Olesen v MacLeod - [2011] FCA 229

FEDERAL COURT OF AUSTRALIA
Olesen v MacLeod [2011] FCA 229

Citation: Olesen v MacLeod [2011] FCA 229

Parties: NEIL OLESEN SUING IN HIS CAPACITY AS DEPUTY COMMISSIONER OF TAXATION (SUPERANNUATION) v MARK ANDREW MACLEOD

File number: WAD 328 of 2010

Judge: BARKER J

Date of judgment: 17 March 2011

Catchwords:
SUPERANNUATION — where contraventions of s 62(1) and s 65(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) have been admitted — where declarations are sought that would reflect those admissions.

SUPERANNUATION — consideration of the imposition of a civil penalty order pursuant to s 196(3) of the Superannuation Industry (Supervision) Act 1993 (Cth) — whether the conduct amounts to a serious contravention — whether a monetary penalty should be ordered – consideration of other principles and factors relevant to the assessment of an appropriate penalty.

Legislation: Building and Construction Industry Improvement Act 2005 (Cth)
Crimes Act 1914 (Cth) s 4AA
Superannuation Industry (Supervision) Act 1993 (Cth) s 10(1), s 19, s 62(1), s 65(1), s 193, s 196

Cases cited: Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121
Australian Prudential Regulation Authority v Holloway [2000] FCA 1245
McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29
Olesen v Eddy [2011] FCA 13
Raelene Vivian, suing in her capacity as the Deputy Commissioner of Taxation (Superannuation) v Fitzgeralds [2007] FCA 1602

Date of hearing: 14 March 2011

Place: Perth

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 81

Counsel for the Applicant: Ms W Gillan

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondent: The respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 328 of 2010

BETWEEN:
NEIL OLESEN SUING IN HIS CAPACITY AS DEPUTY COMMISSIONER OF TAXATION (SUPERANNUATION)
Applicant

AND:
MARK ANDREW MACLEOD
Respondent

JUDGE:

BARKER J

DATE OF ORDER:

17 MARCH 2011

WHERE MADE:

PERTH

THE COURT DECLARES THAT:
1.The respondent, as a trustee of the MAM Superannuation Fund (the Fund) contravened:
(a)section 62(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) (Act) by failing to ensure that the Fund was maintained solely for one or more of the purposes set out in s 62(1) of the Act; and
(b)section 65(1) of the Act by giving financial assistance using the resources of the Fund to a member of the Fund, namely the respondent,

by causing the Fund to pay the following sums from the Fund to himself without authorisation under the governing rules of the Fund:

(i)

9 September 2005

$20,028.00

(ii)

19 September 2005

$3,000.00

(iii)

3 October 2005

$5,000.00

(iv)

26 October 2005

$2,000.00

(v)

11 November 2005

$1,000.00

(vi)

8 December 2005

$1,000.00

(vii)

23 February 2006

$2,000.00

(viii)

4 May 2006

$1,000.00

(ix)

5 May 2006

$1,000.00

(x)

4 July 2006

$2,000.00

(xi)

9 August 2006

$2,000.00

(xii)

11 September 2006

$1,500.00

(xiii)

13 September 2006

$2,000.00

(xiv)

25 October 2006

$1,500.00

(xv)

28 November 2006

$500.00

(xvi)

6 March 2007

$700.00

(xvii)

17 September 2007

$500.00

(xviii)

23 January 2008

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: [2011] FCA 229
Decision Date: 17 March 2011

CaseChat Overview and Summary

In the case of Olesen v MacLeod, the primary issue was the respondent's contravention of sections 62(1) and 65(1) of the Superannuation Industry (Supervision) Act 1993 (Cth). The applicant, the Commissioner of Taxation, sought declarations reflecting these contraventions and a civil penalty order. The court had to determine whether the contraventions constituted a serious offence, whether a civil penalty order should be imposed, and if so, the appropriate monetary penalty. The agreed facts revealed that the respondent, as a trustee of the MAM Superannuation Fund, admitted to failing to maintain the fund solely for its intended purposes and provided himself with financial assistance from the fund.

The court addressed the severity of the respondent's actions, considering them a serious contravention due to the admitted breaches of the statutory provisions. It was noted that the respondent's conduct warranted a civil penalty order. The primary consideration in determining the monetary penalty was the seriousness of the contravention and the need for both specific and general deterrence. The respondent's early admission and cooperation were taken into account, leading to a reduced penalty. The court found that a penalty of $12,500 was appropriate, serving as a deterrent while acknowledging the respondent's cooperation.

The court's final orders included declarations of the respondent's contraventions, a monetary penalty of $12,500 to be paid to the Commonwealth, and an order for the respondent to pay the applicant’s costs of and incidental to the application, to be taxed if not agreed.

Orders

Orders of the court

2. The respondent pay to the Commonwealth of Australia a monetary penalty in the sum of $12,500.

3. The respondent pay the applicant’s costs of and incidental to the application, to be taxed if not agreed.

Note:

Background

Background to the litigation

The principal issues to be determined in this proceeding are:1.Whether the single course of conduct, represented by the contraventions, is a “serious one”, as that expression is used in s 196(4) of the Act.2.Whether it is appropriate to make a civil penalty order under s 196(3) of the Act.3.If so, what the monetary penalty should be.AGREED FACTS The MAM Superannuation Fund (Fund) was established on or about 5 August 2005. A Trust Deed for the Fund was executed on 5 August 2005. On or about 5 August 2005, the respondent made an application to be admitted as a member of the Fund pursuant to cl 6.4 of the Trust Deed and was admitted as a member of the Fund on that date. At all material times no other person was a member of the Fund. The Fund had, at all material times, two trustees, namely the respondent who was the member and Donald MacLeod, who was the father of the respondent. The Trust Deed included the following terms:·The trustees established the Fund on or about 5 August 2005.·The trustees of the Fund were the respondent and Donald MacLeod.·The primary purpose was to provide superannuation benefits to the members in the event of their retirement.·The trustees convenated to comply with the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth) (Act) and other legislation applicable to superannuation funds and any requirements of the Regulator. The governing rules of the Fund provided the primary purpose of the Fund was the provision of old age pensions. The trustees of the Fund did not receive any remuneration from the Fund or from any person for any duties or services performed by the trustees in relation to the Fund. The Commissioner received notice in the approved form for the purposes of s 19(4) of the Act that the trustees elected that the Act was to apply to the Fund:·An “Application for an ABN [Australian Business Number] Registration for superannuation entities” was lodged with the Commissioner on or about 6 August 2005. In the application an election was made for the Fund to be regulated under the Act.·On or about 9 August 2005, the Commissioner issued an ABN in respect of the Fund.·The Fund has been registered on the Australian Business Register under ABN 60 847 614 394 with effect from 5 August 2005. The Fund was at all material times since August 2005:·a superannuation fund within the meaning of s 10(1) of the Act;·a regulated superannuation fund within the meaning of s 19 of the Act; and·a self‑managed superannuation fund within the meaning of s 17A of the Act. The Fund was established with a rollover payment on 7 September 2005 from MLC Investments of $40,032.26 into an ANZ bank account (account number 4963-55939) in the name of the respondent and Donald MacLeod as trustees for the MAM Superannuation Fund (ANZ account). Further amounts were rolled over from the respondent’s Pattersons PSL Super Fund into the Fund as follows:21 October 2005 $1,060.7415 February 2006 $2,095.0026 October 2006 $1,970.10

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Taking all these factors into account, I consider that, absent the respondent’s acknowledgement and admission of his contraventions from the outset of the inquiry and proceedings against him on behalf of the applicant, a monetary penalty in the order of $15,000 to $17,000 would have been appropriate. Taking into account the admissions and cooperative conduct of the respondent, for which he should receive credit, I consider the monetary penalty should be fixed at $12,500. This penalty constitutes both a suitable specific and general deterrent to such conduct, taking into account the circumstances of the respondent in this particular case.DECLARATIONS AND ORDERSThe Court Declares That:1.The respondent, as a trustee of the MAM Superannuation Fund (the Fund) contravened:(a)section 62(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) (Act) by failing to ensure that the Fund was maintained solely for one or more of the purposes set out in s 62(1) of the Act; and(b)section 65(1) of the Act by giving financial assistance using the resources of the Fund to a member of the Fund, namely the respondent,by causing the Fund to pay the following sums from the Fund to himself without authorisation under the governing rules of the Fund:

Citation:		Olesen v MacLeod [2011] FCA 229
Parties:		NEIL OLESEN SUING IN HIS CAPACITY AS DEPUTY COMMISSIONER OF TAXATION (SUPERANNUATION) v MARK ANDREW MACLEOD
File number:		WAD 328 of 2010
Judge:		BARKER J
Date of judgment:		17 March 2011
Catchwords:		SUPERANNUATION — where contraventions of s 62(1) and s 65(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) have been admitted — where declarations are sought that would reflect those admissions. SUPERANNUATION — consideration of the imposition of a civil penalty order pursuant to s 196(3) of the Superannuation Industry (Supervision) Act 1993 (Cth) — whether the conduct amounts to a serious contravention — whether a monetary penalty should be ordered – consideration of other principles and factors relevant to the assessment of an appropriate penalty.
Legislation:		Building and Construction Industry Improvement Act 2005 (Cth) Crimes Act 1914 (Cth) s 4AA Superannuation Industry (Supervision) Act 1993 (Cth) s 10(1), s 19, s 62(1), s 65(1), s 193, s 196
Cases cited:		Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121 Australian Prudential Regulation Authority v Holloway [2000] FCA 1245 McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29 Olesen v Eddy [2011] FCA 13 Raelene Vivian, suing in her capacity as the Deputy Commissioner of Taxation (Superannuation) v Fitzgeralds [2007] FCA 1602
Date of hearing:	14 March 2011
Place:	Perth
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	81
Counsel for the Applicant:	Ms W Gillan
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	The respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 328 of 2010

BETWEEN:	NEIL OLESEN SUING IN HIS CAPACITY AS DEPUTY COMMISSIONER OF TAXATION (SUPERANNUATION) Applicant
AND:	MARK ANDREW MACLEOD Respondent

JUDGE:	BARKER J
DATE OF ORDER:	17 MARCH 2011
WHERE MADE:	PERTH

(i)	9 September 2005	$20,028.00
(ii)	19 September 2005	$3,000.00
(iii)	3 October 2005	$5,000.00
(iv)	26 October 2005	$2,000.00
(v)	11 November 2005	$1,000.00
(vi)	8 December 2005	$1,000.00
(vii)	23 February 2006	$2,000.00
(viii)	4 May 2006	$1,000.00
(ix)	5 May 2006	$1,000.00
(x)	4 July 2006	$2,000.00
(xi)	9 August 2006	$2,000.00
(xii)	11 September 2006	$1,500.00
(xiii)	13 September 2006	$2,000.00
(xiv)	25 October 2006	$1,500.00
(xv)	28 November 2006	$500.00
(xvi)	6 March 2007	$700.00
(xvii)	17 September 2007	$500.00
(xviii)	23 January 2008