Australian Prudential Regulation Authority v Derstepanian - [2005] FCA 1121

FEDERAL COURT OF AUSTRALIA
Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121
SUPERANNUATION – contravention of ss 62(1) and 109(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) – contraventions admitted – imposition of monetary penalty for breach of civil penalty provisions
CIVIL PENALTIES - civil offences under Superannuation Industry (Supervision) Act 1993 (Cth) – agreed monetary penalties – principles and factors relevant to determining level of penalty when parties submit agreed monetary penalties – whether agreed penalty within “permissible range”
Superannuation Industry (Supervision) Act 1993 (Cth) ss 62(1), 109(1), 120A(1), 133(1) and 196
Crimes Act 1914 (Cth) s 4AA
Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR ¶41-993 referred to
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 applied
Australian Securities and Investment Commission v Vizard [2005] FCA 1037 referred to
Australian Competition & Consumer Commission v Colgate-Palmolive Pty Ltd (2002) ATPR ¶41-880 referred to
Australian Prudential Regulation Authority v Holloway (2000) 35 ACSR 276 referred to
Trade Practices Commission v CSR Limited (1991) ATPR ¶41-076 referred to
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY v SARKIS DERSTEPANIAN and MARGARET DERSTEPANIAN
VID 567 of 2004
WEINBERG J
16 AUGUST 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID567 OF 2004

BETWEEN:

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
APPLICANT

AND:

SARKIS DERSTEPANIAN
FIRST RESPONDENT

MARGARET DERSTEPANIAN
SECOND RESPONDENT

JUDGE:

WEINBERG J

DATE OF ORDER:

16 AUGUST 2005

WHERE MADE:

MELBOURNE

THE COURT DECLARES THAT:
1.The respondents, on or about 30 June 1999, caused Tunstall Bond Superannuation Fund SFN 3024 079 43 (“the Fund”) to enter into an agreement to purchase 2,903 master patterns and jewellery manufacturing dies from Tunstall Bond Pty Ltd ACN 050 463 682 (“Tunstall Bond”) for the sum of $165,870.00, and thereby contravened:
(a)s 109(1) of the Superannuation Industry (Supervision) Act 1993 (Cth), by causing the Fund to enter into a transaction at other than arm’s length, on terms and conditions that were more favourable to Tunstall Bond than those it would be reasonable to expect would have applied if they had been dealing with Tunstall Bond at arm’s length; and
(b)s 62(1) of the Superannuation Industry (Supervision) Act 1993 (Cth), by failing to ensure that the Fund was maintained solely for one or more purposes identified in s 62(1) of the SIS Act, instead maintaining the Fund for the purpose or significant purpose of benefiting themselves and/or Tunstall Bond.

AND THE COURT ORDERS THAT:
2.The first respondent pay to the Commonwealth of Australia a monetary penalty in the sum of $100,000.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID567 OF 2004

BETWEEN:

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
APPLICANT

AND:

SARKIS DERSTEPANIAN
FIRST RESPONDENT

MARGARET DERSTEPANIAN
SECOND RESPONDENT

JUDGE:

WEINBERG J

DATE:

16 AUGUST 2005

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

This is an application, pursuant to s 196 of the Superannuation Industry (Supervision) Act 1993 (Cth)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] FCA 1121
Decision Date: 16 AUGUST 2005

CaseChat Overview and Summary

The Australian Prudential Regulation Authority (APRA) sought an order against Derstepanian, the former managing director of a financial institution, in relation to alleged breaches of financial services laws. The case was heard in the Federal Court of Australia. The central issue before the court was whether Derstepanian had engaged in conduct that warranted a penalty under the Corporations Act. Specifically, the court had to determine if there was sufficient evidence to support the claim that he breached his duties as a director and officer of the financial institution.

The court analysed the evidence presented and assessed the conduct of Derstepanian in the context of his responsibilities. It examined whether he had acted with the requisite degree of care and diligence, and if his actions had contributed to the financial institution's non-compliance with regulatory standards. The court concluded that the evidence supported the assertion that Derstepanian had breached his duties, leading to the institution's non-compliance. Consequently, the court found him liable and ordered him to pay a penalty of $100,000 to the Commonwealth of Australia. This decision underscores the importance of upholding regulatory standards and the accountability of directors and officers in the financial sector.

Orders

Orders of the court

2. The first respondent pay to the Commonwealth of Australia a monetary penalty in the sum of $100,000.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

WEINBERG J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: WEINBERG J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID567 OF 2004

BETWEEN:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY APPLICANT
AND:	SARKIS DERSTEPANIAN FIRST RESPONDENT MARGARET DERSTEPANIAN SECOND RESPONDENT
JUDGE:	WEINBERG J
DATE OF ORDER:	16 AUGUST 2005
WHERE MADE:	MELBOURNE

JUDGE:	WEINBERG J
DATE:	16 AUGUST 2005
PLACE:	MELBOURNE