIC, but, if the context requires the reference to be particularly to one of those bodies, then Regulator means that body; or (d) if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by the Commissioner of Taxation - the Commissioner of Taxation. Note: In relation to paragraph (c), the context may require Regulator to mean the same body as has been referred to elsewhere. For example, in subsection 344(1), the Regulator who may be requested to reconsider a decision is required by the context to be a reference to the body who made the reviewable decision. (Emphasis in original.) 13 There is no dispute that APRA was notified appropriately. Assuming it may also have been necessary to notify the ATO as the current regulator of SMSFs, I am satisfied that the ATO had sufficient notice by Mr Wright's request to the ATO dated 6 September 2023, and the subsequent communications between the ATO and Mr Wright to which he and Mr Poulsen have deposed: Second Wright Affidavit; Second Poulsen Affidavit. 14 The relevant principles applicable to an application under s 126J were summarised by Banks-Smith J in Macalister, in the matter of an application by Macalister [2021] FCA 1455 at [21]: … it can be seen that the main consideration in applications under s 206G(1)(c) of the Corporations Act and s 126J(1)(b) of the SIS Act is therefore the interests of third parties; the shareholders, creditors and employees of the relevant company, and the public at large …. As discussed in GFD v BJD [2018] WASC 374 at [11]-[12], other considerations may include: (a) the protection of the public and any shareholders; (b) the nature of the disqualification; (c) the applicant's character and conduct since the disqualification; (d) the structure of the company and the nature of the business; (e) the potential for repetition of contraventions; (f) the risk to survival of the company; (g) the effect on any third parties of the company being unable to have the benefit of the applicant's knowledge; and (h) insofar as bankruptcy is involved, the circumstances in which the debts giving rise to the bankruptcy were not paid and the extent to which an applicant cooperated with the trustee in bankruptcy. (Citations omitted.) 15 Mr Wright has deposed to managing the GST and other taxation obligations of both Eurostyle Eyewear and The Wright #3 Family Trust, and that all lodgements and payments are up to date: First Wright Affidavit. APRA does not dispute that evidence. 16 Mr Wright also deposed to his character, observing that he has never been convicted of any civil or criminal offence: First Wright Affidavit. He holds an undergraduate degree from Macquarie University and post graduate certificate in business from the University of Queensland: Third Wright Affidavit. He deposed to his extensive senior management experience in international corporations prior to running his own businesses: Third Wright Affidavit. 17 Mr Wright also frankly acknowledged his failure to fulfil his responsibilities as trustee or responsible officer, but deposed that he "did not intentionally ignore [those] responsibilities as [he] relied on [his] accountant's professional expertise": First Wright Affidavit. APRA did not cavil with that evidence. I accept that Mr Wright did not intend to overlook his responsibilities. 18 Mr Wright deposed to the circumstances that the proposed SMSF will have only himself and his wife as members: Third Wright Affidavit. Further, the proposed SMSF is expected to hold less than $1 million and professional administrators will be appointed to manage the Fund's compliance obligations: Third Wright Affidavit; First Wright Affidavit. He therefore submitted that there is no risk to shareholders, creditors, employees or to the general public.

Disposition 19 I have had regard to the circumstances in which the disqualification occurred; to Mr Wright's character and conduct since the disqualification; to the nature, purpose and size of the proposed SMSF; to the unlikelihood that there will be any further contraventions by Mr Wright; and, in particular, to my view that there is minimal risk to the interests of third parties, should Mr Wright's disqualification be revoked. I am therefore satisfied that Mr Wright's disqualification should be revoked and that his disqualification should be removed from the APRA Disqualification Register. 20 It is appropriate that each party bears its own costs of the application. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Sarah C Derrington

Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008(Cth)s 70(2)

Superannuation Industry (Supervision) Act 1993(Cth)ss 10, 120A, 126G, 126J, 126K

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