Australian Prudential Regulation Authority v Kelaher

In the case of Australian Prudential Regulation Authority v Kelaher, the Australian Prudential Regulation Authority (APRA) sought to hold two entities and their directors accountable for alleged breaches of the Superannuation Industry (Supervision) Act 1993 (Cth). The case was heard and determined by the Federal Court of Australia, with Justice Bromberg presiding. APRA alleged that the respondents had contravened various provisions of the Act, specifically sections 52 and 52A, which pertain to trustee duties, care, skill and diligence, and best interests of beneficiaries. These allegations centred around the respondents' handling of statutory covenants, their adherence to the prudent person and prudent superannuation trustee standards, and potential conflicts of interest.

The primary legal issues before the court involved whether the respondents had indeed breached the SIS Act, and if so, whether the governing rules of the trusts in question excluded liability for those breaches. APRA argued that the respondents failed to exercise the requisite care, skill and diligence, and did not act in the best interests of the beneficiaries. The respondents contended that the allegations were unsubstantiated and that the governing rules of the trusts shielded them from liability. The court had to determine whether APRA had provided sufficient evidence to prove the alleged contraventions and if the governing rules effectively exempted the respondents from liability.

Justice Bromberg held that APRA had not proven any of the contraventions alleged against the respondents. The court found that the evidence presented by APRA was inadequate to establish the breaches of the SIS Act. Additionally, the court concluded that the governing rules of the trusts did not exclude liability for the alleged contraventions. As a result, APRA's application was dismissed in its entirety. The court ordered that the amended originating application be dismissed and that APRA pay the respondents' costs as agreed or taxed.